GOVERNMENT & POLICY
EPA TO OVERHAUL AIR POLLUTION LAW Administration's new source review plan aids industry, angers environmentalists, states JEFF JOHNSON, C&EN
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chemical companies, will benefit most from four regulatory changes that EPA announced on June 13 and plans to make final within the next month. However, three other proposed changes, also announced by Whitman and Holmstead, will affect all sectors covered by NSR, particularly coal-fired power plants, but they could take three years to implement. NSR, W h i t m a n told reporters, is a "valuable program." But she said, "Our review clearly established that some aspects of the NSR program have deterred companies from implementing projects that would increase energy efficiency and decrease air pollution." She and Holmstead said reforming NSR would simplify the NSR process and end the need for litigation. In the end, the changes would encourage emissions reductions, they said. W h i t m a n and Holmstead were supported by the American Chemistry Couno cil (ACC), a host of utility trade S associations, and several sena-
the agency's long delay, top EPA officials sharply drawn. Representatives said it was due to their decision to include of chemical companies, utilities, recommendations for regulatory reforms and other industry sectors loudalong with the review of NSR's impact on ly applauded a long-delayed Enenergy vironmental Protection Agency announcement that it will rewrite new source MOST OF THE immediate changes that review (NSR), a 25-year-old provision of EPA is taking, in fact, will not affect enerthe Clean Air Act. gy providers, according to EPA Administrator Christine Todd Whitman and JefState regulators, environmental groups, frey R. Holmstead, who is EPA assistant and several state attorneys general were administrator for air and radiation. equally fired up but said the plan would gut Holmstead said manufacturers, such as a powerful tool they have used to cut millions of tons of air pollution. They promised litigation, political challenges, and technical changes to the plan, which top EPA officials announced on June 13. The recommended changes sprang from the Bush Administration energy plan released last year. A part of that plan called for EPA and the Department of Justice to review the energy implications and legality of NSR enforcement. NSR covers most U.S. industries, some 20,000 plants. It requires that when companies make process changes that increase air pollution emissions, they must install modern pollution control equipment. In the last years of the Clinton Administration, EPA and the Justice Department joined with several states and environmental groups to sue coal-fired utilities and refineries, charging that they had violated NSR requirements. The refiners and utilities complained mightily, and the Bush Administration called for the energy-driven examination (C&ENJune 25,2001, page 24). The Justice and EPA reviews were due last August. Justice issued its report in January and found NSR litigation to be legal and consistent with the Clean Air Act. REFORMATION The chemical industry will benefit from In explaining the reason for EPA's proposal to modify air pollution regulations. HE LINES COULD NOT BE MORE
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tors, mostly from coal-producingstates.TheyarguedthatNSR had been costly to comply with, was unnecessary, and blocked expansion that increased efficiency and production. However, John D. Walke, a former EPA attorney and now an official with the Natural Resources Defense Council ( N R D C ) , called the recommendations "the most sweeping assault on the Clean Air Act in its 30-year history" David Hawkins, another former EPA official who held Holmstead's job when NSR provisions were written and is now an N R D C staffer, said that no existing power plant would have to clean up pollution under NSR if the recommendations are adopted. Walke and Hawkins were also joined by other environmental groups and senators and representatives from states that are now on the receiving end ofutility air pollution as well as state regulators. In a statement, the national association of local and state air pollution administrators said NSR had yielded millions of tons of emission reductions that would otherwise not have occurred. The association also C&EN
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GOVERNMENT & POLICY criticized the process EPA used to gather information for the review and warned that the reforms will result in unchecked future emissions and make "responsible changes" in NSR unlikely. So begins the next phase of a controversial battle that goes back to NSR provi sions of the 1977 Clean Air Act. The concept was to save money and encourage cap ital spending for pollution control equipment by al lowing plant managers to couple process improve ments with pollution abate ment projects. It was par ticularly directed to coalfired power plants that were Holmstead operating with minimal if any air pollution control equipment then— and still are today. A June 12 General Accounting Office (GAO) report found that 57% (1,396 units) of fossil-fuel plants that