Winds of change: controlling emissions of pollutants by power generators can be done, but there's lots of disagreement on the best way.

• Author: Morandi, Larry

"These changes in the NSR rule will reduce energy use and air pollution, provide incentives to install state-of-the-art pollution controls...and remove perverse and unintended regulatory barriers to investments in energy efficiency and pollution control projects."

U.S. Environmental Protection Agency

Nov. 22, 2002

"The new EPA rules are a critical first step that--depending on the eventual outcome--could greatly improve the way power plants are regulated under the Clean Air Act."

Edison Electric Institute

Nov. 22, 2002

"We firmly believe the controversial reforms EPA is putting in place today will result in unchecked emission increases that will degrade our air quality and endanger public health."

State and Territorial Air Pollution Program Administrators

Nov. 22, 2002

NSR. Never has an acronym encapsulated the air quality divisiveness among states, the federal government, electric utilities and environmental groups as succinctly as the one for "new source review." A small part of the Clean Air Act, it has nonetheless superseded broader discussions about clean air. To some, the Environmental Protection Agency's (EPA) revisions to the NSR rule represent "progress." To others, they are a "rollback" in public health and environmental protection.

But let's back up a second. What exactly is new source review, and how does it fold into the Clean Air Act?

CLEAN AIR 101

The 1970 Clean Air Act required the newly created EPA to set limits on air pollutants harmful to health and the environment. The EPA regulated six major pollutants--sulfur dioxide ([SO.sub.2]), nitrogen oxides (NOx), ozone, carbon monoxide, particulate matter and lead. Although the federal government set the standards, states must ensure compliance. They can adopt pollution controls tougher than the federal ones, but not weaker. Persistent violations subject a state to loss of federal highway funds.

NSR came about in 1977, when Congress amended the Clean Air Act to set different pollution controls for new and old electric power plants and other industries. New industry sources (hence the acronym) had to get a permit and install state-of-the art equipment to reduce emissions. Facilities built before 1977 were "grandfathered."

They could continue to emit pollution without having to use new controls, provided, and this was important, they did not make major modifications to their operations that significantly increase emissions. If a grandfathered plant polluted more than it did in 1977, it was subject to the same permit and technology requirements as new facilities.

Why the exemption for old facilities? The thinking at the time was that the older power plants would soon become obsolete and be replaced by newer, cleaner facilities. But a quarter century later many of these old plants are still going strong.

EPA'S CHANGES

The Environmental Protection Agency announced final changes to the NSR rule Nov. 22, 2002, including a proposed new rule that would define "routine maintenance, repair and replacement"--or the types of modifications--that would trigger NSR requirements for older plants.

Among the changes in the final rule, electric utilities and other industries that agree to operate within strict "sitewide" emissions limits are allowed to modify their operations without being subject to NSR requirements. In the past, EPA had set emission limits on each part of a facility. The new rule would set a cap on total emissions from the entire facility. As long as the cap is not breached, NSR would not apply. In addition, certain plants are allowed to change the baseline upon which emissions are calculated from the two-year period preceding a proposed modification to the highest two-year period within the preceding 10 years.

One of the most contentious aspects of the NSR program is the definition of "routine maintenance, repair and replacement." EPA's new proposed rule would provide companies with a "facilitywide annual allowance for maintenance...