EPA Finalizes New Source Review Rules

Published October 1, 2003

The Environmental Protection Agency’s proposed adjustments to the New Source Review rules of the Clean Air Act have received final approval, acting EPA Administrator Marianne Horinko announced on August 27. The announcement ended a month-long reconsideration process and two-year debate within EPA about how to most effectively enforce the nation’s clean air laws.

The Clean Air Act requires power companies to install the best available pollution control technology when building or upgrading a plant. Minor upgrades falling under the category of routine maintenance are exempt from the requirement.

Under the old NSR rules, companies were often uncertain as to whether the federal government would consider contemplated investments in maintenance and repair to be significant enough to require the purchase and installation of new anti-pollution equipment. As a result, routine maintenance was frequently delayed or cancelled altogether, resulting in inefficient energy production and increased pollution. Those companies that did perform routine maintenance frequently found themselves being sued by the federal government.

Twenty Percent Threshold

The new NSR rules clarify when the government expects power plants to purchase and install new anti-pollution technology.

Power plants are not required to purchase and install the most advanced technology when they replace equipment, provided the cost of the replacement equipment does not exceed 20 percent of the cost of replacing the plant’s essential production equipment, and provided the replacement equipment is the “functional equivalent” of the worn-out equipment.

The creation of a fine-line rule was welcomed by industry officials, who would rather know in advance of routine maintenance what the law does and does not require.

“It’s extremely important and a good sign if there’s going to be a percentage allowance,” said Scott Segal, executive director of the Electric Reliability Coordinating Council (ERCC).

“This on the whole is a favorable development for electrical reliability and routine maintenance,” agreed Quin Shea, a senior official with the Edison Electric Institute. “I can assure you there are a lot of companies that held back on what we consider routine maintenance out of fear of triggering New Source Review actions.”

“I think it will provide more fairness and predictability for facilities,” Horinko stated in announcing the new rules. “We’re hoping to provide a bright line of clarity on the national level that you can’t get from the scattershot approach.”

EPA’s announcement did not, however, please everyone. Attorneys general from 13 states filed suit in federal court on August 20 seeking an injunction against implementation of the new rules, which will significantly reduce the amount of money states can win in compliance lawsuits against power plants. The suit contends EPA did not provide an adequate public comment period before formulating the new rules.

The ERCC’s Segal disagreed. EPA worked on the new rules for more than a year before reaching a final version, he pointed out, demonstrating the agency “has proceeded with an abundance of caution.”

James M. Taylor is managing editor of Environment & Climate News. His email address is [email protected].