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Client Alert

Increase in HSR Reportability Thresholds and Filing Fees and Other HSR Developments

January 26, 2026

by Michael A. Lindsay, Jaime Stilson, Anthony P. Badaracco, Alyssa Schaefer, Scott Mah, and Kristina Maude

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In January 2026, the Federal Trade Commission (FTC) announced updates to jurisdictional and fee thresholds for premerger notification filings. The new thresholds and fee schedule, published at 91 FR 2133, will become effective on February 17, 2026.

This article summarizes the new threshold requirements and reports on relevant developments over the last year related to the Hart-Scott-Rodino (HSR) Act.

Background

The HSR Act requires parties to notify the FTC and U.S. Department of Justice (DOJ) before closing on an acquisition of voting securities, assets, or non-corporate interests where the transaction value exceeds certain dollar-based size thresholds. If the transaction is reportable, the parties must observe a mandatory waiting period (30 days for most transactions) before closing their transaction. The waiting period allows the agencies to review the proposed transaction and determine whether the transaction raises antitrust issues that require further investigation. Either agency can investigate, although only one agency will do so. If the investigation is not completed during the initial waiting period, then the waiting period may be extended. Ultimately, the investigating agency must decide whether to challenge the transaction (or, potentially, reach a compromise that addresses the agency’s antitrust concerns but permits the parties to proceed with their transaction).

Basic Size Tests

The HSR Act’s dollar-based thresholds (including the size thresholds that trigger the reporting obligation) are adjusted each year to reflect annual percentage changes in gross national product (GNP). The most significant effect of the annual indexing is on the “size of transaction”1 and “size of persons”2 tests. Here are the new thresholds:

  • Transactions resulting in holdings valued at or below $133.9 million in voting securities and/or assets of the seller are not reportable (subject to the rules on aggregation).
  • Transactions resulting in holdings valued at more than $535.5 million are reportable (unless exempted) regardless of the size of persons.
  • Transactions resulting in holdings valued at more than $133.9 million but less than $535.5 million are reportable (unless exempted) if the “size of persons” test is satisfied.
  • The “size of persons” test is satisfied if:
    • A person with $267.8 million in total assets or annual net sales acquires (or acquires from) a manufacturing person with $26.8 million in total assets or annual net sales; or
    • A person with $267.8 million in total assets or annual net sales acquires (or acquires from) a non-manufacturing person with $26.8 million in total assets; or
    • A person with $26.8 million in total assets or annual net sales acquires (or acquires from) a person with $267.8 million in total assets or annual net sales.

Notification Thresholds

In addition to these basic tests, the HSR Act provides five separate “notification thresholds” that are also adjusted each year to reflect annual percentage increases or decreases in GNP. If an acquisition would cause an acquiring person to cross a new threshold, the parties must file HSR notifications before closing their transaction. After indexing, the notification thresholds will be:

  • An aggregate total amount of voting securities of the acquired person valued at greater than $133.9 million but less than $267.8 million;
  • An aggregate total amount of voting securities of the acquired person valued at $267.8 million or greater but less than $1.339 billion;
  • An aggregate total amount of voting securities of the acquired person valued at $1.339 billion or greater; 
  • Twenty-five percent of the outstanding voting securities of an issuer (if valued at greater than $2.678 billion); or 
  • Fifty percent of the outstanding voting securities of an issuer (if valued at greater than $133.9 million).

Exemptions

The increases also affect some of the exemptions from reporting requirements. For example, the “foreign assets” exemption (16 C.F.R. § 802.50) exempts the acquisition of assets located outside the United States “unless the foreign assets the acquiring person would hold as a result of the acquisition generated sales in or into the U.S. exceeding $50 million (as adjusted) during the acquired person's most recent fiscal year” (emphasis added). With the most recent adjustment, this exemption applies unless the assets generated sales in or into the U.S. of more than $133.9 million.

