EPA Continues to Revisit NSR-Related Decisions from the Prior Administration

June 16, 2009
by BART CASSIDY
MGKF News Flash

EPA released three determinations, dated April 24, 2009, responding to requests for reconsideration of determinations made at the end of the Bush Administration concerning implementation of the New Source Review ("NSR") provisions of the Clean Air Act.

First, EPA approved a reconsideration request filed by the Natural Resources Defense Council ("NRDC") concerning the inclusion of fugitive emissions in the determination of emission increases for purposes of evaluating NSR applicability. In December of 2008, EPA issued a determination to exclude fugitive emission increases from the calculation of the net emission increase from a proposed project. If the calculated net emission increase exceeds "significance" levels, the proposed project would trigger NSR. EPA determined that the 2002 amendments to NSR had included language which, unintentionally, could have the effect of requiring the inclusion of fugitive emission increases in the assessment of NSR applicability for all sources, instead of only those sources in industry categories listed directly in the NSR rule. NRDC petitioned EPA to reconsider this determination.

Second, in May 2008, EPA published its final NSR rule for fine particulate matter—particulate matter with a diameter of less than 2.5 microns ("PM2.5"). Earth Justice and the Sierra Club petitioned EPA to reconsider several aspects of that rule. In January 2009, at the very end of the Bush Administration, EPA notified these organizations that EPA would not reconsider the rule, nor stay its provisions. However, on April 24, 2009, EPA notified Earth Justice that EPA would reconsider and stay certain provisions of the rule; namely, the provision that prevented applicability of the new NSR rule to any project for which a complete permit application had been submitted prior to the July 15, 2008 effective date, and related provisions establishing that the pre-existing EPA policy—providing for PM10 to serve as a surrogate for PM2.5—to apply as an interim measure.

Third, the 2002 amendments to EPA's NSR rule provided, among other things, that NSR applicability for all sources should be evaluated by comparing the past actual emission rate to the projected actual emission rate for the source following a modification. The rule further provided that a source need not maintain records of the actual emission increase following the modification to demonstrate the accuracy of its prior determination, unless there was a "reasonable possibility" that the future emissions would exceed the significance threshold triggering NSR applicability for the pollutant. In response to a prior challenge to this regulation, the Court remanded this provision of the rule, and required that EPA provide specific direction through the regulations as to when records must be maintained.

EPA ultimately published a regulation to address this court ruling, providing that sources need not maintain records demonstrating the accuracy of their predicted emission increase if the source determines that the increase in actual emissions resulting from the modification will not exceed 50% of the significance threshold. The State of New Jersey requested that EPA reconsider this rule. Once again, in January 2009, at the end of the Bush Administration, EPA responded to New Jersey, stating that it would not reconsider this determination, since in EPA's assessment, its revised regulation fully satisfied the court's requirements on remand. However, the new administration has agreed to reconsider this regulatory determination, and to reopen the rule for public comment.