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Background on Establishing New Source Performance 

Standards (NSPS) Under the Clean Air Act 

Clean Air Act section 111 establishes mechanisms for controlling emissions of air pollutants 

from stationary sources. Section 111(b) provides authority for EPA to promulgate New Source 

Performance Standards (NSPS) which apply only to new and modified sources. Once EPA has 

elected to set an NSPS for new and modified sources in a given source category, section 111(d) 

calls for regulation of existing sources with certain exceptions explained below. 

Specifically, section 111(b) of the CAA requires EPA to establish emission standards for any 

category of new and modified stationary sources that the Administrator, in his or her judgment, 

finds “causes, or contributes significantly to, air pollution which may reasonably be anticipated 

to endanger public health or welfare.” EPA has previously made endangerment findings under 

this section for more than 60 stationary source categories and subcategories that are now subject 

to NSPS.1

 An endangerment finding would be a prerequisite for listing additional source 

categories under section 111(b), but is not required to regulate GHGs from source categories that 

have already been listed, such as EGU’s at power plants and refineries. 

For listed source categories, EPA must establish “standards of performance” that apply to 

sources that are constructed, modified or reconstructed after EPA proposes the NSPS for the 

relevant source category.2

 However, EPA has significant discretion to define the source 

categories, determine the pollutants for which standards should be developed, identify the 

facilities within each source category to be covered, and set the level of the standards. 

Section 111 gives EPA significant discretion to identify the facilities within a source category 

that should be regulated. To define the affected facilities, EPA can use size thresholds for 

regulation and create subcategories based on source type, class or size. Emission limits also may 

be established either for equipment within a facility or for an entire facility. 

EPA also has significant discretion to determine the appropriate level for the standards. Section 

111(a)(1) provides that NSPS are to “reflect the degree of emission limitation achievable through 

the application of the best system of emission reduction which (taking into account the cost of 

achieving such reduction and any nonair quality health and environmental impact and energy 

requirements) the Administrator determines has been adequately demonstrated.” This level of 

control is commonly referred to as best demonstrated technology (BDT). In determining BDT, 

                                                           

1 EPA has developed NSPS for more than 70 source categories and subcategories. However, endangerment findings 

apply to the categories as a whole, while subcategories within them have been established for purposes of creating 

standards that distinguish among sizes, types, and classes of sources. 

2 Specific statutory and regulatory provisions define what constitutes a modification or reconstruction of a facility. 

40 CFR 60.14 provides that an existing facility is modified, and therefore subject to an NSPS, if it undergoes “any 

physical change in the method of operation . . . which increases the amount of any air pollutant emitted by such 

source or which results in the emission of any air pollutant not previously emitted.” 40 CFR 60.15, in turn, provides 

that a facility is reconstructed if components are replaced at an existing facility to such an extent that the capital cost 

of the new equipment/components exceed 50 percent of what is believed to be the cost of a completely new facility. 
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EPA typically conducts a technology review that identifies what emission reduction systems 

exist and how much they reduce air pollution in practice. This allows EPA to identify potential 

emission limits. Next, EPA evaluates each limit in conjunction with costs, secondary air benefits 

(or disbenefits) resulting from energy requirements, and non-air quality impacts such as solid 

waste generation. The resultant standard is commonly a numerical emissions limit, expressed as 

a performance level (i.e. a rate-based standard). While such standards are based on the 

effectiveness of one or more specific technological systems of emissions control, unless certain 

conditions are met, EPA may not prescribe a particular technological system that must be used to 

comply with a NSPS. Rather, sources remain free to elect whatever combination of measures 

will achieve equivalent or greater control of emissions. 

Costs are also considered in evaluating the appropriate standard of performance for each 

category or subcategory. EPA generally compares control options and estimated costs and 

emission impacts of multiple, specific emission standard options under consideration. As part of 

this analysis, EPA considers numerous factors relating to the potential cost of the regulation, 

including industry organization and market structure; control options available to reduce 

emissions of the regulated pollutant(s); and costs of these controls. 

Section 111(d) requires regulation of existing sources in specific circumstances. Specifically, 

where EPA establishes a NSPS for a pollutant, a section 111(d) standard is required for existing 

sources in the regulated source category (except for pollutants regulated under the CAA section 

109 requirements for national ambient air quality standards or regulated under the CAA section 

112 requirements for hazardous air pollutants). Section 111(d) also uses a different regulatory 

mechanism to regulate existing sources than section 111(b) uses for new and modified sources in 

a source category. Instead of giving EPA direct authority to set national standards applicable to 

existing sources in the source category, section 111(d) provides that EPA shall establish a 

procedure for states to issue performance standards for existing sources in that source category. 

Under the 111(d) mechanism, EPA first develops regulations known as “emission guidelines.” 

These may be issued at the same time or after an NSPS for the source category is promulgated. 

Although called “guidelines,” they establish binding requirements that states are required to 

address when they develop plans to regulate the existing sources in their jurisdictions. These 

state plans are similar to state implementation plans under CAA section 110 and must be 

submitted to EPA for approval. Historically, EPA has issued model standards for existing 

sources that could then be adopted by states. In the event that a state does not adopt and submit a 

plan, EPA has authority to then issue a federal plan covering affected sources. 

Section 111(d) guidelines, like NSPS standards, must reflect the emission reduction achievable 

through the application of BDT. However, both the statute and EPA’s regulations implementing 

section 111(d) recognize that existing sources may not always have the capability to achieve the 

same levels of control at reasonable cost as new sources. The statute and EPA’s regulations in 40 

CFR 60.24 permit states and EPA to set less stringent standards or longer compliance schedules 

for existing sources where warranted considering cost of control; useful life of the facilities; 

location or process design at a particular facility; physical impossibility of installing necessary 

control equipment; or other factors making less stringent limits or longer compliance schedules 

appropriate. 
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Under CAA section 111, EPA possesses authority to distinguish among classes, types and sizes 

of sources within existing categories for purposes of regulating GHG emissions. For example, 

EPA has at times distinguished between new and modified/reconstructed sources when setting 

the standards. This may be appropriate, for instance, when a particular new technology may 

readily be incorporated into a new installation, but it may be technically infeasible or 

unreasonably costly to retrofit this technology to an existing facility undergoing modification or 

reconstruction. Alternatively, EPA has distinguished among sources within a category, for 

instance fossil fuel-fired boilers, for which EPA has subcategorized on the basis of fuel types 

(e.g., coal, oil, natural gas).