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US EPA revives Bush-era interpretation of Clean Air Act permitting program

Highlights

Action is designed to improve regulatory certainty

November 7 action will clarify 'project aggregation' aspect

Washington — The US Environmental Protection Agency restored a Bush-era interpretation of a Clean Air Act program for fossil fuel-fired power plants and other major emissions sources that has been stayed for nearly a decade.

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The change represents the latest in a series of moves the Trump administration has made to ease permitting requirements under the New Source Review, or NSR, program. That program is designed to ensure that industrial facilities install state-of-the-art pollution controls when they undertake upgrades that are projected to significantly increase emissions of regulated pollutants.

According to the EPA, the November 7 action will clarify the "project aggregation" facet of the highly technical permitting program, which "will greatly improve regulatory certainty and remove unnecessary obstacles to projects aiming to improve the reliability, efficiency, and safety of facilities while maintaining air quality standards."

"Project aggregation" refers to an assessment by owners and permitting authorities that multiple related physical or operational changes to a facility should be considered a single "project" for NSR applicability.

The EPA said the move affirms the interpretation of the NSR program set forth in January 2009 in the final days of the George W. Bush administration.

The 2009 action did not amend any regulatory text but instead explained that the EPA's interpretation of the Clean Air Act statute was that physical and/or operational changes should be combined into a single project for NSR consideration when those changes are "substantially related."

At that time, the EPA explained that physical or operational changes should be grouped together for NSR permitting purposes when the modifications are "technically or economically" interdependent. The EPA also said it would apply a policy of presuming that changes separated by three or more years are not substantially related unless the specifics of the activities rebut that presumption.

In response, the Natural Resources Defense Council, or NRDC, on January 30, 2009, filed a petition for administrative review in the U.S. Court of Appeals for the District of Columbia Circuit, saying the action would allow sources to evade NSR requirements for activities that plainly should trigger the need to install modern pollution controls. The group specifically argued that the action failed to adequately define "technical dependence" or "economic dependence," leaving greater uncertainty than the previous policy. That uncertainty created a new loophole that invited facilities to escape NSR by "disaggregating" related projects, thereby causing emissions to increase."

On February 13, 2009, the Obama EPA announced it would reconsider the action and asked for comments responding to the points raised by the NRDC. The Utility Air Regulatory Group, a trade organization representing dozens of power utilities and related companies, responded that the Bush EPA's "substantially related" interpretation is clear and supported by case law. However, the Obama EPA eventually decided to stay the action indefinitely.

EXPECTED IMPACTS

John Walke, the director of clean air at the NRDC who filed the group's lawsuit in 2009, said in a November 7 email that he does not expect the changes to have a major impact on existing power plants. "I don't see the 'project aggregation' rollbacks having great significance for the utility sector, due to the fewer numbers of emissions units at power plants, units that are not integrated in inter-related projects and process lines the way other industries are," Walke said, referring to chemical plants, oil refineries and other industrial enterprises.

But Walke said the NRDC will be discussing potentially reactivating the DC Circuit case -- Natural Resources Defense Council v. EPA; No. 09-1065 -- and possibly filing a petition for review challenging the November 7 EPA action.

-- Zack Hale, S&P Global Market Intelligence, newsdesk@spglobal.com

-- Edited by Jeffrey Ryser, newsdesk@spglobal.com