Key Takeaways
What Happened: The U.S. Environmental Protection Agency (EPA) recently proposed a new rule to revise the Clean Air Act’s (CAA) New Source Review (NSR) preconstruction permitting program to allow owners and operators to begin certain non-emitting construction activities before obtaining an NSR permit. Specifically, EPA proposes to:
- Revise the definition of “begin actual construction”;
- Add new definitions for the terms “pollutant-emitting activities” and “commence construction”; and
- Make additional changes to clarify the distinction between the construction of a stationary source and the construction of non-emitting components or structures.
If finalized as proposed, EPA’s rule would allow companies (at their own risk) to perform certain non-emitting construction activities, such as building foundations, cement pads, and office buildings, before obtaining an NSR permit.
Who’s Impacted: Companies planning new major stationary sources or major modifications to those sources, especially projects with utility service infrastructure, concrete pads, or core and shell building work.
What Should Companies Do Now: Impacted companies should consider submitting comments to EPA supporting the proposed rule before the end of the 45-day comment period on June 29, 2026.
Background
The CAA’s NSR permitting program applies to the construction of major new stationary sources and major modifications of existing major stationary sources. EPA’s regulations prohibit “begin[ning] actual construction” without an NSR permit, but there have been decades of confusion over what that term means in practice. 40 C.F.R. § 52.21.
Historically, EPA guidance often treated a broad range of permanent on-site activities as prohibited before permit issuance. EPA strictly interpreted its regulation to prohibit many preparatory on-site activities aimed at completing construction of the source, such as installing building supports and foundations, laying underground pipework, and constructing permanent storage structures, even when there would be no impact on emissions. However, in September 2025, EPA clarified its interpretation of “begin actual construction” when it agreed with the Maricopa County Air Quality Department (MCAQD) that a company could proceed with building the core and shell of a building that will eventually house emission units prior to obtaining a NSR permit. EPA determined the company did not need an NSR permit to proceed with preliminary construction projects because the proposed “initial phase of construction” would not involve building emissions units, installing air pollution capture or control equipment, or laying foundations for emissions units.
This proposed rule, if finalized as proposed, would codify and expand on EPA’s Maricopa County interpretation that “begin actual construction” should focus on construction of the newly defined “pollutant-emitting activities,” not every permanent physical activity at a project site. However, EPA expressly states that owners or operators who complete pre-permit work are proceeding “at their own risk” since the NSR permit could be denied or require design changes, additional controls, or even rebuilding of work already completed.
What Types of Activities Would EPA’s Proposal Allow Before It Has to Issue an NSR Permit?
Under this proposal, “begin[ning] actual construction” is limited to “initiation of physical on-site construction of pollutant-emitting activities on a stationary source.” EPA’s proposal provides a non-exhaustive list of activities that it proposes to exclude from the “begin actual construction” definition, including engineering and design planning, geotechnical investigation, vegetation clearing, grading, surveying, soil compacting and stabilization, associated pile driving, excavation, blasting or hardrock removal, ordering equipment and materials, staging equipment and temporary trailers, and paving surfaces.
EPA also proposes to define “pollutant-emitting activities” narrowly to include “any equipment or components in a process or operation that emit or have the potential to emit a regulated NSR pollutant.” The proposed definition would exclude certain non-emitting or ancillary projects, including office buildings, retail stores, certain storage buildings, concrete pads, building foundations, walls, roofs, HVAC equipment for human workspaces, utility service wiring and piping, and certain sealed junctions or tie-ins from the definition, meaning that such activities could occur before issuance of the NSR permit. Classification would depend on emissions from the process or operation after construction, not emissions generated during construction work.
Why the Proposal Matters
For decades, EPA guidance interpreted “begin actual construction broadly.” EPA’s 1978 Reich memorandum barred on-site activities of a permanent nature intended to complete a PSD source. Then, EPA’s 1986 Reich memorandum went further by treating installations necessary to accommodate an emissions unit as part of the emissions unit.
EPA’s proposal signals a significant departure from that approach and focuses on whether the constructed item emits, or has the potential to emit, air pollutants, not on whether construction work is permanent, costly, or difficult to reverse. This shift could give project developers more flexibility to perform site preparation, construction, utility work, and other non-emitting building work while air permit review proceeds.
Key Issues for Comment
EPA seeks comments on several key issues, including:
- Whether the proposed definitions align with other NSR provisions;
- Whether EPA should add any additional exclusions;
- Whether industry-specific activities, such as refinery tie-ins, should be allowed before permit issuance; and
- How industry expects to benefit from the rule.
Next Steps
Companies with major projects in planning or permitting should map early construction activities against EPA’s proposed definition and the applicable state or local NSR program. The proposed revisions to 40 C.F.R. § 52.21 will automatically apply to EPA and permitting authorities implementing PSD programs, but other SIP-approved programs will need to incorporate the new definition once finalized. As a result, companies should preserve clear records showing that pre-permit construction does not involve pollutant-emitting activities that would require a permit. Additionally, stakeholders should prepare to submit comments on the proposed rule to provide EPA with real-world examples of how manufacturing projects progress and where current uncertainty has caused delays.
