EPA NSR Chief Reports on Progress, Plans

Raj Rao, EPA NSR group leader, provided NSR program and modeling updates to attendees at the Air & Waste Management Association’s Annual Conference and Exhibition in Quebec last week. Mr. Rao stated that EPA, under the direction of just-resigned Assistant Administrator Bill Wehrum, was pursuing NSR reforms in two phases. Phase 1 is nearing completion; the status of Phase 2 is more uncertain after Mr. Wehrum’s resignation.

In a related matter, Principal Deputy Assistant Administrator Anne Idsal has assumed the responsibilities of the Acting Assistant Administrator for Air.

ANALYSIS

Phase I Actions

Mr. Rao reported that most of EPA’s planned Phase 1 NSR actions are completed and provided the following summary of their status:

Actual-to-Projected-Actual Applicability Test Memo. Issued.
Once in Always In (MM2A). Letter issued; law suit initiated by California Communities Against Toxics, EDF, EIP, and others; proposed rule presently at OMB.
Project Emissions Accounting.
Memo. Issued. Link to prior NSR Law Blog analysis.
Rulemaking. At OMB; expected soon.
Source Aggregation
Common Control Guidance (Meadowbrook & Ameresco letters). Issued.
Draft Guidance on Interpreting Adjacency. Issued and comment requested. EPA received 14 comments on the draft guidance. Concerns included whether there are multiple possible interpretations of adjacency (e.g., whether states could continue to consider interrelatedness), requests for a bright line cut off distance, and the impact of the guidance on prior permits and decisions.
PM2.5 and Ozone SILs Guidance. Issued. Litigation is underway.
Project Aggregation Reconsideration. Issued. Mr. Rao noted that the Natural Resources Defense Council had just given EPA notice that it was dropping legal challenges to the 2010 and 2018 rules. See earlier NSR Law Blog analysis.
Draft Ambient Air Guidance. Issued and comment requested. EPA received 37 comments, with the majority favoring, but objections as well. While EPA proposed only changes to the “practical preclusion of public” part of the policy, some of the comments in favor of the proposal sought more sweeping changes. Some of those opposed to the policy challenged all aspects of the Costle letter upon which the policy is based. See earlier NSR Law Blog analysis.

Phase 2 Actions

Mr. Rao reported that there are several items on the Phase 2 agenda.

Oil and Gas FIP. EPA plans an amendment to the oil and gas FIP that would allow sources to simultaneously file the Screening Procedures and the Part 1 Registration, thus saving sources at least 30 days in time prior to construction. This proposal is expected sometime this summer.
NSR corrections rule. EPA plans to issue a “corrections” rule to fix various minor typographic errors in the existing rules. EPA expects it in the summer of 2019 and does not expect it to be controversial, although Mr. Rao admitted that many things he has thought would not be controversial have been controversial.

Other Phase 2 initiatives that are less certain as to their scope and timing in light of Mr. Wehrum’s retirement include:

Begin actual construction guidance. Currently expected in the Fall of 2019.
Routine maintenance, repair and replacement (RMRR) guidance draft. Currently expected in the Fall of 2019.
Plantwide Applicability Limit (PAL) guidance draft. Currently expected in the Fall of 2019.
Actual to Projected Actual guidance draft. Currently expected in the Winter of 2019.
2010 NSR Reconsiderations (includes fugitives, reasonable possibility, ethanol). TBD

Mr. Rao also reported that the agency is considering developing an electronic compendium of its guidance that is searchable to replace the current compilation on the website. The current version is an outgrowth of the former Region 7 compilation and is not easily searchable. The initiative under consideration would group all relevant documents together by topic.

In response to questions, Mr. Rao stated that the compilation would start with just EPA prepared materials, but that it might over time grow to include Environmental Appeals Board and court decisions. Mr. Rao also noted that EPA, as part of a LEAN/Kaizen initiative, is seeking to cut the time required for agency-issued permits to approximately 6 months after determined complete.

Modeling

In a separate modeling update session, Mr. Rao noted that the MERPs program appears to be successful, with no known cases where an applicant has needed to proceed to Tier 2 analysis. Litigation initiated over the “significant impact limits” (SILs) by the Sierra Club in a June 2018 petition is underway. EPA filed its brief on March 25, 2019. Oral argument is expected to be scheduled in Fall 2019. In response to questions, Mr. Rao stated that the Office of General Counsel is comfortable with EPA’s position and likelihood of success on the merits.

COMMENTARY

Conspicuous in its absence from Mr. Rao’s report on EPA’s planned actions is the potential change to NSR applicability proposed as the “NSR reform” portion of the Affordable Clean Energy (ACE) rule. That proposal, which would predicate PSD “major modification” on triggering an hourly test in addition to the annual test presently used, would work substantial change to the NSR program. Its omission seems curious unless it is being prepared by another agency group other than the NSR group.

Otherwise, the majority of the Phase 1 and early Phase 2 NSR rules and guidance outlined by Mr. Rao consist mainly of what Mr. Wehrum has previously characterized as “singles and doubles” – relatively small, incremental steps toward improving program efficiency and certainty. Whether EPA will have the will to press forward with the more aggressive Phase 2 elements, such as the guidance on routine maintenance, repair and replacement or the 2010 reconsideration issues, remains to be seen given the uncertainties following Mr. Wehrum’s resignation.

On the modeling side, EPA’s MERPs guidance appears to be succeeding in providing a viable approach to evaluating secondary formation impacts within the regulatory program. The most closely watched issue remains the SILs, however. As many in the room remarked following Mr. Rao’s report, unless EPA is able to maintain the SILs or a similar modeling de minimis, the NSR program could be brought to its knees.