Dems Attack NSR Reform

Published March 1, 2003

The Bush administration’s recently announced plans to reform the New Source Review provisions of the Clean Air Act are under assault by activist environmental groups and several northeastern state attorneys general. To date, the proposed rules have withstood the attack, but the battle is far from over.

Attorneys general for nine northeastern states filed a federal lawsuit December 31 in the U.S. Court of Appeals for the District of Columbia, arguing the updated rules run afoul of the Clean Air Act itself.

“We think what they are doing is contrary to the Clean Air Act, and it is fundamentally injurious to the American public,” said Eliot Spitzer, attorney general of New York.

Spitzer was joined in the lawsuit by the state attorneys general for Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island, and Vermont.

The suit was filed on the same day the Environmental Protection Agency submitted its proposed New Source Review updates to the Federal Register. Publication in the Federal Register fulfills the government’s obligation to notify the public of proposed new rules and establishes a time period during which the public may submit comments on the proposed rules. The public comment period on the NSR reforms closes March 3.

New Source Review Provisions

The Clean Air Act of 1970 required newly constructed plants and utilities to install the best available pollution abatement technology. In its 1977 amendments to the Act, Congress developed the New Source Review (NSR) program to reduce air pollution from existing facilities. When an existing facility undergoes a major expansion or refurbishment that would result in significant emission increases, New Source Review requires the facility to update its pollution abatement technologies.

Congress intended NSR to apply only to major expansion or refurbishment projects that increase emissions. But in 1999, EPA began calculating emission increases in a way that meant common maintenance, routine repairs, and routine equipment upgrades subjected existing facilities to costly technology overhauls.

The broader interpretation of NSR took U.S. industry by surprise. Maintenance and repair decisions made according to predictable and consistently enforced EPA guidelines were suddenly and retroactively challenged as violations of NSR. Facilities aborted or postponed regular maintenance and repairs necessary for efficient operation until the uncertainty over what would trigger NSR mandates could be resolved.

EPA Admits it Overreached

In 2002, EPA recognized it had overreached in departing from the plain language and long-established interpretation of the New Source Review program. The agency released a report on June 13, 2002 calling for a return in many ways to the pre-1999 New Source Review standards.

“Our reforms will remove the obstacles to environmentally beneficial projects, clarify NSR requirements, encourage emissions reductions, promote pollution prevention, provide incentives for energy efficient improvements, and help assure worker and plant safety,” noted the EPA report. “Overall, our reforms will clarify and simplify the program so that industry will be able to make improvements to their plants that will result in greater environmental protection.”

The agency made clear it was not seeking to cripple the NSR program, but rather to clarify its provisions. “The basic elements of the NSR program remain in place. All new major sources of air pollution will need to comply with the best control technology and existing sources which make major modifications and have a significant increase in actual emissions also will have to meet these requirements. The reforms simply clarify which changes at existing sources can be made without triggering NSR.”

According to EPA Administrator Christie Whitman, flexibility is the key to encouraging power plants to invest in updating their emissions technology. The rigid post-1999 interpretation of NSR was counterproductive, she said, because it “deterred companies from implementing projects that would increase energy efficiency and decrease air pollution.”

Clean Air or Political Games?

The lawsuit filed by New York Attorney General Spitzer and his colleagues takes aim at four elements of the proposed rules: provisions addressing new technology, new emissions tests, updated methods for calculating emission levels, and a focus on plant-wide emission levels rather than each of a plant’s individual components.

“Our argument is ultimately going to be that these are illegal changes to the Clean Air Act and the EPA has gone beyond its authority in granting loopholes to smokestack industries,” said Frank O’Donnell, executive director of the Clean Air Trust, a pro-regulation environmental activist group. The Trust is among several activist groups that have indicated they will join the suit on behalf of the state attorneys general.

“There was a need to make changes in the rules to keep up with how business has changed over the past 25 years,” countered William Harnett, director of EPA’s New Source Review enforcement program. “The rules we just went final on are things consistent with the law passed by Congress … and will lead to greater environmental benefit.”

Scott Segal, director of the Electric Reliability Coordinating Council, observed that the state attorneys general appear more interested in scoring political points against President Bush than in ensuring common-sense rules regarding air pollution. He also suggested the northeastern attorneys general were motivated by resentment that utilities in the rest of the country produce energy less expensively than their northeastern counterparts, who must navigate more state-level regulatory hurdles.

“Nationwide, more governors and attorneys general do support clarification,” Segal said. “The northeast attorneys general reflect a minority opinion, unfortunately demonstrating their desire to address economic competitive concerns rather than environmental protection.”

EPA spokesman Joe Martyak agreed. “There are those who would reach the conclusion that this appears to be more of a political step than based on other reasons,” he said.

New Rules Upheld in Senate

Senate Democrats, led by Presidential candidate John Edwards of North Carolina, failed in their own attempt to delay or defeat the updated rules. On January 22 the Senate rejected by a 51-45 vote a Democratic rider to a federal budget bill that would have postponed any reform of New Source Review until after the National Academy of Sciences studied the issue.

“We’ve delayed already for 10 years,” said Senate Environment Committee chairman James Inhofe (R-Oklahoma). “We need reform now.”

As a compromise, Inhofe and other supporters of New Source Review reform voted to direct the National Academy of Sciences to study the issue and provide its report after the new rules take effect.

“We feel the Senate has chosen clean air and energy efficiency over Presidential politics,” said Electric Reliability Coordinating Council spokesman Frank Maisano.

The updated New Source Review rules will not exist in a vacuum, but come in the context of, and will be subject to, other measures aimed at reducing air pollution. The Bush administration points out, for example, that it has already proposed a Clean Skies Initiative that will require a roughly 70 percent cut in power plant emissions of what EPA calls “the three worst air pollutants.”

James M. Taylor is managing editor of Environment & Climate News.