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EPA Proposes Revisions to NSR, CWA

Wednesday, August 14, 2019

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Last week, a few proposals emerged out of the Environmental Protection Agency—including revisions to New Source Review regulations and changes to certifications under the Clean Water Act—that could have a direct impact on power plant and gas pipeline construction.

The NSR proposal clarifies the process—known as project emissions accounting (previously referred to as project netting)—for evaluating whether the NSR permitting program would apply to proposed projects at existing air pollution sources, in addition to clarifying that both emissions increases and decreases from a major modification at an existing source would be considered during Step 1 of the two-step NSR applicability test.

EPA Administrator Andrew Wheeler also announced the second proposal, suggesting changes in the process through which states give Section 401 certifications for projects under the Clean Water Act.  The proposed CWA rule would limit state regulatory considerations for natural gas infrastructure and was expected following an executive order from President Donald J. Trump issued in April.

About the NSR Permitting Process

Created to monitor physical and operational projects, NSR permits are used to report on projects that are slated to have a “significant emissions increase” of a regulated pollutant. Although, if a project doesn’t rise to the level of a major modification, NSR can still be triggered to keep record and report obligations if there are reasonable possibilities that a project could result in significant emissions increase of a regulated pollutant.

RoschetzkyIstockPhoto / Getty Images

Last Friday (Aug. 9), the Environmental Protection Agency published a proposed rule in the Federal Register, suggesting revisions to its New Source Review regulations.

To determine the project’s emissions results, the NSR conducts a two-step applicability analysis, with the first step consisting of compiling projected annual emissions and how they’ll increase over a threshold level. In Step 2, emissions calculated in Step 1 are added to “any other increases and decreases in actual emissions” that are contemporaneous (meaning they occur between five years before construction of the project commences and the date the increase from the project occurs) and creditable.

Announced in March 2018, the EPA issued a Memorandum titled “Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program,” which outlined the interpretation of the NSR’s Step 1 at the time. The guidance, aimed at state and federal regulators, allowed the consideration of decreased emissions alongside increases for projects.

However, according to Andrew Sawula, an environmental partner at Schiff Hardin: “Most states have been interpreting the existing rules to mean that you cannot account for decreases [in emissions].”

What This Means

By clarifying the use of measuring net emissions—changing the verbiage of “sum of the difference” to “shall include both increases and decreases in emissions calculated in accordance”—in Step 1, power plant and pipeline companies would be less likely to trigger NSR permitting, ultimately streamlining the process for implementing upgrades and modifications.

The proposal also modifies testing for projects that involve both new and existing units, ensuring consistency for all types of work.

"By simplifying the permitting process and implementing a common-sense interpretation of our NSR rules, we will remove a major obstacle to the construction of cleaner and more efficient facilities," Wheeler said in a statement.

Comments on the matter will be due by Oct. 8. Although environmentalists are expected to oppose the changes, commenters would have to properly allege the EPA of not following procedure or identify a matter that is incompatible with the CWA to halt official publication.

Still, the final rule is expected to be challenged in the D.C. Circuit, with reports that Natural Resources Defense Council’s clean air director John Walke already intends to file suit once a final rule is issued.

No expected finalization date for the rule has been released at this time.

Clean Water Act Changes

Announced on Aug. 9 at the Council of Manufacturing Associations Summer Leadership Conference in Charleston, South Carolina, the EPA proposed a rule for the CWA, seeking to “increase the transparency and efficiency of the 401 certification process and to promote the timely review of infrastructure projects while continuing to ensure that Americans have clean water for drinking and recreation.”

Following Executive Order 13868, “Promoting Energy Infrastructure and Economic Growth,” made by Trump in April, the EPA proposes to modernize and clarify both the timeline and scope of CWA Section 401 certification review and action, as to avoid misperception and unnecessary delays in infrastructure projects.

“Under President Trump, the United States has become the number one oil and gas energy producer in the world, while at the same time continuing to improve our air quality,” said Wheeler.

“Our proposal is intended to help ensure that states adhere to the statutory language and intent of Clean Water Act. When implemented, this proposal will streamline the process for constructing new energy infrastructure projects that are good for American families, American workers and the American economy.”

The proposed rule will remain on the Federal Register for 60 days for public comment. The EPA is expected to finalize the new Section 401 rule by May 2020.


Tagged categories: Asia Pacific; Clean Water Act; EMEA (Europe, Middle East and Africa); Emissions; Environmental Protection; Environmental Protection Agency (EPA); EPA; Government; Latin America; New Source Review; North America; President Trump; Program/Project Management; Project Management; Regulations; Z-Continents

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