On October 14, 2022, the US Environmental Protection Agency (EPA) proposed changes to its New Source Review (NSR) regulations that would expand the number of projects that trigger NSR permitting at existing facilities by requiring that all major stationary sources consider fugitive emissions when evaluating a project’s impact on emissions.

See the EPA’s proposed changes here.

NSR and Fugitive Emissions Explained

The NSR program imposes permitting and regulatory obligations on major stationary sources of air emissions. The requirements are triggered when a source is newly constructed or when a major existing source undertakes a “major modification.” A major modification is a physical change or change in the method of operation that results in an increase in emissions above regulatory thresholds. What emissions are included in the analysis is the central issue in this proposed rule.

Emissions from stationary sources can be divided into two categories: fugitive emissions and non-fugitive emissions. Fugitive emissions are emissions that do not (and reasonably could not) exhaust through a structure like an emissions stack, chimney, or vent. In practice, these emissions consist of things like dust blown from a pile of raw materials, dust generated by driving a truck across a property, or furnace gases that could not be captured by a furnace hood. For simplicity, non-fugitive emissions could be called “stack” emissions.

Stationary sources are considered “major” if they have the potential to emit regulated pollutants above a regulatory threshold level. Stack emissions are counted toward that threshold. But fugitive emissions count toward the threshold only for certain listed categories of sources. These can be called the “listed categories.”   

Modifications are considered “major” and potentially subject to permitting requirements if they result in increases in emissions of regulated pollutants above another set of regulatory thresholds. Stack emissions count toward those thresholds. Whether and when to include fugitive emissions is the focus of EPA’s proposed rule. 

Do Fugitive Emissions Count Toward Emission Calculations for Major Modifications? 

It depends. 

The NSR regulations contain an exemption, codified in 1980, that allows sources that do not fall under listed categories to avoid triggering NSR for modifications that would be considered “major” solely due to the inclusion of fugitive emissions in the emission analysis. The exemption is not a model of clarity. It includes language that could be read to narrow the circumstances in which the exemption applies. 

In fact, EPA asserts that this exemption for modifications means nothing at all. EPA explains that, from 1984 until 2008, it interpreted the regulations as requiring all sources to include fugitive emissions when determining whether a modification was major, and that no exemption applied. EPA states that it “inadvertently” retained the exemption when it revised the NSR regulations in 1989 and 2002, thus “creating an apparent conflict between EPA’s interpretation and the legacy regulatory text.” 

Much needed clarity came in 2008 through the Fugitive Emissions Rule. This rule amended the NSR regulations to create consistency between when fugitive emissions count toward determining whether a source is a major stationary source, and when they count toward determining whether a modification is a major modification. That is, only existing sources that fall within a listed category must count fugitive emissions when determining whether a modification is a major modification. With this clarity in place, EPA removed the 1980 exemption. 

The Fugitive Emissions Rule took effect on January 20, 2009. Just three months later, EPA announced that it was reconsidering the rule — a process that has lasted over 13 years. For most of this time, the Fugitive Emissions Rule has been stayed, and the 1980 exemption has remained in effect.

What is EPA Proposing to Change?

EPA proposes to repeal the Fugitive Emissions Rule and the 1980 exemption. The effect would be to require that all major stationary sources (that is, both listed and non-listed sources) consider fugitive emissions when evaluating whether physical or operational changes constitute major modifications. 

Next Steps

EPA is accepting public comments on this proposed rule through December 13, 2022. Potentially impacted sources — particularly those with upcoming construction projects — should assess how this rule may impact their planned activities and plan accordingly.