On March 25, 2020, USEPA released draft guidance regarding its interpretation of “begin actual construction” under the regulations implementing the New Source Review (NSR) permitting program.

Those regulations provide that “[n]o new major stationary source or major modification to which the requirements of paragraphs (j) through (r)(5) of this section apply shall begin actual construction without a permit that states that the major stationary source or major modification will meet those requirements.” 40 CFR § 52.21(a)(2)(iii) (emphasis added).

Under USEPA’s current interpretation of this regulatory definition, it largely considers almost every physical on-site construction activity that is of a permanent nature to constitute the beginning of “actual construction,” even where that activity does not involve direct construction “on an emissions unit.”  For example, in USEPA’s 1995 Seitz Letter, it stated that, “[p]rohibited (permanent and/or preparatory) preconstruction activities . . . would include any construction that is costly, significantly alters the site, and/or [is] permanent in nature.”

The Draft Guidance would change this interpretation, and under USEPA’s revised interpretation:

a source owner or operator may, prior to obtaining an NSR permit, undertake physical on-site activities – including activities that may be costly, that may significantly alter the site, and/or are permanent in nature – provided that those activities do not constitute physical construction on an emissions unit, as the term is defined in 40 CFR §52.21(b)(7). Further, under this revised interpretation, and in contrast to the 1986 Reich Memorandum, an “installation necessary to accommodate” the emissions unit at issue is not considered part of that emissions unit, and construction activities that involve an “accommodating installation” may be undertaken in advance of the source owner or operator obtaining an NSR permit.

Draft Guidance at 11-12.

This revised interpretation would allow a wide range of construction activities to occur, although USEPA expressly notes that any construction “may be wasted should the owner or operator be required to re-do or revise work already completed in order to obtain a permit or should it ultimately be the case that no permit is issued or if the permit review agency determines that design changes (e.g., stack height, emission unit location, etc.) are needed ….”  Draft Guidance at 12.

Finally, the Draft Guidance notes that permitting agencies and sources “will still have to make case-specific determinations regarding the scope of the emissions unit in question.”  Draft Guidance at 20.  Detailed guidance on the scope of an emission unit is expressly beyond the scope of the Draft Guidance.  Draft Guidance at 20.  That said, the Draft Guidance notes that:

a source or permitting authority would be acting contrary to the purpose and intent of EPA’s interpretation of “begin actual construction” set forth here were that source or permitting authority to take an unduly broad or otherwise unreasonable view of the scope of an emissions unit that fails to recognize a distinction between an emissions unit and the major stationary source.

Draft Guidance at 22.

The USEPA Draft Guidance, if finalized in its current form, is not expressly applicable to state or local permitting agencies, though they may look to it for guidance as well.

USEPA is accepting comments on the draft guidance through May 11, 2020.  Comments can be submitted on-line here, or by email to draft_permitting_guidance@epa.gov.

Please contact Vorys environmental attorneys Anthony Giuliani at ajgiuliani@vorys.com, Ryan Elliott at rdelliott@vorys.com, or Mac Taylor at mwtaylor@vorys.com if you have questions about the applicability of the Draft Guidance or NSR requirements more generally.