Key Takeaways
- What is Happening? The U.S. Environmental Protection Agency (EPA) recently issued new guidance that clarifies its interpretation of "begin actual construction" under the Clean Air Act's (CAA) New Source Review (NSR) preconstruction permitting program. Through this guidance and the associated press release issued last week, EPA is allowing building activities that are not related to air emissions, such as installing cement pads, to proceed before companies obtain an NSR permit.
- Who is Impacted? This guidance will impact companies planning to build new major sources or make significant modifications to their facilities. EPA's clarification may also affect state and local permitting authorities who implement state NSR programs.
- What Should I Do? Companies should monitor EPA's upcoming rulemaking and prepare to submit comments to help shape the final regulation.
Overview
EPA issued new guidance that should help expedite the project development and air permitting timeline for major stationary sources. The guidance clarifies that preconstruction activities that do not involve building emissions units can proceed before a facility obtains an NSR permit. This interpretation offers companies more flexibility and should help reduce project delays caused by lengthy permitting processes.
Background
Under the CAA's NSR program (40 C.F.R. § 52.21), an owner or operator must secure a preconstruction permit before "begin[ing] actual construction" on a new major stationary source or major modification of that source.1 Previously, EPA took the position companies could conduct prior to permit issuance, including "...limited activities that do not represent an irrevocable commitment to the project... such as planning, ordering of equipment and materials, site clearing, grading, and on-site temporary storage of equipment and materials..." 2 But, EPA stated that, by contrast "...all on-site activities of a permanent nature aimed at completing construction of the source including but not limited to installation of building supports and foundations, paving, laying of underground pipe work, construction of any permanent storage structure, and activities of a similar nature are prohibited..." 3
During the first Trump administration, EPA issued a 2020 draft memorandum by Principal EPA Deputy Administrator Anne Idsal that allowed owners or operators to "undertake physical on-site activities – including activities that may be costly, that may significantly alter the site, and/or are permanent in nature – provided that those activities do not constitute physical construction on an emissions unit, as the term is defined in 40 CFR § 52.21(b)(7)" (emphasis in original) (the "March 2020 Draft Guidance"). This guidance was never finalized or otherwise codified.
The New Guidance
EPA's new guidance centers on a recent case in Arizona involving a proposed semiconductor facility. EPA agreed with the Maricopa County Air Quality Department (MCAQD) that the company could proceed with building the core and shell of a building that will eventually house emission units. Because this "initial phase of construction" will not involve building emissions units, installing air pollution capture or control equipment, or laying foundations for emissions units, EPA agreed that the company does not need an NSR permit to proceed with those preliminary construction projects.
EPA quoted MCAQD's opinion that if a structure contains no emissions units, it is not considered a "source" under the CAA because it does not emit or have the potential to emit air pollutants. EPA further clarified that the NSR regulation "does not prohibit initiation of physical on-site construction of those parts of a facility that do not qualify as an emission unit."
Although this guidance responds to project-specific facts from the Arizona case and provides guidance that substantively aligns with the March 2020 Draft Guidance, EPA stated that it did not intend to issue a final version of the March 2020 Draft Guidance. Instead, EPA stated that it intends to initiate a formal rulemaking to revise the NSR program's definition of "begin actual construction" consistent with the above discussion.
What's Next
EPA has included this rulemaking in its recently released 2025 Spring Agenda. The Agency plans to propose a rule revising the definition of "begin actual construction" by January 2026 and to finalize the rule by September 2026.
Companies and industry groups should prepare to participate in the rulemaking process. Submitting robust factual and legal comments will be critical to help shape how EPA draws the line between emissions and non-emissions construction activities and ensure the final rule provides the clarity and flexibility that regulated parties need.
Beveridge & Diamond's Air and Climate Change practice group helps private and municipal clients navigate all aspects of compliance with Clean Air Act regulations. We frequently assist clients in commenting on, and bringing administrative challenges to, EPA rulemakings. Our team of litigators represent clients in administrative rulemakings and appellate matters in numerous state and federal courts, including the D.C. Circuit and U.S. Supreme Court. Last year, B&D was part of a state/industry coalition that won a rare Supreme Court stay of a major EPA rule in Ohio. v. Environmental Protection Agency.
Footnotes
1 The definition of the term "begin actual construction" under 40 C.F.R. 52.21(b)(11) means, "in general, initiation of physical on-site construction activities on an emissions unit which are of a permanent nature. Such activities include, but are not limited to, installation of building supports and foundations, laying underground pipework and construction of permanent storage structures."
2 Memorandum, Dave Howekamp, Director, Air and Toxics Division, EPA Region IX, to all Region IX Air Agency Directors and NSR Contacts (November 4, 1993) at
3 Id. at 2.
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