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EPA Outlines NSR Initiatives for 2022-2023


Peter Keller of EPA’s NSR group provided an overview of the EPA’s NSR initiatives for the 2022-2023 period at the Air & Waste Management Association’s 2022 Annual Conference and Exhibition. As always, these EPA updates provide an important glimpse into the policies and priorities of the current administration.


ANALYSIS


Mr. Keller outlined a number of items currently on EPA’s plate. We will address each briefly:


NSR Actual-to-Projected-Actual Applicability Test memorandum


This memo was issued by former Administrator Scott Pruitt and communicated guidance on how EPA intended to exercise its enforcement authority in reviewing source’s invocation of the actual to potential actual applicability test under the 2002 NSR Reform Rule. In general, the memorandum announced that EPA would not “second guess” source’s applicability determinations unless the source had failed to conduct the test or had failed to meet part of the regulatory requirements underlying it. The memorandum also gave heightened consideration of post-project actual emissions and stated that EPA and sources could consider the “source’s intent” to manage post-project emissions.

Mr. Keller stated that EPA is reviewing this memorandum in accordance with Executive Order No. 13990.


Fugitive Emissions


Mr. Keller noted that the proper handling of fugitive emissions in the NSR program has long been contentious. In 2008, a rule exempted non-listed source categories from considering fugitive emissions in determining “major modification” applicability. In 2009, EPA granted an NRDC petition for reconsideration of that rule. Litigation was held in abeyance. EPA is now working on a proposal “that will address whether all sources, or only sources in listed source categories, must include fugitive emissions towards major modification thresholds.” Mr. Keller indicated that EPA hopes to release its proposal in late summer 2022.


Project Emissions Accounting Rule


EPA issued guidance in March 13, 2018, interpreting the existing NSR regulations allow accounting for emissions decreases resulting from a project in “Step 1” of the NSR applicability analysis. This was codified in a final rule issued effective December 24, 2020 (see 85 FR 74890 (Nov. 24, 2020)). Petitions for reconsideration were submitted by five environmental groups and petitions for review of the rule were submitted by two environmental groups and several states. On October 12, 2021, EPA issued a letter denying the requests for reconsideration and withdrawal of the memorandum but stated that it “plans to initiate a discretionary rulemaking to address the concerns” raised by petitioners. The litigation is held in abeyance and EPA plans to release this rule in Spring 2023.


Sufficiency of Minor NSR Programs


EPA is considering a rulemaking “to add specificity to the public participation provisions for minor NSR programs, while maintaining flexibility, with the intent to improve the effectiveness and nationwide consistency” of minor NSR programs. Tentatively planned for 2023. In part, this initiative is driven by an Office of Inspector General Report released in July 2018 that urged the EPA to:

  • Update guidance on practical enforceability

  • Develop a synthetic minor permit oversight plan

  • Revise guidance to “communicate its key expectations for synthetic minor source permitting”

  • Identify state/local/tribal programs that fail to adhere to public participation programs


"Potential to Emit" Definition Revisions


Mr. Keller said that EPA is currently undertaking a review of “legally and practicably enforceable” limits. It is now considering this issue for all programs (NSR, Title V, and NESHAPs) as part of the “major source to area source” rulemaking reconsideration process. The target date is early 2023.


Outer Continental Shelf (OCS) Permitting


EPA has delegated OCS authority to Virginia, Maryland and Delaware and four authorities in California (Santa Barbara, San Luis Obispo, South Coast and Ventura County). EPA itself recently issued two OCS permits and has issued two recent policy decisions:

  • Pull-ahead anchor cable laying vessels are not OCS sources; and

  • Permtting-related emissions offsets are not required for OCS construction emissions


Future activity under consideration includes determining “which equipment, activities, or facilities constitutes an OCS source and at what point in time does an OCS source exist; and how should air quality modeling be handled for OCS sources that require extended time to construct.


