Reform of New Source Review Raises Concerns

Published March 1, 2003

The fog has not yet cleared from the Bush administration’s decision to change the rules that govern the Clear Air Act. Both industry and environmentalists are expressing concern about the Bush plan: One side says it is ambiguous and could lead to more lawsuits, while the other claims human health and the environment will suffer.

At issue is the Clean Air Act’s New Source Review (NSR) provision. When older power facilities make “major modifications,” the law says they must also install modern technologies–something required of all newer plants. The NSR provision treats “routine maintenance” and “upgrades” differently, but the definitions are vague, leading environmentalists to accuse industry of sidestepping the law to add capacity.

The U.S. Environmental Protection Agency and the Department of Justice in 1999 cracked down, filing lawsuits against 51 companies in 13 states EPA considered to be in violation of the Clean Air Act. Tampa Electric reached an early settlement, agreeing that two of its power plants–Big Bend and Gannon–would commit to major pollution reductions. Cinergy Corp. and Virginia Power came to terms with authorities in principle but have since backtracked.

Plants that were targeted said the Clinton administration had a too-restrictive interpretation of New Source Review that ultimately discouraged any renovations, including those that would necessitate new pollution controls. The Bush administration agreed and has now formally outlined ways that make it easier for utilities to perform “routine maintenance” without triggering legal assaults.

What Bush Proposed

The thrust of the Bush plan, which takes effect almost immediately, is to reduce emissions without heavy government interference. Toward that end, it calculates total emissions on a plant-wide basis–not for specific pieces of equipment. Equipment can therefore be modified so long as the plant’s overall emissions don’t increase. Companies that voluntarily install new technologies to cut emissions will be given greater flexibility to make revisions “if they continue to operate within permitted limits.”

The administration also has proposed rules that would make improvements to the “routine maintenance, repair and replacement” exclusion contained in EPA’s New Source Review regulations. Specifically, the proposed rules would provide an as-yet-undefined facility-wide annual allowance for maintenance activities. Most projects involving the replacement of existing equipment with newer versions would constitute routine maintenance under the new rules. EPA expects these proposals to be finalized after a lengthy comment period, no later than year-end 2003.

Industry is displeased with the wording of the new policy. It’s unclear, they say, what can be modified without triggering expensive new investments in scrubbers and other cleaning technologies. The confusion, says the Edison Electric Institute, will ultimately create another wave of lawsuits.

“We’re frustrated that the agency has stopped short of advancing a specific proposal that would remove the perpetual threat of litigation hanging over the heads of power plant operators facing difficult decisions about whether to proceed with critical maintenance activities,” says Quin Shea, EEI executive director – environment. “We have long urged EPA to draw a distinction between routine activities and those that clearly are major modifications that would require power plants to install additional emission controls.”

The National Coal Council, meanwhile, supports the revised interpretation. It says the new rules will allow about 40,000 megawatts of increased electrical production to become available in the next three years from existing coal-fired generators. Such increased supply can occur, it adds, without increasing emissions per megawatt hour–all because of new clean coal technologies.

Critics React

The NSR reforms met with fervent opposition, however, not just from environmentalists and their Democratic supporters but also from nine attorneys general in the Northeast, who will fight to have the reforms reversed in a Washington federal appeals court. That will presumably keep alive all lawsuits related to New Source Review.

The Northeast has long complained about poor air quality and acid rain associated with power plants in the Midwest, South, and Mid-Atlantic states. Specifically, New York’s Elliot Spitzer labeled the NSR reform plan “a Presidential pardon against polluters,” while Sen. Joe Lieberman (D-Connecticut) called on EPA Administrator Christine Whitman to resign.

“Gov. Whitman has a good record and good intentions, but on her watch this administration has undertaken the biggest rollback in Clean Air history and scaled back countless other environmental protections,” said Lieberman. “All this rule change will do is extend the life of the dirtiest industrial plants and worsen the lives of citizens …”

Lieberman had pressed the administration to perform studies on what the potential health effects might be of reforming New Source Review, before making any final rulings. The administration countered its plan would encourage plants to install pollution controls without government interference.

While the decision to revamp parts of the New Source Review is unsurprising, the timing may speak volumes. The announcement came a few weeks after the congressional elections–a strong indication the administration did not want it to become fresh fodder for the Democrats. By extension, however, Democrats and environmentalists will certainly bring the subject to the fore during the 2004 elections.

By all accounts, the issue presents a clear distinction between the administration and key Democrats. It will no doubt become a factor in the next Presidential election, although at this point it appears it will remain clouded by matters of foreign policy and job creation.

S. Fred Singer, professor emeritus of environmental sciences at the University of Virginia and president of the Science and Environmental Policy Project, shares his thoughts on environment and climate news stories of the month. Singer’s The Week That Was columns can be found at