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Environment, Energy and Transportation Program

Clean Air Newsletter

A Quarterly Review of Mobile and Stationary Source Issues

July 2001
Vol. 5, No. 2

Contents

EPA Issues Flexible Ozone Guidelines
EPA Moves Forward with Regional Haze Rule
EPA Denies California Reformulated Gasoline Waiver Request
Court Upholds EPA Limits on Transboundary Pollution

Massachusetts Regulates Air Emissions from Older Power Plants
Wisconsin Proceeds with Proposed Mercury Rule

Evaluating Vehicle Emissions Inspection and Maintenance Programs
State Alternative Fuel Vehicle Incentives: A Decade and More of Lessons Learned

STATE LEGISLATION

Summaries of Selected 2001 Bills

FEDERAL ACTIONS

EPA Issues Flexible Ozone Guidelines

The U.S. Environmental Protection Agency (EPA) issued guidelines on June 22 to encourage state, local and tribal governments to adopt programs to reduce emissions that result in the formation of ground-level ozone, or smog. The "Ozone Flex" guidelines will apply to areas that currently meet the 1-hour ozone standard but that may be in danger of violating the more stringent 8-hour ozone standard (EPA is currently working with states to determine an implementation schedule for the 8-hour ozone standard that was initially proposed in 1997).

The guidelines are not mandatory. EPA suggests that there are several incentives for state, local and tribal governments to participate in the voluntary program. The two most important incentives appear to be that those areas participating in the program will have flexibility in designing their own approaches to reducing nitrogen oxide and other emissions that contribute to smog, and that for a period of up to five years, those areas will be protected from being designated as nonattainment areas should they subsequently violate the 1-hour ozone standard.

Eligible governments must sign a memorandum of agreement with EPA that describes the air pollution control measures that they will adopt as a condition for participating in the program. As part of the agreement, state, local and tribal governments must prepare emission inventories and conduct air quality modeling and monitoring to support their program elements.

EPA Moves Forward with Regional Haze Rule

On June 22, U.S. Environmental Protection Agency (EPA) Administrator Christine Todd Whitman signed a rule to control regional haze caused by emissions from older power plants and industrial facilities. These sources emit tiny particles-including sulfur dioxide, nitrogen oxide and particulate matter-that absorb and scatter sunlight, thus impairing visibility. The rule originally was proposed in April 1999 in an effort to protect visibility in 156 of the country's most scenic areas, including the Grand Canyon, Yosemite, Yellowstone, Acadia, the Everglades and the Great Smoky Mountains national parks.

The administrator had announced on May 29 that the agency would move forward with the rule, but delayed the formal signing until it had completed an energy impact analysis pursuant to a May 18 executive order. The agency determined that the rule "is not likely to have an adverse effect on supply, distribution or use of energy."

The rule provides guidelines to state and tribal agencies to use in setting emission limits for facilities built between 1962 and 1977 that have the potential to emit more than 250 tons of pollutants annually. The categories of facilities covered under the rule include coal-fired power plants, industrial boilers, refineries, pulp mills and smelters. The action does not establish new federal emission limits; states and tribes will identify which facilities must install best available retrofit technology (BART). The proposed rule also gives states and tribes flexibility to consider establishing emissions trading programs if a market-based approach will provide greater visibility protection and emissions reduction than BART implementation. States and tribes must begin identifying facilities subject to BART controls between 2003 and 2005, and comply with all the rule's provisions by 2013.

EPA Denies California Reformulated Gasoline Waiver Request

On June 12, the U.S. Environmental Protection Agency (EPA) denied a request from California to waive a federal requirement that reformulated gasoline used in the state contain oxygen. The Clean Air Act mandates that oxygen be used in reformulated gasoline (RFG) in high pollution areas to reduce emissions that contribute to ground level ozone, or smog. Smog is formed when emissions of nitrogen oxides (NOx), carbon monoxide (CO) and volatile organic compounds (VOC) react with sunlight. In order to obtain a waiver, a state must demonstrate that compliance with the oxygen requirement will interfere with it being able to meet air quality standards.

California Governor Gray Davis requested the waiver in April 1999, shortly after he decided to phase out the use of methyl tertiary butyl ether (MTBE)-the most commonly used oxygenate in gasoline-because of its impact on water quality in the state. California claimed that oxygen in RFG actually increases the emission of NOx, thereby inhibiting the NOx reduction capacity of California RFG Phase 3 fuel (CaRFG3). EPA agreed with California's contention regarding NOx emissions, but concluded that the oxygen waiver would increase CO emissions and may or may not increase VOC emissions. The CO emission increase and VOC uncertainty led the federal agency to deny the request.

