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December 06, 2019
EPA clarifies NSR and ambient air policies

The EPA has issued a policy memo largely to accommodate industry concerns about the rigidity of the Clean Air Act’s (CAA) New Source Review (NSR) program, as it has been implemented by the Agency, as well as states with CAA permitting authority. The NSR requires that major stationary sources, as the program defines that term, obtain permits before beginning construction of a new major stationary source of air pollutants or modification of such a source when the projects significantly increase emissions of those pollutants. The permitting process can delay or even contribute to the abandonment of planned construction. While environmental advocates state that the NSR is an essential control on industrial air pollution, industry has long argued that the program has the perverse effect of blocking installation of new and more efficient equipment that effectively reduces air pollution.

A second memo addresses the definition of ambient air. The EPA’s new policy allows air agencies to exclude from that definition areas to which public access is blocked by measures in addition to fences and other physical barriers.

Neither memo constitutes rulemaking. The EPA urges—but does not require—permitting agencies, primarily state agencies, to make use of the revised policies. But the EPA emphasizes that permitting agencies retain considerable discretion to make permitting decisions based on the circumstances of specific cases. Still, publication of the memos can provide the kind of expedited permitting industry seeks for construction projects affecting major source emissions.

Definition of adjacent

The first memo interprets the term adjacent as it is used in the NSR and Title V source determinations. For permitting purposes, emissions from sources in the same industrial grouping, which are located on one or more contiguous or adjacent properties and under common control by the same person or persons, must be aggregated. Historically, the Agency interpreted adjacent within the “common sense notion of a plant.” The EPA found the dictionary definition of adjacent to be appropriate—that is, “close to,” “lying near,” “next to,” “not distant: nearby.” But in a 2009 memorandum, the EPA decided to expand the definition of adjacent to encompass functional interrelatedness. This means that facilities under common ownership and performing the same or closely related functions could be located some distance from each other and still be considered adjacent. The definition impacted the process of aggregation, meaning that the permitting authority would view emissions from facilities that were not “close to” each other as coming from a single source. This could have important permitting consequences; for example, two sources that individually did not meet the major source definition and are therefore not subject to the NSR could become subject to the NSR because of functional interrelatedness.

Several courts invalidated the functional interrelatedness definition of adjacent, but the EPA says confusion still exists among permitting agencies and the regulated community. The intent of the memo is to clarify the Agency’s position. The EPA states:

“In sum, for purposes of making source determinations for NSR and Title V, EPA interprets the term adjacent to entail physical proximity between properties. From this point forward, EPA will consider properties that do not share a common boundary or border, or are otherwise not physically touching each other, to be adjacent only if the properties are nevertheless nearby, side-by-side, or neighboring (with allowance being made for some limited separation by, for example, right-of-way).
“This is inherently a case-specific inquiry where determining the appropriate distance at which two properties are proximate enough to reasonably be considered adjacent may vary depending on the nature of the industry involved. Therefore, EPA is not here establishing or recommending a bright line or specifying a fixed distance within which two or more properties will be deemed (or presumed) by EPA to be in close enough physical proximity to be considered adjacent.”

The definition does not apply to permitting in the oil and gas sector, wherein facilities located within a quarter mile of each other, with shared equipment, are considered to be adjacent.

Exclusions from ambient air

For purposes of implementing the National Ambient Air Quality Standards (NAAQS), the EPA interprets the term ambient air to mean “that portion of the atmosphere, external to buildings, to which the general public has access.” Under this interpretation, certain areas the public cannot access are excluded from the definition. Traditionally, the EPA’s position was that lands could be excluded if they are owned or controlled by the stationary source and if public access is precluded by a fence or other physical barrier. Excluded areas are not subject to CAA requirements such as air quality analyses that are used to demonstrate compliance with the NAAQS and Prevention of Significant Deterioration (PSD) increments.

Stakeholders have informed the EPA that the “fence or other physical barrier” policy is overly restrictive because security advances in surveillance and monitoring are also effective in precluding public access to a source’s property.

The EPA agrees. Accordingly in its memo, the EPA takes the position that sources “can in many instances employ measures, other than fencing or other physical barriers, or in combination with fencing or other physical barriers, to effectively preclude public access.” Other measures may include video surveillance, monitoring, clear signage, and routine security patrols. Furthermore, the Agency recognizes that there will be future technologies, such as drones and more advanced video surveillance capabilities, that will potentially be used to preclude public access. The EPA states:

“Thus, the EPA’s revised ambient air policy, consistent with its discretion available under the regulation definition of ambient air, is that the atmosphere over land owned or controlled by the stationary source may be excluded from ambient air where the source employs measures, which may include physical barriers, that are effective in precluding access to the land by the general public.

The Agency adds that it will consider making public exclusion requirements enforceable in permits on a case-by-case basis. For example, this may occur in locations where, before implementation of effective public access preclusion measures, there was a historic practice of allowing public access to the area of concern.

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