Opponents square off over Clean Air Changes

By Kathy Helms-Hughes
STAR Staff
khelms@starhq.com
A recent Environmental Protection Agency rule changing the Clean Air Act's New Source Review program has been examined under a microscope by Congress, industry, environmental groups, and the courts. Now states such as New York and New Jersey have announced plans to challenge the new plan in federal court, saying it violates the federal Clean Air Act.
New Source Review (NSR) is designed to protect public health and enhance air quality. Opponents claim the new regulations would increase emissions at an estimated 17,000 factories across the United States and would result in releases of hundreds of thousands of tons of additional pollutants each year. Industry representatives say the plan merely clarifies EPA's definition of "routine maintenance, repair, and replacement."
EPA's "final rule" on the NSR program came about after Vice President Dick Cheney's National Energy Policy Development Group issued its proposed national energy policy in May 2001. The group recommended EPA report to the President on NSR's impact on investments in new utility and refinery generation capacity, energy efficiency, and environmental protection.
According to U.S. Public Interest Research Group, a national public interest advocacy group with roots at the state level, EPA's June 2002 Report to the President concluded that the New Source Review program had not affected investments in new power plants and refineries but had discouraged some energy efficiency projects at existing facilities, including some that would have reduced air emissions.
The General Accounting Office -- the investigative arm of Congress -- was asked to determine the basis for EPA's conclusions and released its report in August.
GAO reviewed EPA's analysis of the rule and its impacts and also reviewed documents from representatives of the American Chemistry Council, the American Forest and Paper Association, the American Petroleum Institute, the American Public Power Association, British Petroleum, Detroit Edison, Duke Energy, the Edison Electric Institute, Excel Energy, Exxon Mobil, the National Coal Council, and the National Petrochemical & Refiners Association. GAO also spoke with the Natural Resources Defense Council, a national environmental advocacy organization that disputed EPA findings.
The information was whittled down to 69 anecdotes which GAO said were not independently verified on a factual basis. Industries listed three ways that compliance with NSR discouraged energy efficiency projects, including concerns that:
* EPA would later determine that projects companies initiated as routine maintenance, repair, and replacement without an NSR permit were actually major modifications subject to NSR and enforcement action;
* The test used to measure the emissions impacts of company modifications was not fair;
* The NSR permitting process caused unanticipated project delays and increased costs.
Following review, GAO recommended that due to lack of data and uncertainties about the rule's impacts, that EPA should determine what information is available and monitor the NSR rule's effects, identify whether more information is needed, and if so, decide how to obtain it. Then use the results to determine whether the rule has created any problems that the agency needs to address. EPA agreed that the idea was a good one.
Concerns about possible enforcement action came from recent litigation by EPA against certain electricity producers. EPA contested claims that certain projects were exempt because they qualified as routine maintenance, claiming instead that they were major modifications that should have triggered NSR.
Industry countered that this meant EPA could consider potentially thousands of projects previously completed without an NSR permit under this exemption as NSR violations, and alleged that EPA was reinterpreting the program.
GAO said EPA has never explicitly defined routine maintenance since the exclusion was established, while EPA maintains that it takes a case-by-case approach to determining whether a modification constitutes routine maintenance.
Environmentalists claim the exemptions will allow companies to falsely treat major plant modifications as routine maintenance, thus avoiding NSR requirements and increasing emissions.
Before the final rule, a company could compare a facility's emissions during the previous 24 months to its future potential emissions if its facility was run at maximum capacity -- even if the facility had not run at this level before and did not plan to in the future.
"If the expected future emissions resulting from the change were more than 40 tons per year higher after making the change, the project qualified as a significant emission increase and triggered NSR," GAO said.
EPA's new final rule now gives a company the option to compare a facility's previous emissions to its projected actual emissions, instead of its maximum potential emissions.
Industry also said the NSR process can result in project delays ranging from six to 24 months, thus increasing costs, and that certain repairs required quick decisions and turnaround, both of which are not compatible with the time it takes to obtain an NSR permit and install appropriate controls.
Gene Karpinski, U.S. PIRG executive director, said, "The truth is that the Bush administration's 'Clear Skies' air pollution plan will weaken public health protections, leading to more smog, soot and mercury pollution from old electric power plants than under current law.
"It is unacceptable that in the year 2003 we are relying on a fleet of power plants that are using antique emission control technologies, if any at all. The consequences include millions of avoidable asthma attacks and tens of thousands of premature deaths each year, as well as acid rain, haze in our national parks, toxic mercury in our fish, and perhaps the most serious threat to our future, global warming. Unfortunately, industry is working with the Bush administration to push plans that would weaken protections already in the current Clean Air Act," he said.
John Shipp, vice president of Environmental Policy and Planning at Tennessee Valley Authority -- the nation's largest public power producer -- takes issue with claims that the new rule would be a "relaxation" of the Clean Air Act.
"That's absolutely incorrect. What they did was to clearly define what routine maintenance, repair and replacement is. The New Source Review rule has been a part of the Clean Air Act since 1977, and for 25 years, EPA and the states viewed routine maintenance projects that TVA and utilities all across the country undertook to be just that -- 'routine maintenance, repair and replacement.'
"In the late 1990s, EPA changed their interpretation without going through a rulemaking and brought suit against TVA and several utilities, alleging that projects that we had conducted in good faith in the 1980s and 1990s as routine maintenance, they no longer considered routine maintenance.
"So, EPA now has clarified, written down in easy-to-understand language, what routine maintenance and repair means with regard to the Clean Air Act. It is in no way a relaxation," Shipp said.
In June, the 11th Circuit Court of Appeals in Atlanta set aside a ruling against TVA which alleged that TVA had violated portions of the Clean Air Act when it undertook 14 rehabilitation projects at nine of its coal-burning plants without first obtaining permits. The court said TVA is now "free to ignore" the EPA order without being assessed penalties for noncompliance.
"There are other parts of the Clean Air Act that require emissions reductions for various reasons," such as acid rain and ozone, Shipp said. EPA has made the standards for those more stringent, and TVA is in the process of implementing those new standards at a cost of about $1 million per day.
"Those are the portions of the Clean Air Act that are driving the emissions reductions that we're making, and are the subject of and basis for the rate action" the TVA board took at its Aug. 27 meeting, he said.
The board approved a 7.4 percent increase in rates for most commercial and residential customers to fund Clean Air improvements for the next 10 years. It also approved a 2 percent decrease in wholesale rates for large manufacturers.
Shipp said he doesn't expect the NSR change to save TVA ratepayers any money directly, "but what it means is we can continue to repair and maintain our plants and therefore we can continue to provide reliable, affordable electricity."