Environmental Justice


Mr. Keller noted that “EPA has made it a priority to infuse equity and environmental justice principles and priority into all EPA practices, policies and programs.” He then outlined the following guidance issued by EPA on this topic:


  • EO 13985, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government

  • EO 13990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis

  • EO 14008, Tackling the Climate Crisis at Home and Abroad

  • April 7, 2021, Message from Admin. Regan to all EPA offices

  • May 5, 2022, Memorandum from Asst. Attorney General: Comprehensive Environmental Justice Enforcement Strategy

  • June 13, 2022, Memorandum from Admin. Regan: Holding Ourselves Accountable for Implementation of the

  • FY2022-2026 EPA Strategic Plan and EPA’s Equity Action Plan

Mr. Keller also pointed the attendees to the following resources:

  • EPA Legal Tools to Advance Environmental Justice

  • Office of Environmental Justice (OEJ) Toolkit for Assessing Potential Allegations of Environmental Injustice

  • EJScreen 2.0

  • https://www.epa.gov/environmentaljustice

Electronic Systems and Training


Mr. Keller closed by noting that EPA is working in conjunction with its state partners and the Environmental Council of the States to develop an “Electronic Permitting System” to transmit permits to EPA for review. Initially completed in march 2020, EPA has now received about 4,500 perimts from 22 states and 63 local authorities from Regions 1,4,9 and 10. EPA is also looking at updating RACT/BACT/LAER Clearinghouse functionality and creating standardized training courses for new staff in air agencies. These will be made available on the APTI website.


COMMENTARY


EPA has outlined a sweeping agenda for the next several years. Several of these topics will be explored in more detail in upcoming issues of NSR Law Blog. A few initial observations:


  • Pruitt Actual to Projected Actual Emissions Applicability Test guidance. No one is surprised by the ongoing review of the Pruitt ATPA guidance. It represents a significant departure from prior EPA practice and apparent judicial acceptance of those past practices. As NSR Law Blog has observed, “Reliance on this memorandum is at a source’s considerable risk.” Rejection of much of this memorandum is a likely end result of the reconsideration.

  • Fugitive Emissions. EPA’s position on this issue has waxed and waned over time. The fundamental problem is that Congress has spoken on this issue – fugitive emissions are not counted for determining major source status – and this clear but incomplete guidance causes ongoing confusion. One side argues that the exclusion of fugitives from source status implies their exclusion for lesser purposes. This makes logical sense: if the emissions are not counted for source status, why should they be counted for modification applicability? The other side argues that the regulations do not expressly exclude fugitive emissions and therefore they must be counted. Because the statute is involved and the best that EPA can claim is that it is ambiguous, the meaning will always be up for potential revision absent either congressional action or a Supreme Court determination. While EPA could attempt to foreclose this by invoking its Clean Air Act 307(d) authority, the Supreme Court is a stormy place for an agency “defer to us and bar all others” claim at the present time. Stay tuned for future fireworks.

  • Minor NSR initiative. Possibly the most important initiative under consideration for day-to-day permitting. Permitting authorities currently have wide latitude under Part 51, Subpart I on the structure of their programs. This latitude is, to put it politely, “disliked” by the regions which would like more authority to bring “errant” state and local programs to heel. Permitting authorities are vexed by interference from regional offices that they perceive have little understanding or patience for the practical realities of permitting more and more sources at ever more intrusive levels. The initiative seems likely to incur much disagreement between EPA, the states and local permitting authorities.

  • "Potential to Emit" Definition. This is another topic that may prove fraught. EPA has concerns about whether state permits are adequately enforceable. States are prickly about the implication that their programs are inadequate. Sources often see changes in these areas as EPA “overreach” and note that prior efforts to “federalize” limits were resoundingly rejected by the courts. One wonders where the fixation on “enforceability” arises, whether it reflects a federal-centric view that ignores the roles of other actors, and whether the fixation actually results in environmental benefits that offset the increased complexity, length and burden on the permitting process.

  • Environmental Justice. There is a lot going on in the environmental justice space. Environmental justice advocates state that they want enhanced community engagement, ambient monitoring, real-time reporting and modeling to demonstrate no adverse impacts on disproportionately affected local communities. The challenge is that these steps are time-consuming and expensive and may fall disproportionately hard upon members of those very communities by discouraging economic activity in or near them. How the agency achieves the first while avoiding the second will be an interesting challenge.

Stay tuned for more coverage of developments as they happen.