Proposed Rule2025-13598
Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Regulations Related To Project Emissions Accounting; Withdrawal of Proposed Rule
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Published
July 21, 2025
Issuing agencies
Environmental Protection Agency
Abstract
The U.S. Environmental Protection Agency (EPA) is withdrawing the proposed rule titled "Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Regulations Related to Project Emissions Accounting" that published in the Federal Register on May 3, 2024. Based on comments received, the EPA has determined that there is insufficient justification for the proposed rule revisions to the New Source Review (NSR) program applicability provisions under the Clean Air Act (CAA) and that the proposed revisions could result in unnecessary additional burden on regulated entities and State, Tribal, and local air agencies that implement the NSR regulations.
Full Text
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<title>Federal Register, Volume 90 Issue 137 (Monday, July 21, 2025)</title>
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[Federal Register Volume 90, Number 137 (Monday, July 21, 2025)]
[Proposed Rules]
[Pages 34206-34208]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13598]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51 and 52
[EPA-HQ-OAR-2022-0381; FRL-9249-03-OAR]
RIN 2060-AV62
Prevention of Significant Deterioration (PSD) and Nonattainment
New Source Review (NNSR): Regulations Related To Project Emissions
Accounting; Withdrawal of Proposed Rule
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule; withdrawal.
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SUMMARY: The U.S. Environmental Protection Agency (EPA) is withdrawing
the proposed rule titled ``Prevention of Significant Deterioration
(PSD) and Nonattainment New Source Review (NNSR): Regulations Related
to Project Emissions Accounting'' that published in the Federal
Register on May 3, 2024. Based on comments received, the EPA has
determined that there is insufficient justification for the proposed
rule revisions to the New Source Review (NSR) program applicability
provisions under the Clean Air Act (CAA) and that the proposed
revisions could result in unnecessary additional burden on regulated
entities and State, Tribal, and local air agencies that implement the
NSR regulations.
DATES: As of July 21, 2025, the proposed rule published on May 3, 2024,
at 89 FR 36870, is withdrawn.
ADDRESSES: The EPA has established a docket for the Project Emissions
Accounting rulemaking under Docket ID No. EPA-HQ-OAR-2022-0381. All
documents in the docket are listed on the <a href="https://www.regulations.gov">https://www.regulations.gov</a>
website. Although listed in the index, some information is not publicly
available, e.g., Confidential Business Information or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available electronically through <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Ms. Jessica Montanez, Air Quality
Policy Division, Office of Air Quality Planning and Standards (C504-
03), Environmental Protection Agency, Post Office Box 12055, Research
Triangle Park, NC 27711; telephone number: (919) 541-3407; email
address: <a href="/cdn-cgi/l/email-protection#2a4745445e4b444f5004404f595943494b6a4f5a4b044d455c"><span class="__cf_email__" data-cfemail="15787a7b61747b706f3b7f7066667c7674557065743b727a63">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: As established under CAA, the NSR program is
a preconstruction permitting program that requires certain stationary
sources of air pollution to obtain permits prior to beginning
construction. The NSR permitting program applies to both new
construction and to modifications of existing sources, regardless of
whether the source is in an area where the national ambient air quality
standards (NAAQS) have been exceeded (nonattainment area) or if the
source is in an area where the NAAQS have not been exceeded (attainment
or unclassifiable area). NSR permits for major sources that are located
in attainment or unclassifiable areas are referred to as Prevention of
Significant Deterioration (PSD) permits. NSR permits for major sources
located in nonattainment areas and that emit pollutants above the
specified thresholds for which the area is in nonattainment are
referred to as Nonattainment NSR (NNSR) permits. An existing major
stationary source triggers major NSR permitting requirements when it
undergoes a ``major modification.'' The EPA's implementing regulations
for NSR establish a two-step process for determining major NSR
applicability for projects at stationary sources. To be subject to
major NSR requirements, the project must result in both (1) a
significant emissions increase from the project (the determination of
which is called ``Step 1'' of the NSR applicability analysis); and (2)
a significant net emissions increase at the stationary source, taking
account of emission increases and emission decreases attributable to
other projects undertaken at the stationary source within a specific
time frame (called ``Step 2'' of the NSR applicability analysis, or
``contemporaneous netting''). Thus, a project is a major modification
for a regulated NSR pollutant if it results in both a significant
emissions increase and a significant net emissions increase for that
pollutant across the stationary source.
