EPA's Proposed Rewrite of 'Begin Actual Construction' — How Manufacturers Can Compress Major-Project Timelines Without Tripping the State SIP

On May 13, 2026, EPA published a proposed rule that does something the New Source Review program has not seen in over a decade: it narrows the definition of when construction on a major source actually begins. If you are planning a new plant, a major modification, or a capacity expansion that triggers NSR or PSD review, this rulemaking changes how you sequence civil work against permit review — and it opens a parallel-path construction schedule that could pull four to twelve months off a major capex timeline. It also lays a trap for the unwary: in every state where iSi works, the federal definition does not control state-law enforcement until the state amends its SIP. Read both halves of this carefully before you break ground on anything.

What the Proposed Rule Actually Does

EPA’s proposal — formally titled “Begin Actual Construction in the New Source Review (NSR) Preconstruction Permitting Program,” Docket EPA-HQ-OAR-2025-0618 — rewrites the definition of “begin actual construction” across the federal NSR regulations at 40 CFR 51.165, 51.166, 52.21, and the Federal minor NSR rules for Indian Country at 40 CFR 49.151–49.165. The change codifies a September 2, 2025 EPA guidance letter issued to Maricopa County Air Quality Department in response to a TSMC Arizona inquiry (EPA letter, September 2, 2025).

The mechanic is straightforward. The existing rule has been read to capture “installation of building supports and foundations, laying underground pipework and construction of permanent storage structures” as the moment construction begins for NSR purposes — the trigger that locks in penalty exposure if the source has not yet obtained its permit. EPA proposes to narrow that reading by introducing a new defined term — “pollutant-emitting activities” — and limiting “begin actual construction” to physical work on those activities. In plain English: foundations for a building shell, the shell itself, parking lots, support buildings, and other non-emitting infrastructure no longer count as having “begun” construction of the emissions unit. Construction on the emissions unit still requires an issued permit. The proposal is published in the Federal Register at 2026-09524, with full background available on EPA’s Begin Actual Construction resource page.

EPA framed the move publicly as removing “unnecessary impediments” to industrial development (EPA news release). The agency’s history of analyzing what kinds of pre-permit work are allowable is captured on the EPA Construction Activities Allowed Before Obtaining a Preconstruction Air Permit page — which is the resource AEs should keep open during a capex planning conversation.

Comments are due June 29, 2026 — a 45-day window. A virtual public hearing will be held May 28, 2026 if any party requests one by May 18, 2026 (Federal Register notice 2026-09524). A final rule is expected later in 2026 or early 2027.

Who Falls Inside This Rulemaking

NSR and PSD apply to new major stationary sources and major modifications of existing major sources. The trigger is potential-to-emit (PTE):

100 tons per year of any regulated NSR pollutant for facilities in one of the 28 listed source categories (EPA — Categories with 100 TPY PSD Major Source Threshold)
250 tons per year for any other facility type (EPA — NSR Fact Sheet)
100,000 tons per year CO2e for greenhouse gases alone (EPA — NSR Fact Sheet)

The 28 listed categories include the heavy industrial universe iSi works in every week: petroleum refineries, kraft pulp mills, Portland cement plants, iron and steel mills, primary aluminum reduction plants, primary copper smelters, hydrofluoric/sulfuric/nitric acid plants, lime plants, chemical process plants, fossil-fuel boilers totaling more than 250 MMBtu/hr, petroleum storage and transfer units larger than 300,000 barrels, taconite ore processing, glass fiber processing, and similar. If you are running one of these operations in Kansas, Missouri, Oklahoma, Nebraska, Texas, Arkansas, or Kentucky, this rulemaking affects how you sequence your next major capex project.

Minor source projects below the major-source PTE threshold are not directly affected by the federal definition change for major NSR, but the rule does propose parallel amendments to the Federal minor NSR rules at 40 CFR 49 — which matters if you operate on tribal land or under Federal Indian Country minor NSR jurisdiction.

The Capex Scheduling Angle — What Actually Changes on Your Gantt Chart

Here is the practical effect. Under the existing interpretation, a facility planning a major project pauses civil construction until the air permit is issued. PSD permit review timelines run six to eighteen months depending on agency workload, modeling complexity, and any public comment cycle. That pause is the most expensive line on any major capex schedule — site is acquired, engineering is complete, contractors are mobilized, and the project sits because pouring a foundation could be characterized as “begun construction” of the emissions unit.

