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Release Date: 06/13/2002
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Environmental News



Acts on Broad-based Bipartisan Call for Common-Sense Improvements to New Source Review, Clean Air Program
Contact: Joe Martyak, 202-564-9828

Acting on the broad-based, bipartisan call for improving the New Source Review (NSR) program, the U.S. Environmental Protection Agency (EPA) today announced steps to increase energy efficiency and encourage emissions reductions. The EPA today submitted a report on NSR and recommendations for reform to President Bush to encourage pollution prevention projects, energy efficiency improvements, and investments in new technologies and modernization of facilities.

EPA’s review found that the NSR program has impeded or resulted in the cancellation of projects that would maintain or improve reliability, efficiency or safety of existing power plants and refineries. There is overwhelming support for reform from a diverse group of people and organizations.

The improvements that EPA is recommending today are the culmination of a 10-year process. During this period, EPA implemented pilot studies and received thousands of comments from state and local governments, environmental groups, private sector representatives and concerned citizens. Over the past year, EPA met with more than100 environmental and consumer groups and public officials from across the political spectrum, held public meetings around the country, and evaluated more than 130,000 written comments to assess the effect of NSR on the energy sector. Last summer, the nation’s governors and the state environmental commissioners – on a bipartisan basis – called for reform of the NSR program. Today’s report and recommendations support this call for NSR reform.

“EPA is taking actions now to improve NSR and thereby encourage emissions reductions,” said EPA Administrator Christie Whitman. “NSR is a valuable program in many respects but the need for reform is clear and has broad-based support. Our review clearly established that some aspects of the NSR program have deterred companies from implementing projects that would increase energy efficiency and decrease air pollution.”

The following reforms that EPA is moving to finalize were originally proposed during the previous Administration in 1996 and has been subject to extensive technical review and public comment:
  • Pollution Control and Prevention Projects: To encourage pollution prevention, EPA will create a simplified process for companies that undertake environmentally beneficial projects. NSR currently discourages investments in pollution control and prevention projects, even if they reduce overall emissions.
  • Plantwide Applicability Limits (PALs): To provide facilities with greater flexibility to modernize their operations without increasing air pollution, a facility would agree to operate within strict site­wide emissions caps called PALs. PALs provide clarity, certainty and superior environmental protection.
  • Clean Unit Provision: To encourage the installation of state­of­the­art air pollution controls, EPA will give plants that install “clean units” operational flexibility if they continue to operate within permitted limits. Clean units must have an NSR permit or other regulatory limit that requires the use of the best air pollution control technologies.
  • Calculating Emissions Increases and Establishing Actual Emissions Baseline: Currently, the NSR program estimates emissions increases based upon what a plant would emit if operated 24 hours a day, year-round. This makes it impossible to make certain modest changes in a facility without triggering NSR, even if those changes will not actually increase emissions. This common-sense reform will require EPA to evaluate how much a facility will actually emit after the proposed change. Also, to more accurately measure actual emissions, account for variations in business cycles, and clarify what may be a “more representative”period, facilities will be allowed to use any consecutive 24-month period in the previous decade as a baseline, as long as all current control requirements are taken into account.

EPA is also proposing three new reforms that will go through new rulemaking and public comment processes before they are finalized. These include:
  • Routine Maintenance, Repair and Replacement: To increase environmental protection and promote the implementation of necessary repair and replacement projects, EPA will clarify the definition of “routine” repairs. NSR excludes repairs and maintenance activities that are “routine,” but a complex analysis must currently be used to determine what repairs meet that standard. This has deterred companies from conducting needed repairs, resulting in unnecessary emissions of pollution and hazardous conditions at these plants. EPA is proposing guidelines for particular industries to clearly establish what activities meet this standard.
    “The NSR program needs to be clarified to adequately define the concept of “routine maintenance” to avoid the regulatory uncertainty facing industry. Such clarification would allow companies to repair their facilities and maintain reliable and safe electric service for consumers and workers without being subject to the threat of federal government lawsuits for allegedly violating vague NSR requirements.” – Letter to Administrator Whitman, May 13, 2002, from a bipartisan group of 26 Senators.
  • Debottlenecking: EPA is proposing a rule to clarify how NSR applies when a company modifies one part of a facility in such a way that throughput in other parts of the facility increases (i.e., implements a “debottlenecking” project). Under the current rules, determining whether NSR applies to such complex projects is difficult and can be time consuming.
  • Aggregation: Currently, when multiple projects are implemented in a short period of time, a difficult and complex analysis must be performed to determine if the projects should be treated separately or together (i.e., “aggregated”) under NSR. EPA’s proposal will establish two criteria that will guide this determination.

