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MYTHS AND FACTS ABOUT NEW SOURCE REVIEW REFORM
The New Source Review (NSR) program covers (1) the construction of new
major emitting industrial facilities and (2) existing facilities that make major
modifications that significantly increase pollution emissions. The program requires that
new plants and major modifications of existing plants obtain a permit before
construction, which will be issued only if the new plant or major modification includes
pollution control measures that reflect best technology available.
Responding to a longstanding, bipartisan call for reform, EPA is making a number
of regulatory improvements in the way the program works for existing facilities. These
improvements will not change the NSR program as it applies to new facilities and will
not change which facilities are subject to the NSR rules.
EPA is promulgating one set of final rules and is issuing one set of proposed
rules. The final rules already have been through the full notice-and-comment rulemaking
process. In 1996, EPA proposed several changes to the NSR program, and accepted
extensive public comments on this proposal, several elements of which are now being
finalized. These improvements will:
1) Remove needless regulatory barriers to pollution control and prevention projects;
2) Encourage modernization of plants and provide operating flexibility by establishing
stringent pollution caps known as "Plantwide Applicability Limits" (PALs);
3) Create incentives for facilities to install state-of-the-art pollution controls by providing
operational flexibility for facilities that install "clean units," and
4) Calculate actual emissions increases and establish actual emissions baselines.
In addition, EPA is seeking public comment on a proposed rule concerning the
definition of "routine maintenance, repair, and replacement" under the NSR program.
The proposed rules would amend that exemption, which is currently contained in EPA's
regulations, to make clear that two categories of activities constitute routine maintenance,
repair and replacement.
EPA proposes to establish an annual routine maintenance, repair and replacement
allowance, so that activities undertaken to promote the safe, reliable and efficient
operation of a plant whose costs fall within the allowance would automatically constitute
routine maintenance. EPA also proposes to establish an equipment replacement
approach, whereby most replacements of existing equipment with functionally equivalent
new equipment to allow plants to run more safely, efficiently and reliably - for example,
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a utility's replacement of turbine rotor shafts or turbine blades with upgraded shafts or
blades - would constitute routine maintenance, repair and replacement. EPA is asking for
public comment on these proposals and will not take final action on them until after the
public has had an opportunity to comment on the proposed rules and the agency has
considered those comments.
(1) MYTH: EPA is finalizing changes to the NSR program without analyzing the impact
of those changes on public health and the environment.
FACT: EPA has evaluated the impact of the changes to the NSR program and found that
these improvements will reduce overall emissions by (1) eliminating unintentional
regulatory barriers that stand in the way of environmentally beneficial projects at existing
plants, (2) removing counterproductive incentives that encourage facilities to maintain
their emissions as high as legally allowed, and (3) establishing regulatory incentives for
sources to decrease emissions. The final rules are based on an enormous amount of
public comment that EPA has gathered and evaluated over the last 10 years, and on
EPA's own legal, technical and policy review. In addition to reducing emissions, the
changes will provide regulatory certainty, administrative flexibility and permit
streamlining.
(2) MYTH: EPA is making major changes to the NSR program without providing an
opportunity for full public notice and comment.
FACT: The matters addressed in the final rule have already been through the full notice-
and-comment process and have been the subject of extensive public hearings and
comment. There has been a broad, bipartisan consensus for many years that the NSR
program needs improvement. The nation's governors, state environmental
commissioners, environmental groups, industry, academia and other groups have
acknowledged problems with the current NSR program. The Democratic Leadership
Council's think tank, the Progressive Policy Institute, has also called for NSR reform,
recognizing that the existing regulations are inefficient and counterproductive.
The final rule changes to NSR are the result of a 10-year multi-stakeholder process that
has included numerous opportunities for interested parties and individuals to provide
input. State regulators, environmental groups, industry and the public commented
extensively on the provisions in the final rule - which were proposed in 1996 - and we
have considered these comments fully in developing the final rule.
The routine maintenance proposal will be subject to a full public comment process.
(3) MYTH: EPA is making major changes to the NSR program that will undercut the
NSR enforcement cases it brought against utilities.
FACT: Governor Whitman has stated numerous times that she strongly supports
enforcement of the law and is moving forward with these cases. None of the changes,
either in the final rule or the proposed rule, will apply to the existing enforcement cases.
The final rule will apply only prospectively. EPA will not make any final decisions with
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respect to the proposed rule until after the completion of public notice and comment, and
in any event, EPA is proposing to apply the proposed rule only prospectively as well.