The proposed rule reframes that pause. If your project includes a building shell, foundations, parking lots, employee parking, administrative buildings, warehouse space, non-emitting support structures, and similar non-emitting infrastructure, that work can move in parallel with permit review. Only the emissions unit construction itself — the work physically on or for the pollutant-emitting activity — has to wait for the issued permit.

For a facility planning a $50M to $250M expansion, the practical gain is four to twelve months of compressed schedule. That compression does not just shorten the project — it changes the economics. Every month a major capex project sits idle costs holding capital, mobilization fees, deferred revenue from delayed startup, and the soft cost of an engineering team waiting on a permit. Pulling six months out of a major build is meaningful financial impact, not procedural cleanup.

But — and this is the part that gets missed in the trade press coverage — the rule does not waive any other compliance obligation. A facility relying on the new definition still must:

Hold any minor-NSR or state construction permits required for the building shell itself. Local zoning, building codes, NPDES stormwater coverage, and Section 404 wetlands permits where applicable still apply.
Submit a complete NSR application before any pollutant-emitting activity construction begins. EPA has been consistent on this — the change does not remove the requirement to have a complete and timely application on file before the emissions unit goes vertical.
Document the non-emitting boundary in writing before breaking ground. The entire rule turns on what counts as construction of a “pollutant-emitting activity.” That distinction is binary in enforcement: anything beyond the boundary is a permit violation. A written engineering opinion identifying which structures, foundations, piping runs, and slabs are non-emitting versus emitting is the new compliance artifact. Without it, you cannot use the rule’s flexibility safely.

The State SIP Trap — Why the Federal Rule Does Not Control What You Can Build in Kansas, Missouri, Oklahoma, Nebraska, or Texas

This is the part facilities will miss. The proposed rule is a federal definition change. It does not automatically flow into every state SIP. Until each state revises its SIP to match the new federal definition, the broader state-law definition of “begin actual construction” still controls — and a state-level enforcement action or a citizen suit under Clean Air Act §304 can still find a willing plaintiff.

Each of iSi’s primary states operates an EPA-approved SIP-based NSR program with its own rule architecture:

Kansas (KDHE) runs its NSR/PSD permitting under K.A.R. 28-19. Kansas adopts most federal definitions by reference but applies its own permitting procedures. Kansas will need to revise its SIP through formal rulemaking before the new “begin actual construction” definition controls under state law (EPA — CAA Permitting in Kansas).
Missouri (MoDNR) operates an EPA-approved SIP-based NSR program with construction permit fees that apply to both major and minor sources. Missouri’s air construction permit process is separate from any federal NSR review (EPA — CAA Permitting in Missouri).
Oklahoma (ODEQ) has an EPA-approved SIP and operates the PSD/NSR program through Oklahoma Administrative Code Title 252.
Nebraska (NDEE) operates a delegated NSR program (EPA — CAA Permitting in Nebraska).
Texas (TCEQ) operates its own SIP-based NSR program through TAC Title 30 Chapter 116 and historically adopts federal NSR amendments through formal rulemaking on a 12–24 month lag (TCEQ — Major NSR Reviewer Reference Guide APDG 5881).

The practical answer in every one of these states is the same: assume the pre-2026 state interpretation of “begin actual construction” still controls until the state agency formally adopts the new federal language into its SIP. Acting on the federal interpretation today — before the rule is final and before your state’s SIP is amended — exposes the facility to two distinct risks: a state-level enforcement action under state-only authority, and a citizen suit under CAA §304 based on the current (broader) federal rule text. The proposed rule does not protect anyone from §304 enforcement until it is final and effective.

This is where facilities reading the EPA news release and assuming the new flexibility applies in their state will create the next generation of NSR enforcement matters. The federal proposed rule by itself does not change what a facility can legally do under state law.

Enforcement History — Why This Is a High-Stakes Distinction

NSR enforcement is consistently among the most penalty-heavy in EPA’s portfolio. The Stationary Source Civil Penalty Policy (EPA — Clean Air Act Stationary Source Civil Penalty Policy) authorizes penalties up to the statutory maximum under CAA §113. That maximum is currently up to $37,500 per day per violation, per 40 CFR 19.4. Field citations carry a maximum of $7,500 per day per violation. The 2026 inflation adjustment was cancelled by OMB Memorandum M-26-11, so 2025 penalty amounts carry forward through 2026 (Lion Technology — 2025 Penalty Update).

