A new policy memorandum from Environmental Protection Agency (EPA) Administrator Scott Pruitt will impact one of the most common, complex, and fundamental questions regarding air permitting: Will my proposed project be considered a minor modification or major modification? A major modification will trigger Prevention of Significant Deterioration (PSD), may trigger nonattainment new source review requirements, and may affect project costs and schedules. But the EPA’s March 13, 2018 memorandum changes the new source review air permitting analysis, as it allows consideration of emissions decreases in Step 1 of this 2-step analysis.
Determining whether a proposed project constitutes a minor versus major modification is critical to determining the air permitting requirements that will apply to a proposed project. EPA new source review air permitting requirements address major modifications, but not minor modifications. While many states’ regulations require air permits for both minor and major modifications, there typically are more extensive requirements for major modifications. This is true in both Maine and Massachusetts.
For quite some time, the process for determining whether a project constitutes a major modification involved a 2-step analysis. Step 1 required a source to determine whether there will be a significant emissions increase from the proposed project. Under a 2010 EPA policy memorandum, emissions decreases were not considered during Step 1. If the emissions increases by themselves would reach “significant” levels, then the source was required to determine whether a significant net emissions increase would result in a second step of the analysis.
Step 2 involved consideration of emissions increases and decreases at the entire source (not just the proposed project) during a “contemporaneous” five year period to determine whether a significant net emissions increase would occur. Under EPA’s 2010 policy memorandum, a source desiring to include any emissions decreases associated with a project could do so only by undertaking the Step 2 analysis, which includes emissions decreases from the project as well as all emissions increases and decreases at the entire source during the 5-year contemporaneous period. If Step 1 results in a determination that emissions increases from the project alone would be significant and Step 2 results in a determination that there would also be a significant net emissions increase, then the proposed project would be considered a major modification.
EPA just changed Step 1. EPA’s March 13, 2018 policy memorandum allows a source to include both emissions increases and decreases resulting from the proposed project in Step 1. In this memorandum, EPA asserts that its existing air permitting regulations allow this approach, which it refers to as “project emissions accounting.” The memo provides that this new interpretation is:
Grounded in the principle that there must be a causal link between the physical or operational change at issue – i.e., the ‘project’ – and any change in emissions that may ensue. In other words, it is necessary to account for the full and direct effect of the proposed change itself.
EPA’s memorandum applies to its new source review permitting regulations. As noted above, many states have adopted air permitting requirements for both minor and major modifications. Accordingly, the applicability of EPA’s new policy is state-dependent.