US refiners oppose EPA's new source review proposal

April 3, 2000
US refiners say that the US Environmental Protection Agency is on the wrong track in drafting rules for the new source review (NSR) program.

US refiners say that the US Environmental Protection Agency is on the wrong track in drafting rules for the new source review (NSR) program.

EPA is preparing to revise the rule, which was designed to mandate a detailed review of any proposed changes to processing plants that would increase emissions significantly. Preliminary information indicates that EPA is pushing for what amounts to a "hair trigger" for NSR reviews, meaning that any modification to an existing plant, whether environmentally significant or not, will require a full NSR review before the operator can proceed, placing an undue burden on US refiners, who are already laden with the burden of several pending environmental reguations (see related story, p. 28).

The problem

The Senate environment and public works committee's clean air subcommittee recently held a hearing on the program.

Sen. James Inhofe (R-Okla.), subcommittee chairman, noted that the Clean Air Act requires plants built after 1977 to have state-of-the-art emissions control devices.

"Congress did not believe that it was financially feasible to require all existing facilities to install the new equipment. Instead, Congress required existing large facilities to undergo a new source review before they make major expansions or modifications, to prevent significant new air emissions."

Over the years, he says, EPA has issued more than 4,000 pages of guidance documents, which sometimes contradict each other, to explain the original 20 pages of its 1980 regulations. In 1994, said Inhofe, EPA proposed changes in the NSR process, and it plans to issue a final rule later this year.

The key question for industry, he says, is: When do modifications or changes to a facility or plant trigger the NSR?

Sen. George Voinovich (R-Ohio) added that companies need to know what kind of repairs they can make without triggering an NSR. It takes EPA 1-2 years to approve an NSR permit, he said. "I'm not sure most industries can withstand that time frame without suffering severe consequences."

John Seitz, director of EPA's office of air quality planning, said the NSR program has been a success: "Recent figures suggest that, over the life of the program, NSR has prevented more than a hundred million tons of air pollution."

He said about 250 facilities apply for a Prevention of Significant Deterioration (PSD) or nonattainment NSR permit annually, out of the 20,000 sources that would be classified as major under the act.

Seitz said, "Recent data show that NSR permits at PSD sources have prevented about a half a million tons per year of new emissions...Clearly, in the absence of NSR, Americans would be breathing less-healthy air."

He said that, in its effort to draft a new rule, EPA has drawn extensive comments from stakeholders. The primary complaint, he says, is that the process to determine if an NSR permit is needed takes too long, or the permit is not issued within a year. Stakeholders also have complained that decisions made in the NSR process, such as selection of a control technology, have been arbitrary.

Other views

Bob Slaughter, National Petrochemical & Refiners Association general counsel, testified for NPRA and the American Petroleum Institute at the hearing. He said the Clean Air Act has resulted in the refining industry reducing its pollutant air emissions by 74%, and more emissions reductions are coming.

Slaughter said, "EPA applies NSR to many changes that will never cause emissions increases, even to changes that will reduce emissions. Moreover, EPA's practice of defining critical elements of the program by a guidance rather than by rulemaking-or not defining them at all-has created a situation where it is effectively impossible for even the most diligent refiner to determine when NSR applies and when it does not."

He said Congress intended that NSR would apply when physical changes in operations increased emissions a significant amount. It would not apply if the change resulted in offsetting emissions that negated the effect of the change.

"NSR is one of the most complicated regulatory programs ever created," said Slaughter. "EPA's current approach to NSR applicability makes it difficult for refiners to determine when NSR permitting and controls are required and leaves refineries in enforcement jeopardy unless they consider NSR for any and all operational changes. As a result, the program is an untenable burden on state permitting authorities and refineries and threatens their ability to implement Congress's future environmental goals in a timely manner."

Slaughter said, "The end point of EPA's current position is universal NSR. However, no industrial economy could function if every change to a factory required a permit before construction could begin. This will be particularly burdensome for refineries, given the operational changes necessary to comply with the blizzard of new fuel reformulation and stationary source regulations."

David Hawkins, the Natural Resources Defense Council's air and energy programs director, said too much attention has been focused on the complexity of the NSR permitting process while ignoring the failure of the program to reduce emissions as Congress intended. Hawkins said, "Grandfathered air pollution sources are more and more the central impediment to clean air progress. Contrary to the intent of Congress, investments in new production have not resulted in existing grandfathered sources being replaced by facilities that must meet modern performance standards. As a result, grandfathered sources dominate the pollution inventory throughout the US."