Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Regulations Related To Project Emissions Accounting; Withdrawal of Proposed Rule

ENVIRONMENTAL PROTECTION AGENCY <CFR>40 CFR Parts 51 and 52</CFR> <DEPDOC>[EPA-HQ-OAR-2022-0381; FRL-9249-03-OAR]</DEPDOC> <RIN>RIN 2060-AV62</RIN> <SUBJECT>Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Regulations Related To Project Emissions Accounting; Withdrawal of Proposed Rule</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Environmental Protection Agency (EPA). <HD SOURCE="HED">ACTION:</HD> Proposed rule; withdrawal. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The U.S. Environmental Protection Agency (EPA) is withdrawing the proposed rule titled “Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Regulations Related to Project Emissions Accounting” that published in the <E T="04">Federal Register</E> on May 3, 2024. Based on comments received, the EPA has determined that there is insufficient justification for the proposed rule revisions to the New Source Review (NSR) program applicability provisions under the Clean Air Act (CAA) and that the proposed revisions could result in unnecessary additional burden on regulated entities and State, Tribal, and local air agencies that implement the NSR regulations. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> As of July 21, 2025, the proposed rule published on May 3, 2024, at 89 FR 36870, is withdrawn. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> The EPA has established a docket for the Project Emissions Accounting rulemaking under Docket ID No. EPA-HQ-OAR-2022-0381. All documents in the docket are listed on the <E T="03">https://www.regulations.gov</E> website. Although listed in the index, some information is not publicly available, <E T="03">e.g.,</E> Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available electronically through <E T="03">https://www.regulations.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Ms. Jessica Montanez, Air Quality Policy Division, Office of Air Quality Planning and Standards (C504-03), Environmental Protection Agency, Post Office Box 12055, Research Triangle Park, NC 27711; telephone number: (919) 541-3407; email address: <E T="03">montanez.jessica@epa.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> As established under CAA, the NSR program is a preconstruction permitting program that requires certain stationary sources of air pollution to obtain permits prior to beginning construction. The NSR permitting program applies to both new construction and to modifications of existing sources, regardless of whether the source is in an area where the national ambient air quality standards (NAAQS) have been exceeded (nonattainment area) or if the source is in an area where the NAAQS have not been exceeded (attainment or unclassifiable area). NSR permits for major sources that are located in attainment or unclassifiable areas are referred to as Prevention of Significant Deterioration (PSD) permits. NSR permits for major sources located in nonattainment areas and that emit pollutants above the specified thresholds for which the area is in nonattainment are referred to as Nonattainment NSR (NNSR) permits. An existing major stationary source triggers major NSR permitting requirements when it undergoes a “major modification.” The EPA's implementing regulations for NSR establish a two-step process for determining major NSR applicability for projects at stationary sources. To be subject to major NSR requirements, the project must result in both (1) a significant emissions increase from the project (the determination of which is called “Step 1” of the NSR applicability analysis); and (2) a significant net emissions increase at the stationary source, taking account of emission increases and emission decreases attributable to other projects undertaken at the stationary source within a specific time frame (called “Step 2” of the NSR applicability analysis, or “contemporaneous netting”). Thus, a project is a major modification for a regulated NSR pollutant if it results in both a significant emissions increase and a significant net emissions increase for that pollutant across the stationary source. On November 24, 2020, the EPA published a final rule titled “Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Project Emissions Accounting” (85 FR 74890) (“Project Emissions Accounting rule”). The Project Emissions Accounting rule made clarifying revisions to the applicability procedures in the EPA's NSR regulations that are used to determine whether a physical change or change in the method of operation ( <E T="03">i.e.,</E> a “project”) at an existing major stationary source will result in a significant emissions increase under Step 1 of the NSR applicability process. Specifically, the