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USEPA Concludes Reconsideration of 2009 NSR Project Aggregation Interpretation

By Mac Taylor

On November 7, 2018, USEPA concluded its reconsideration (“2018 Reconsideration Action”) of a January 15, 2009 interpretation regarding NSR project aggregation (the “2009 NSR Aggregation Action”).  See 74 Fed.Reg. 2376 et seq.  The 2009 Aggregation Action never became effective in 2009, because the NRDC filed a petition for reconsideration that resulted in USEPA indefinitely staying the effectiveness of the 2009 Aggregation Action and USEPA accepting comments on the same.  USEPA received a number of comments, but did not take any action to either implement or revoke the 2009 Aggregation Action, which has remained stayed until now.  USEPA has now determined to retain “the interpretation set forth in the 2009 NSR Aggregation Action, while not adopting any changes to the relevant rule text.”  2018 Reconsideration Action at 1.

In the 2009 Aggregation Action, USEPA stated that “Activities at a source should be aggregated when they are substantially related. To be ‘‘substantially related,’’ there should be an apparent interconnection—either technically or economically—between the physical and/or operational changes, or a complementary relationship whereby a change at a plant may exist and operate independently, however its benefit is significantly reduced without the other activity.”  74 Fed.Reg. 2378.  USEPA went on to note that “When there is no technical or economic relationship between activities or where the relationship is not substantial, their emissions need not be aggregated for NSR purposes” and that “The test of a substantial relationship centers around the interrelationship and interdependence of the activities, such that substantially related activities are likely to be jointly planned (i.e., part of the same capital improvement project or engineering study), and occur close in time and at components that are functionally interconnected.”  Id.  That said, “timing, in and of itself, is not determinative in a decision to aggregate activities. We do not believe that timing alone should be a basis for aggregation because it is inconsistent with our policy discussed earlier in this notice that the appropriate basis for aggregation should be a substantial technical and economic relationship.”  Id. at 2379.

In addition to establishing the “substantially related” test, the 2009 Aggregation Action also established a rebuttable presumption that “if a previous physical or operational change has operated for a period of three or more years, permitting authorities may presume that a newly constructed change is not substantially related to the earlier change.”  74 Fed.Reg. 2380.  “In order to rebut the presumption of nonaggregation, there should be evidence that demonstrates a substantial relationship between the activities.”  Id.  Furthermore, “in applying this presumption, the time period separating physical or operational changes should be calculated based on time of approval (i.e., minor NSR permit issuance).”  74 Fed.Reg. 2381.  Although the 2009 Aggregation Action establishes a rebuttable presumption for non-aggregation, there is no presumption that activities separated by less than three years should be aggregated.  74 Fed.Reg. 2380 (“we are setting forth our view that activities separated by less than three years have no presumption.”)

Finally, both the 2009 Aggregation Action and the 2018 Reconsideration Action acknowledge that “Permitting authorities, as they have long done, will continue to exercise their best judgment in determining the technical and economic relationship of activities.”  74 Fed.Reg. 2379; 2018 Reconsideration Action at 33-34.

The 2018 Reconsideration Action, and through it, the 2009 Aggregation Action, will become effective when the 2018 Reconsideration Action is published in the Federal Register.  Petitions for judicial review of the 2018 Reconsideration Action can be filed with the D.C. Circuit Court of Appeals up to sixty days after its publication in the Federal Register.

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