Recent New Source Review Guidance Updates

In September 2025, the U.S. Environmental Protection Agency (U.S. EPA) issued three new guidance memoranda on New Source Review (NSR) topics: begin actual construction, projected actual emissions, and reactivation. The three memos are posted on U.S. EPA’s NSR policy and guidance database and represent either new policy or a change back to a policy communicated under the first Trump administration. Each is discussed below.

Begin Actual Construction

This 9/2/2025 memo is actually a site-specific determination that previews U.S. EPA’s current policy, which reflects U.S. EPA’s March 2020 draft guidance on the topic that was never finalized. Air quality regulations prohibit beginning actual construction of a major stationary source prior to obtaining an air permit. State and federal air quality regulations characterize “begin actual construction” as “the initiation of physical on-site construction activities on an emissions unit, which are of permanent nature….” Previous U.S. EPA guidance had precluded construction of ancillary buildings or structures that were not emissions units. With this determination, U.S. EPA states that “begin actual construction” does not apply to the parts of a facility that do not qualify as an emissions unit and that previous guidance (i.e., the March 28, 1986 Reich memo) adopted an overly broad reading of the term. U.S. EPA intends to clarify this policy in a future rule revision.

This case-by-case determination is important because it potentially shrinks a Prevention of Significant Deterioration (PSD) project’s construction timeline by allowing several significant construction activities to be performed prior to permit issuance. However, any non-emissions unit construction would be done at the permittee’s risk. For example, the permitting agency could require changes to the submitted air dispersion modeling analysis that affect building parameters or require higher stacks with different foundations. “Equity in the ground” (e.g., the reasoning that you already started building your project a certain way) also cannot be used to support a best available control technology (BACT) or lowest achievable emission rate (LAER) determination for your project.

Projected Actual Emissions

When determining if a project’s emissions increase triggers PSD or nonattainment new source review (NNSR), the actual to projected actual (ATPA) emissions test is often used for existing emissions units. The federal regulations define projected actual emissions and require permit applications to consider various factors when developing the projection. On December 7, 2017, then U.S. EPA Administrator Scott Pruitt wrote a memo to regional administrators that set out two concepts related to projected actual emissions. The December 7, 2017 memo was rescinded in 2022 under the previous administration but the September 15, 2025 memo from Administrator Zeldin reinstates the 2017 memo.

First, the memo states that a facility can factor into its projected actual emissions an intent to manage those emissions to prevent a significant emissions increase (this intent is part of “all relevant information” that the NSR rules require facilities to consider when making their projection of actual emissions). This essentially means you can avoid PSD or NNSR review for your project without having to take an avoidance condition in your permit. Second, the memo states that projected actual emissions are not enforceable, and as long as the facility has met the regulatory requirements, the agency should not second guess a facility’s projection. This means that as long as you follow the requirements in the regulation for developing your projected actual emissions, the permitting agency should not reject your projection just because it doesn’t agree with it. The burden falls on the agency to show projected emissions are in error, and U.S. EPA does not intend to initiate enforcement action unless post-project actual emissions data indicates a significant emissions increase did occur as a result of the project. Sources do not trigger major NSR if their projected actuals and post project emissions are less than significant emissions increase thresholds. Tracking post-project emissions ends after five or ten years depending on the circumstance. U.S. EPA argues that the 2022 memorandum rescinding the policy did not identify a deficiency in the policy or adopt a different policy. U.S. EPA also argues that the need for guidance still exists and that the 2017 ATPA memo is consistent with the Clean Air Act (CAA) and the NSR regulations. This memo is consistent with U.S. EPA’s July 2025 rescission of their 2024 proposed changes to the NSR regulations.

Reactivation

The third memo issued in September 2025 rescinds U.S. EPA’s reactivation policy. U.S. EPA had historically applied a reactivation policy to determine whether resumption of operation of an idle stationary source or emissions unit required an NSR permit as a new source or unit. Under that policy, U.S. EPA presumed that a major stationary source or emissions unit that was idle for two or more years was permanently shut down unless the source could rebut that presumption by providing evidence that it intended to restart operations at the time the source or unit went idle. This policy was at the heart of a specific refinery case (Port Hamilton Refining and Transportation, LLLP v. U.S. EPA) that also had environmental justice implications. U.S. EPA under the first Trump Administration determined that the refinery could restart without a PSD permit and then U.S. EPA under the Biden Administration determined that the refinery needed a PSD permit to restart. Litigation ensued as a matter of course.

U.S. EPA justifies its rescission of the reactivation policy as a reduction in permitting burden, a better reading of the CAA (NSR applies only when construction or a modification occurs), and in response to a July 2023 Third Circuit Appeals Court decision on the Port Hamilton case rejecting U.S. EPA’s position regarding an entity that was restarting equipment or facilities was subject to NSR as a modification. If a restart involves a physical change that qualifies as a major modification, then a PSD or NNSR permit is still required. U.S. EPA states in the latest memo that restarting an emissions unit that has been idled cannot by itself be considered a change in the method of operation. Finally, the memo raises the possibility of revisiting State Implementation Plans (SIPs) that include elements from the rescinded reactivation policy that are not supported by state or local laws.

Summary

These three memos represent reasonable NSR permitting policy shifts that could help make 2026 the year to permit capital projects, especially if U.S. EPA completes other adjacent deregulatory actions and policy improvements. ALL4’s air quality experts have significant experience developing permitting strategies, air permit applications, and modeling analyses. Please reach out to me or your favorite ALL4 project manager for assistance in evaluating or permitting your next project!