Avoiding Major NSR: The Synthetic Minor Source Strategy

Because major NSR, particularly NNSR in nonattainment areas, can be extraordinarily time-consuming, costly, and operationally constraining, data center developers routinely seek to avoid triggering it.

The primary mechanism is to permit as a Synthetic Minor Source: a facility that would otherwise be a major source based on its physical potential to emit, but that accepts federally enforceable operating limits on hours of operation, fuel consumption, or both, to keep allowable emissions below major source thresholds. These limits are incorporated into a state-issued construction permit, making them legally binding and federally enforceable.

Careful engineering and permitting strategy are essential to this approach. Operating limits must be achievable given the facility’s real-world operational needs, including emergency response, maintenance testing, and operator training, while keeping emissions below applicable thresholds.

In Virginia, as discussed below, limiting generator operating hours is the standard method for maintaining synthetic minor status for data center backup generators.

State Air Quality Programs

Role of State Programs

While the CAA establishes the federal framework, implementation and enforcement are largely delegated to individual states through EPA-approved State Implementation Plans (SIPs).

Each state must maintain an air quality program that includes enforceable air pollution control regulations specifying emission limits, control requirements, and operational standards; air permitting programs that implement NSR at the state level and include key thresholds and exemptions that vary by state; and air compliance and enforcement programs covering inspection, monitoring, recordkeeping, reporting, and permit condition enforcement.

Federal construction permitting (NSR/PSD/NNSR) is typically administered at the state level by state environmental agencies, though EPA retains review authority, particularly for Title V facilities, and can object to permits that do not comply with federal requirements. This delegation means that state agencies are the primary point of contact for permit applications, and state-specific rules, guidance, and practice will govern the permitting process. For Title V facilities, EPA input should be anticipated and factored into project timelines.

State Construction vs. Operating Permits

It is important to distinguish between construction permits and operating permits, two distinct but related authorizations.

• Construction permits are required before construction or modification of emission sources and in NSR terms may be major (PSD or NNSR) or minor (state minor or synthetic minor). Some states require only registration of equipment; others require a full permit with technical review. States may also impose more stringent short-term requirements such as BACT analyses even for minor sources.
• Operating permits govern ongoing facility operations. At the federal level, Title V operating permits are required for major sources and consolidate all applicable emission requirements into a single document. At the state level, minor and synthetic minor sources may also be required to obtain state operating permits depending on the state’s program design. Even when a data center qualifies as a minor or synthetic minor source for construction permitting purposes, it may still be subject to federal operating permit requirements, a distinction that should be confirmed with the relevant state agency early in the project.

Emissions Sources at Data Centers

Primary Emission Sources

Air permitting for data centers is driven primarily by the trend towards onsite self-generation in addition to backup power generation systems installed to maintain uptime during grid outages.

• Diesel and natural gas backup generators, which are reciprocating engines regulated under NSPS Subpart IIII (for diesel) or NSPS Subpart JJJJ (for natural gas), as well as NESHAP Subpart ZZZZ, are the dominant source of regulated air emissions, producing NOx, CO, VOC, particulate matter, and hazardous air pollutants.
• Natural gas combustion turbines, used at some large facilities for prime or backup power, are subject to NSPS Subpart KKKK or KKKKa.

Beyond primary generation equipment, other emission sources must be inventoried in air permit applications. Some examples include:

• Fuel cells are an emerging technology for backup or primary power whose emission profiles vary by technology type. Emissions controls such as oxidation catalysts or selective catalytic reduction (SCR) systems may be required by permit or regulation.
• Evaporative cooling equipment (cooling towers) can be a source of particulate matter from mineral deposits in water drift and, under certain conditions, may raise concerns about Legionella.
• Diesel storage tanks are a source of VOC emissions through tank breathing, standing, and filling losses, and depending on tank size and throughput may be subject to emission standards or permit requirements of their own.

Early Permitting Considerations

Why Air Permitting Must Be Addressed Early

Air permitting is frequently underestimated as a project development constraint. In reality, a permitting strategy can directly influence fundamental project decisions – site selection, facility design, equipment choices, construction phasing, and ownership structure – making early engagement with the permitting process essential.

The location of the data center matters immediately: Site location is among the most consequential decisions in data center permitting and development. A site’s attainment status under the Clean Air Act — whether it meets National Ambient Air Quality Standards (NAAQS) for regulated pollutants — determines which permitting pathway applies and at what thresholds. For ozone nonattainment areas in particular, where both NOx and VOC emissions are implicated, the distinction between Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR) carries significant practical consequences: NNSR imposes stricter major source thresholds and additional offset requirements that can materially affect project feasibility, cost, and timeline.

Resource availability (e.g., fuel, water, and land) must be evaluated not just at the time of siting but across the project’s operational life, as constraints in any of these areas can threaten long-term viability.

The type of location can introduce additional complexity. Rural sites offer significant advantages in space, lower land costs, reduced public visibility, and typically fewer community opposition concerns; however, they require upfront infrastructure investment to establish grid connectivity and utilities or self-generation facilities. Urban sites, by contrast, benefit from existing infrastructure but present considerably greater challenges — including higher land costs, limited room for expansion, and heightened scrutiny from neighboring communities, regulators, and the public.

