EPA Sets Regulatory Limits on Title V Objections to NSR Permits

On September 25, 2025, the EPA issued “Clarifying the Scope of ‘‘Applicable Requirements’’ Under State Operating Permit Programs and the Federal Operating Permit Program,” 91 Fed. Reg. 61026.  This final rule follows an earlier proposal in sought to revise its program requirements to follow the Fifth Circuit’s decision in Environmental Integrity Project v. EPA, 969 F.3d 529 (5th Cir. 2020), that the “structure and purpose” of the Clean Air Act does not provide for general Title V objection review of NSR permits and to revise the regulations to moot the Tenth Circuit’s contrary, regulation-based decision in Sierra Club v. EPA, 964 F.3d 882 (10th Cir. 2020), which rejected the agency’s decision in Hunter Energy.  The final rule is an important step in achieving national uniformity and solidifying EPA’s efforts to have NSR permits reviewed in direct administrative appeal proceedings and not through Title V objections, with a few exceptions.

ANALYSIS

The EPA begins by recounting the evolution of the use of Title V objections to review NSR permits, noting that initially, Title V objections were not used for this purpose, consistent with EPA’s belief that NSR permits and permit conditions were adequately addressed in the second part of the Title V definition of “applicable requirements” in 40 C.F.R. § 70.2.  Starting around 1997, the EPA began to consider whether a proper NSR permit was issued or whether the control technology was appropriate might implicate the first provision of the definition of “applicable requirements” and began to issue objections if it believed an error was made or an incorrect process followed, at least for SIP-approved states. This process continued until 2017, when EPA issued its Title V objection orders in Hunter Energy and Big River Steel, where it articulated again the position that Title V objection orders are not the appropriate forum for challenging NSR permit decisions or applicability decisions.  As noted above, EPA’s approach in Hunter Energy was upheld by the Fifth Circuit as consistent with the Clean Air Act but rejected by the Tenth Circuit in the appeal of the Hunter Energy decision itself. The Tenth Circuit adopted the EPA’s 1997-2017 interpretation of the first and second provisions of the definition of “applicable requirement” in 40 C.F.R. § 70.2 and so the EPA, in [DATE], moved to amend the regulation to remove the regulatory provisions and establish a uniform interpretation.

In reaching this conclusion, the EPA takes the position that the Clean Air Act does not define what the relevant “applicable requirements” are and, given the applicable statutory language, it is apparent that Congress delegated this aspect of program development to the agency to gap-fill using its “necessary and proper” rulemaking authorities. In reaching this conclusion, the EPA relief heavily upon the rationale of the Fifth Circuit in Environmental Integrity Project concerning the structure and purpose of Title V as supporting its approach.

The EPA thus adopted the following new language to provision (1) of the definition of applicable requirement under 40 C.F.R. § 70.2:

provided that where a preconstruction permit described in paragraph (2) of this definition is issued with public notice and the opportunity for comment and judicial review, the terms and conditions of such a permit establish and define, for purposes of this paragraph, the applicable requirements of the implementation plan that apply to the activities authorized by such a preconstruction permit;

EPA also amended provision (2) of the definition of applicable requirement under 40 C.F.R. § 70.2 to add permits issued pursuant to 42 U.S.C. § 7410(a)(2), which now explicitly includes minor NSR permits. Finally, in 40 C.F.R. § 70.8, the EPA added the following language about what it will do in an objection/petition proceeding:  “As part of this determination, the Administrator will not evaluate whether applicable requirements, as defined in § 70.2, were correctly established.”  As the EPA explained in the preamble:

In short, provided that a source obtains an NSR permit under EPA-approved (or EPA-promulgated) title I rules, with public notice and the opportunity for comment and judicial review, that NSR permit establishes and defines the relevant NSR-related applicable requirements of the SIP (or FIP) for purposes of title V. As with applicable requirements established under other CAA authorities (e.g., NSPS, NESHAP), the EPA will not reevaluate those NSR decisions through the title V process, which is not designed to authorize or require permitting authorities to second-guess prior NSR decisions when implementing title V.

In addition, the EPA makes it clear that it will follow the approach set forth in the Final Rule in the following circumstances:

• During review of the initial permit; during responses to public comments on a draft permit; during the 45-day objection period; during the response to petitions for objection; during reopenings for cause; and during other actions under 40 C.F.R. § 70.10 (and equivalent actions under 40 C.F.R. Part 71).

• The Final Rule approach applies regardless of whether the underlying basis is a SIP approved program or a FIP program.

• The Final Rule approach extends to other questions concerning NSR-related requirements of a SIP that may be relevant to a particular preconstruction authorization, including whether additional requirements of the SIP (e.g., major NSR requirements) should have been applicable to the construction, and questions regarding other types of SIP requirements that establish preconditions for NSR permit issuance (e.g., whether the permitting authority correctly determined that the construction would not cause or contribute to a violation of the NAAQS).  EPA notes that this includes startup, shutdown and malfunction provisions.  EPA also noted that modeling demonstrations are considered “part” of the NSR permit and not subject to Title V review if the general requirements of the Final Rule are met.

• The Final Rule applies to both consecutive construction and operating permits and concurrent construction and operating permits (for example, when a state issues a combined PSD/Title V permit).

