EPA Proposal Could Reduce New Source Review-Related Delays for Major Construction Projects

The U.S. Environmental Protection Agency (EPA) recently proposed a rule that could allow project developers of data centers, energy projects, and other facilities to begin certain site-development and infrastructure activities before obtaining a Clean Air Act (CAA) New Source Review (NSR) permit. The proposed rule, published on May 11, 2026, would clarify that certain non-emitting activities may occur before an NSR permit is issued, potentially providing greater flexibility for project development without altering the substantive air permitting requirements applicable to pollutant-emitting equipment.

History of “Begin Actual Construction”

The EPA’s regulations prohibit “begin[ing] actual construction” of major new stationary sources and major modifications of existing sources prior to receiving an NSR permit. NSR permits are preconstruction permits that establish what construction is allowed, emission limits that must be met, and operating requirements for new and modified sources.

Historically, the EPA has often broadly applied the prohibition on beginning construction. For example, EPA guidance in the 1970s and 1980s interpreted the prohibition to include any permanent on-site activities aimed at completing a source. The EPA stated that any installation necessary to accommodate an emissions unit would be treated as part of that emissions unit.^[1] At the same time, the EPA’s interpretation has not been entirely uniform, and the Agency has periodically revisited how closely the prohibition should be tied to the construction of emissions-producing equipment itself. In a 2020 memorandum, the EPA proposed a draft interpretation of “begin actual construction” that was never finalized which would have allowed construction activities that did not constitute construction “on an emissions unit” itself.

In September 2025, the EPA issued a response letter agreeing with the Maricopa County Air Quality Department’s decision to allow a company to proceed with the initial phases of construction of the “core and shell” of a building that would house emissions units prior to receiving an NSR permit.^[2] The EPA explained that this revised interpretation is more consistent with the NSR program’s purpose of balancing economic growth with environmental protection. According to the EPA, the CAA requires permitting before construction of emissions-generating equipment — not before a source can put a shovel in the ground for unrelated site-development activities that do not affect emissions. In the letter, the EPA also previewed that it would proceed with a rulemaking to further clarify the construction activities permissible prior to obtaining an NSR permit by revising its definition of “begin actual construction.”

The Proposed Rule

The proposed rule would limit the definition of “begin[ing] actual construction” to the “initiation of physical on-site construction of pollutant-emitting activities on a stationary source.” The EPA proposes to define “pollutant-emitting activities” as including “any equipment or component in a process or operation that emits or has the potential to emit a regulated NSR pollutant.” The EPA’s proposal includes a non-exhaustive list of activities that would not be considered “begin[ing] actual construction,” including engineering and design planning, geotechnical investigation, clearing vegetation, grading, surveying, soil compacting and stabilization, excavating land, ordering equipment and materials, storing equipment and setting up temporary trailers, and paving surfaces.

The EPA also proposes a non-exhaustive list of activities excluded from the definition of “pollutant-emitting activities,” including the construction of office buildings; retail stores; certain other buildings and structures, concrete pads, walls, and roofs that are not “specifically and uniquely configured” to support regulated NSR pollutant-emitting equipment; HVAC systems designed for human spaces; utility service wiring and piping; and certain sealed junctions of tie-ins. These exclusions clarify that companies can undertake potentially significant construction activities before obtaining an NSR permit, so long as those activities are not part of pollutant-emitting equipment or structures specifically configured to serve that equipment.

What This Means for Industry

In its press release, the EPA stated that the proposed rule fulfills the Agency’s 2025 commitment to clarify preconstruction permitting requirements and adds flexibility to the building process: “Cutting unnecessary permitting red tape will allow the reshoring of manufacturing, while still ensuring the highest degree of protection for human health and the environment.”

According to the EPA, the proposed revision will advance the development of AI infrastructure and power generation, as supported by Executive Order 14179, “Removing Barriers to American Leadership in Artificial Intelligence.”^[3] The proposed rule impacts companies planning new major stationary sources or major modification of existing sources, and may accelerate timelines for major infrastructure projects that involve significant non-emitting components such as manufacturing facilities and data centers. However, the EPA notes that any entity undertaking pre-permit construction of non-emitting structures “assumes the risk” that it may not realize a return on investment if a permit is subsequently denied or requires modifications.

The EPA has requested input on the proposed rule and will accept comments through June 29, 2026.

Summer Associate Lexi Detrick contributed to this post.

[1] See, e.g., Letter from EPA’s Office of Air Quality Planning and Standards to Robert R. DeSpain, Construction Activities Prior to Issuance of a PSD Permit with Respect to “Begin Actual Construction” (Mar. 28, 1986).

[2] Letter from Aaron Szabo to Philip McNeely, TSMC Arizona Begin Actual Construction – EPA Response Letter (Sept. 2, 2025).

[3] EO 14179, Removing Barriers to American Leadership in Artificial Intelligence, 90 Fed. Reg. 8,741 (Jan. 23, 2025).

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