Projects Could Break Ground Faster Under EPA Proposal Allowing Pre-Permit Site Work

The U.S. Environmental Protection Agency (EPA) is still weighing public comments on a proposal announced in May, which would redefine when “actual construction” on new or modified sources of air emissions may begin under the Clean Air Act's New Source Review (NSR) preconstruction permitting program.

Although the comment period has closed, and EPA has held a public hearing on the proposed rule, the agency has not yet issued a final rule. If finalized, the rule would allow developers to begin more site preparation and construction activities before receiving a Clean Air Act permit, which could reduce delays but could also bring new risks.

Proposed Rule Could Give Developers More Flexibility

All new “major” sources of air emissions or modifications to existing sources must undergo New Source Review and obtain a construction permit under the Clean Air Act before beginning “actual construction.” EPA has consistently interpreted this phrase broadly to prohibit not only work on an emissions source itself, but most permanent on-site work, before a permit is issued, including activities such as building foundations, laying underground pipework, and constructing other “installations necessary to accommodate” an emissions unit.

What Work Could Begin Before Permit Approval?

EPA’s new proposal would stop that approach by changing what it means to “begin actual construction” to only constitute the physical on-site construction of “pollutant-emitting activities.” EPA also proposed to specifically list categories of site work that do not count as “construction,” including:

• • Grading, excavation and associated pile driving
  • Paving
  • Utility infrastructure
  • Office buildings
  • Certain concrete pads and foundations
  • Sealed junctions or tie-ins that may serve equipment or components in another process constructed at a later time

Although EPA says their proposal, which would significantly expand the scope of allowable pre-permit construction activities, is the “best reading” of the Clean Air Act, they also stress that any work done before a permit is issued is performed at the owner's own risk. If the permit is ultimately denied, the project will not be able to advance.

Responses Divided Over Project Impacts and Compliance Questions

Industry groups have largely supported the proposal and urged EPA to go further, saying the changes will mitigate development delays without any loss of environmental protection. Commenters have asked EPA to expand the scope of allowed activities in several specific ways, including by clarifying that ordinary equipment foundations and anchor bolts don't become “pollutant-emitting” just because they are designed to support future emissions sources. They have also asked EPA to clarify the tie-in exclusion, which EPA’s surrounding discussion suggests may apply only to refineries.

In contrast, state regulators have been more cautious, and multiple state agencies have urged EPA to withdraw the rule. Commenters support streamlining in general, but caution that the tie-in exclusion could encourage developers to artificially split up their projects to avoid NSR and requirements to use Best Available Control Technologies (BACT).

Most environmental and community groups oppose the rule outright. NGO commenters have argued that the proposal conflicts with the Clean Air Act and reverses four decades of agency practice, and they point out that pre-permit activities such as demolition, grading and tie-in work can produce their own emissions, which should require permitting.

Next Steps for Developers

EPA is expected to issue a final rule by the end of 2026, but these changes won’t be immediate. Once EPA finalizes the proposed rule, the majority of states with their own EPA-approved air permitting programs may still need to revise those programs to incorporate the new rule, and the Prevention of Significant Deterioration (PSD) regulations give them up to three years to do so.

Furthermore, this rule will apply retroactively to permits issued under the current standard. This means that for now, project developers should keep following existing EPA guidance and their state's current rules on what work can proceed before their permit is issued.

If you have questions about this rulemaking, please contact David Topping, Sophie Gray or any member of Phelps' Environmental team.