• The EPA severed its proposal to eliminate the “enhanced NSR” process, which allows an NSR permit to be issued following procedures substantially similar to 40 C.F.R. §§ 70.7 and 70.8 and then be incorporated into the Title V permit by administrative amendment, based upon comments from states and permitting authorities that use or are interested in using that approach. The Final Rule would generally apply to enhanced NSR permits.

The EPA did identify several instances where it might use its Title V objection authorities to address what may be perceived to be NSR issues:

• If a facility proceeds with construction without any title I-based preconstruction  permit (or similar authorization), there is nothing to conclusively establish all relevant NSR-related applicable requirements of the SIP.

• If a preconstruction permit is issued, but not issued under title I, such a permit would not establish the NSR requirements of the SIP that apply to an individual source.

• Only title I preconstruction permitting decisions that have been subject to public notice and the opportunity for comment and judicial review conclusively establish the applicable requirements of the SIP.

• This issue received much comment, particularly from state and local permitting authorities.

• EPA clarified that most general permits and permits-by-rule go through a public process and hence the general terms would not be reopened under this provision, but that the application to an individual facility would be open for Title V review.

• The EPA will continue to review issues involving an overlap of title V and NSR requirements. The most notable example involves using title V to evaluate the sufficiency of monitoring and related compliance assurance requirements associated with more substantive NSR permit requirements. However, the EPA rejected comments from environmental groups that a finding that monitoring for “synthetic minor” limits was inadequate required invalidation of the underlying minor NSR permit.  Instead, the EPA reiterated that the NSR substantive requirements (e.g., limits, possibly base monitoring) are untouched but may be supplemented by additional Title V monitoring.

• Where the SIP provision itself allows/requires use of Title V procedures.

Finally, the EPA noted that its failure to object to a permit does not mean that it agrees with the NSR conditions found in it or that EPA cannot seek to reopen, terminate or bring an enforcement action for NSR violations.  Similarly, EPA stated that its rule does not undermine the validity of NSR permits issued without public notice and opportunity for comment or judicial review; it only affects how they are considered in the Title V context. EPA agreed with commenters (mostly environmental groups) that the effect of the Final Rule would be to shift more NSR issues to enforcement but rejected the concern that this would allow some “decades old” violations to escape correction, noting that if that occurred, it

would be due to Congress’ imposition of a statute of limitations and not the Final Rule.

The EPA did spend some time on the interaction of NSR permits with the Title V permit shield.  The EPA noted that there are two types of permit shield: the permit shield that covers applicable requirements that are incorporated into the Title V permit; and the “negative applicability shield” where an agency determines that some requirement does not apply. First, the EPA noted that a permit shield only applies if the local program puts it into the permit, either by operation of law or on a permit-by-permit basis.  Second, for the first type of permit shield, the EPA stated that the “applicable requirements” permit shield does not protect a source from an allegation that a different type of NSR permit was required than the one it obtained.  That would, in the EPA’s view, require the second, negative applicability shield.  The EPA stated that both permit shield decisions are “Title V” actions and are reviewable in the Title V context.  Similarly, the EPA states its view that because it is no longer reviewing NSR issues in the Title V context, the Title V process is no longer a “bar” to enforcement of NSR issues as a collateral attack on the underlying permit.

COMMENTARY

In general, there is much to like in the Final Rule.  It establishes a firmer distinction and demarcation between the Title V and NSR permit processes. It should reduce the use of the Title V process to relitigate NSR matters time and time again.  

There are problems with the Final Rule, however.  First, for those NSR actions which EPA is denying protections under this rule – notably in any NSR action without public notice and comment and an opportunity for judicial review – EPA does not clearly limit them to the most recent actions, leaving open the possibility that very old actions may be relitigated at each Title V permit renewal. This is a disservice to EPA, the permitting authorities, regulated entities and even the public at large.

Second, the EPA falls short in failing to address the myriad of ways that minor changes are made, including trivial and insignificant activities, administrative permit amendments, and minor permit revisions, not all of which receive the full “public notice and comment with opportunity for judicial review.”  The EPA’s failure to address these issues makes it appear that they are all open for Title V petitions, which many now use in lieu of formal appeals because there are few, if any, guardrails on use (or abuse) of the petition process.  The EPA should have addressed a de minimis level below which it will not go.  The law does not concern itself with trifles.

Third, EPA is attempting to have it both ways, with the NSR permit “conclusively determining” the SIP-related NSR requirements for a permit that goes through public notice and comment with the opportunity for judicial review. But the EPA then states that it believes the NSR permit should be subject to collateral attach in enforcement proceedings. This is a gratuitous injury to the finality of state and local permits and is inconsistent with general American administrative law practice. It is to be hoped that the EPA will reconsider its position.

Fourth, perhaps inadvertently, the EPA may have damaged the general permit, permit-by-rule and similar programs when it suggests that the “individual application” of these programs to a facility is appropriately subject to Title V scrutiny because it is not addressed public notice and comment proceeding. This potentially adds tens of thousands of permits to the petition universe. 

In summary, in the majority of cases the Final Rule should improve the consistency of results and reduce the burden on permitting authorities and regulated entities at minimal additional burden to the public and interested parties, who can appeal most NSR permit decisions in local adjudicatory systems. That is to be encouraged. But the EPA has left enough loopholes that the results may not be fully satisfactory or may result in an unintended surge of petitions over minor actions.