{"id":905289,"date":"2026-01-28T16:57:49","date_gmt":"2026-01-28T23:57:49","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=905289"},"modified":"2026-01-28T16:57:51","modified_gmt":"2026-01-28T23:57:51","slug":"begin-actual-construction-epa-may-redefine","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/begin-actual-construction-epa-may-redefine\/","title":{"rendered":"EPA May Redefine \u2018Begin Actual Construction\u2019 in Permit Reform Intended to Expedite Construction of Emissions-Generating Developments"},"content":{"rendered":"\n

Jamey Collidge, Melissa Horne, Darby Koput, Mack McGuffey and Christian Pirri | Troutman Pepper Locke<\/a><\/p>\n\n\n\n

The U.S. Environmental Protection Agency (EPA) has expressed its intent to propose a rule to revise the regulatory definition of \u201cbegin actual construction\u201d under the Clean Air Act\u2019s (CAA) New Source Review (NSR) preconstruction permitting program, with a proposed rule expected in 2026.[1]<\/a> The EPA has indicated that the rule, if proposed and finalized, will provide \u201cflexibility\u201d to developers to begin construction on ancillary structures that are not themselves components of the emitting structures, such as concrete pads and external walls, before obtaining the requisite air permit.[2]<\/a><\/p>\n\n\n\n

CAA permit reform arrives at a time when energy demand, driven by artificial intelligence (AI) development, data center expansion, and electrification, is projected to surge over the next decade.[3]<\/a> Against this backdrop, the EPA\u2019s potential permitting reform aims to provide stakeholders with greater flexibility for early-stage site developments and accelerated project timelines.<\/p>\n\n\n\n

Reg<\/u>ulatory Background<\/strong><\/p>\n\n\n\n

Under the CAA, a new or modified major stationary source of air pollutants cannot \u201cbegin actual construction\u201d without first obtaining an NSR permit.[4]<\/a> EPA regulations define \u201cbegin actual construction\u201d as the \u201cinitiation of physical on-site construction activities on an emissions unit<\/em>,\u201d which \u201cinclude, but are not limited to, installation of building supports and foundations, laying underground pipework and construction of permanent storage structures.\u201d[5]<\/a><\/p>\n\n\n\n

For decades, the EPA interpreted this definition broadly. In a\u00a01986 memorandum<\/a>\u00a0issued by then-EPA Director Edward Reich (the Reich memo), the agency adopted the position that the construction of structures \u201cnecessary to accommodate\u201d emissions units could themselves constitute \u201cactual construction\u201d of emissions units and therefore trigger the need for an NSR permit.[6]<\/a>\u00a0The Reich memo effectively prohibited construction of structures that are not emission units \u2014 like footings, foundations, storage structures, and retaining walls \u2014 until developers obtained an NSR permit.<\/p>\n\n\n\n

The result: often slower timelines and higher costs. Indeed, one study found that from 2002 to 2014, the average time to process an NSR permit was 420 days.[7]<\/a> Of course, permitting timelines may vary depending on the type of project. For example, the same study found that natural gas permits on average were processed the fastest (319 days), whereas refinery project permits took the longest to assess (537 days).<\/p>\n\n\n\n

In March 2020, however, the EPA issued draft\u00a0guidance<\/a>\u00a0(the 2020 draft guidance) that adopted a less restrictive interpretation of the term \u201cbegin actual construction.\u201d[8]<\/a>\u00a0Returning to the original regulatory text, the 2020 draft guidance confirmed that the only construction prohibited prior to issuance of an air permit is construction \u201con an emissions unit.\u201d The EPA explained that its prior interpretations were \u201cunnecessarily restrictive,\u201d and that the revised interpretation \u201cbetter conforms to the regulatory text\u201d that defines \u201cbegin actual construction.\u201d[9]<\/a><\/p>\n\n\n\n

EPA Announces Permitting Reform<\/strong><\/p>\n\n\n\n

In September 2025, the EPA reaffirmed its 2020 guidance on the definition of \u201cbeginning actual construction\u201d to provide \u201cmuch needed clarity\u201d and \u201cflexibility,\u201d motivated primarily by the global AI race.[10]<\/a> EPA Administrator Lee Zeldin stated that, \u201c[f]or years, Clean Air Act permitting has been an obstacle to innovation and growth\u201d and identified \u201cPermitting Reform\u201d as a key pillar of the agency\u2019s new \u201cPowering the Great American Comeback Initiative.\u201d[11]<\/a> A stated goal of CAA permit reform is to promote the development of data centers \u201ccritical to making the U.S. the Artificial Intelligence (AI) capital of the world.\u201d[12]<\/a> A proposed rule to further clarify the meaning of \u201cbeginning actual construction\u201d is expected by January 2026, with a final rule targeted for September 2026.[13]<\/a> Proponents hope the rule will accelerate project timelines.<\/p>\n\n\n\n

The latest guidance from the EPA is found in a\u00a0letter<\/a>\u00a0to the Maricopa County Air Quality Department (MCAQD) regarding a proposed semiconductor facility in Phoenix, Arizona (the TSMC letter).[14]<\/a>\u00a0MCAQD sought guidance from the EPA on whether Taiwan Semiconductor Manufacturing Company (TSMC), one of the world\u2019s largest chip manufacturers, could begin construction on the \u201ccore and shell\u201d of the semiconductor facility \u2014\u00a0i.e.<\/em>, foundation, steel superstructure, and external walls \u2014 prior to MCAQD\u2019s issuance of an NSR permit. TSMC agreed to defer the installation of semiconductor manufacturing equipment that could be classified as emissions units, foundations for such units, and piping until after the issuance of a permit.<\/p>\n\n\n\n

The EPA referred back to its 2020 draft guidance and concluded that TSMC could proceed with the initial phase of construction because the structures to be built were not specifically configured for emissions units and therefore did not constitute \u201cbegin[ning] actual construction.\u201d[15]<\/a> But the EPA cautioned that any construction activities undertaken prior to issuance of an NSR permit would be at the developer\u2019s \u201cown risk\u201d and that the developer\u2019s \u201ctime and resources expended on construction prior to obtaining a permit\u201d may not<\/em> be used as justification to grant the air permit.[16]<\/a> And until the EPA officially proposes and finalizes a rule, the EPA stated that it may advise on \u201cbegin actual construction\u201d questions on a \u201ccase-by-case basis.\u201d[17]<\/a><\/p>\n\n\n\n

Takeaways<\/strong><\/p>\n\n\n\n

The effects of the EPA\u2019s permitting reform will certainly vary by the particulars of a project, and likely by state as well, because state permitting agencies have broad discretion to enforce NSR requirements.[18]<\/a> Developments that include significant non-emitting structures, such as manufacturing facilities and data centers, may benefit from accelerated timelines. However, construction of emission units cannot be completed without an NSR permit. And while permitting reform may allow for faster construction times, proceeding with pre-permit construction activities is unlikely to be a risk-free endeavor. At least in one response to a state agency \u2014 the MCAQD \u2014 the EPA expressed that the time and resources expended on pre-permit construction will not influence permitting decisions. Developers therefore retain potentially significant exposure by proceeding with construction of even non-emitting structures. Indeed, permits could impose conditions requiring modification to work that was already in progress or, even be outright denied.<\/p>\n\n\n\n

While the full effects of the promised permitting reform will not be understood for some time, it is not too early for stakeholders to start to evaluate their potential risks and develop risk mitigation measures for their current and future projects. Potential risks that project participants may think through include:<\/p>\n\n\n\n