NRDC Wants EPA to Roll Back New Source Review Changes

The Natural Resources Defense Council is asking EPA Administrator Mike Leavitt to roll back the changes in the New Source Review Program that allows utilities to spend as much as 20 percent of the cost of replacing a plant's essential production equipment and be exempt from installing any pollution controls.

In the past, utilities were required to install anti-pollution devices whenever physical or operational changes increased air pollution.

According to the NRDC, internal electric utility documents reveal the industry has known for more than a decade that air pollution increases from coal-fired power plants violate the Clean Air Act. In fact, EPA recently sent letters to the governors of 31 states affirming that more than 530 counties were unable to meet new health-based ozone standards. "Many of those counties have unhealthy air through no fault of their own," Leavitt told a group of industry executives, "It's because they live downwind from one or more coal-burning power plants."

According to a recent Justice Department brief, the documents contradict claims by industry officials that they had no idea they had run afoul of the EPA's interpretation of the law until the agency filed the first of several high-profile enforcement lawsuits in 1999.

The Justice Department obtained the documents last November from Duke Energy Corporation, one of several electric utilities that EPA determined were violating the Clean Air Act's New Source review (NSR) program. The NSR program requires companies to install modern pollution control technologies in new plants, and in old plants when they make modifications that significantly increase emissions. The documents are memoranda to Duke Energy from the Utility Air Regulatory Group (UARG), an industry trade organization.

According to the government's brief, the documents reveal "that UARG understood and told Duke from the beginning" that the EPA-created exemption from the Clean Air Act for "routine maintenance" at industrial facilities was too narrow to accommodate the substantial emissions-boosting renovations that utilities had been making at their plants.

Said John Walke, director of the clean air program at NRDC, "This is smoking-gun evidence that the utility industry has been lying to the American people, its shareholders and the government for years."

Duke Energy spokesperson Pete Sheffield countered, "The information and arguments the Justice Department now offers have already been presented to and considered by the court when it issued its August 26, 2003, opinion in the Duke Energy case. To put it simply, there's nothing new here."

Sheffield was referring to a preliminary ruling in a federal lawsuit alleging Duke upgraded plants by categorizing the changes as routine maintenance, thereby bypassing New Source Review Program requirements that called for installation of pollution controls.

Duke Energy argued that the changes were considered routine maintenance within the energy industry, and judge concurred, saying a trial will have to determine what constitutes "routine" within the industry. Bullock also agreed with Duke's interpretation of federal regulations that measure pollution increases, saying, "A net emissions increase can result only from an increase in the hourly rate of emissions."

"The yardstick we have followed concerning the Clean Air Act has not changed," said Sheffield, "and Judge Bullock's recent ruling of summary judgment in our case supports our long-standing interpretation."

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