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Environment, Energy and Transportation ProgramClean Air NewsletterA Quarterly Review of Legislation and Air Quality Issues
June 2002
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FEDERAL ACTIONS |
EPA Recommendations to Revise NSR Program
The U.S. Environmental Protection Agency (EPA) submitted recommendations to the president on June 13 to revise the New Source Review (NSR) permitting program. The NSR program applies to the construction of new sources or the modification of existing sources of air pollution. Its purpose is to ensure that in either instance, "1) air quality improves if the change occurs where the air currently does not meet federal air quality standards; and 2) air quality is not significantly degraded where the air currently meets federal standards." The primary means of achieving those objectives is to install the most effective pollution control technology.
The most contentious aspect of the NSR program revolves around the definition of what constitutes a "major modification" of a source (e.g., an electric utility or oil refinery) that triggers the permitting process. Many electric utilities and oil refineries argue that requiring major capital investments in technology to accommodate what they consider to be routine repairs or upgrades to an older facility discourages efficiency. Many state air administrators and environmental groups contend that allowing modifications of older, high-polluting facilities to go unchecked will result in increased emissions as their generating capacity expands.
In its report to President Bush, EPA found that "for existing power plants and refineries, we conclude that the NSR program has impeded or resulted in the cancellation of projects that would maintain or improve (energy) reliability, efficiency, or safety." EPA Administrator Whitman's letter went on to suggest that "preventing emissions of pollutants covered by NSR does not result in significant environmental and public health benefits...[and] for the power generating sector the benefits currently attributed to NSR can be achieved much more efficiently and at much lower cost through the implementation of a multi-emission national cap and trade program, such as your Clear Skies proposal for the power plant industry." (See March 2002 NCSL Clean Air Newsletter for description of Clear Skies proposal.)
The federal agency's recommendations fall into seven categories:
• Pollution control and prevention projects.
• Plantwide applicability limits (PALs).
• Clean unit provision.
• Calculating emissions increases and establishing actual emissions baseline.
• Routine maintenance, repair and replacement.
• Debottlenecking.
• Aggregation.
The full report containing the agency's complete recommendations can be downloaded from EPA's Web site at www.epa.gov/air/nsr-review/nsr_report_to_president.pdf.
In a statement released the same day as the EPA recommendations were made public, the State and Territorial Air Pollution Control Administrators (STAPPA) and Association of Local Air Pollution Control Officials (ALAPCO) voiced their concern with the proposed changes to the NSR program. The organizations' presidents stated that, "We believe the controversial reforms being pursued by EPA will not only result in unchecked emission increases that will degrade our air quality and endanger public health, they will also undermine the chances of any responsible changes to the NSR program ever taking effect." Citing a January 23 letter to EPA Administrator Whitman, STAPPA/ALAPCO pointed to specific concerns about changes in the definition of "routine maintenance," which the organizations understood " ... would institute an investment-based test, whereby the triggering of NSR would depend on the cost of the modification...with no restrictions on the level of air pollution that will be caused by the change."
Although the Edison Electric Institute did not release a specific position on the proposed NSR changes, a spokesman for the institute, which represents shareholder-owned electric companies that account for 70 percent of the electricity generated by U.S. electric utilities, noted that the organization was " ... pleased that the administrator has launched a process that has the potential to address the routine maintenance issue and other issues of concern." The staff member cautioned that the recommendations were just the start of what may be an 18-month rulemaking process, and there is uncertainty about how the process would proceed.
Court Decision on EPA's Regional Haze Rule
In a 2 to 1 decision, a federal appeals court on May 24 overturned a portion of the Environmental Protection Agency (EPA) regional haze rule, finding that it contravened provisions in the federal Clean Air Act.
The regional haze rule, designed to protect air quality in national parks and wilderness areas, requires each state to identify all major stationary sources subject to best available retrofit technology (BART). The rule further calls for states to use a group rather than a source-by-source approach-known as "group BART." It is that portion of the rule that the court found to be "inconsistent with the [Clean Air] Act's provisions giving states broad authority over BART determinations." The court determined that the rule forces states to "require controls without any empirical evidence of the particular source's contribution to visibility impairment."