On November 24, 2020, the EPA published a final rule titled
``Prevention of Significant Deterioration (PSD) and Nonattainment New
Source Review (NNSR): Project Emissions Accounting'' (85 FR 74890)
(``Project Emissions Accounting rule''). The Project Emissions
Accounting rule made clarifying revisions to the applicability
procedures in the EPA's NSR regulations that are used to determine
whether a physical change or change in the method of operation (i.e., a
``project'') at an existing major stationary source will result in a
significant emissions increase under Step 1 of the NSR applicability
process. Specifically, the revisions made clear that both increases and
decreases resulting from a project shall be accounted for under Step 1
of the NSR applicability process, consistent with an earlier EPA
memorandum that interpreted the pre-existing regulations to allow for
the same approach (termed ``project emissions accounting'').\1\ The EPA
determined that a full accounting of emissions changes resulting from a
project is more consistent with the definition of ``modification'' at
CAA section 111(a)(4) because it ensures that projects that result in
an overall decrease in emissions or in a de minimis increase in
emissions will not be subject to the major NSR program.
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\1\ Memorandum from E. Scott Pruitt, to Regional Administrators,
``Project Emissions Accounting Under the New Source Review
Preconstruction Permitting Program,'' March 13, 2018. Available at:
<a href="https://www.epa.gov/sites/production/files/2018-03/documents/nsr_memo_03-13-2018.pdf">https://www.epa.gov/sites/production/files/2018-03/documents/nsr_memo_03-13-2018.pdf</a>.
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The EPA received a petition for reconsideration on the Project
Emissions Accounting rule dated
[[Page 34207]]
January 22, 2021 (``2021 petition''),\2\ which the EPA denied on the
grounds that the petition did not meet the CAA section 307(d)(7)(b)
criteria for mandatory reconsideration. However, the EPA decided to
undertake a discretionary rulemaking in response to the 2021 petition.
As a result, the EPA issued a proposed rule that was published in the
Federal Register on May 3, 2024.\3\ The proposed rule included a
potential revision to the definition of ``project'' in the NSR
regulations, additional recordkeeping and reporting requirements
applicable to minor modifications at existing major stationary sources,
and a potential requirement that decreases accounted for under the Step
1 significant emissions increase calculation be enforceable. The EPA
provided a 60-day public comment period on the proposed rule that
closed on July 2, 2024.
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\2\ Letter from Sanjay Narayan et al., to Acting Administrator
Jane Nishida, ``Re: Petition for Reconsideration of `Prevention of
Significant Deterioration (PSD) and Nonattainment New Source Review
(NNSR): Project Emissions Accounting,' 85 FR 74890 (November 24,
2020), Docket ID No. EPA-HQ-OAR-2018-0048 and for Withdrawal of
Guidance Memorandum titled `Project Emissions Accounting Under the
New Source Review Preconstruction Permitting Program' (March 13,
2018) (OAQPS-2020-683 and OAQPS-2020-223),'' January 22, 2021,
(``Petition for Reconsideration''), available at: <a href="https://www.epa.gov/system/files/documents/2021-10/final-nsr-accounting-rulereconsideration-petition-1_22_21.pdf">https://www.epa.gov/system/files/documents/2021-10/final-nsr-accounting-rulereconsideration-petition-1_22_21.pdf</a>.
\3\ ``Prevention of Significant Deterioration (PSD) and
Nonattainment New Source Review (NNSR): Regulations Related to
Project Emissions Accounting.'' 89 FR 36870 (May 3, 2024).
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Based on a careful review of the proposed rule and comments
received during the public notice period, the EPA has determined that
the proposed rule did not provide sufficient justification of the
benefits of the proposed revisions to the NSR regulations, and that the
proposed revisions could result in additional burdens on regulated
entities and State, Tribal, and local air agencies that implement the
NSR regulations, which are not necessary to achieve the intended
result. These burdens could disincentivize or delay environmentally and
economically beneficial projects at stationary sources, including
efficiency improvements.
The stated goal of the proposed rule was to improve implementation
and strengthen enforceability of the NSR program provisions finalized
in the 2020 Project Emissions Accounting rule. However, based on
feedback the EPA received during the public comment process, the EPA
agrees with several commenters that the changes the EPA proposed would
impose additional burdens and uncertainty on regulated stationary
sources without clear and justifiable corresponding benefits.