revisions made clear that both increases and decreases resulting from a project shall be accounted for under Step 1 of the NSR applicability process, consistent with an earlier EPA memorandum that interpreted the pre-existing regulations to allow for the same approach (termed “project emissions accounting”). <SU>1</SU> <FTREF/> The EPA determined that a full accounting of emissions changes resulting from a project is more consistent with the definition of “modification” at CAA section 111(a)(4) because it ensures that projects that result in an overall decrease in emissions or in a <E T="03">de minimis</E> increase in emissions will not be subject to the major NSR program. <FTNT> <SU>1</SU>  Memorandum from E. Scott Pruitt, to Regional Administrators, “Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program,” March 13, 2018. Available at: <E T="03">https://www.epa.gov/sites/production/files/2018-03/documents/nsr_memo_03-13-2018.pdf.</E> </FTNT> The EPA received a petition for reconsideration on the Project Emissions Accounting rule dated January 22, 2021 (“2021 petition”), <SU>2</SU> <FTREF/> which the EPA denied on the grounds that the petition did not meet the CAA section 307(d)(7)(b) criteria for mandatory reconsideration. However, the EPA decided to undertake a discretionary rulemaking in response to the 2021 petition. As a result, the EPA issued a proposed rule that was published in the <E T="04">Federal Register</E> on May 3, 2024. <SU>3</SU> <FTREF/> The proposed rule included a potential revision to the definition of “project” in the NSR regulations, additional recordkeeping and reporting requirements applicable to minor modifications at existing major stationary sources, and a potential requirement that decreases accounted for under the Step 1 significant emissions increase calculation be enforceable. The EPA provided a 60-day public comment period on the proposed rule that closed on July 2, 2024. <FTNT> <SU>2</SU>  Letter from Sanjay Narayan <E T="03">et al.,</E> to Acting Administrator Jane Nishida, “Re: Petition for Reconsideration of ‘Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Project Emissions Accounting,’ 85 FR 74890 (November 24, 2020), Docket ID No. EPA-HQ-OAR-2018-0048 and for Withdrawal of Guidance Memorandum titled ‘Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program’ (March 13, 2018) (OAQPS-2020-683 and OAQPS-2020-223),” January 22, 2021, (“Petition for Reconsideration”), available at: <E T="03">https://www.epa.gov/system/files/documents/2021-10/final-nsr-accounting-rulereconsideration-petition-1_22_21.pdf.</E> </FTNT> <FTNT> <SU>3</SU>  “Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Regulations Related to Project Emissions Accounting.” 89 FR 36870 (May 3, 2024). </FTNT> Based on a careful review of the proposed rule and comments received during the public notice period, the EPA has determined that the proposed rule did not provide sufficient justification of the benefits of the proposed revisions to the NSR regulations, and that the proposed revisions could result in additional burdens on regulated entities and State, Tribal, and local air agencies that implement the NSR regulations, which are not necessary to achieve the intended result. These burdens could disincentivize or delay environmentally and economically beneficial projects at stationary sources, including efficiency improvements. The stated goal of the proposed rule was to improve implementation and strengthen enforceability of the NSR program provisions finalized in the 2020 Project Emissions Accounting rule. However, based on feedback the EPA received during the public comment process, the EPA agrees with several commenters that the changes the EPA proposed would impose additional burdens and uncertainty on regulated stationary sources without clear and justifiable corresponding benefits. For the proposed definition of “project,” the Agency proposed to codify in the NSR regulations the EPA's interpretation and policy for determining whether changes at a facility should be grouped together or separated, as articulated in EPA's 2018 final action on “project aggregation.”  <SU>4</SU> <FTREF/> The EPA explained in the proposal that this change was intended to provide greater clarity as to the types of activities to be included in a single project and to address concerns of over- or under-aggregation in determining the scope of a project. However, after considering comments, the EPA agrees with State and industry commenters that the proposed definition of “project” could in fact lead to more uncertainty in permitting decisions rather than improve clarity and that there is insufficient evidence to show that ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 15k characters. 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