Environmental & Safety Issues: New Source Review (NSR) Reform
In 1977, Congress added the NSR provisions into the Clean Air Act. The purpose of the NSR was to minimize the administrative rule-making burden by reducing the number of source specific rules, while serving as an air pollution permitting and regulatory review "catch-all" for new sources or major modifications of existing sources. Since inception, the NSR program has been under continuous scrutiny; however, it wasn't until the EPA began issuing multimillion dollar penalties for violations of the NSR program that the significance of interpreting and navigating the complicated NSR process came to fruition.
The main problem resided in determining NSR applicability. Specifically, how and when a company triggered a "major" change in operations and how this change impacted emission calculations. According to the rule, a facility was required to compare actual emissions before a change to potential emissions after the implementation. Although this process may appear simple, it is rather complex when considering that a company must consider a theoretical quantity of emissions (potential to emit), both upstream and downstream of the change in operations (debottlenecking). As a result, even slight changes to an operation could trigger NSR.
Due to the potential financial implications of prompting NSR, companies began avoiding and/or minimizing equipment repair and modernization, which resulted in old equipment operating less efficiently and being used beyond recommended life. In addition, because technological advancements rely on an active market, reduced spending on operating and pollution control equipment meant limited available resources at the supplier and entrepreneurial level for new product development. It was apparent that NSR would not be the panacea for administering a progressive air pollution control program.
The EPA publicly came to terms with the NSR program shortcomings on June 13, 2002. After over two-decades of defending the program, the EPA announced that the NSR program "does discourage projects than improve capacity or efficiency but do not result in increases in actual emissions." While opponents of the NSR program felt vindicated by the statement, proponents blamed the Bush Administration for playing politics and failing to protect the environment. Regardless, the EPA began working on a new rule that was promulgated this past March.
According to the EPA, the proposed new rule should improve operating flexibility, while encouraging process improvements and equipment modernization. There are several significant changes, as follows.
To address operating flexibility within a facility's property, the EPA developed a Plantwide Applicability Limits (PALs) program. PALs allow facilities that agree to operate within strict facility-wide emission caps to modify their operations without undergoing NSR, so long as the modifications do not cause emissions to violate their plantwide cap. The EPA also re-worked a program to address the installation of new pollution equipment. The Pollution Control and Prevention program is designed to streamline the permitting process by allowing companies to begin installing and operating environmentally beneficial equipment without having to wait for adjudication of a permit application. Closely aligned with this program is the Clean Unit Provision, which was created to encourage companies to install the best available pollution controls. As a result of attaining "clean-unit" status, facilities gain a strategic advantage for future permitting flexibility and pollution limits.
One of the key discrepancies with the original NSR program involved determining rule applicability using emission calculations for existing and future equipment. The proposed new rule takes up this issue by establishing changes in the Emission Calculations Test Methodology. The new calculus allows facilities to establish a baseline actual emission estimate using any consecutive 24-month period in the previous decade. EPA is anticipating that this will result in fewer facilities triggering NSR. (Note: The baseline emission provision does not apply to power plants.)
Lastly, the Routine Maintenance, Repair and Replacement provision of the proposed new rule authorizes facility-wide annual allowances for maintenance activities. Activities undertaken to promote the safe, reliable and efficient operation of a plant, whose costs fall within the allowance, would constitute routine maintenance, repair and replacement and therefore be exempt from NSR. In addition, replacement of existing equipment with functionally equivalent new equipment would also be exempt from NSR, if the cost of replacement components is below a specified threshold.
A number of opponents to the proposed new rule have provided feedback to the EPA. In fact, prior to the comment period ending on May 2, 2003, concerned environmental groups delivered more than 225,000 responses of opposition and various air agencies, particularly in northeastern U.S., voiced apprehension. Undoubtedly, there will be an NSR program, let's hope it works better than the last. For more information on the proposed new rule: www.epa.gov/air/nsr-review.