Filing Fees

This year, the HSR filing fees are increasing as required by the Merger Filing Fee Modernization Act of 2022. There is now an annual adjustment to track inflation based on changes to the Consumer Price Index as determined by the Department of Labor. The new fee schedule will be as follows:

Transaction Value

Old Fee

New Fee

More than $133.9 million but less than $189.6 million

$30,000

$35,000

$189.6 million or more but less than $586.9 million 

$105,000

$110,000

$586.9 million or more but less than $1.174 billion

$265,000

$275,000

$1.174 billion or more but less than $2.347 billion

$425,000

$440,000

$2.347 billion or more but less than $5.869 billion

$850,000

$875,000

$5.869 billion or more

$2.39 million

$2.460 million

 

New HSR filing process

On February 10, 2025, a new HSR filing form and rules went into effect. The new form and rules require the submission of new narrative statements, additional deal-related documents, and certain ordinary-course documents with information about relevant products and markets. The new form also expands the requirements for disclosure of revenue detail and adds a requirement for disclosure of certain foreign subsidies and pending or active defense or intelligence contracts. On the positive side, the new rules also restored the “early termination” process, which can result in shortening of the 30-day waiting period. 

Interlocking Directorates – Increased Thresholds and Other Issues

On January 14, 2026, the FTC announced updated thresholds for the Clayton Act Section 8’s prohibition on interlocking directorates. The Clayton Act prohibits one person from serving as an officer or director of two competing companies when each company has capital, surplus, and undivided profits of more than $54,402,000 for Section 8(a)(1) and competitive sales of more than $5,440,200 for Section 8(a)(2)(A). The updated thresholds became effective as of January 16, 2026.

The DOJ continued to challenge interlocking directors in 2025. On September 15, 2025, the DOJ announced that three directors had resigned from Sevita Health’s Board of Directors due to concerns the DOJ raised about their overlapping membership on Beacon Specialized Living Services, Inc.’s Board of Directors.3

HSR Related Developments

Civil Penalties for HSR Violations

Parties who close a reportable transaction without filing complete notifications (including providing all documents required to be included under business-related documents and of the notification form) and observing the waiting period are subject to civil penalties. As of this writing, the maximum daily penalty is $53,088. We expect that the FTC will soon announce the annual inflation adjustment, increasing this penalty to about $54,540.

Last year, Dorsey’s annual HSR update reported the DOJ’s January 14, 2025 complaint against KKR & Co. Inc. and certain related advisors and funds, alleging repeated and systematic violations of the HSR Act on at least 16 separate transactions between 2021 and 2022.4 The complaint alleged that KKR failed to submit an HSR notification at all for two transactions in which notification was required, failed to include required business documents related to competition in several transactions that were notified, failed to correct a deficient filing to include documents that its outside counsel had in their possession, and knowingly altered or omitted documents to evade merger scrutiny, even after KKR became aware of the DOJ investigation into its HSR Act compliance. The complaint alleged 16 counts of violating the HSR Act (one for each transaction). The maximum civil penalty for the alleged violations exceeds $650 million.

On April 17, 2025, KKR moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, arguing that the DOJ exceeded its statutory authority, that the government’s interpretive guidance on the HSR Act is unconstitutionally vague and applied arbitrarily, and that the DOJ did not allege that KKR failed to “substantially comply” with the HSR Act, which is what is required under the Act. KKR’s motion to dismiss has been fully briefed by both parties and is pending before the district court. 

State Merger Notification Statutes

In July 2024, the Uniform Law Commission approved the “Uniform Antitrust Pre-Merger Notification Act.” Two states (Washington and Colorado) adopted versions of this uniform law in 2025. The same proposed legislation had been introduced last year in six other jurisdictions (California, Hawaii, Utah, Nevada, West Virginia and DC) but not adopted. In 2026, the proposed legislation has been introduced in California, Hawaii, Indiana, West Virginia, and DC.5

Neither the Uniform Act nor the versions adopted in Washington and Colorado require creation of new notification forms. Rather, the Uniform Act requires the parties to HSR-reportable transactions to provide a copy of the HSR notification (including exhibits) to the State Attorney General if the filing person has its principal place of business in the State. If the filing person does not have its principal place of business in the State but does have annual net sales of about $25 million (adjusted annually) in the State, then the filing person must file the notification form (without exhibits, but the filing person must provide the exhibits on request). (Colorado requires filing of exhibits in all cases.)