Court Upholds EPA Limits on Transboundary Pollution

The U.S. Court of Appeals for the District of Columbia ruled on May 15 that the U.S. Environmental Protection Agency (EPA) has the authority to impose limits on nitrogen oxide (NOx) emissions from sources in the Midwest and South that contribute to smog problems in the Northeast. At issue in the case-Appalachian Power Co. et al. v. EPA-is whether Section 126 of the Clean Air Act authorizes EPA to set NOx standards before states have an opportunity to develop their own regional control plans. Section 126 empowers states to petition the federal agency to control transboundary pollution from upwind states.

Several northeastern states petitioned EPA in 1997 to impose NOx emission limits on upwind sources that they contend are adversely affecting their ability to meet air quality standards within their borders. The petition was filed at the same time a larger number of states in the Midwest, South and Northeast began developing NOx emission control plans under EPA's NOx SIP-State Implementation Plan-Call. The appellate court determined that the Clean Air Act does not require EPA to wait until state efforts are complete before responding to a Section 126 petition. The court remanded EPA's Section 126 rule back to the agency, however, for additional rulemaking to resolve technical issues.

STATE ACTIONS

Massachusetts Regulates Air Emissions from Older Power Plants

The Massachusetts Department of Environmental Protection issued final regulations on May 11 to control air emissions from some of the state's oldest and highest-polluting power plants. The regulations affect not only emissions of "criteria" pollutants-those traditionally regulated under the Clean Air Act, including nitrogen oxides (NOx), sulfur dioxide (SO2) and mercury-but also carbon dioxide (CO2), a greenhouse gas that contributes to climate change.

The regulations apply to fossil fuel fired power plants that emitted more than 500 tons of NOx and 500 tons of SO2 during any of calendar years 1997, 1998 or 1999, and that were permitted prior to August 7, 1977. Six facilities are affected. They must begin complying with the following emission limits by October 1, 2004:

By October 1, 2006, regulated facilities must comply with the following emission limits:

Standards for mercury and CO2 were not immediately set. The department will evaluate the technological and economic feasibility of controlling mercury emissions from fossil fuel fired power plants by December 1, 2002. Within six months of completing the evaluation, the department must propose emission limits that facilities must comply with by October 1, 2006.

Regulated facilities must demonstrate to the department by January 30 of each year that CO2 emissions in the previous year did not exceed historical actual emissions, and that the average emission rate did not exceed 1,800 lbs./MWh. Facilities may demonstrate compliance by taking part in an emissions trading program using offsite reductions or carbon sequestration, provided the department certifies that the reductions are "real, surplus, verifiable, permanent and enforceable." The CO2 controls are the first imposed on existing power plants by any state, and are part of the state's multi-pollutant approach.

Wisconsin Proceeds with Proposed Mercury Rule

The Wisconsin Natural Resources Board decided at its June 27 meeting to proceed with public hearings on a proposed mercury rule to reduce mercury emissions to the air. The proposed rule is designed to reduce mercury emissions from four major electric utilities-those emitting in excess of 100 pounds of mercury annually-by 90 percent over a 15-year period. The phased reduction schedule would require emission reductions of 30 percent five years after promulgation of the rule, and 50 percent after 10 years. The proposed rule also would place an emissions cap on 12 smaller facilities that emit at least 10 pounds of mercury annually.

The required reductions would be in baseline emissions, which are the average annual mercury emissions for each facility over the period 1998-2000. The facilities would have two years after promulgation of the rule to provide information on baseline emissions to the Department of Natural Resources. The department would have one year after submittal to determine actual baseline emission levels, which would serve as the facility's emissions ceiling. Any proposal to increase emissions from new or modified sources beyond the ceiling would require a 1.5-to-1.0 emission offset (a reduction of 1.5 pounds of mercury emissions from an existing source for each 1.0 pound of new emission from a new or modified source).

In order to comply with the rule, a facility may employ emissions control technology or take part in an emissions trading program by acquiring emission reduction credits certified by the department. The department would be responsible for establishing an emissions reduction registry that contains information on the availability of emission reduction credits three years after promulgation of the rule.

Public hearings on the proposed rule will begin in September. Written public comments will be accepted up to 30 days after the end of the hearing period. For additional information on Wisconsin's proposed mercury reduction program, access the Department of Natural Resources web site at www.dnr.state.wi.us/org/aw/air/reg/mercury/rule.htm.

REPORTS

National Research Council
National Academy of Sciences
Washington, D.C.
July 18, 2001

The National Research Council, an arm of the National Academy of Sciences, released a report on July 18, 2001, entitled Evaluating Vehicle Emissions Inspection and Maintenance Programs. The report questions the cost-effectiveness of state vehicle inspection and maintenance programs that test all cars, including cleaner new models, in reducing air emissions (primarily carbon monoxide, hydrocarbons and nitrogen oxides). It notes that the 10 percent of the nation's fleet that comprises the oldest and highest-polluting vehicles account for 50 percent of the pollution, and concludes that they should be targeted if real reductions in air emissions are to be realized.