“Reforming NSR will promote energy efficiency, plant safety and modernization at refineries, power plants, and other industrial facilities across the country,” said Administrator Whitman. “Our common commitment to environmental protection need not be an obstacle to having the most modern and efficient energy infrastructure in the world. Unfortunately, some elements of NSR have discouraged modernization and the development of new technologies. These reforms will bring clarity and greater opportunities for pollution prevention and energy efficiency.”

To see a copy of the report and recommendations as well as other information on the New Source Review program, visit EPA’s website at:

New Source Review (NSR) — Reform Examples

Plantwide Applicability Limits (PALs): Using a PAL type permit, a computer chip manufacturing facility used pollution prevention techniques to lower its smog forming volatile organic compound (VOC) emissions by 70% from 190 tons/year to 56 tons/year, while at the same time increasing production significantly. The PAL permit provided flexibility to allow quick and timely process and equipment changes that enabled the facility to significantly reduce VOC emissions without triggering costly and time-intensive permitting actions. New generations of computer chips are introduced every 12 to 24 months, and this company typically needed to make 150 to 200 equipment and operational changes per year. In the absence of the PAL type permit, the company would need to examine each change individually to determine whether it triggered NSR.

Clean Unit Test: A company that manufactures chemical and specialty products for home care, personal care, home storage and insect control operates a plant in an ozone non-attainment area. All of the plant’s aerosol product-filling and packaging operations underwent non-attainment NSR in the early to mid-1990s. The NSR permitting process required the installation of very stringent emission controls. Under the current NSR program, many routine projects designed to maintain or improve operating efficiencies, improve safety, and reduce operating costs at this facility could trigger NSR, even though very stringent controls are in place, emissions would remain well within permit limits, and the offsets previously secured were based on maximum permitted capacity. In many cases, projects designed to improve operating efficiency would also result in decreased line scrap and waste generation, providing a pollution prevention benefit.

Calculation of Emissions: A refinery wanted to install a heat exchanger that would recover waste heat from one of its gasoline-producing units. As a result other heaters and boilers would need to be used less, reducing energy usage and emissions. However, because of how NSR currently measures future emissions (i.e., assumes future operation is at full capacity, although present operation is not) the project showed a “potential” emissions increase that could trigger NSR. The facility determined that NSR would make the project uneconomical, and it would not go forward.

Pollution Control Project: A facility that is equipped with boilers that currently burn fuel oil wanted to change its boilers so they could burn natural gas, which would reduce emissions of SO2 and NOX. It may also result in a fuel cost savings. Although emissions of SO2 and NOX would decrease significantly, the facility projected emissions of VOCs and CO to increase slightly. These increases could trigger NSR, and the facility is likely to conclude that the project is no longer viable and continue to burn oil. This change would no longer be subject to NSR because the exclusion for pollution prevention and control projects includes fuel switching.

Routine Maintenance, Repair and Replacement: For example, a manufacturer operates a process that includes a drying system. It determined that the energy efficiency of the system could be improved if the existing drier nozzles were replaced with Teflon-coated nozzles. Because it could not readily determine whether installation of the new nozzles would be considered routine maintenance, repair or replacement, the company decided not to proceed with the project. NSR excludes repairs and maintenance activities that are “routine,” but a complex analysis must currently be used to determine what repairs meet that standard. This has deterred companies from conducting needed repairs, often times resulting in unnecessary emissions of pollution. The proposed changes would provide more certainty for activities that qualify for the routine maintenance, repair and replacement exclusion.

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