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April 2, 2020

US EPA Releases Draft Guidance for New Source Review Preconstruction Permitting, Revising Longstanding Interpretation of "Begin Actual Construction"

On March 25, the US Environmental Protection Agency (EPA) departed from its longstanding interpretation of “begin actual construction,” releasing draft guidance with a new interpretation under the Clean Air Act New Source Review (NSR) preconstruction permitting regulations. The EPA’s draft guidance is subject to public review and public comment until May 11. 

Projects subject to the NSR may not “begin actual construction” until a preconstruction permit is issued. The definition of “begin actual construction” has, therefore, always been key for applicants seeking to move forward with a project during the often lengthy permitting process. It is defined as: “in general, initiation of physical on-site construction activities on an emissions unit which are of a permanent nature.” This regulatory definition has long been interpreted by the EPA as allowing an applicant to undertake only certain preliminary construction activities prior to obtaining a NSR preconstruction permit. These activities have historically been limited to aspects such as planning, site clearing, and providing for temporary on-site storage.

The EPA is now proposing to change its longstanding interpretation to allow additional types of construction activities to occur prior to receiving a NSR preconstruction permit. Under its revised interpretation, the EPA seeks to make a distinction between on-site construction that is “on an emission unit” versus that which is not “on an emission unit.” Under the new interpretation, only construction “on an emission unit” would be prohibited prior to obtaining a NSR preconstruction permit. On-site construction that is not on the actual emission unit itself would be allowed. 

This new interpretation would permit “a source owner or operator [ ], prior to obtaining a NSR permit, [to] 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.” Notably, an “installation necessary to accommodate” the emissions unit would not be considered part of the “emission unit” and, therefore, could be undertaken in advance of obtaining a preconstruction permit.

Despite the apparent loosening of its statutory interpretation to facilitate continued industrial expansion, the EPA warns that resources (e.g., time, money, etc.) expended on construction authorized by this new guidance may be wasted if the owner or operator is required to redo completed work to comply with additional regulatory requirements to ultimately obtain a NSR permit. In other words, any construction prior to receiving a NSR preconstruction permit remains at the owner’s risk. 

Assuming it is adopted following the public comment period, this revised interpretation will be implemented by EPA regional offices that issue federal NSR permits. States with delegated programs, including New York, will not be required to apply this revised interpretation. It is therefore unlikely that New York will adopt the new interpretation of “begin actual construction” proposed by the EPA. 

Barclay Damon’s environmental attorneys are available to assist current and prospective owners and operators who may have questions regarding NSR permitting regulations.

If you have any questions regarding the content of this alert, please contact Danielle Mettler-LaFeir, partner, at dmettler@barclaydamon.com or another member of the firm’s Environmental Practice Area or Energy Team.

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