The Uniform Act provides that there shall be no state-level filing fee or waiting period. Materials produced under the Uniform Act are exempt from state-level FOIA laws (but this may require modification of the State’s laws). The State AG may share materials with other States that have adopted the same or similar laws with at least the same level of confidentiality protection. The Uniform Act also provides for civil penalties for noncompliance.

A number of states have adopted premerger notification statutes specific to the healthcare industry. These states include California, Colorado, Connecticut, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington.

Other Antitrust Developments

New California Antitrust Provisions

California did not adopt the Uniform Antitrust Pre-Merger Notification Act in 2025, but it did make some significant changes to its antitrust law.6 First, a new statute on pricing algorithms prohibits:

  • Use or distribution of “a common pricing algorithm as part of a contract … or conspiracy to restrain trade or commerce”
  • Use or distribution of “a common pricing algorithm if the person coerces another person to set or adopt a recommended price or commercial term recommended by the common pricing algorithm for the same or similar products or services in the jurisdiction of this state”

The new statute also limits Twombly principles in state-court antitrust cases. The statute provides that “it is sufficient” for a complaint “to contain factual allegations demonstrating that the existence of a contract … or conspiracy to restrain trade … is plausible, and the complaint shall not be required to allege facts tending to exclude the possibility of independent action.”

California also increased the penalties for violations of its state antitrust laws.

Information Sharing Guidelines

In 2023, the DOJ and FTC withdrew 30-year-old antitrust guidelines on information-sharing. In October 2025, FTC Commissioner Melissa Holyoak said that fresh guidance from U.S. federal antitrust enforcers was needed to assist companies in effectively avoiding antitrust liability. Holyoak noted, “I am very supportive of trying to replace the guidance that was lost . . . and to be able to signal to the market our thinking on some of these issues so that we protect consumers.”7 Commissioner Holyoak left the FTC in November 2025, and there is no public timeline for when—if ever—the previous guidance will be replaced.

 The test includes the value of all the voting securities (and certain assets) of the acquired person that the acquiring person will hold after the transaction is completed, including voting securities of the acquired person that the acquiring person owned before the transaction.
 “Person” means the ultimate parent of the legal party to a transaction (including all entities controlled by the ultimate parent).
 Three Directors Resign from Sevita Board of Directors in Response to the FTC’s Ongoing Enforcement Efforts Against Interlocking Directorates | Federal Trade Commission (September 15, 2025).
 Office of Public Affairs | Justice Department Sues KKR for Serial Violations of Federal Premerger Review Law | United States Department of Justice (January 14, 2025). 
 Resources on the Uniform Act are available at Antitrust Pre-Merger Notification Act - Uniform Law Commission.
 AB-325 Cartwright Act: violations; SB-763 Conspiracy against trade: punishment.
 Chris May, US FTC’s Holyoak ‘very supportive’ of issuing new information-sharing guidelines, MLEX (Oct. 23, 2025).