Facility location in or near environmental justice communities is an increasingly consequential factor in both regulatory review and community acceptance. For example, in 2026 Virginia approved a new law, HB1266, directing the Department of Environmental Quality (DEQ) to update its “Environmental Justice in the Permitting Process Guidance Memo”. It requires state agencies to consider the cumulative pollution impacts on historically marginalized communities before approving new industrial permits.

Finally, location type and resource availability factors may have implications for securing rights-of-way and surface use agreements.

Data center facility size:  the number and capacity of generators required scales directly with IT load, and more generators mean more emissions and potentially a higher permit classification, depending in large part on where the facility is located.

Facility size is often a function of location characteristics. For example, urban sites present a strategic constraint beyond initial development: expansion is often limited by surrounding density, zoning boundaries, and land availability, meaning the footprint of the facility may ultimately be dictated by the location itself rather than operational need. Rural sites, by contrast, better preserve optionality – typically offering room to scale as demand grows.

Supply chain concerns and timing. Even once a site is selected and sized appropriately, infrastructure and equipment availability introduce a separate layer of risk. Supply chain constraints can significantly delay procurement of critical hardware, raising a practical question: by the time equipment is delivered and the facility is operational, will that location still align with the market conditions, power availability, and customer demand that made it attractive in the first place? Site selection and equipment lead times must therefore be evaluated in tandem, not in isolation.

Ownership structure and source aggregation deserve careful analysis at the outset. Whether multiple data center buildings, power generation facilities, or other emission sources will be treated as a single aggregated source depends on ownership, proximity, and operational relationships. Common ownership – even across nominally separate LLCs – can result in combined emissions that trigger major source status. In Virginia, VADEQ Guidance Document APG-204 addresses aggregation in detail and should be reviewed early. Finally, construction phasing can affect how project emissions are calculated and whether NSR applies to individual phases or the combined project.

Additional Permitting Considerations

How generators will be categorized, emergency versus non-emergency, significantly affects permissible operating hours and applicable regulatory standards. Emergency generators are subject to more favorable operating conditions but are limited in the total runtime, hence, they may not be dispatched for demand response or used to sell power to the grid in ways that would compromise their emergency designation. Data center customers often impose contractual uptime and reliability requirements that can drive generator operating hours into conflict with permit-imposed limits, a tension that must be resolved in the permitting strategy.

The need for add-on emission controls – oxidation catalysts, diesel particulate filters, selective catalytic reduction – must be evaluated both technically and financially. Controls may be required to achieve synthetic minor status or to comply with applicable standards, and their capital cost can be substantial.

The trend toward larger onsite power generation in response to utility grid limitations adds further complexity: gas turbines or fuel cells introduced as primary generation sources can bring additional emission inventories, potentially different ownership structures, and more intricate permitting scenarios.

Air dispersion modeling is required for PSD and major source construction permits and is increasingly expected for state major permits; it evaluates ground-level concentration impacts on nearby receptors and must demonstrate compliance with NAAQS and applicable increment standards.

The Three Strategic Pillars of Air Permitting

Air permitting strategy for data centers ultimately revolves around three interrelated considerations that must be balanced against one another:

1. Regulatory burden: the difference between major source and synthetic minor permitting is enormous in terms of cost, time, operational restrictions, and ongoing compliance obligations, making qualification as a synthetic minor source the primary goal in most cases.
2. Operational flexibility: permit conditions – particularly limits on operating hours or fuel consumption – directly constrain how and when generators can run, and insufficient flexibility can create real operational risk during extended outages or maintenance and testing cycles.
3. Capital cost: emissions controls required to meet permit conditions or applicable standards represent a significant capital expenditure, and the cost-benefit tradeoff between control technologies and permitting strategies must be evaluated carefully.

Evolving Challenges

The air permitting landscape for data centers is evolving rapidly, driven by several converging forces.

New and evolving EPA and state rules continue to tighten emission standards and expand regulatory coverage.

Public opposition to data centers on grounds of noise, visual impact, water use, electricity rates, and air quality is growing in many markets, including Virginia, and community perception can affect permitting timelines and project feasibility.

Utility grid constraints are driving some data centers to pursue significantly larger onsite generation capacity, fundamentally changing the emissions profile and permitting complexity.

As development expands beyond established markets, developers and their consultants may encounter state and local agencies with limited experience processing data center air permit applications, introducing additional uncertainty into the process.

Virginia Air Permitting

Virginia’s Nonattainment Geography

Virginia’s air quality attainment status varies significantly by region and has direct implications for which permitting pathway applies and what major source thresholds govern.

Northern Virginia – Alexandria City, Arlington County, Fairfax City, Fairfax County, Falls Church City, Loudoun County, Manassas Park City, Manassas City, and Prince William County – is classified as a moderate nonattainment area for the 2015 8-hour ozone NAAQS. In this area, the major source thresholds for NNSR purposes are 100 tons per year (tpy) for both NOx and VOC.

Portions of Northern Virginia also fall within EPA’s designated Ozone Transport Region (OTR), which overlaps with the nonattainment area and imposes more stringent ozone precursor controls, including a reduced major source threshold of 50 tpy for VOC.

The remainder of Virginia is in attainment for ozone, where the higher PSD major source thresholds apply, typically 250 tpy for most source categories, or 100 tpy for sources in a listed category.

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