When must two different activities be grouped together to determine whether they trigger New Source Review permitting? That is the question EPA answered last month after many years of debate and uncertainty. Although the clarification remains only a policy statement (not a rule) and leaves significant discretions for states to apply in individual cases, the "final action" published on November 15th should finally provide some clarity to existing industrial facilities trying to decide whether to get an NSR permit for multiple activities that may, or may not, count as one "project."
EPA's efforts to clarify this issue began in 2006, when the Bush Administration attempted to craft regulatory language to codify what is typically referred to as EPA's "project aggregation" policy. That proposal was tweaked and then finalized in 2009, just before the Obama Administration took office, albeit without adopting any of the proposed changes to the regulatory text. However, the Obama Administration granted a reconsideration of that action and issued an indefinite "stay"—procedural moves that are similar to those recently taken by the Trump Administration to reconsider a variety of environmental regulations. But whereas environmentalists have challenged the Trump Administration's stays (often successfully), no one challenged the Obama Administrations stay of the "project aggregation" policy, so the issue has been under a stay for nearly a decade.
EPA's new action lifts the Obama Administration stay and reaffirms the action taken by the Bush Administration. In short, it sets forth several key guidelines on how to decide whether two activities must be deemed a single project for the purpose of NSR permitting. First, the two activities should be "substantially related" with respect to both economic and technical independence and feasibility. Second, any activities undertaken more than three years apart are presumed to be separate "projects," although that presumption can be overcome with sufficient evidence to the contrary. And third, two activities should not be deemed a single project merely because both activities ultimately serve the overall basic purpose of the facility.
Notably, EPA also clarified that EPA's "aggregation" policy only focuses on combining nominally separate activities into one "project," and thus does not address whether a facility must separate what may appear to be a single activity into two separate "projects." That issue, according to EPA, is inherently related to the question of whether and how one activity that decreases emissions can be used to offset any emission increases resulting from another activity. Thus, EPA reiterated its promise to address that issue in more detail at a later date.
EPA's Final Action on Aggregation can be found here: Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Aggregation; Reconsideration.
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