- within Insolvency/Bankruptcy/Re-Structuring topic(s)
On January 21, 2026, the House Committee on Energy and Commerce reported a package of bills that, if enacted, would constitute the most significant amendments to the Clean Air Act (CAA) since 1990. The amendments address core CAA programs, including New Source Review (NSR), National Ambient Air Quality Standards (NAAQS), and EPA's permit review authority under the National Environmental Policy Act (NEPA). Narrow margins in Congress present high hurdles but, if enacted, these amendments could have widespread operational and compliance implications across the energy, industrial, and manufacturing sectors.
Key Changes
- Narrows NSR Triggers, Facilitating Maintenance and
Improvements to Power Plants and Industrial
Facilities
The CAA's NSR permitting program applies to "stationary sources" that emit threshold amounts of regulated pollutants. NSR permitting is triggered when a "modification" of the source leads to a "significant" emissions increase. The amendments exclude certain categories of projects from the definition of "modification," including projects focused on reliability, efficiency, and safety that currently would trigger NSR review. The amendments also clarify that changes at sources do not qualify as a modification unless the change increases the source's maximum achievable hourly (as opposed to annual) emission rate of an air pollutant. The amendments would allow for improved NSR permitting predictability, particularly for projects that straddle the line between routine maintenance (which is not subject to NSR permitting) and modification, which could help minimize risk for plans to modernize by allowing for increased certainty around NSR applicability. - Increases Flexibility for Emission Offset Compliance,
Removing Barriers to New Projects
Major sources subject to NSR permitting need a Non-Attainment New Source Review (NNSR) permit if located in a nonattainment area. NNSR permits typically require operators to obtain "offsets" for emission of nonattainment pollutants. Offset requirements can be a significant barrier to source modernization in areas where emission reduction credits are scarce. The amendments would authorize states to allow an alternative compliance mechanism or emissions fees (with defined caps) when offsets are unavailable, and would also exempt advanced manufacturing facilities and critical mineral facilities from the requirement to offset emissions as part of the NNSR permit process if the President issues a national security determination. This flexibility would help relieve pressure on utilities that need to develop new energy infrastructure, increasing reliability given recent unprecedented increases in demand. - Reduces Regulatory Uncertainty Resulting from Changes
in Air Quality Standards
EPA designates each area of the country as in "attainment" or "nonattainment" for each criteria pollutant. Attainment designations are specific to each criteria pollutant and may change when EPA revises a NAAQS. The amendments would:- Extend the current NAAQS review cycle from five years to 10 years.
- Allow for the Administrator to consider the likely attainability of a standard (as a secondary factor) when choosing among a range of air quality standards that would protect public health with an adequate margin of safety.
- Prevent any new or revised NAAQS from applying to preconstruction permit applications until their implementing regulations and guidance have been published.
- Limit the application of the 2024 PM2.5 standard only to permits completed after the date of the final designation of the area.
The extended timelines and increased flexibility for NAAQS revisions and implementation could improve regulatory certainty by providing more notice prior to implementation of new standards. Permits that have conditions that depend on the attainment status of an area would have longer windows of NAAQS certainty, and the consideration of attainability gives regulators wider latitude to consider the practical impact of a revised NAAQS. Requiring regulation and guidance before the application of a revised standard reduces the likelihood of an ad-hoc approach to a permitting authority's review of a preconstruction permit.
- Clarifies Impact of Foreign Emissions and
"Exceptional Events" on Air Quality Attainment
Designations
Large-scale wildfires and cross-border emissions can affect designation decisions despite being outside the control of local sources. While EPA does consider these exceptional events when determining an area's designation status, it does so pursuant to its own guidance, which requires extensive case-by-case reviews. The amendments refine the definition of "exceptional events" to encompass certain wildfire responses (e.g. prescribed burns) and exclude foreign emissions from attainment/nonattainment determinations, which could reduce permitting burdens and allow for economic development in affected areas. - Reduces NEPA Reviews, Accelerating Permitting Timelines
The amendments would narrow EPA's authority to comment on other federal agency actions by eliminating the requirement for EPA to review and provide written comments on federal construction projects or other actions by a federal agency that are already subject to NEPA review. The amendment would preserve substantive obligations while shortening procedural timelines and reduce the uncertainty created by late-stage objections.
The Baker Botts team will continue to track the progress of this and other legislation with the potential to impact our clients' compliance and operational strategies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