Firm Highlights

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On September 29, 2026, the Supreme Court granted certiorari in one case: Department of Homeland Security v. D.V.D., No. 26-426: This case concerns the Trump Administration’s “third-country removal” procedures, where immigrants are deported to countries not listed in the removal orders. In granting certiorari, the Court granted the Government’s application to stay a lower court decision halting the practice, which will allow third-country removals to continue pending resolution of the case. The issues presented are: (1) Whether the district court had jurisdiction over respondents’ claims; (2) whether the district court had authority to enter class-wide declaratory relief and APA vacatur under 8 U.S.C. § 1252(f)(1); (3) whether the Government’s guidance on third-country removals is unlawful under 8 U.S.C. § 1231(b), the due process clause, or FARRA/CAT and its implementing regulations; and (4) such other questions that the Government determines are appropriate for the proper disposition of the case. On October 1, 2026, the Court granted certiorari in three additional cases: Rhoney v. Barbosa da Cunha, No. 26-104: Immigration officials detained Ricardo Aparecido Barbosa da Cunha—a Brazilian citizen who had lived in the United States for approximately twenty years after entering without inspection—and denied him a bond hearing under 8 U.S.C. § 1225(b)(2)(A). The Second Circuit held that his detention was instead governed by § 1226(a), which permits release on bond, because § 1225(b)(2)(A)’s mandatory-detention requirement applies only to noncitizens apprehended while entering the country or shortly thereafter. The question presented is: Whether 8 U.S.C. § 1225(b)(2)(A) mandates the detention pending removal proceedings of aliens who, like Barbosa da Cunha, are present in the United States without having been admitted. Missionaries of St. John the Baptist, Inc. v. Frederic, No. 25-113: A Catholic religious organization sought to build a shrine to the Virgin Mary on land the organization owned adjacent to its church in Park Hills, Kentucky. Local zoning restrictions prohibited the proposed construction. The question presented is: Whether a land-use regulation that prohibits a religious institution from building a religious structure on its own property constitutes a “substantial burden” on religious exercise under the Substantial Burden Provision of the Religious Land Use and Institutionalized Persons Act, 42 U.S.C. § 2000cc(a). Marschner v. Marschner, No. 25-1349: Under the Uniformed Services Former Spouses’ Protection Act (“USFSPA”), a veteran’s longevity-based retirement pay can be divided in a divorce, but retirement pay based on disability and retirement pay that was waived to receive disability pay are indivisible. The question presented is: Does the USFSPA require state courts to refuse enforcement of indemnification provisions in a divorce settlement agreement?

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The Supreme Court Update - October 14, 2026

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SEC Proposes Expansion of Investment Adviser Performance-Based Compensation Rule

On September 30, 2026, the Securities and Exchange Commission (the “SEC”) proposed amendments to Rule 205-3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), which provides an exemption from the general prohibition under Section 205(a)(1) of the Advisers Act on registered investment advisers receiving performance-based compensation (the “Proposal”) so long as performance-based compensation is limited to “qualified clients”.1 Most notably for private fund sponsors, the Proposal would expand the definition of “qualified client” to include any investors that satisfy the “accredited investor” definition under Regulation D. The Proposal may also have implications for private fund managers that rely on exemptions from investment adviser registration under state law because certain state-level investment adviser registration exemptions incorporate or otherwise reference the federal qualified client definition. Expansion of the Qualified Client Definition Under the current Rule 205-3, an investor generally may qualify as a qualified client if, among other alternatives, the investor has at least $1.4 million under management with the adviser or has a net worth exceeding $2.7 million. These thresholds are higher than the financial thresholds applicable to many accredited investors under Regulation D. As a result, an investor may currently qualify as an accredited investor for purposes of investing in a private offering without qualifying as a qualified client for purposes of paying performance-based compensation. The Proposal would expand the qualified client definition to include any natural person or legal entity investor that satisfies the accredited investor definition under Regulation D. The Proposal would also remove the assets under management and net worth thresholds under the current Rule 205-3 qualified client test. 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Energy Law: Month in Review - September 2026

