Preconstruction Permits: New Source Performance Standards and New Source Review
| Author | Arnold W. Reitze, Jr. |
| Pages | 189-236 |
Page 189
Chapter 7:
Preconstruction Permits:
New Source Performance Standards
and New Source Review
§1. Introduction
e Clean Air Act (CA A) §§165 and 1731 require
a major new or modied facility to obtain a pre-
construction permit (often called a construction
permit). e facility subsequently is required, by
CAA §§502-504,2 to obtain an operating permit
that imposes continuing environmental protec-
tion requirements. A construction permit require-
ment is the government’s lever that allows it to be
involved in the planning of new faci lities or in the
major modication of existing facilities. By using
a two-step permitting process, the government
participates at the design stage of a construction
project when changes usually can be made, or
advanced technology ca n be installed, at a lower
cost than the cost of upgrading an existing facility.
Once a facility is built, it may not be possible to sig-
nicantly improve its environmental performance
because of high retrot costs, spac e restrictions, or
site limitations. If the best available technology or
other technology-forcing requirements are to be
required, it is important that they are addressed
early in the planning process. e operating permit
mandated for major sources ensures that a facility’s
emissions will continue to meet prescribed param-
eters, and it provides a mechanism for imposing
more stringent requirements in the future that
may be needed to protect public health or the envi-
ronment. Operating permits a lso can be used to
require facilities constructed prior to the applica-
bility of construction permit requirements to meet
specied discharge limitations. e construction
permit program was added to the CAA in 1977.
However, the CAA did not require an operating
permit u ntil 1990 when a comprehensive permit-
1. 42 U.S.C. §§7475 & 7503, CAA §§165 & 173.
2. Id. §§7661a-7661c, CAA §§502-504.
ting program modeled after the Clean Water Act’s
(CWA) program was added by CAA §§501-507.3
Planning to meet the emission standard for a
new or modied source under t he CAA begins
with §111’s new source performa nce standards
(NSPS).4 For existing sources, limitations on emis-
sions a re determined by the states as provided in
CAA §111(d). CAA §10 requires the development
and implementation of state implementation plans
(SIPs) in order to achieve the atmospheric quality
specied in the national ambient air quality stan-
dards (NAAQS) in areas where air quality does not
meet the standards. Areas with air that is cleaner
than the NAAQS are required by §110(a)(1) to have
an air quality maintenance plan. EPA wa s tasked
with developing NSPS for industry classications
to require new or modied stationar y sources,
whose emissions were rea sonably anticipated to
endanger public health or welfare, to install the
best system of emission reduction that t he Admin-
istrator determined is adequately demonstrated.
e goal of the NSPS is to reduce pollution by hav-
ing more stringent pollution control technology
incorporated into new or modied facilities.5 But
this encourages e xisting facilities to continue oper-
ating beyond their expected economic life to avoid
the costs associated with meeting more st ringent
NSPS.
It is diicult for a new, or “greeneld,” unit to
accidentally become subject to NSPS. erefore,
the determination of whether such sources are sub-
ject to NSPS rarely is controversial. But, because
NSPS a re applicable to modied sources, a facil-
ity must be careful to avoid having maintenance
3. Id. §§7661a-7661f CAA §§502-507.
4. Id. §7411, CAA §111.
5. National Asphalt Pavement Ass’n v. Train, 539 F.2d 775, 783,
6 ELR 20688 (D.C. Cir. 1976).
Page 190 Air Pollution Control and Climate Change Mitigation Law
and repair work being considered a modication
that subjects the facility to the need to comply with
NSPS. A weakness of the NSPS program is t hat
the rules used to determine when ma intenance or
repairs become a modication under the CA A are
not always easy to understa nd. Moreover, the pro-
gram is limited to industrial classications regu-
lated by 40 C.F.R. Part 60, and it only applies to
modications that increase a facility’s hourly emis-
sion rate. Operating more hours, which increases
annual emissions, does not trigger NSPS applica-
bility. In addition, NSPS requirements apply to
“reconstruction” if replacement components cost
more tha n 50% of the xed capital cost required
to construct a comparable new facility. It is worth
noting that since 1972 the Federal Water Pollution
Control Act (commonly known as the C WA) has
treated existing sources almost the sa me as new
sources, and for the steam electric power-gener-
ating point source category there is essentially no
dierence.6 us, t here is no signicant pollution-
related nancial incentive under t he water pollu-
tion law to keep old plants operating.
