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The Environmental Protection Agency (EPA) is proposing to revise certain New Source Review (NSR) applicability regulations to clarify the requirements that apply to sources proposing to undertake a physical or operational change (i.e., a project) under the NSR preconstruction permitting program. Under this program, an existing major source proposing to undertake a project must determine whether that project will constitute a major modification following a two-step applicability test and thus be subject to the NSR preconstruction permitting requirements. The first step is to determine if the proposed project will cause a ‘‘significant emissions increase’’ of a regulated NSR pollutant (Step 1). If the proposed project is projected to cause such an increase, the second step is to determine if there is a ‘‘significant net emissions increase’’ of that pollutant (Step 2). In this action, we are proposing to clarify our regulations to make it clear that both emissions increases and emissions decreases that result from a proposed project are to be considered at Step 1 of the NSR major modification applicability test. In addition, this proposal replaces and withdraws the agency’s 2006 Project Netting Proposal.

Statement of Need:

In early 2017, the new Administration issued a Presidential Memorandum and several Executive Orders initiating a review of regulatory requirements. As part of the comments received on these memorandum and Executive Orders, the commenters asked the EPA to allow for Project Emissions Accounting (formerly known as ‘‘project netting’’) in Step 1 of the NSR applicability test because, in general, most of these stakeholders believed that ‘‘project netting’’ streamlines permitting. In addition, some of these commenters asked the agency to finalize a 2006 proposal that would had allowed Project Emission Accounting for all types of units (i.e., new, existing or projects that involve multiple types of emissions units).

After consideration of the ‘‘project netting’’ regulatory history, past interpretations, and the recent public comments on this topic, in March 2018 the EPA issued a memorandum titled ‘‘Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program’’ (the March 2018 Memorandum). In this memorandum and unlike the 2006 proposal, the EPA explained that it interprets the current NSR regulations as providing that emissions decreases as well as increases can be considered at Step 1 of the NSR applicability process for all project categories (i.e., new, existing, and projects that involve multiple types of emissions units). This rulemaking proposal is intended to eliminate any uncertainty that Project Emissions Accounting should be conducted under Step 1 of the major modification applicability procedures for all project categories, consistent with the interpretation set forth in the March 2018 Memorandum.

Summary of the Legal Basis:

With this proposal, we are proposing to revise the regulatory language for projects that involve multiple types of emissions units to more directly state that both emissions increases and decreases are to be considered as part of Step 1 of the major modification applicability test in the same manner as they are for projects that involve only existing emissions units and projects that involve only new emissions units. The programs that this proposal revises are under the authority of parts C and D of title I of the Clean Air Act. The EPA regulations implementing those programs are found in 40 CFR parts 51 and 52. If finalized, the proposal will revise regulatory language and will fully clarify that the NSR regulatory language is consistent with the approach set forth in the March 2018 'Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program' Memorandum, Step 1 of the NSR applicability test allows for consideration of both increases and decreases to determine whether a project results in a significant emissions increase.

Alternatives:

No alternatives have been determined at this time.

Anticipated Costs and Benefits:

As we explained in the March 2018 Memorandum, we interpret our existing regulations to allow for project emissions accounting. Thus, this proposal, if finalized, will not provide cost savings nor reduce permitting authority burden beyond any cost savings or burden reduction that is currently occurring in the absence of this rule.

Risks:

We do not anticipate any risks related to this action.