By the OGJ Editors
WASHINGTON, DC, June 13 -- Industry officials heralded a new proposal by the US Environmental Protection Agency to dramatically revise regulations under the New Source Review program. Current rules require industrial facilities to upgrade their pollution-control equipment when they make major modifications to their operations.
"Culminating years of consideration spanning two administrations, the proposal for much-needed reform of New Source Review regulations is an encouraging step," the American Petroleum Institute said June 13. "The administration's action ends a period of uncertainty by finalizing some and proposing other much-needed regulatory changes that should allow industry to maintain and expand facilities in a manner that benefits the environment and consumers.
"The goal should be to assure that significant changes at facilities are reviewed for their air quality impact while not impeding normal operations. Current interpretations of the regulations are overly stringent and can delay needed improvements for safe and efficient plant operation," API said.
The group argued that the proposal "will foster energy efficiency, plant safety and modernization of oil and natural gas facilities."
According to the American Gas Association, the current NSR program impedes routine repairs not just at refineries and other manufacturing plants but also natural gas pipelines and local gas utility systems across the country.
AGA and API both said the NSR regulation became particularly onerous when EPA a few years ago changed the way it interprets what qualifies as "routine repair and maintenance." Under the spirit of the original 1977 law, routine repairs were supposed to be allowed without having to inform regulators, industry officials maintained.
But recent enforcement actions have made that nearly impossible.
"It can take enormous amounts of paperwork and at least 2 years to obtain permission to proceed with a project under the current program," AGA said.
EPA proposal
EPA said the NSR reforms it is proposing have been under discussion for 6 years and have been subject to extensive technical review and public comment.
Of special interest to refiners is a plan to formally give operators greater flexibility by using plant-specific emission caps, called plantwide applicability limits (PAL), to meet air pollution guidelines.
Even as EPA was negotiating settlements for past infractions, regulators still had been granting plants new permits so that refiners could make clean fuel upgrades required under other clean air programs. This was done on a case-by-case basis, but EPA's decision to formalize it was seen as a good development for industry.
"We see it as a positive for the refining industry to have it adopted formally. Formal integration of the PAL program would likely also benefit the pace of spending on engineering and construction services . . . ," according to an analysis by Schwab Capital Markets LP.
The agency also wants to allow refiners and power plants to use any consecutive 24-month period in the previous decade as a baseline, as long as all current control requirements are taken into account.
New reforms
EPA is also proposing three new reforms that will go through new rulemaking and public comment processes before they are finalized. These include:
-- Routine maintenance, repair, and replacement. EPA said it wants to clarify the definition of "routine" repairs. NSR excludes repairs and maintenance activities that are "routine," but EPA argues that more guidelines are needed so industry is not discouraged from making upgrades that could lower pollution and improve plant conditions.
-- Debottlenecking. EPA is proposing a rule to clarify how NSR applies when a company modifies one part of a facility in such a way that throughput in other parts of the facility increases (i.e., implements a "debottlenecking" project). Under the current rules, determining whether NSR applies to such complex projects is difficult and can be time-consuming, the agency said.
-- Aggregation. Currently, when multiple projects are implemented in a short period of time, a difficult and complex analysis must be performed to determine if the projects should be treated separately or together (i.e., "aggregated") under NSR. EPA's proposal will establish two criteria that will guide this determination.
Reaction
An avalanche of public comment is expected, with industry praising and environmental groups opposing the new policy; meanwhile, some Northeast US regulators say they will go to court to ensure the rules don't give industry the kind of leeway they have been seeking to expand or modify existing plants.
"We believe the controversial reforms being pursued by EPA will not only result in unchecked emission increases that will degrade our air quality and endanger public health, they will also undermine the chances of any responsible changes to the NSR program ever taking effect," said Bill Becker, executive director of the State and Territorial Air Pollution Program Administrators.