e 1977 CAA Amendments added require-
ments for preconstruction permits for new and
modied major stationary sources as pa rt of a new
source review (NSR) program. ere are two parts
to the NSR program. ere is the prevention of sig-
nicant deterioration (PSD) review, which is part
of the PSD program to protect clean areas that
meet the NAAQS found in the CAA’s Subchap -
ter 1, Part C, and there is an NSR nonatta inment
area (NAA) program applicable to areas that fail to
meet t he NA AQS, which is found in Subchapter
1, Part D. e NSR program applies to each cri-
teria pollutant and their precursors; thus, an area
can be classied PSD for one or more pollutants
and nonattainment for others. In January 1996,
the U.S. Environmental Protection Agency (EPA)
said it would exempt sources producing volatile
organic compounds (VOCs) with neg ligible pho-
tochemical reactivity from NSPS requirements.
Some NSPS dene which VOCs are regulated.
Industry questioned whether those denitions or
the more general denition at 40 C.F.R. §50.100
would apply. is distinction is important bec ause
EPA has added chemicals, such as perchloroethy-
lene and acetone, to its list of compounds that are
exempted from VOC requirements. EPA in 1996
announced it would use the denition at 40 C.F.R.
6. FWPCA §301, 33 U.S.C. §1311.
§50.100 when interpreting which VOC exemp-
tions apply to NSPS.7
NSPS are applicable to all sources, and they usu-
ally are the minimum requirements; the more strin-
gent NSR program is applicable to major stationary
sources. NSR applies to a modication of a major
stationary source that could result in a signicant
increase in pollution.8 e PSD and NSR/NAA
programs use the sa me denition of modication
as in the NSPS provision in §111(a)(4). However,
the NSPS program is triggered when an increase
occurs in an hourly emission rate, expressed in
kilograms per hour (k g/hr.) at the facility’s ma xi-
mum physical capacity, but the NSR program’s
applicability is based on the tons per year (tpy) of
emissions to the atmosphere.9 In 2005, litig ants
challenged the use of the a nnual emissions test for
NSR, which is discussed below.
Permits are a contract between the government
and the permit holder, a nd the terms of the con-
tract are the result of the skill of the negotiators a s
well as the relative bargaining power of the parties.
is is evident in the process of seeking a construc-
tion permit for a new source. e government may
or may not want the source to be constructed. e
source’s willingness to bargain depends on how
badly the applicant wants to build or modify a
source at the pla nned location and how important
it is to obtain a permit quickly. Some issues usually
are site speci c and subject to loca l and state con-
cerns, which increase the importance of negotia-
tions. About 75 to 80% of the permits issued under
federal environmental law are issued by state gov-
ernments. However, permits for new sources are
rarely the subject of litigation because applica nts
do not want projects delayed. If a permit cannot be
obtained under terms acceptable to the applicant,
the application is usually withdrawn. e permit,
when issued, provides a formal documentation of
the permit holder’s environmental legal obligations.
An ongoing controversy concerns the applica-
bility of the NSPS to sources that began operat-
ing before 1972, when NSPS rst were imposed.
Plants that began operating prior to the 1977 NSR
program are subject to signicantly relaxed stan-
dards compared with the requirements imposed on
7. Air Pollution: VOCs With Negligible Reactivity Exempt From New
Source Performance Standards, Daily Env’t Rep. (BNA), Feb. 26,
1996, at D-4.
8. Alabama Power Co. v. Costle, 636 F.2d 323, 400, 10 ELR 20001
(D.C. Cir. 1979).
§52.21(b)(21).