Vacating that portion of the rule has fueled speculation that EPA's ability to approve an upcoming emissions trading program for sulfur dioxide among Western states has been undermined. However, the decision is seen as a potential boost to White House arguments for comprehensive utility emissions legislation-such as that being drafted to implement the Bush administration's "Clear Skies" initiative [see March 2002 NCSL Clean Air Newsletter]-as an alternative to rule-by-rule litigation. Although it concedes that the ruling is a setback, EPA has restated its commitment to work with states and tribes to meet the original goals of the regional haze rule.
The dissenting opinion found there was nothing in the Clean Air Act language that bars EPA from promulgating the group BART provisions and that those provisions represent "a reasonable interpretation of an ambiguous statute." The case is American Corn Growers vs. Environmental Protection Agency, 2002 WL 1040579 (D.C.Cir.).
EPA Harmonizes Compliance Dates for Ozone Rules
On April 22, the U.S. Environmental Protection Agency (EPA) took final action to move back by one year the compliance date for sources contributing to ozone transport under the Section 126 rule to coincide with the compliance date contained in the NOx State Implementation Plan (SIP) Call, which is May 31, 2004. Section 126 of the Clean Air Act allows states to petition EPA to enforce emission reductions from upwind sources contributing to transboundary pollution in downwind states. The federal agency had approved a petition on Dec. 17, 1999 filed by Connecticut, Massachusetts, New York and Pennsylvania against 392 facilities emitting smog-causing nitrogen oxide (NOx) in 12 states and the District of Columbia. A federal circuit court suspended the compliance date for electric power plants under the Section 126 rule on Aug. 24, 2001, and ordered EPA to resolve some technical issues which, according to the federal agency, would set back compliance beyond the 2003 smog season.
The Section 126 rule and the NOx SIP Call overlap, with all the facilities targeted under the Section 126 rule located in states required to develop state implementation plans. EPA noted that "harmonizing" the two rules would provide states, industry and the public " ... with a better coordinated and simpler program for achieving the necessary emissions reductions." To view the revised rule, go to EPA's Web site at http://www.epa.gov/ttn/rto/126/.
Federal Court Overturns New York Curbs on Emissions Trading
On April 9, a federal judge in the U.S. District Court for the Northern District of New York ruled invalid a New York law passed in 2000 that restricts the sale or trade of air pollution credits earned in New York to industries in other states. The intent of the legislation (L 2000, c. 36; N.Y. Pub. S. Law, §66-k) is to prevent sulfur dioxide (SO2) emissions-which contribute to acid rain-from drifting back into New York. The law authorizes the Public Service Commission to assess an "air pollution mitigation offset" against any New York entity engaged in the sale or trade of an "SO2 allowance credit" to any source in 14 upwind states. The air pollution mitigation offset is equal to the dollar amount of the market transaction.
Clean Air Markets Group-a coalition primarily of electric utilities, mining companies and credit brokers-challenged the law. In overturning the statute, Judge David N. Hurd determined that it prevents states from participating in the federal emissions trading program established under the Clean Air Act and is a restraint on interstate commerce. New York plans to appeal the decision. The full decision can be viewed at http://www.nysd.uscourts.gov/courtweb/pdf/D02NYNC/02-03325.PDF.
Federal Court Upholds EPA Clean Air Standards
In a unanimous decision handed down March 26 in the case of American Trucking Associations vs. Environmental Protection Agency (No. 97-1440), the U.S. Court of Appeals for the District of Columbia Circuit denied a petition for review of EPA's new 8-hour ozone (smog) and fine particulate matter (soot) air quality standards. For a description of the new standards, log onto EPA's Web site at www.epa.gov/oar/oaqps/ozpmbro.htm.
