Industry calls on Senate not to stand in the way of NSR changes

Aug. 8, 2002
Oil companies and electric utilities are urging the US Senate not to challenge an effort by the US Environmental Protection Agency to revise air pollution control guidelines.

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, Aug. 8 -- Oil companies and electric utilities are urging the US Senate not to challenge an effort by the US Environmental Protection Agency to revise air pollution control guidelines for power plants and refineries.

EPA in June proposed revisions to the 1977 New Source Review provision of the Clean Air Act. Among the items EPA wants public comment on is a plan to draw a brighter line between routine maintenance and extensive remodeling. Repairs usually do not trigger a permit review, but extensive remodeling does. Regulators typically assume that that a bigger plant means more emissions, which requires additional pollution controls (OGJ Online, July 18, 2002).

Refiners and power generators say they are worried the Senate may seek to stall the NSR reform process despite wide agreement that the current program is seriously flawed.

"A delay at this point in the process would be counterproductive because it would continue to discourage facilities from making modifications and undertaking projects that would reduce emissions and improve energy efficiency," a broad industry coalition wrote senators Aug. 6. "Moreover, these capital-intensive projects would be further delayed at a time when every investment decision is critical to the nation's economic recovery."

Senatorial letter
Before Congress went on a month-long recess, more than 40 US senators, including 3 Republicans and Independent Jim Jeffords (Vt.), in an Aug. 1 letter, called on EPA to take a harder look at air quality issues surrounding NSR reform.

"While EPA should be free to pursue thoughtful changes to New Source Review that reduce regulatory burdens while strengthening public health protection, we see no reason to believe that the proposed changes adequately protect air quality," the letter said. "In fact, because the specific changes proposed have not been subject to careful study and full public comment, we have serious concerns that the changes could allow more air pollution—causing more asthma, more heart and lung problems, and more premature deaths.

"We therefore ask that, before finalizing any of these changes, EPA conduct a rigorous analysis of the air pollution and public health impacts of the proposed rule changes and give the public full opportunity to comment on these changes. "

Industry fights back
An industry coalition, which includes 28 producers and manufacturers, quickly responded, saying that changes to the NSR program would not harm the environment.

"We disagree with the letter's characterization of the environmental impact of the NSR reform package. We believe that the proposed changes to the NSR program, in fact, will result in cleaner air and in increased energy efficiency," the coalition said.

The industry letter noted that EPA has recommended changes to the NSR program in two parts. The first is a proposed rule expected to clarify definitions for "routine repair and replacement," among other things. EPA still must go through a formal public comment period that "by its very nature, will allow for substantial analysis and a full debate of the issues before the rule takes effect," the letter said.

A second set of changes to NSR will be issued in a final rule that the agency has been considering, with public comments since 1996. That rule proposes to change the way the agency measures actual emissions and includes incentives that industry says will encourage manufacturers to undertake pollution control and prevention projects.

"The expected changes on emissions measurement will actually encourage reductions in pollution from manufacturing and other industrial facilities. The rule modifies cumbersome regulations, thereby allowing facilities to install more energy- (and) cost-efficient and less-polluting technology. Without this rule change, facilities will continue to operate within their permitted levels, but in a less efficient manner. Under no circumstance do the proposed changes allow emissions from a facility to exceed the levels set forth in their clean air permits," the letter said.

Next steps
Industry's biggest fear is that the Senate will try to delay or change EPA's NSR reforms when senators return in September. Right now there are enough senators to cause delays in other, unrelated legislation if their views on NSR are not considered. Under Senate rules, at least 60 senators are needed to prevent delaying tactics such as a filibuster.

Conservative Democrats from manufacturing states, such as Max Cleland (D-Ga.) will likely be aggressively lobbied to change their view on NSR, stakeholders say.

Pew study
To help counter claims that the EPA proposal will harm the environment, industry groups such as the Electric Reliability Coordinating Council (ERCC) pointed to a new study by the Pew Center on Climate Change as evidence that NSR reforms are needed. The group suggested that the report found that emissions of greenhouse gases might increase if routine maintenance is discouraged.

ERCC later clarified its remarks to say that the Pew report did not specifically mention "routine maintenance" but rather states, "Uncertainty as to whether efficiency upgrades trigger expensive Clean Air Act requirements may have discouraged some generators from undertaking efficiency improvements that could have greenhouse gas reduction benefits."

Nevertheless, ERCC spokesman Scott Segal said that the question of efficiency upgrades triggering NSR is bound up in the current discussion of whether such upgrades are considered "routine maintenance."

In the report, Pew authors noted that "one key NSR issue is whether upgrading a generating unit's thermal efficiency should trigger NSR; such a policy discourages investment in plant efficiency."

Meanwhile some, although not all environmental groups sharply criticized the Pew study.

"We can't fathom why the Pew Center would seek to promote these industry views," said Frank O'Donnell, executive director of Clean Air Trust. "We can only speculate that the leaders of the Pew Center are less interested in the truth than in aligning the organization with the goals of some of its industry partners—including American Electric Power [Co. Inc.] and Cinergy [Corp.], which face justice department lawsuits for alleged violations of New Source Review. Obviously, they don't realize that tough and continued enforcement of the Clean Air Act would also lead to a reduction in greenhouse gas emissions, which is their ostensible goal."

Other views
In addition, some natural gas producers are unhappy because they are worried that if EPA moves forward with its proposal, it could encourage utilities to add capacity to less-expensive, coal-fired plants instead of building gas-fired ones.

Highlighting what a political football the NSR program has become, Eileen Claussen, director of Pew's climate change program, felt compelled to defend the study, saying both industry and environmental groups mischaracterized the results.

"I want to be clear that the Pew Center believes New Source Review is a valuable program that has yielded important environmental benefits. This report only deals with one narrow issue: Do the current NSR rules provide disincentives to improving the thermal efficiency of existing power plants? This question clearly merits further discussion and debate," she said. "Our interest is in finding a way to increase efficiency while ensuring that there would be no negative impacts on local or regional air quality.

"We are not endorsing the Bush administration's NSR proposal. And the report simply does not address the broader issues raised by the administration regarding NSR," she said.