Single-source NSR settlements have historically ranged from $1M to over $100M, with the largest cases targeting electric utilities, refineries, and pulp and paper mills that constructed or modified emissions units without a valid NSR permit. The most common NSR violation pattern is not “facility built without a permit at all” — it is “facility started construction before permit issuance” or “facility modified a unit without recognizing the modification triggered major-NSR review.”

The September 2025 EPA guidance and the May 2026 proposed rule are explicitly designed to remove a sub-category of these violations from the enforcement universe: facilities that built shells and non-emissions infrastructure before the permit issued, on the theory that those activities were not “begin actual construction” under a properly narrow reading.

EPA’s Guidance on the Appropriate Injunctive Relief for Violations of Major New Source Review (NSR) Requirements confirms that civil penalties are available against a source for violation even before the source has commenced operation. Mitigation is available if the source ceases construction promptly after notification and does not resume until a valid permit is issued — but the days of unpermitted construction still carry penalty exposure.

What to Do Between Now and the Final Rule

If your facility has a major project on the current capex calendar, here is the sequence:

Identify whether your project would benefit from parallel-path scheduling. Most projects with significant non-emitting infrastructure components — building shells, foundations, parking, administrative space, warehousing — have material schedule compression available if the rule is finalized. If the entire project envelope is emissions unit work, the rule does not change your timeline.
Verify your state’s current SIP language. The federal proposed rule does not override your state’s existing definition. Until your state amends its SIP, the state definition controls. KDHE, MoDNR, ODEQ, NDEE, and TCEQ will each need formal rulemaking to adopt the federal change. Treat that lag as part of your project risk.
Map the non-emitting boundary in engineering documentation before breaking ground on anything. This is the artifact that protects the facility. Identify every structure, foundation, slab, piping run, and utility connection — and document which side of the “pollutant-emitting activity” line each one falls on. Get a written engineering opinion on file before the first shovel.
Maintain a complete NSR application on file before any emissions unit construction begins. The rule does not change this requirement. Construction on the emissions unit itself still has to wait for the issued permit.
Track local zoning, building, NPDES stormwater, and Section 404 (wetlands) permits separately. The federal NSR change does not affect state or local construction permits, building codes, or other federal authorizations. Each runs on its own timeline.
Watch the final rule effective date. A proposed rule is not law. Acting on the new interpretation today still depends on EPA’s September 2, 2025 guidance letter (which is non-binding) plus any state agency guidance. Facilities that start non-emitting construction before the final rule and SIP amendments are in place are still at risk of citizen suits under CAA §304.
Consider submitting comments before June 29, 2026. Manufacturing trade groups and individual large emitters have a narrow window to push for sharper definitions and faster effective dates. The clearer the final definition of “pollutant-emitting activity” — and the faster EPA pushes states to adopt corresponding SIP amendments — the sooner the schedule compression is actually usable. Industry comments shape both pieces.

When the Rule Is Worth Acting On — and When It Is Not

The schedule compression is real. It is also conditional on three things finalizing in the right order: the federal rule, your state SIP, and your engineering documentation defining the non-emitting boundary. Until all three are in place, the safer answer is to plan as if the pre-2026 definition still controls — and use the comment period and the SIP amendment process as the trigger points for revising your capex schedule.

For facilities with major projects in the next 12–24 months, the rulemaking is worth tracking week by week through the final rule and into the state SIP amendment cycle. Build the parallel-path schedule on paper now; deploy it only when both the federal rule is final and your state SIP has been amended.

How iSi Helps

Air permitting consulting and facility EHS support are core iSi services. When a major project is in the planning stage, iSi works with the facility engineering team to map the non-emitting boundary, document the pollutant-emitting activity scope, prepare the NSR/PSD application, and track state SIP status through the agency rulemaking cycle. For multi-site operators with parallel capex projects across Kansas, Missouri, Oklahoma, Nebraska, Texas, or surrounding states, iSi coordinates the permit review and the state-level compliance posture from one team — so a federal rule change does not turn into a five-state enforcement matter when one state lags its SIP amendment.

If you have a major project on the calendar and want to know whether the proposed rule changes your timeline, the next step is a brief scoping conversation. Call (316) 264-7050 or contact iSi’s air permitting team.