Dr. Ralph Cicerone, Chancellor of the University of California at Irvine and chair of the Academy committee that wrote the report, emphasizes that "inspection and maintenance programs should focus on repairing the worst polluting vehicles and verifying repairs, but in ways that are cost-effective for states and not overly burdensome for owners." "But having said that," he continues, "it's important to emphasize that these programs are absolutely necessary to reduce harmful auto emissions and achieve better air quality."

The report points to remote sensing devices as one means of verifying actual on-road emissions, something that inspection and maintenance programs may not be able to simulate. It acknowledges that focusing on the worst polluting vehicles may raise equity concerns, since these are typically owned by lower-income persons who may not be able to pay for necessary repairs. This raises the need for states to consider policies that provide financial assistance or other incentives to repair or replace these vehicles.

The full report can be viewed on the National Academy of Sciences' web site at www.nas.edu.

Matthew Brown and Leah Breckenridge
National Conference of State Legislatures
Denver, Colorado
February 2001

This report seeks to assess how successfully alternative fuel vehicle incentives contained in state law have been in achieving two goals-to reduce America's reliance on foreign oil imports, and to reduce air pollution resulting from dependence on fossil fuels for transportation. It finds that "in general, state alternative fuel vehicle incentives have not stimulated widespread conversion to alternative fuels in the United States." The reasons for this failure include: 1) the design of the incentives themselves; 2) the early state of technological development of some of the alternative fuel technologies; and 3) competition against inexpensive and well-entrenched conventional fuels.

The report's assessment of the air quality impacts of alternative fuel vehicles is directly tied to the small number of qualifying vehicles currently in the market. It concludes that "only significant penetrations of clean-burning alternative fuel vehicles are likely to make a major contribution to improving air quality [and that] small numbers of vehicles-no matter how little pollution they release into the air-will not make a major difference in overall air quality." One of the difficulties in competing with conventional fuel vehicles, the report notes, is that "much of that conventional fleet is, as a whole, becoming a less-polluting vehicle fleet."

Although not generally successful, those incentive-based programs that have achieved results share some common characteristics. They tend to be:

One example of a successful program that the report cites is California's Carl Moyer Program, which is clearly focused on air quality improvements from medium and heavy-duty vehicles.

The report's findings are based primarily on interviews with Clean Cities coordinators, and utility, government, manufacturer and fleet representatives, and state tax and grant incentive managers. To obtain a copy, contact the National Conference of State Legislatures' Marketing Department at (303) 830-2054.

STATE LEGISLATION

The 2001 state legislative sessions have seen significant activity in air quality legislation. Much of it has been related to the concerns over energy supply and the air quality impacts of accelerated electricity generation. The California Legislature, for example, passed legislation requiring the State Air Resources Board to establish a schedule for retrofitting electric generating facilities, and implementing an emissions trading program for power plants. It is considering a bill that would encourage the siting of facilities that use lower air emission technologies, and allow those facilities to supply power to the grid during peak demand periods and emergencies. Montana enacted legislation that would enable small, temporary power plants to operate without an air quality permit provided they do not violate ambient air quality standards. Oklahoma passed a law that provides tax credits for the generation of electricity from zero-emission facilities. Although vetoed by the governor, the Connecticut General Assembly passed legislation that would have placed a sulfur dioxide emissions cap on older, high-polluting facilities, and authorized the cap to be suspended during electricity shortages-the governor and legislature are expected to resume negotiations on a bill for next session (see related story on Massachusetts regulations aimed at older facilities).

Incentives for alternative fuel vehicles also captured significant legislative attention. Georgia expanded its tax credit program for the purchase of low-emission vehicles to include a higher credit for the purchase of a zero-emission vehicle. Hawaii adjusted its fuel tax by reducing the rate assessed on alternative fuels. Oklahoma extended its income tax credit for investment in clean burning fuel property. The Illinois General Assembly is close to passing a measure that would extend the conversion cost rebate program for vehicles that run on alternative fuels, and create an Alternative Fuel Infrastructure Program to award grants to construct alternative fueling facilities.

The single issue garnering the most legislative interest has been methyl tertiary butyl ether (MTBE). Six states-Illinois, Kansas, New Hampshire, New Jersey, South Dakota and Washington-have enacted or are closing to passing legislation to phase out the use of MTBE as a gasoline additive in reformulated gasoline (see related story on EPA's denial of California's request for a waiver of the oxygenate requirement).

Other issues receiving legislative scrutiny this session include increases in emission fees, authorization of emissions trading, regulation of mercury (see related story on Wisconsin's mercury control rule), and motor vehicle emissions testing. The details are contained in the following tables. To download copies of the legislation cited, log on to NCSL's web site at www.ncsl.org, and go to Internet Sites of State Legislatures.

Summaries of Selected 2001 Bills

Alternative Fuel
Electric Generation
Emission Fees
Emission Trading
Mercury
MTBE
Motor Vehicle Emissions Testing
No More Stringent Than
Regional Haze

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