Regulators seek to reassure skeptical senators on shifting NSR policy

George W. Bush's environmental enforcers sought to reassure senators that refiners and power generators that remodel or expand plants without installing updated pollution controls will be prosecuted.

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, July 18-- President George W. Bush's top environmental enforcers this week sought to reassure skeptical senators of US Northeast states that they will still prosecute refiners and power generators that allegedly remodel or expand plants without installing updated pollution controls.

"I would like to assure these committees that the Department of Justice takes very seriously its obligation to enforce the existing laws and to protect public health and the environment," Thomas Sansonetti, assistant attorney general, DOJ's Environment and Natural Resources Division, told a joint hearing of the Committee on Environment and Public Works and the Committee on the Judiciary July 16.

The US Environmental Protection Agency last month proposed revisions to a 1977 provision of the Clean Air Act called New Source Review. 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 say that large-scale changes thatare not necessarily an expansion can create higher emissions that must be controlled through new equipment.

Routine versus remodel
Clean-air advocates say that industry often uses maintenance as an excuse to avoid a new emissions review by regulators.

"No one is opposed to 'routine maintenance,' as long as it doesn't cause a major increase in emissions," said Frank O'Donnell, executive director of Clean Air Trust. "But the dirty power companies want to make 'routine maintenance' a new loophole, a euphemism for extending the life of and expanding the capacity of grandfathered powerplants. In effect, the dirty power companies want to make old power plants 'bionic grandfathers'."

Current rules
NSR allows older industrial facilities to delay adding many new pollution control systems until a plant expands or is modified in a manner that regulators decide compromises air quality. But refiners and other industrial plant owners have long complained that the rules are too complicated and enforcement so inconsistent that it discourages companies from performing even routine maintenance.

Scott Segal, an attorney with Bracewell & Patterson, a law firm whose clients include refiners and generators, said EPA made a politically motivated decision in 1999 to reinterpret routine maintenance in a much narrower fashion and that it was done "without rulemaking or guidance." He maintains that it is premature for lawmakers and environmental groups to complain about EPA's pending reform plan because a key portion of the measure, a commitment to clarify the routine maintenance definition, has not even been made available for public comment yet.

Environmental groups, meanwhile, contend that parts of the rule not subject to further scrutiny, such as a plan to allow refiners to use historical baselines for emissions control, may actually increase pollution on a plant-by-plant basis, impacting local communities' public health.

Lawmakers representing energy-producing states and regions that rely heavily on coal-fired plants for power rejected that argument, saying that those who complain about "process" and "access" are off the mark considering the years the agency has spent trying to revise the program.

Review and comment
Last month 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 (OGJ Online, June 18, 2002). In remarks before the committees, regulators said that changes to NSR that are not subject to further public comment will not have a negative impact on pending lawsuits, EPA Assistant Administrator for Air and Radiation Jeffrey Holmstead told lawmakers.

"The changes that we make to the NSR program will be prospective in nature, and EPA will continue to vigorously pursue its current enforcement actions," he said.

Harsh criticisms remain
The president's critics in Congress remain unconvinced EPA is committed to reining in offending facility operators. They say pending cases, mostly against the utility sector, may now be in jeopardy because of the administration's announcement to streamline permitting.

"Last month, EPA proposed sweeping revisions to the New Source Review regulation ? revisions that could have been written in corporate energy boardrooms or by the legal teams for corporate NSR violators," said Judiciary Chairman Patrick Leahy (D-Vt.).

"And despite pledges by Bush administration officials that these revisions would not change the course of pending litigation against NSR violators, we are already seeing the effects of this rollback," he charged.

Leahy said two large utility cases that had been settled "in principle" in early 2000 under the Clinton administration remain stalled while the "bellwether" case to set the precedent for all litigation against illegal pollution from coal-fired power plants—US vs. Tennessee Valley Authority—was recently sent to mediation.

"This action by the judge was a surprise to all involved and is a much weaker outcome than had been expected before the NSR revisions were publicized," Leahy said.


Current lawsuits
Environmental groups and state air regulators concurred with Leahy that there is already strong evidence showing that EPA's efforts to streamline and clarify NSR could weaken DOJ's efforts.

New York Att. Gen. Eliot Spitzer told the committees that EPA's declared intention to streamline the current rules has compromised existing enforcement cases and given industry an enhanced bargaining position.

The judge overseeing New York's lawsuit against Niagara Mohawk Power Corp. and NRG Energy Inc. over alleged NSR violations asked the parties involved to explain how EPA's proposal would affect the existing case.

Spitzer said that he expects the courts to find with "relative ease" that the utilities violated the law. "But when it comes time to select a remedy, will they require substantial emission reductions even though the administration's proposed policy would not require such reductions? Will a practical judge require a company to spend millions of dollars on pollution controls for actions that EPA is now saying do not require such controls," Spitzer asked.

NPRA view
Refiners, meanwhile, called on EPA and DOJ to abandon NSR-related enforcement for their own industry calling it "inappropriate" in light of the current disarray of the program, Bob Slaughter, president of the National Petrochemical & Refiners Association told the committees. "Enforcement actions against the refining industry based upon anticipated and shifting NSR interpretations have sought to add significant and uncoordinated new investment requirements to those already mandated in this decade," Slaughter said.

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