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The latest developments regarding NSR aggregation

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Courtesy of Courtesy of Trinity Consultants

The New Source Review (NSR) program is a preconstruction permitting program designed to:

  • Ensure that ambient air quality standards continue to be met in “clean air” (i.e., attainment) areas, and
  • Ensure that state of the art pollution control technology is installed at new major facilities and existing modified facilities.

In the September 15, 2006 proposed revisions to the NSR program, EPA attempted to clarify its policies on project aggregation, debottlenecking, and project netting. These three issues are part of the criteria a facility may need to consider when determining major NSR applicability. In the waning hours of the Bush administration, EPA took final action on one part of the 2006 proposed rule relating to project aggregation. EPA simultaneously withdrew the proposed debottlenecking rule due to a variety of concerns raised by commenters. The third issue, project netting, was not acted upon. We start with a look at aggregation.

Aggregation is the combining of two or more construction projects for the purposes of determining major NSR applicability, and the aggregation rule provides insights on when projects should and should not be combined for NSR applicability purposes. On January 15, 2009, EPA published a “final action,” rather than a final rule, on aggregation using the proposed 2006 rule as a starting point. The new policy directs facilities to combine activities that are substantially economically or technically related for the purposes of determining NSR applicability. However, the final action falls short of defining “economic dependence” and “technical dependence.” EPA previously attempted to define these terms in its 2006 Federal Register notice but received comments from a variety of stakeholders stating that the definitions were too prescriptive, potentially leading to increased confusion as compared to the existing policy. EPA conceded that its attempt to define these terms in a universal manner would be contrary to its acknowledgement that NSR applicability determinations are clearly case-by-case; thus, there is no plan to include any regulatory language surrounding these more project-specific terms.

The final action also adopts a rebuttable 3-year presumptive timeframe such that two projects separated by more than three years are not substantially related to constitute categorizing them as a single project; however, EPA views activities separated by less than three years to have no presumption (i.e., not automatically aggregated or disaggregated). This policy can be contrasted with the frequently referenced 1993 EPA memorandum regarding 3M’s Maplewood, Minnesota facility which states that activities timed within one year or eighteen months of each other may be related, and should be scrutinized more closely. In the January 2009 publication, EPA asserts that there has been some confusion among regulating authorities that closely-timed minor source permit applications are assumed to be aggregated. EPA describes the 3M memo as a reaffirmation of its view that operational changes made over a short period of time should be considered for treatment as one project, but not the sole basis of a decision to aggregate. Thus, EPA emphasizes that timing alone should not be a basis for aggregation.

The final NSR aggregation action was slated to be effective on February 17, 2009. However, the new Administration issued a memo withdrawing rules that were published in the Federal Register during the final days of the Bush administration but not yet effective, to undergo a 60-day review period by agencies followed by a 30-day public comment period. Furthermore, EPA recently indicated its intention to consider the Natural Resources Defense Council’s comments on the aggregation action despite receipt of those comments after the close of the public comment period. More recently, on March 18, 2009, EPA proposed a further stay of effectiveness until November 18, 2009 (at the earliest) or May 18, 2010 (at the latest).

Other components of the 2006 notice included clarification on the interpretation of debottlenecking. In the January 2009 notice, EPA issued a withdrawal of the proposed debottlenecking rule, citing a variety of concerns raised by commenters on the viability of each of the proposed options as its reason for withdrawal. It is unlikely that the Obama administration would resurrect this withdrawn rule; thus further clarification as to the effect of debottlenecking on the applicability of NSR for existing, modified sources is not expected in the near future.

The January 2009 Federal Register notice also briefly touches on project netting, stating that EPA is still considering how to proceed with this proposed rule. No action is currently taken on the proposed project netting rule; moreover, EPA states that facilities should not cite statements in the 2006 Federal Register as demonstrating EPA’s interpretation of project netting. For now, the potentially more stringent project netting guidelines from the 1990 DRAFT New Source Review Manual might be considered EPA’s only (semi-)official interpretation. Note that EPA explicitly stated in January that the 2006 Federal Register proposed project netting rule should not be used, but did not simply withdraw the rule.

What’s the net effect of these actions? In short, there’s not much NSR relief or clarity ahead, as the Administration seeks to unwind the limited, last-minute efforts of its predecessor.

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