Welcome to Dorsey’s Energy Law: Month in Review. We provide this update to our clients to identify significant developments in the previous month. Please reach out to any of the authors, listed above, to discuss these issues. Regulatory Developments Massachusetts Ratchets Up State and Local Regulation of AI Data Centers In early September, Governor Maura Healey of Massachusetts signed an executive order requiring that artificial intelligence data centers secure the approval of local communities as a precondition to proceeding with a given project. According to the terms of the order, data center developers will need to secure a “community benefits agreement” as a precondition to receiving permits from numerous state agencies, including the Department of Environmental Protection, the Energy Facilities Siting Board, and the Massachusetts Environmental Policy Act Office. Beyond requiring community benefits agreements, the order also mandates that developers mitigate utility costs to consumers, prohibits the use of nondisclosure agreements, and requires various state agencies to develop measures to limit data center impacts on the environment. North Carolina Regulators Decline Approval of Duke Energy Gas Turbine On September 18, 2026, North Carolina Utilities Commission (NCUC) denied Duke Energy’s application for a certificate of public convenience and necessity required to construct a gas-fueled combustion turbine at its Smith Energy Complex in North Carolina. The NCUC objected strongly to the $584 million price tag and noted that Duke appeared to be constructing the facility “based on anticipated data center customer additions.” The NCUC rejected that anticipated growth as “insufficiently reliable for the Commission to act at this point.” In rejecting Duke’s application, the NCUC also noted that Duke had signed the White House Ratepayer Protection Pledge, in which it represented that it would not shift data center costs to consumers. The NCUC observed that the record did not demonstrate how Duke “intends to adhere to its commitments under the Ratepayer Protection Pledge with regard to the Proposed Facility.” Notably, commission staff had actually supported the construction of the turbine, citing concerns about Duke’s reserve margins. The NCUC noted that it “understands the Public Staff’s expressed concerns,” but those concerns were outweighed by the NCUC’s reservations, including questions of demand. Department of Energy Approves Funds for Grid Improvement The U.S. Department of Energy (DOE) recently announced that it would fund 31 grid-improvement projects in 26 states. The funding initiative is part of the DOE’s “SPARK” initiative. The funding will include $1.9 billion in federal funding from DOE and $3.35 billion in recipient cost-sharing funding. The funds will go to projects designed to improve grid reliability and lower electricity costs. Recipients plan to reconductor over 1,500 miles of transmission lines and will deploy grid-enhancing technologies across approximately 21,000 miles. DOE stated that this initiative will make available over 23 additional gigawatts of electricity. Texas Moderates Rules Governing Data Center Interconnection The Texas Public Utility Commission adopted new regulations governing large-load interconnections. The rules impose a flat study fee of $100,000 for all proposed interconnections, which departs from the initial proposal to impose study fees using a tiered system based on project size. Additionally, the final rule eliminates the PUC’s previous proposal to impose a non-refundable interconnection fee of $50,000 per MW of contracted peak demand. The final rule also moderates the initially proposed regulations governing Electric Reliability Council of Texas (ERCOT) notifications for large-load customers’ non-utilized capacity. The proposed rules would have required notifying ERCOT within 30 days of missing a scheduled energization milestone by six months. The final rules, however, do not require informing ERCOT unless a scheduled energization milestone is missed by 24 months. FERC Denies TransAlta 202(c) Cost-Recovery Plan The Federal Energy Regulatory Commission (FERC) recently rejected TransAlta’s plan to recover $19.9 million in expenses stemming from a DOE order in which DOE prohibited TransAlta from retiring its coal-powered Centralia power plant. TransAlta had previously intended to retire the facility at the end of 2025. TransAlta’s cost recovery plan proposed spending an additional $23 million on repairs to continue operating the unit. FERC’s main objection had to do with geographic scope. TransAlta’s recovery plan called for recovering costs from California Independent System Operator (CAISO) and the Southwest Power Pool (SPP), but the DOE’s order requiring operation of the plant was designed to ensure reliability in the Northwest assessment area (Montana, Oregon, Washington, and parts of northern California and northern Idaho). Accordingly, FERC was unwilling to allow cost recovery from CAISO and SPP when the order that precipitated the additional costs only related to the Northwest assessment area. FERC informed TransAlta that it would only approve cost recovery from load-serving entities in the Northwest assessment area. FERC’s decision comes amid a rush of DOE emergency orders requiring the continued operation of coal-fired generating units. Litigation Appeals Court Upholds Washington Hydropower Plant With Caveats In a September 21, 2026, opinion, the Washington Court of Appeals largely upheld a Clean Water Act water quality certification by the Washington Department of Ecology for the Goldendale Energy Storage Project, a proposed pumped-water storage hydropower system adjacent to, but off-stream from, the Columbia River. A nonprofit (Columbia Riverkeeper) and the Confederated Tribes and Bands of the Yakama Nation appealed the certification, contending that it failed to impose necessary conditions and monitoring requirements to protect the water quality of the Columbia River. Most saliently, the plaintiffs argued that the project had the potential to leak 100 acre-feet of water per year into tributaries of the Columbia River. The Court of Appeals broadly rejected plaintiffs’ challenge to the state’s conclusion that “the project was designed not to leak.” That said, the Court of Appeals did reverse on one narrow issue. Specifically, the court determined that the state’s conclusion that “leakage from the project’s tunnels would be monitored and reported” was not supported by the evidence because the certification “does not explicitly require monitoring and reporting to determine whether there is any leakage.” Accordingly, the court remanded the matter to the state to impose monitoring and reporting requirements but otherwise affirmed the certification. Legislative Developments California Legislates Restrictions on Data Center Energy Use and Grid Costs On September 21, 2026, California Governor Gavin Newsom signed seven bills broadly regulating data centers in the state. SB 1168 directed the California Public Utilities Commission to assess the energy used by data centers. It also requires the PUC to pass costs of transmission and distribution upgrades and load increases on to data centers, rather than customers. 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EPA Limits Title V Re-Litigation of NSR Permits

