EPA Signals Case-By-Case Guidance and Pending Rule Change to Facilitate Early-Stage Construction Activities

Recent changes in the Environmental Protection Agency’s (EPA) permitting policies under the Clean Air Act are making waves across the construction industry and in environmental law. New guidance from EPA promises more flexibility to begin certain project activities before receiving a New Source Review (NSR) permit for new industrial facilities and/or expansion of existing facilities. These NSR permits are enforceable legal documents that typically determine what construction is allowed, what air emissions must be met, and how the source can be operated consistently with air quality requirements. These efforts are intended to remove barriers that stifle construction and, as EPA Administrator Lee Zeldin stated, “make America the AI capital of the world.”

The September 2 letter from EPA Assistant Administrator for Air and Radiation, Aaron Szabo, to Maricopa County Air Quality Department Director Philip McNeeley, confirms EPA’s intention to propose and finalize modification to the NSR regulations in 2026 to address modification of the definition of “begin actual construction.” In the meantime, Szabo suggests in the letter that EPA will advise on matters of interpretation of the term on a case-by-case basis:

“Consistent with the views expressed in the March 2020 Draft Guidance, the EPA continues to recognize that the definition of ‘begin actual construction’ in EPA’s regulation prohibits ‘the initiation of physical on-site construction on an emissions unit’ and that this does not prohibit initiation of physical on-site construction of those parts of a facility that do not qualify as an emission unit.”

EPA also signaled that its interpretation of “emission unit” will not be “overly broad.”

However, environmental groups argue EPA does not have the authority to allow substantial on-site work before preconstruction air permits for an entire facility are in place. Environmental groups have sent letters to EPA arguing that this issue requires formal rulemaking rather than case-by-case guidance. While this issue has not yet spurred litigation, it is possible environmental groups could file a petition for review or attempt to elicit persons with standing to enjoin projects from proceeding before preconstruction air permits have been issued.

Given the heightened scrutiny from environmental groups, construction projects should proceed cautiously. Projects must assist the regulatory agency in developing an administrative record that supports a regulatory conclusion that the proposed preconstruction activities are distinguishable from construction of the emission unit, capture device, etc. It is critical to stay up to date with the latest EPA guidance, review permit provisions, and attend to comprehensive recordkeeping. Doing so safeguards project timelines and budgets, preserves the reputations of project participants, and mitigates the risks of relying on administrative guidance before issuance of a NSR permit. Owners, developers, and contractors involved in construction projects should take care to participate in the rulemaking process on this issue when the opportunity arises to ensure EPA is made aware of the practical intricacies of preconstruction activities as they relate to the implementation of any administrative guidance or formal rulemaking.

If you are unsure of what activities you can legally conduct prior to the issuance of any preconstruction permits or if you need assistance navigating the permitting landscape, please reach out to the authors of this alert.