EPA Provides New Source Review (NSR) “Netting” Guidance

In a recent letter dated April 4, 2011 to the Indiana Department of Environmental Management (IDEM), U.S. EPA clarified its position on conducting “Step 2” of a New Source Review (NSR) permitting applicability analysis (determine the net emissions increase). This clarification is very important for facilities to consider if they have multiple projects that have occurred or will be occurring within a 5-year contemporaneous period. If a project results in a significant emission increase during “Step 1” (determine the significant emission increase), any contemporaneous projects that avoided NSR applicability through the use of the “Actual to Projected Future Actual” applicability test will be reviewed in “Step 2” (evaluation of contemporaneous and creditable emissions increases and decreases) using the unit’s emissions increase as determined by comparing past actual emissions to potential to emit (PTE). Contemporaneous projects cannot use their projected actual emissions to limit their emission increases in Step 2. If the facility needs to limit such emissions increases to avoid a significant net emissions increase, it would be necessary to take an enforceable limit on the PTE of the emission unit that was subject to the contemporaneous change. While the guidance does not cover any new ground, it is an important reminder regarding how critical it is to consider future plant projects when permitting immediate projects.