(4) MYTH: EPA is making regulatory changes that effectively rewrite the Clean Air
Act.
FACT: The changes that we are making to the NSR rules do not change the Clean Air
Act at all. All the changes are fully authorized under and are consistent with the Act.
(5) MYTH: Because EPA estimated in 1996 that, with these improvements, 50% fewer
sources would go through NSR, the improvements will have an adverse impact on air
quality.
FACT: The number of times sources have to go through the permitting process is not a
good measure of NSR benefits. EPA's analysis of the NSR reforms is that they will
benefit the environment by reducing emissions and improving energy efficiency.
Even though a source may make a change without obtaining a new NSR permit, it does
not mean that source is not covered by NSR or that NSR is reducing air emissions from
the source. For example, a source that takes an emissions cap known as a Plantwide
Applicability Limit (PAL) may avoid some future NSR permitting, but only in exchange
for an agreement to cap its overall emissions under the NSR program. By so doing, it
would reduce its emissions and also reduce the frequency of its NSR permit reviews.
Conversely, requiring an NSR permit for some types of projects (e.g., those at clean
units) can result in no or only trivial environmental benefits. The NSR rule being
finalized today is designed to streamline review in such cases. Likewise, requiring an
NSR permit for some environmentally beneficial projects may deter some projects from
going forward. In such instances, no permit is now recorded, but real environmental
benefits are lost. Our rules are designed to remove NSR barriers and promote these
beneficial projects.
(6) MYTH: Because some of the final rule changes allow facilities to freeze their
emission levels for 10 years, EPA's changes to the NSR program will not lead to air
quality improvements.
FACT: This claim is simply untrue. As noted above, EPA's review shows that the
changes made by the final rule will provide a net benefit to air quality by removing
current NSR barriers to environmentally beneficial projects and by removing incentives
in the current NSR rules to keep pollution at high levels.
It is important to understand that the NSR program was never designed to require
facilities to reduce existing levels of pollution - that is not its purpose. NSR review is
designed to be triggered when a new facility is being built or when one is undergoing a
major modification that could significantly increase emissions. NSR is a permitting
process to review and control emissions increases, not a tool to require reductions. The
best way to require reductions in emissions is through legislative action such as the
President's Clear Skies proposal.
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In practice, sources' emissions fluctuate as part of the business cycle, as well as for other
reasons. The current rule often results in lengthy discussions over what time period is
truly representative of normal operations. EPA's rule would resolve this by allowing
industrial sources to select any two-year period in the last 10 years - consistent with the
business cycle. However, importantly, the baseline would have to be adjusted to reflect
all current emissions limits. This allows a facility to operate at maximum capacity during
peak periods of the business cycle, while still maintaining strict air quality controls.
(7) MYTH: EPA's changes to the NSR program will allow new sources to be built
without installing pollution controls.
FACT: EPA's changes to the NSR program would not affect new sources at all, and new
sources account for a large majority of NSR permits issued every year. Neither the final
rule nor the proposed rule being announced by EPA would change NSR requirements for
new sources.
(8) MYTH: EPA's changes to the NSR program will pre-empt state programs.
FACT: The changes do not pre-empt any state program more stringent than the federal
program. Rather, under the Clean Air Act, states are specifically authorized to establish
their own programs that may be more stringent than federal law. This continues to be the
case.
EPA believes that the changes will significantly improve the NSR program. Thus, EPA
will include the changes in the base NSR program as has been EPA's consistent practice
and will encourage states to adopt these changes in their own programs.
(9) MYTH: The final rule has not been subject to enough public comment and is a
complete departure from the Clinton Administration's 1996 proposal.
FACT: These proposals have been subject to an extraordinary amount of public input.
The history of the final rule goes back to 1992 when EPA formed a federal advisory
committee to determine how NSR could be improved. The committee included
representatives from environmental groups, state and local governments, federal agencies
and industry. The work of this committee ultimately led to the publication of two Federal
Register notices (in 1996 and in 1998), each followed by an opportunity for public
comment. EPA also held two public hearings and hosted more than 50 stakeholder
meetings. Over 600 detailed comments have been submitted during the decade EPA has
spent working on these rule improvements.
These final rules address the same issues as those originally proposed in 1996. EPA has
made improvements based on the public comments and analysis, and, as is required by
law, these changes are consistent with the scope of the 1996 proposal.
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