generated elec tricity in 2000 began operation before the 1970s. They are mostly coal-fired power plants, and they produce about 42% of all electricity that is generated by fossil-fired plants, but they produce nearly 60% of sul fur dioxide and 47% of nitrogen oxides emissions. LOOKED AT in terms of electricity gener ated, the older units in aggregate produce about twice as much sulfur dioxide and about 25% more N O x as newer units, GAO said. About 36% of the units pump out most of the sulfur, GAO said, but almost 75% of the old units exceed N O x emissions stan dards for modern plants. Most of the old plants are found in the mid-Atlantic, midwestern, and south eastern U.S., GAO said. Some 50 power plant units operated by 11 companies are being sued by EPA, states, and environmental groups for making changes that violated NSR. Several have set tlements pending. The Bush Administration's review and the EPA recommendations throw these deals into chaos. EPA's new plan comes in two phases: Four reforms, which were originally pro posed by the Clinton Administration, will be made final in the weeks ahead, and three
new Bush regulatory proposals will be is sued soon but could take up to three years before becoming final. Three of the Clinton-era regulations that EPA wants to implement quickly would give companies the flexibility to use plantwide emissions caps to avoid NSR when making process changes, would allow com panies to avoid NSR for 10 to 15 years after installing a "clean unit" with new air pollution control equip ment, and would not sub ject companies to NSR if they modify plant opera tions to comply with an en vironmental law. The fourth reform is of particular importance to the chemical industry, says Debra Phillips, ACC regulatory technical manager. It will change how EPA calculates the baseline emissions that trigger an m NSR review | Phillips explains that cur- ^ rently companies have to χ compare actual emissions to > future potential emissions ° when determining whether j installation of a new piece of equipment will lead to an NSR review. With EPA's plan, compa nies will now be allowed to compare actual emissions before a process change to actual emissions after the in- Whitman stallation of new equipment. "We were being penalized for market conditions," Phillips says. A company op erates based on what it can sell, not how fast it can potentially produce product with a new piece of equip ment, according to Phillips. EPA's proposal also allows companies to select any 24-month period over the past 10 years when deterrnining past emissions, al lowing t h e m to use their highest emis sions to set a baseline. Phillips says this is not of great importance to chemical compa nies, but state regulators say it will be a big loophole to avoid NSR compliance for many companies. W h e n considering these changes in 1996, an EPA analysis estimated that the
A company operates based on what it can sell, not how fast it can potentially produce product with a new piece of equipment.
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proposed clean-unit exemption and the baseline changes would remove 51% of emissions sources from NSR coverage. In fact, changes to the emissions baseline alone would drop 45% of facilities from facing NSR compliance. WHITMAN PARTIALLY defended her an nouncement by noting that Clinton's EPA planned to issue these regulations, but crit ics respond that EPA never finalized the rules under Clinton. And although Robert Perciasepe, former head of EPA's air office, endorsed several proposed NSR changes in a letter as the Clinton Admin istration left office, emissions baseline modifications were not among them. Whitman's EPA has not conducted a review of the impact of these regulations, and EPA sources tell C&EN the agency is unlikely to do so. Holmstead stressed, however, that the proposed changes will result in "signifi cantly reduced" air pollution. Among the three pro posals that are to be for mally released in the next few months and debated through public comment over the next few years is one that will redefine "rou tine maintenance." It has garnered the most criti cism as well as support. EPA has historically ex cluded routine maintenance capital projects from NSR. The newproposal would ex pand that definition by using the projects' costs to trigger an exemption. EPA is considering allowing exempted project costs to run from 1.5 to 15% of a plant's value and be consid ered routine. However, exact wording is yet to come. Holmstead said there is "absolutely no basis" for a legal challenge to the process the Administration has followed in devel oping and implementing the regulations. But NRDC's Walke told reporters he "absolutely promised litigation" over the finalized rules as well as a hard fight over those proposed. Eliot Spitzer, New Icfork attorney gen eral, who is a party to several of the NSR suits against utilities, called the proposals a "sellout by the Bush Administration" to the coal, oil, and gas industries. He prom ised to "pursue legal action in federal court to prevent the Administration from gutting the Clean Air Act." An end to NSR's stormy history appears very unlikely • HTTP://PUBS.ACS.ORG/CEN
