EPA conducts hearing on Clean Air Act 'new source review'

By the OGJ Online Staff

HOUSTON, July 10 -- By raising the bar on enforcement of air pollution rules the government is increasing the potential for less reliable and dirtier plants, electric industry officials testified Tuesday, but environmentalists said the policy curtailed emissions.

They testified in Cincinnati, Ohio, at the first of four planned hearings the US Environmental Protection Agency is holding on how the "new source review"(NSR) provision of the Clean Air Act (CAA) should be interpreted. The Bush administration ordered the review as part of the energy plan developed by Vice-Pres. Dick Cheney.

The final report, due to President Bush on Aug.17, is expected to include recommendations on how to improve the NSR process.

NSR requires firms to install the best available pollution control equipment when they build a new facility or when they make a major modification that increases emissions from an existing facility. Under the Clinton administration, the EPA used the rule to launch a crackdown alleging modifications were made at power plants, refineries, and other industrial facilities in violation of the law.

In numerous lawsuits, EPA and the Department of Justice alleged a number of power plants, refineries, and pulp and paper mills made upgrades enlarging and extending the life of facilities in violation of NSR provisions.

The lawsuits sought to force the companies to install billions of dollars worth of pollution-control equipment. The companies claimed the modifications were routine maintenance that previously had passed muster with EPA without problems. They complained they were victims of an illegal retroactive rulemaking by the agency and the stricter EPA interpretation was a change from its previous policy.

Legislation needed
In testimony at the Tuesday hearing, Paul King, executive vice-president, Cinergy Corp. testified EPA's current interpretation of rules on power plants is "counterintuitive to meeting the nation's environmental goals, while maintaining a reliable electric supply."

Instead, he said, the result will be the potential for increasingly less efficient and reliable power plants and increased environmental degradation, not enhancement. King said EPA's current interpretation of NSR is causing "havoc" at electric generating stations across the country.

Piecemeal interpretation of NSR, combined with the current uneven regulatory implementation of other air quality reduction programs that utilities face, should be simplified and integrated into one complete program, King said.

"If the notion of needing additional emission reductions is behind EPA's current NSR interpretation, then only legislative change will meet that goal," he said. "Legislation can simplify NSR and integrate other air quality programs, giving the industry one set of nationwide reduction goals, adequate time to meet them and the tools to make them work, such as emissions trading."

King said EPA's current interpretation creates roadblocks for projects that would make steam turbines more efficient by producing more electricity with the same amount of steam. That means that Cinergy could not undertake a project that produces "dramatically more power per pound of coal with no increased emissions. A program intended to prevent the significant deterioration of air quality would actually contribute to air quality degradation."

Environmentalists said the Bush administration review will lead to weaker enforcement putting public health at risk. The Sierra Club's Glenn Brand said NSR is not adequately enforced.

While this provision is important for the regulation of all refineries and power plants, the Sierra Club said it is an especially vital enforcement tool for old, "grandfathered" plants built in the 1940s, 50s, and 60s, and emit 4-10 times more pollution than modern plants.

Over the past 2 years enforcement of the NSR provision has caused 30% of the refining industry to agree to spend hundreds of millions of dollars to reduce illegal air pollutants from several dozen refineries, the organization said. On average, the Sierra Club said the companies that have agreed to install advanced air pollution controls under settlements with the EPA will reduce their emissions of harmful sulfur dioxide and nitrogen oxide at refineries by 70%.

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