The federal agency originally promulgated the standards in July 1997. The U.S. Supreme Court upheld the constitutionality of the standards on Feb. 21, 2001, but determined that EPA's implementation strategy was unlawful and remanded the standards to the agency to develop a reasonable approach. In rejecting further challenges to the standards, the D.C. Circuit Court determined that the standards were neither arbitrary nor capricious. The full decision can be viewed at http://pacer.cadc.uscourts.gov/common/opinions/200203/97-1440c.txt.
STATE ACTIONS |
Texas, EPA Reach Ozone Flex Agreement
On June 19, the regional administrator for the U.S. Environmental Protection Agency's (EPA) Region 6 office in Dallas, Texas, signed an agreement with the Texas Natural Resource Conservation Commission (TNRCC) that "endorses the principles proposed in the [TNRCC's] 8-hour Ozone Protocol." The agreement is in response to EPA's "Ozone Flex" guidelines that were issued on June 22, 2001, to encourage state and local governments to voluntarily adopt programs to reduce smog-forming emissions (See July 2001 NCSL Clean Air Newsletter).
The guidelines apply to areas that currently meet the 1-hour ozone standard but may not meet the new 8-hour standard. Incentives for developing early ozone-reduction programs include local control of the measures to be employed and deferral from 2004 to 2007 of potential nonattainment designation for the new 8-hour standard. As Gregg Cooke, the EPA regional administrator, indicated in a meeting with state legislators and state environmental agency officials in Dallas on June 20, "It's your choice whether to take part in the program. If you accelerate planning, you can escape nonattainment by three years." (See related story on page 5.)
States must make commitments to take advantage of the flexibility offered under the Ozone Flex guidelines. EPA's protocol notes that the " ... early action plans will include all necessary elements of a comprehensive air quality plan, but will be tailored to local needs and driven by local decisions." Further, " ... this approach will offer a more expeditious time line for achieving emission reductions than EPA's expected 8-hour [ozone standard] implementation rulemaking, while providing 'fail-safe' provisions for the area to revert to the traditional State Implementation Plan (SIP) process if specific milestones are not met." The "milestones" include:
• Completion of emissions inventories and modeling;
• Adoption of control strategies that demonstrate attainment;
• Completion and adoption of the early action SIP revision; and
• Attainment not later than Dec. 31, 2007.
States have little to lose by entering into the voluntary process. If they fail to meet all the milestones and revert to the "same requirements and deadlines which would have been effective under the Clean Air Act and EPA's 8-hour designation rulemaking," they nonetheless will receive "appropriate credit in the standard SIP process for all reductions from measures implemented in this program." For additional information about the Texas-EPA agreement, contact Kate Williams in TNRCC's office at (512) 239-6797.
New Hampshire Passes Multi-Pollutant Legislation
In an effort to control emissions from the state's three fossil-fuel power plants, the New Hampshire legislature passed House Bill 284 on April 18, and the governor signed the legislation on May 9. The bill provides market incentives to reduce sulfur dioxide (SO2), nitrogen oxide (NOx) and mercury-"criteria" pollutants under the Clean Air Act-and carbon dioxide (CO2)-a greenhouse gas that contributes to climate change. The legislation is designed to reduce SO2 emissions by 75 percent from current levels in 2006; reduce NOx emissions by 70 percent during the same period; and roll back CO2 emissions to 1990 levels by 2010. Mercury reductions will be determined by the Department of Environmental Services (DES).
The legislation authorizes DES to allocate emission allowances to the three electric utilities under a cap and trade program up to the following statewide annual emissions caps:
• SO2-7,289 tons.
• NOx-3,644 tons.
• Mercury-a level to be determined by DES based on the U.S. Environmental Protection Agency's proposed regulation establishing a maximum achievable control technology standard.
• CO2-5,425,866 tons.
The affected facilities must comply with the emission caps by Dec. 31, 2006. To view the legislation, go to the New Hampshire legislative Web site at http://gencourt.state.nh.us/ie/.
