A new beginning for “begin actual construction”?

On September 2, 2025, Aaron Szabo, Assistant Administrator for Air and Radiation, issued a letter responding to a request for guidance on the interpretation of the federal definition of “begin actual construction” by the Maricopa County Air Quality Department (MCAQD). In its letter, the EPA agreed with MCAQD that an owner or operator of a property could construct a “building shell and core” that did not include any emissions units without violating the preconstruction review prohibition in Sections 165 and 173 of the Clean Air Act even though the owner/operator acknowledged that the core and shell might be modified one day to include emissions units. While the EPA expressly disclaimed that it is establishing a new policy, it indicated it is contemplating a rulemaking on this topic.

ANALYSIS

In July, TSMC Arizona approached MCAQD with a request that it be allowed to construct the “core and shell” of a future fabrication facility without obtaining an air quality permit (Arizona has a “unitary” permit system) from MCAQD. The EPA characterized the request as follows: “this company proposes to construct the core and shell of a building that will eventually house emission units without contemporaneously beginning construction on any semiconductor manufacturing equipment that could be classified as an emissions unit. TSMC also states that this phase of construction will not include air pollution capture or control equipment or foundations for any emission units.”  MCAQD in its letter sought guidance from the EPA, noting that “if a structure contains no emissions unit(s) it is not a ‘source’ subject to Clean Air Act permitting authorities because it does not emit or have the potential to emit pollutants.” 

The EPA noted that in its request to MCAQD TSMC had relied upon a draft March 20, 2025, EPA guidance memo issued by Anne Idsal that shifted the focus in the “begin actual construction” inquiry to whether an emissions unit is being constructed, but MCAQD had noted that there was tension between the draft March 20, 2020, guidance, which has not been finalized, and an earlier March 28, 1986, EPA guidance memo that stated that if a building would “accommodate” an emissions unit that it is subject to the preconstruction ban. Because the TSMC structure presumably would be used to accommodate a future fabrication line, MCAQD sought guidance.

The EPA stated that it “does not presently intend to issue a final version of the March 2020 Draft Guidance.”  Instead, the EPA indicated that it planned to “revis[e] the EPA’s NSR regulations, including the definition of ‘begin actual construction,’ which EPA plans to propose and finalize in 2026.” Nevertheless, EPA provided some guidance to help guide MCAQD’s response to TSMC’s request.

First, the EPA said, consistent with the draft 2020 guidance, the term “begin actual construction” “does not prohibit initiation of physical on-site construction of those parts of a facility that do not qualify as an emission unit” and that the 1986 guidance had “adopted an overly broad reading of the term ‘emissions unit.’” Instead, the EPA stated that it believes permitting authorities can “exercise discretion” in determining whether to permit construction of buildings without an emission unit, “provided that the construction of this core and shell of a building does not involve the physical construction on an emission unit or the laying of underground piping or construction of supports and foundations that are part of any emissions unit.”  Accordingly, the letter concludes “The EPA agrees with MCAQD’s conclusion that requiring TSMC to obtain a permit before it starts building a structure that does not include an emission unit, or any component of an emission unit (including piping or a foundation specifically configured for an emissions unit) seems an overly broad reading of EPA’s regulations….”

The EPA added a few caveats: (1) its letter is based on the unique facts and circumstances of the TSMC application and is not final agency action; (2) construction is at TSMC’s risk, (3) MCAQD may not use any facet of the building’s prior construction in determining BACT or LAER, and (4) that MCAQD may require BACT or LAER conditions that require changes to the preconstructed facility.   

COMMENTARY

The EPA appears to be moving toward a position, advanced in the first Trump Administration, that the interpretation of “begin actual construction” as set forth in agency guidance prior to 2020 had become overbroad and is limiting economic development more broadly than required to achieve the Clean Air Act’s purposes. There are some good reasons for flexibility:  some initial construction phases are weather sensitive but relatively low cost and delaying these phases until after the unpredictable permit process is completed may set a project back significantly. On the other hand, moving away from the broad prohibition in the 1986 guidance may create a slippery slope where an applicant starts construction that is almost immediately followed by a permit application for an emissions unit in that construction. While in the TSMC matter EPA characterized the construction as not “contemporaneous” with the eventual emissions unit, it is unclear in the EPA letter whether contemporaneous means “at the same time” or is intended to invoke the “contemporaneous period” used in the netting evaluation. Considerable uncertainty thus remains.

Encouragingly, the EPA has stated it intends to clarify the scope of “begin actual construction” by rulemaking rather than guidance, which will provide an opportunity to vet language and consider consequences in reaching a resolution. NSR Law Blog hopes that the rulemaking process will enable the temporal question discussed above to be evaluated and addressed.  NSR Law Blog is supportive of the EPA’s stated intent to clarify “begin actual construction” by rule in the hope that a resolution better balancing the gains from flexibility versus the risk of circumvention given lengthening permitting and construction timeframes.