Preconstruction Permits: New Source Performance Standards and New Source Review Page 191
more recently constructed facilities. In June 2002,
the U.S. General Accounting Oce (GAO) stated
that in 2000 57% of the fossil-fueled electric power
units had begun operating prior to 1972.10 An elec-
tric power plant may have one or more units. Of the
1,396 old operating units, 1,157 reported emissions
data in 20 00. ey emitted 59% of the nation’s
sulfur dioxide (SO2), 47% of the nitrogen oxides
(NOx), and 42% of the carbon dioxide (CO2), but
generated only 42% of the electricity produced by
fossil-fueled units. Most of the older units are in the
Mid-Atlantic, Midwest, and Southeast.11 irty-six
percent of the older units exceeded NSPS for SO2,
and 73% exceeded the NSPS for NOx.12
§2. New Source Performance
Standards
NSPS have been imposed since the 1970 CAA
Amendments, and only modest cha nges have been
made by subsequent CAA Amendments. e 1977
CAA Amendments modied C AA §111(a) to
require NSPS to be based on consideration of costs,
non-air quality health and environmental impacts,
and energy requirements, but the standards con-
tinue to be based on adequately demonstrated tech-
nology. e 1990 CAA Amendments amended the
special treatment previously given to electric power
plants to require them to meet the NSPS require-
ments that are applicable to other new sources.13
Section 111(a) was amended to make it clear that
stationary internal combustion engines were not to
be regulated as mobile sources pursu ant to CAA
Subchapter II.14 ere also were changes that made
nonhazardous solid waste incinerators subject to
regulation by both CA A §§111 and 129.15
e most important change to §111 in the 1990
CAA Amendments involves t he eect of C AA
Subchapter V that requires operating permits for
major stationary sources. is program reduces
some of the advanta ges existing facilities enjoy
in avoiding the ordinarily more stringent NSPS
because it applies to all major sources. While the
NSPS program establishes nationwide, uniform
limitations on new and modied sources, NSPS
regulations of ten have not been updated in recent
10. U.S. GAO, A P E F O E-
G U 2 (2002) (GAO-02-709).
11. Id. at 3.
12. Id. at 13.
13. 42 U.S.C. §7651b, CAA §403.
14. Id. §7411(a), CAA §111(a).
15. Id. §7429, CAA §129.
years. Programs under the PSD and nonattain-
ment provisions have become more important to
industrial sources seeking to construct or modify
facilities because their requirements a re negotiated
for each applicant and continuously become more
stringent as technology evolves.
§2(a). New Source Performance Standards
Source Categories
CAA §111(b) requires EPA to publish a list of cat-
egories of stationary sources. For each category,
proposed regulations are to be published within
one year of listing, and nal standards are to be
promulgated within one year of publication of the
proposed regulations. A st ationary source category
is to be listed if, in the judgment of the Admin-
istrator, “ it causes, or contributes signicantly to
air pollution which may reasonably be anticipated
to endanger public health or welfa re.” e list is
to be reviewed a nd, if appropriate, revised at least
every eight years. e 1990 Amendments in CAA
§111(f) ma ndate that source categories listed prior
to November 15, 1990, for which regulations have
not been promulgated, must have regulations pro-
mulgated by November 15, 1996. EPA has promul-
gated regulations for approximately 77 categories
in 40 C.F.R. Part 60, Subpart C. In addition, 40
C.F.R. Part 60, Subpart A has general provisions
applicable to new stationary sources unless such
provisions are in conict with t he specic require-
ments of Subpart C.
A NSPS is created after a number of decisions
are made concerning the source category being
considered for regulation. EPA considers t he fol-
lowing elements in preparing an NSPS16:
(1) e source category to be regulated—usu-
ally an industrial category, but it can be
a process or g roup of processes within an
industry;
(2) e equipment that will include the source
to which the NSPS will apply;
(3) e pollutants emitted by the aected facil-
ity that the standards control;
(4) e technology that will be considered to
be the best system of continuous emission
reduction (taking into consideration the
16. Standards of Performance for New Stationary Sources and Emis-
sions Guidelines for Existing Sources: Medical Waste Incinerators,
60 Fed. Reg. 10654, 10657 (proposed Feb. 27, 1995).
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