EPA Opens Can of Worms With New Source Review Rule Changes

While the Environmental Protection Agency (EPA) is touting changes to the New Source Review Program announced Aug. 27 as "improvements," others aren't so sure.

Pennsylvania's Department of Environmental Protection (DEP) has vowed a court fight if necessary over the agency's move to relax regulations requiring utility owners to install pollution-control devices when undertaking anything other than "routine maintenance."

DEP Secretary Kathleen A. McGinty criticized what she said is EPA's weakening of the federal Clean Air Act and said DEP will play a leading role in challenging New Source Review (NSR) rule changes that exempt thousands of polluters from air quality requirements.

"EPA's reversal of long-standing environmental policy will lead to more pollution, poorer air quality and dirtier skies, increasing public health risks and putting Pennsylvania at a competitive disadvantage as businesses here have to shoulder the burden of increased emissions from upwind states," McGinty commented.

The new rule, signed yesterday by acting EPA Administrator Marianne Horinko, says that as much as 20 percent of the cost of replacing a plant's essential production equipment can be spent and the owner will still be exempt from installing any pollution controls.

EPA said the changes establish an equipment replacement provision as part of the routine maintenance, repair and replacement exclusion of the New Source Review (NSR) permitting program. According to the agency the rule "makes the program more effective and responsive to today's environmental, economic and energy challenges."

"The changes we are making in this rule will provide industrial facilities and power plants with the regulatory certainty they need," said Horinko. "This rule will result in safer, more efficient operation of these facilities and, in the case of power plants, more reliable operations that are environmentally sound and provide more affordable energy."

She took pains to remind everyone "that existing authorities under the Clean Air Act, including the Acid Rain Amendments of 1990, already control emissions from these facilities and will do so in the future."

Pennsylvania is not buying that explanation. According to McGinty, because allows overhauls can be done partially and over a period of time, plants will be able to increase their emissions without installing state-of-the-art clean-air technology. With the new rule in place, it is estimated that more than 17,000 older power plants, oil refineries and industrial units could avoid making extensive upgrades to reduce emissions.

"Pennsylvanians will pick up the tab for this blow to our competitiveness and this assault on our health. We urge President Bush to reverse course...," McGinty said.

It is not the first time EPA has attempted to roll back or eliminate NSR. On Dec. 31, 2002, EPA finalized NSR rule changes creating other loopholes that allow plants to increase their emissions without having to clean up. For example, the changes permit plants to use as a baseline emissions figures from any two-year period over a decade, allowing plants to reach back to high-emissions years to measure future emissions increases and skewing results.

Not surprisingly, industry groups representing electric utilities, a group heavily impacted by the new rule, are ecstatic.

The Edison Electric Institute welcomed the Bush administration's New Source Review (NSR) regulations, declaring that the final rule will enhance the "affordability, reliability and safety of the nation's electric supply."

"We are returning to the commonsense standard that has applied throughout most of the history of New Source Review," said EEI President Thomas R. Kuhn. "[The] regulations will lift a major cloud of uncertainty, boosting our efforts to provide affordable, reliable electric service and cleaner air."

Kuhn claims that for the past several years, power companies have faced an uncertain and sometimes hostile regulatory environment in which even the most routine power plant maintenance practices or efficiency improvements are called into question.

John L. Kirkwood, president and CEO of the American Lung Association, says his group "strongly opposes the rule," claiming it "will roll back key provisions of the Clean Air Act…. The Environmental Protection Agency's decision is the latest in a series of steps that undermine large parts of the most effective environmental law in the United States."

He said the American Lung Association has already joined with other organizations concerned about air quality in this country in taking legal action to challenge previous EPA decisions that roll back provisions of the Clean Air Act. "We will take legal action to challenge this decision also," he vowed.

Environmental groups were particularly harsh in their criticism of the changes.

"The Bush administration, using an arbitrary, Enron-like accounting gimmick, is authorizing massive pollution increases to benefit Bush campaign contributors at the expense of public health," said John Walke, director of the National Resources Defense Council's Clean Air Project. "Corporate polluters will now be able to spew even more harmful chemicals into our air, regardless of the fact that it will harm millions of Americans."

Joel Schwartz, adjunct scholar for the National Center for Policy Analysis (NCPA), waved off the concerns of Pennsylvania, the American Lung Association and environmental groups, saying, "The extremity of the rhetoric is matched only by its almost complete disconnection with reality. Not only will pollution not increase; no policy maker, no matter how tenacious or determined, can stop continued reductions in air pollution."

Schwartz notes that the NSR changes won't affect air pollution emissions, because a wide range of other regulations require large pollution reductions in coming years, and/or set hard, declining caps on pollution that can't be exceeded, regardless of NSR. For example:

EPA's "NOx SIP Call" regulation will reduce eastern power plant and industrial boiler nitrogen oxide emissions by 60 percent next year during the May-September "ozone season," according to the administration. Schwartz claims this is a hard, system-wide cap that can't be exceeded and is not affected by NSR. The acid rain program for sulfur dioxide sets a similar declining cap that is reducing year-round emissions by a total of 50 percent between 1995 and 2010.

EPA declared that states must implement the final NSR rule changes unless the state can convince the federal agency that its existing air quality program is "at least as stringent" as the EPA's finalized rules. McGinty complained that state governments now have to spend scarce resources attempting to convince EPA to leave more protective programs alone.

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