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Related Practices
Related Practices

EPA Issues Proposed “Reasonable Possibility Recordkeeping” NSR Rule

Beveridge & Diamond, P.C., March 12, 2007

On March 1, 2007, the Environmental Protection Agency (“EPA”) proposed regulatory amendments to clarify the “reasonable possibility” recordkeeping requirements under the New Source Review (“NSR”) program.  The “reasonable possibility” standard (1) identifies the circumstances under which a major stationary source, having concluded that a project does not trigger NSR, must nonetheless maintain certain records; and (2) specifies the recordkeeping and reporting requirements for such sources.  These requirements apply to any major stationary source subject to NSR – that is to say, most large industrial plants across the country.

In 2002, EPA promulgated changes to the existing NSR regulations that would allow sources to use an actual to projected actual emissions test rather than the actual to potential test that EPA had previously claimed was required to determine whether a project triggered NSR “major modification” permitting requirements.  40 C.F.R. § 52.21(a)(2)(iv)(c).1  As part of this proposal, EPA required extensive recordkeeping to document that NSR was not triggered.  Thus, if a facility projected that its post-modification emissions would be below the major modification thresholds, EPA required recordkeeping for five (and sometimes ten) years to demonstrate that these projections were accurate.  40 C.F.R. § 52.21(r)(6).  On the other hand, where a source did not believe there was a “reasonable possibility” that such an increase could occur, the 2002 rule did not require any recordkeeping to confirm this conclusion.

In 2005, the United States Court of Appeals for the D.C. Circuit remanded the “reasonable possibility” provision to EPA.  New York v. EPA, 413 F.3d 3, 82-9 (D.C. Cir. 2005).  The Court noted that if major sources used the “reasonable possibility” standard to avoid recordkeeping, EPA would lack data to determine whether the sources had accurately determined there was no “reasonable possibility,” or to enforce violations in the event that such a source actually experienced a significant emissions increase.  Id. at 85-6.  Because EPA did not explain how it could ensure NSR compliance without data, the Court remanded the recordkeeping provisions to EPA for “an acceptable explanation for its ‘reasonable possibility standard’ or to devise an appropriately supported alternative.”  Id. at 89.

In response to the remand, EPA proposes two options for determining when a project has a “reasonable possibility” of a significant emissions increase, thus triggering the recordkeeping requirements.  The first option (and EPA’s preferred option) is the “percentage increase trigger,” in which there is a “reasonable possibility” of a significant emissions increase if a source projects that a change will result in an actual emissions increase that meets or exceeds fifty percent of the significance level for the relevant NSR pollutant.  The second option is the “potential emissions trigger,” in which there is a “reasonable possibility” of a significant emissions increase if the post-project potential to emit equals or exceeds NSR significance levels – i.e., where the old actual to potential test would show a significant emissions increase, even though the current actual to projected future actual test does not.  This second option would, we believe, require recordkeeping in the vast majority of cases.

EPA also issued a final rule amending Appendix S of 40 C.F.R. Part 51.  The final rule makes Appendix S requirements, which apply in states without an approved state implementation plan (“SIP”), consistent with the NSR requirements for areas with an approved SIP.  In its final rule, EPA included the percentage increase trigger for the “reasonable possibility standard” on an interim basis, unless EPA chooses another option. 

EPA will accept comments on these proposals until May 7, 2007.  Click here to read the proposals.    

For more information, please contact David Friedland  at (202) 789-6047 (dfriedland@bdlaw.com) or Bethany S. French at (202) 789-6042 (bfrench@bdlaw.com).


1  See also, 40 C.F.R. §§ 51.165, 51.166.