The US EPA Issues Memorandum Reinterpreting the Meaning of Adjacent for NSR Permitting Purposes

On November 26, 2019 US EPA issued a memorandum narrowing its reading of the term “adjacent” in deciding whether different operations run by the same company qualify as a single source significant enough to require a pre-construction permit under the New Source Review (NSR) program. While this memo does not carry the force of law, it does significantly shift EPA’s application of the NSR program. If EPA follows this memorandum, fewer sources will be subject to NSR pre-construction review. State, local, and tribal authorities administering the NSR program are not required to follow the interpretations found in this memorandum.

The Clean Air Act’s (CAA) NSR program requires that facilities obtain pre-construction permits for any new major stationary sources of air pollutant emissions or a modification of a source that significantly increases emissions. EPA’s permit regulations found in 40 CFR 70 and 71, define major sources as “any stationary source (or group of stationary sources that are located on one or more contiguous or adjacent properties, and are under common control of the same person (or persons under common control)) belonging to a single major industrial group….” Under these regulations, “major industrial grouping” refers to the Major Group two-digit SIC code. Over the years, EPA has issued multiple memorandum interpreting and re-interpreting significant parts of these rules, particularly the meaning of adjacent properties. In employing the three part test found in the regulations (same industrial grouping, location on contiguous or adjacent properties, and under common control) the prevailing approach has been to reasonably approximate the “common sense notion of a plant” and avoiding the aggregation of pollutant-emitting activities that would not fit within the ordinary meaning of building, structure, facility, or installation. EPA did, however, over the years, did employ and considered adopting a “functional interrelatedness” approach – meaning that facilities separated by some physical distance could be grouped as one source if they share some pollutant-emitting activities.

In this memorandum, EPA has chosen to emphasize the proximity and “common sense notion” approach in determining the meaning of adjacent for sources under the NSR program. EPA has rejected the “functional interrelatedness” approach. However, EPA has decided not to apply the “common sense notion” proximity approach retroactively. State, local, and tribal administrators of the NSR program are not required to follow this interpretation.

Source:

Interpreting “Adjacent” for New Source Review and Title V Source Determinations in All Industries Other Than Oil and Gas, Memorandum, November 26, 2019.