New Hampshire becomes the first state to employ a multi-pollutant strategy for SO2, NOx, mercury and CO2 through legislation. The Massachusetts Department of Environmental Protection issued final regulations on May 11, 2001, to control the same set of air emissions from six of the state's oldest and highest-polluting power plants (See July 2001 NCSL Clean Air Newsletter).
New York Governor Proposes "Green" Car Tax Break
On June 14, Governor George Pataki proposed legislation to make it easier for New Yorkers to claim tax benefits for the purchase of "hybrid" vehicles, which use a combination of gasoline and electric motors to increase gas mileage and cut emissions.
Assembly Bill 11749 and Senate Bill 7757 would exempt $3,000 of the price of certain hybrid vehicles from state and local sales tax. Purchasers also may receive a $2,000 personal income tax credit or corporate tax credit, matching the current federal deduction allowance. These provisions would solve the problem of calculating tax credits based on "incremental costs" (the cost differential between a hybrid vehicle and a similar conventionally powered vehicle) that are not always obtainable. The legislation would be retroactive to January 2000, meaning that consumers who have previously purchased hybrids could apply for the tax break.
The measure is the latest in a series of efforts by the state to promote the use of alternative fuel vehicles (AFV). New York's Clean Fuel Vehicle Council has coordinated the state's approach to AFV use in daily operations. More than 1,400 of the vehicles currently are in use in the state.
MEETINGS |
NCSL "Environmental Policy Dialogue," June 20, Dallas, Texas
The National Conference of State Legislatures (NCSL) and the U.S. Environmental Protection Agency's (EPA) Region 6 office co-sponsored a meeting of state legislators, legislative staff, state environmental agency officials and EPA staff at an "Environmental Policy Dialogue" in Dallas, Texas, June 20. The purpose of the meeting was to encourage direct discussions of environmental issues of concern to legislators in the five-state region comprised of Arkansas, Louisiana, New Mexico, Oklahoma and Texas. The focus of the dialogue was on air quality issues. Regional EPA Administrator Gregg Cooke attended the entire meeting and responded to questions from legislators, legislative staff and state environmental agency officials throughout the day. The meeting agenda can be found on NCSL's air quality Web page at www.ncsl.org/programs/esnr/cleanair.htm.
NCSL "Energy Institute on Energy and Air Quality," June 6-7, Denver, Colorado
NCSL 's Energy Program conducted an "Energy Institute on Energy and Air Quality Issues" in Denver, Colo., June 6-7. The meeting was designed as an intensive, two-day seminar to help 25 state legislators and legislative staff gain a better understanding of issues surrounding air quality, energy development and electricity generation. The power point presentations prepared by speakers at the meeting can be downloaded from NCSL's energy Web page at www.ncsl.org/programs/esnr/EI02Pres.htm.
STATE LEGISLATION |
The 2002 state legislative sessions have seen significant activity in air quality legislation, although the volume appears to be less than in 2001 (especially with budget shortfalls dominating legislative deliberations). Unlike last year, however, concerns over energy supply and the air quality effects of accelerated electricity generation are not as prevalent. Enacted legislation falls into several different categories; more than three-fourths of the legislatures have adjourned for the year. Among the 10 categories are bills dealing with incentives for alternative fuel vehicles; phasing out the use of MTBE; multi-pollutant strategies that package emissions reductions for sulfur dioxide, nitrogen oxides, mercury and carbon dioxide; emissions trading; regional haze; motor vehicle emissions testing; electricity generation; greenhouse gas emissions; judicial review; and air quality standards.
Summaries of Selected 2002 State Air Quality Bills
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Published quarterly by the National Conference of State Legislatures, Suite 700, 1560 Broadway, Denver, Colorado 80202, (303) 364-7700. William T. Pound, Executive Director Funding support for this publication is provided by the U.S. Environmental Protection Agency. Any opinions, findings or conclusions in this publication are those of NCSL staff and do not necessarily reflect the views and policies of the U.S. Environmental Protection Agency. Contributors to this issue: Larry Morandi, Melissa Savage, Denise Griffin |
© 2008 National Conference of State Legislatures, All Rights Reserved
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