27 Aug 2003 New Source Review: What the Fuss is About, by Amy Ridenour and Christopher Burger

BACKGROUND: The Bush Administration is issuing a new rule clarifying what is meant by “routine maintenance” under “New Source Review” provisions in the 1977 Clean Air Act amendments.

The 1977 Clean Air Act amendments required power plant and oil refinery operators to install best-available anti-pollution devices whenever they modified or expanded power plants, but not when they conducted periodic maintenance, repairs and routine upgrades on the plants.

Twenty years later, the Clinton Administration, in the words of a January 27, 2003 Wall Street Journal editorial, “got angry that utilities weren’t voluntarily capping emissions beyond what the law required. The EPA suddenly decided that maintenance activities like replacing a steam duct or a turbine blade constituted ‘major modification,’ triggering NSR and requiring the installation of expensive scrubbers and the like. Dozens of companies, including the government’s own Tennessee Valley Authority, were hauled into court for past actions, many of which had been done with the approval of regulators.”

James Taylor, writing in the January 1, 2003 Environment News, describes what happened next: “The Clinton-era mandates took American industry by surprise. Maintenance and repair decisions made according to predictable and consistently enforced EPA guidelines were suddenly and retroactively challenged by EPA as unlawful. As a result, businesses delayed implementing current and future maintenance and repairs, uncertain as to whether New Source Review regulations would be applied to them. Efforts to improve the efficiency of industrial facilities and reduce pollutant emissions were being postponed until more reliable enforcement standards could emerge.”

Now the Bush Administration, citing a need to make certain the rules are clear and understandable to all concerned, is announcing modifications to New Source Review regulations. Organizations and individuals on the environmental left are all but apoplectic; supporters of the change counter that the Administration is essentially returning to the policy enacted by a Democratic Congress and signed into law by President Carter.

TEN SECOND RESPONSE: The Bush Administration’s New Source Review modifications will improve air quality by removing perverse incentives in Clinton-era regulations that actually encouraged industry to retain older plants instead of building cleaner, more-efficient new ones.

THIRTY SECOND RESPONSE: For two decades the Environmental Protection Agency enforced the “New Source Review” provisions of the 1977 Clean Air Act Amendments as intended by Congress. Then the Clinton Administration changed the rules, throwing the energy industry into confusion, delaying plant modernizations and causing massive numbers of lawsuits. The Bush Administration now is acting to make sure the regulations are clearly understandable and are written in accordance with Congress’ original intent, so the industry will know exactly what is expected of it, and plant modernizations can take place.

DISCUSSION: Environmental organizations and their allies on the left have been shrill in their denunciation of the New Source Review modifications, and some of their rhetoric has been misleading at best. The Sierra Club website, for example, has described the EPA’s decision this way: “In the latest insult to the environment, the EPA has announced its intentions to abandon a longstanding provision of the Clean Air Act.”

Other criticisms were scarcely more informative:

“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. 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.” – John Walke, Natural Resources Defense Council, NRDC press release, August 22, 2003

“It seems the Bush Administration’s New Year’s resolution is to appease the energy industry by sacrificing the lives of people in the Northeast.” – Connecticut Attorney General Richard Blumenthal, as quoted in the Wall Street Journal, January 27, 2003

“President Bush’s gift to polluters promises more smog, more soot and more premature deaths.” – U.S. Senator John Edwards (D-NC), as quoted in the Wall Street Journal, January 27, 2003

“President Bush’s proposed overhaul of the Clean Air Act would eliminate the new source review provision.” – Albany Times-Union editorial, August 17, 2003

Supporters of the change are more calm:

“For far too long, enforcement of the New Source Review program has been burdensome, confusing, contradictory, and counterproductive to environmental progress. Today’s action by President Bush means NSR will no longer be a barrier to investments in state-of-the-art pollution control technologies that reduce pollution and make our air cleaner. In short, it takes the nation’s environmental policy into the 21st Century. Moreover, this reform will ensure greater electricity reliability by removing regulatory obstructions to routine upgrades and repairs that help prevent accidents and power failures. As the recent blackouts so painfully showed, keeping the lights on is an absolutely essential ingredient to a functioning economy.” – James Inhofe (R-OK), chairman of the U.S. Senate Committee on Environment and Public Works

