Clearing The Air On Industrial Plant Emissions

The federal permit program that governs industrial emissions is seriously broken. Within the next few weeks, the Bush administration will release its plan for revamping the program, called new source review. While this little-known rule is hardly a household term, Washington’s ability to meet the nation’s growing demand for energy while controlling air pollution is at stake.

New source review, enacted under the Clean Air Act in 1977, requires new and reconstructed facilities to go through an exhaustive permitting process and install top-technological pollution control equipment.

The rule applies to new or expanded facilities. It was never intended for existing plants unless they make major alterations. Congress recognized at the time the rule was written that imposing the harsh NSR regulations on existing sources – on top of other, extensive Clean Air Act regulations – would be an extreme and unnecessary cost burden.

Instead, Congress required NSR regulations when a plant undergoes a “major modification,” defined as any change resulting in a “significant” emissions increase. The rule stipulates that activities involving “routine maintenance” do not fall under NSR requirements.

The Clinton administration, however, applied a new and extreme interpretation of the law, imposing NSR controls on existing plants for routine changes and repairs and filing dozens of lawsuits and notices of violation against electric utilities, petroleum refiners and paper mills for “widespread” violations. Industries are being penalized even in cases where modifications actually reduced emissions, improved the plant’s energy efficiency or increased the safety of operations.

Some of these enforcements are against activities EPA Ok’d a decade ago. In one case, EPA determined the utility company Detroit Edison violated NSR requirements by replacing two worn-out steam turbines with state-of-the-art models. The new design was projected to increase the turbines’ efficiency by 4.5 percent each by using less coal to produce the same amount of fuel. Yet EPA concluded, because the activity improved the efficiency of the turbine, that it was not routine and therefore violated NSR regulations, even though it did reduce emissions.

This isn’t an isolated case. The broad interpretation of NSR would place almost all industrial activity in violation, since efficiency improvements, as well as routine maintenance and repairs, are common and necessary. Not surprisingly, the Clinton administration found 80 percent of the nation’s utilities, refiners and paper manufacturers in violation of NSR.

Industries’ alternatives are not apparent. Plants that continue operations without maintaining equipment and making standard repairs threaten worker safety.

Moreover, utilities jeopardize the reliability of electric generation, putting vulnerable segments of the population in danger. The elderly, for example, could face serious health problems should they lose their heat in the winter or air conditioning in the summer.

Furthermore, NSR impedes efforts to protect air quality since it discourages plants from adopting cleaner-burning technologies or converting to cleaner fuels.

The Bush administration wants to restructure the NSR program to end its perverse incentives but is falling victim to claims by self-described environmentalist that it is “weakening” the Clean Air Act to benefit industry.

These accusations give the impression that industry is alone in supporting reforms; this simply isn’t the case. The National Governors’ Association and the Environmental Counsel of States are among numerous organizations advocating changes to the “complex program…not readily comprehended by those impacted, namely the public companies, and regulators.” Even former EPA Administrator Carol Browner had pledged to “examine ways to simplify and streamline the NSR process…[and] to reduce chances of legal challenge” – empty promises, given the onslaught of lawsuits EPA filed in the following years.

EPA’s proposed reforms are expected to clarify the term “routine maintenance.” They will also require a plantwide emissions limit rather than separate controls on each emissions source and allow companies to upgrade plants without triggering NSR for 10 years once they have installed state-of-the-art technology.

The latter two measures are versions proposed by the Clinton administration before it broadened the rule, but they were never finalized.

NSR creates the wrong incentives, discouraging industry from making plants run more efficiently, using cleaner-burning technology and maintaining the plant’s upkeep to protect against outages and safety hazards.

Restructuring the program, as the Clinton administration had promised to do, doesn’t mean weakening the Clean Air Act. Conversely, it means strengthening it to further protect air quality while meeting the nation’s growing energy needs.