Overview On September 25, 2026, the U.S. Environmental Protection Agency (“EPA”) published a final rule that significantly limits the ability of third parties to use the Clean Air Act (“CAA”) Title V permitting process to revisit New Source Review (“NSR”) permitting decisions years after those decisions were made. The rule establishes that NSR permitting determinations generally must be challenged during the original permitting proceeding, thereby providing regulated sources with greater permitting certainty and finality for major capital projects. Published in the Federal Register titled Clarifying the Scope of “Applicable Requirements” Under State Operating Permit Programs and the Federal Operating Permit Program (Docket ID No. EPA-HQ-OAR-2023-0401), the rule amends 40 C.F.R. Parts 70 and 71 to codify EPA’s interpretation regarding when requirements established under other CAA programs may be reviewed, modified, or implemented through the Title V operating permit program. The rule becomes effective 30 days after publication. The rule addresses two principal issues: (1) the relationship between NSR preconstruction permitting and Title V operating permits, and (2) the treatment of the General Duty Clause under CAA section 112(r)(1). Most significantly, the rule provides greater certainty for sources navigating the NSR permitting process. EPA’s amendments are intended to ensure that NSR permitting decisions made through an approved public process are generally not revisited later through Title V permit proceedings. The rule responds to a circuit split between the U.S. Courts of Appeals for the Fifth and Tenth Circuits. In Environmental Integrity Project v. EPA, 969 F.3d 529 (5th Cir. 2020), the Fifth Circuit upheld EPA’s interpretation, concluding that it was consistent with the text, structure, and purpose of Title V. In contrast, the Tenth Circuit reached the opposite conclusion in Sierra Club v. EPA, 964 F.3d 882 (10th Cir. 2020), finding that the then-existing regulatory definition of “applicable requirement” did not support EPA’s position. By amending the regulatory language on which the Tenth Circuit relied and codifying the interpretation approved by the Fifth Circuit, EPA has established a nationwide framework governing the interaction between NSR and Title V. NSR and Title V: EPA Establishes a Uniform Nationwide Framework At the core of the rule is EPA’s effort to define the respective roles of NSR and Title V. The rule codifies the approach EPA has applied since 2017: once a source obtains an NSR permit under an EPA-approved permitting program, and that permit was issued following public notice with an opportunity for comment and judicial review, the permit establishes the NSR-related “applicable requirements” of the State Implementation Plan (“SIP”) or Federal Implementation Plan (“FIP”) for Title V purposes. Under this framework, Title V is not a vehicle for re-examining underlying NSR permitting decisions. EPA does not intend to use the Title V process to revisit applicability determinations, emissions calculations, control technology determinations, permit conditions, or other issues resolved through the NSR permitting process. This principle applies regardless of the stage of the Title V proceeding; whether the NSR permit was issued pursuant to a SIP or FIP; the type of NSR issue involved; or whether the NSR permit is incorporated into Title V sequentially or concurrently. Limited Exceptions EPA recognizes several circumstances in which NSR issues may still be reviewed through the Title V program: No NSR permit was issued at all; The permit was issued without public notice and an opportunity for comment and judicial review; or The issue involves substantive overlap between Title V and NSR requirements, such as the adequacy of monitoring provisions. As a result, the rule does not insulate unpermitted projects or foreclose review of matters that independently arise under Title V. Key Regulatory Amendments The rule revises the definition of “applicable requirement” in 40 C.F.R. §§ 70.2 and 71.2. Paragraph (1): Where an NSR permit is issued with public notice and an opportunity for comment and judicial review, the permit establishes and defines the applicable SIP or FIP requirements for Title V purposes. Paragraph (2): All NSR permit terms, including terms contained in minor NSR permits, constitute applicable requirements that must be incorporated into Title V permits. Paragraph (4): CAA section 112(r)(1) (the General Duty Clause) is expressly