“A range of opinion leaders claim the Bush administration’s proposed relaxation of some New Source Review requirements will cause massive increases in pollution and will in effect repeal the Clean Air Act. Ironically, the extremity of the rhetoric is matched only by its almost complete disconnection from reality. Not only will pollution not increase; no policymaker, no matter now tenacious or determined, can stop continued reductions in air pollution. NSR is easy to criticize. The program has actually slowed progress on air pollution by creating perverse incentives to keep older plants running well beyond their ostensible useful lives, rather than build more-efficient new ones. Thousands of pages of often-conflicting EPA guidance make it difficult to tell how and when the rules apply, creating endless conflict and litigation. And the case-by-case nature of NSR permitting creates long delays, and sets up regulators to micromanage companies’ business decisions. Eliminating these enormous costs is reason enough to reform NSR. That’s why the Clinton administration had already proposed many of the changes now being implemented by the Bush administration — including some over which activists are now crying foul.” – Joel Schwartz, American Enterprise Institute, writing on TechCentral Station, August 27, 2003 at http://www.techcentralstation.com/1051/envirowrapper.jsp?PID=1051-450&CID=1051-082703A

“Twenty-six Senators, including nine Democrats, have signed a letter urging the Administration to clarify the 1977 rules so that companies can ‘repair their facilities and maintain reliable and safe electric service… without being subject to the threat of federal government lawsuits for allegedly violating vague NSR requirements.” – Wall Street Journal editorial, May 29, 2002

“Although long overdue, the Bush Administration’s NSR recommendations are a step in the right direction to ensuring reliable and affordable supplies of energy for Americans. These reforms will provide industry with more regulatory certainty and enhance environmental quality by encouraging pollution prevention projects, energy efficiency improvements and new investments in state of the art technologies at the nation’s oldest power plants and factories.” – Charli Coon, The Heritage Foundation, June 13, 2002

FOR MORE INFORMATION:

James Taylor, “EPA Restores Flexibility to New Source Review” Environment News, The Heartland Institute, January 1, 2003, at http://www.heartland.org/Article.cfm?artId=11300

Associated Press, “EPA to Ease Air Pollution Rules for Old Plants,” August 25, 2003, available at http://www.foxnews.com/story/0,2933,95619,00.html

“Power Partisanship,” Wall Street Journal, August 26, 2003 at http://online.wsj.com/article/0,,SB106185383024614500,00.html?mod=opinion

“Freeing Christie Whitman,” Wall Street Journal Editorial, January 27, 2003, available at http://online.wsj.com/article/0,,SB1043633852628789264,00.html?mod=opinion

“Clean Air, Muddy Law,” Wall Street Journal, May 29, 2002, available at http://online.wsj.com/article/0,,SB1022634048886981400,00.html?mod=opinion%5Fmain%5Freview%5Fand%5Foutlooks

“EPA New Source Review Webpage” at http://www.epa.gov/ttn/nsr/

National Petrochemical and Refiners Association Webpage on New Source Review at http://www.npradc.org/issues/environmental/new_source.cfm

Charli Coon, J.D., “New Source Review Recommendations: A Step in the Right Direction,” Heritage Foundation WebMemo #111, June 13, 2002 at http://www.heritage.org/Research/EnergyandEnvironment/WM111.cfm

National Association of Manufacturers New Source Review webpage at http://www.nam.org/secondary.asp?CategoryID=790&TrackID=

“Bush Administration to Gut Clean Air Act,” Natural Resources Defense Council press release, August 22, 2003 at http://www.nrdc.org/media/pressreleases/030822.asp

“EPA Announces Plans to Undo Clean Air Regulations,” Sierra Club webpage, June 14, 2002 at http://www.sierraclub.org/scoop/new_source_review.asp

“Don’t Pollute the Law,” Albany Times-Union, August 17, 2003, at http://www.timesunion.com/AspStories/story.asp?storyID=161475&category=OPINION&BCCode=&newsdate=8/17/2003

by Amy Ridenour and Christopher Burger
The National Center for Public Policy Research

Contact the authors at: 202-507-6398 or [email protected]
The National Center for Public Policy Research
20 F Street NW, Suite 700 Washington, D.C. 20001