For the proposed definition of ``project,'' the Agency proposed to
codify in the NSR regulations the EPA's interpretation and policy for
determining whether changes at a facility should be grouped together or
separated, as articulated in EPA's 2018 final action on ``project
aggregation.'' \4\ The EPA explained in the proposal that this change
was intended to provide greater clarity as to the types of activities
to be included in a single project and to address concerns of over- or
under-aggregation in determining the scope of a project. However, after
considering comments, the EPA agrees with State and industry commenters
that the proposed definition of ``project'' could in fact lead to more
uncertainty in permitting decisions rather than improve clarity and
that there is insufficient evidence to show that aggregation concerns
warrant making these changes to the NSR program. The EPA agrees with
these commenters that this proposed definition could increase
uncertainty by requiring State, Tribal, and local permitting
authorities to use as controlling criteria terms like ``substantially
related,'' ``economic viability,'' and ``technical viability,'' which
were not defined in the proposed rule. Introducing these terms into the
definition of ``project'' without further defining these terms may lead
to inconsistent air permitting implementation results if different
permitting authorities interpret these terms differently. In addition,
the proposed rule did not include sufficient consideration and
information on this issue to allow this issue to be fully addressed in
public comments and resolved in a final rule.
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\4\ Prevention of Significant Deterioration (PSD) and
Nonattainment New Source Review (NNSR); Aggregation;
Reconsideration, 83 FR 57324 (November 15, 2018).
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Regarding aggregation concerns, commenters rightly observed that
the EPA has not identified examples of over- or under-aggregation in
prior permitting decisions, and that any issues of this nature that do
arise can be handled through enforcement of existing NSR regulations.
On top of these concerns, the EPA was not able to quantify any benefits
from the proposed revisions to the ``project'' definition. After
considering comments on the proposed rule, the EPA has been persuaded
by commenters that the 2018 final action on project aggregation
provides sufficient guidance on how individual projects should be
considered, while maintaining needed flexibility for permitting
authorities and regulated sources to consider the particular facts on a
case-by-case basis.
The EPA also agrees with similar concerns raised in comments on the
proposed clarification of monitoring, recordkeeping and reporting
requirements. The commenters noted that these proposed revisions to the
monitoring, recordkeeping and reporting requirements could
unnecessarily burden the permitting process and associated obligations
without corresponding benefits. In the proposal, the EPA noted that the
changes to monitoring, recordkeeping and reporting requirements were
intended to clarify and strengthen existing requirements to provide
increased transparency, and that in proposing these changes, the EPA
sought to analyze the trade-off between compliance improvement with the
burdens of additional data collection. Upon further consideration, the
EPA agrees with commenters that the additional data collection burden
on regulated entities outweighs theoretical benefits of increased
transparency from additional reporting. As commenters correctly noted,
the EPA did not provide examples or empirical evidence of insufficient
recordkeeping, reporting, or monitoring to support these proposed
changes, yet the proposed changes would have required additional, and
in some instances redundant, data collection burdens on regulated
sources.
Regarding the EPA's proposal to make decreases in emissions
accounted for in the Step 1 significant emissions increase calculation
enforceable, commenters demonstrated that the rationale for this part
of the proposal is inconsistent with the EPA's rationale (reflected in
prior NSR rulemakings) for other provisions in the EPA's NSR
regulations, and that implementation of this part of the proposal would
restrict source operation for projects that involve projected decreases
in emissions. In a 2002 final rule that reformed the major NSR program
applicability provisions, the EPA determined that projected actual
emissions should not be made enforceable through a permitting action,
finding that doing so ``may place an unmanageable resource burden on
reviewing authorities'' and that ``the Act provides ample authority to
enforce the major NSR requirements.'' \5\ This same reasoning applies
regardless whether a projection results in an increase or decrease in
emissions, and the EPA did not receive any comments on the proposal
that provided a compelling basis for requiring an enforceable
[[Page 34208]]
limitation in one instance but not the other.
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\5\ 67 FR 80186, at 80204 (December 31, 2002).
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Furthermore, the EPA agrees with commenters that, in some cases,
requiring enforcement of a projected decrease in emissions from
baseline levels can restrict operating flexibility and future project
opportunities. This may be particularly true for projects that improve
efficiency, which discourages source owners from pursuing
environmentally and economically beneficial projects. Based on the
foregoing, the EPA is withdrawing the proposed rule and does not plan
to take further action at this time on the project emissions accounting
provisions in the NSR regulations.
Lee Zeldin,
Administrator.
[FR Doc. 2025-13598 Filed 7-18-25; 8:45 am]
BILLING CODE 6560-50-P
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