excluded from the definition of “applicable requirement,” while section 112(r)(7) Risk Management Program requirements remain included. EPA also amended 40 C.F.R. §§ 70.8 and 70.12 to clarify that alleged defects in requirements established outside the Title V process generally do not provide a basis for EPA objection to a Title V permit or for a Title V citizen petition. General Duty Clause Exclusion The rule also codifies EPA’s longstanding position that the General Duty Clause in CAA section 112(r)(1) is not an “applicable requirement” for Title V purposes. EPA points to several considerations supporting that conclusion, including the distinction between the General Duty Clause and Title V permit terms, the provision’s origins in the Occupational Safety and Health Act’s general duty clause, and the different enforcement structures applicable to the General Duty Clause and Title V permit requirements. Importantly, excluding section 112(r)(1) from the definition of “applicable requirement” does not eliminate EPA’s authority to enforce the General Duty Clause independently of the Title V program. The final rule instead clarifies that the General Duty Clause need not—and should not—be incorporated into Title V permits as an applicable requirement. Practical Implications for Regulated Sources Greater Finality for NSR Permits  For projects requiring PSD, nonattainment NSR, or minor NSR permits, the permitting process becomes the primary forum for resolving disputes regarding applicability determinations, emissions calculations, control technology requirements, offsets, and permit conditions. Once an NSR permit is issued through a qualifying public process, regulated sources should face substantially reduced risk that those same issues will be challenged years later through Title V permit proceedings. Reduced Risk of Collateral Permit Challenges Stakeholders have sometimes sought to use Title V permit issuance, renewal, revision, or citizen-petition proceedings to challenge underlying NSR determinations. The final rule makes clear that Title V is not the appropriate vehicle for challenging whether an applicable requirement was correctly established in the first instance. This should reduce the risk of permit delays and uncertainty associated with collateral challenges to previously issued NSR permits. The rule does not, however, eliminate all Title V challenges relating to an NSR permit. Challenges concerning the Title V permit itself—including whether it appropriately incorporates applicable requirements or contains adequate compliance provisions—remain possible. Increased Importance of the Initial NSR Proceeding Because Title V generally will not provide a second opportunity to challenge the substantive validity of an NSR determination, the administrative record developed during the NSR process becomes increasingly important. Permit applicants should ensure that applicability analyses, emissions calculations, control technology evaluations, modeling demonstrations, and supporting technical documentation are thoroughly developed during the original permitting proceeding. For significant projects, applicants may therefore have an additional incentive to identify and resolve potential permitting issues before the NSR permit is issued rather than assuming that unresolved issues can be addressed during a subsequent Title V proceeding. Potential Incentive for Broader Public Participation EPA also notes that permitting authorities may choose to provide public notice and an opportunity for comment for a broader range of NSR permits because permits issued through a qualifying public process receive the benefit of the finality framework established by the rule. Some permitting authorities may conclude that greater public participation at the NSR stage is preferable to uncertainty during subsequent Title V proceedings. Conclusion The final rule is principally a permitting-certainty measure. For sources that obtain NSR permits through a public process, EPA has substantially limited the ability of third parties to revisit underlying NSR determinations through the Title V program. As a result, regulated entities should benefit from greater finality regarding key permitting decisions, reduced risk of collateral permit challenges, and increased certainty when planning and implementing capital projects.

Regulatory Affairs Partner Jeff Beelaert Joins Dorsey in Boise

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Regulatory Affairs Partner Jeff Beelaert Joins Dorsey in Boise