• Mission & Governance
• Services Overview
• How to Get Involved
• Standing Committees
• NCSL Foundation

• Issue Areas: A-Z
• State-Federal Relations
• NCSL Standing Committees
• News from D.C. and the States

• About State Legislatures
• Elections, Campaigns & Redistricting
• NCSL's StateConnect Directory
• Web Sites

• Online Guide to NCSL Services
• Staff Sections and Networks
• Meetings & Professional Development
• Staff Directories

• Meetings Calendar
• Online Registration
• Meetings Home Page
• Legislative Summit

• Bookstore
• State Legislatures Magazine
• NCSL's StateConnect Directory

Environment, Energy and Transportation Program

Clean Air Newsletter

A Quarterly Review of Legislation and Air Quality Issues

September 2003
Vol. 7, No. 3

(printer-friendly versions)

To read portable document format (.pdf) files, you must install Adobe Acrobat Reader.

IN THIS ISSUE

FEDERAL ACTION

EPA Makes Changes to NSR Rule

STATE ACTION

California Passes NSR Bill
New England Governors Oppose NSR Changes
Connecticut First to Regulate Mercury Emissions from Power Plants
Automakers Drop Suit over California's Zero Emission Vehicle Mandate

COURT ACTION

Federal District Court Upholds Application of NSR Rule
Federal Appeals Court Rules Against New York Limits on Emissions Trading

REPORTS

The North Carolina Clean Smokestacks Act Update

MEETINGS

Indiana Senator Participates in White House Roundtable on "Clear Skies"
NCSL Air Quality Workshop in Baltimore on September 25

STATE LEGISLATION

Summaries of Selected 2003 State Air Quality Bills

FEDERAL ACTION

EPA Makes Changes to NSR Rule

The U.S. Environmental Protection Agency (EPA) announced changes to the Clean Air Act's New Source Review (NSR) rule on August 27 that will exempt certain modifications in the operation of older power plants and manufacturing facilities from requirements to install state-of-the-art pollution control technology. The Clean Air Act exempted power plants constructed before 1970 from having to comply with the same tough air quality standards to which new plants must adhere unless there were modifications to the plant that resulted in increased emissions. Modifications that were considered to be "routine maintenance, repair and replacement (RMRR)" under the act were exempt from such requirements. At issue has been what exactly constitutes RMRR.

EPA's changes create a category of activities that are automatically considered to be RMRR and thus exempt from NSR permitting requirements. The revised rule establishes an "equipment replacement" provision that will exempt a facility modification from NSR review if, according to EPA:

• It involves replacement of any existing component(s) of a process unit with an identical or functionally equivalent component(s);
• The fixed capital cost of the replacement component, plus the costs of any repair and maintenance activities that are part of the replacement activity ... does not exceed 20 percent of the replacement value of the entire process unit;
• The replacement(s) does not change the basic design parameters of the process unit; and
• The replacement(s) does not cause the unit to exceed any emissions limits.

EPA contends that the new rule will remove " ... disincentives for owners and operators of power plants and manufacturing facilities to undertake RMRR activities that would improve safety, reliability and efficiency of their plants." "It would not allow power plants," the agency continues, "to increase their emissions past their current Clean Air Act limits." Further, EPA notes that because " ... States implement source-specific emission limits through State Implementation Plans ... states may also set more stringent requirements than those set forth in the final rule, if further controls are needed." http://www.epa.gov/newsroom/headline2_082703.htm

The Edison Electric Institute (EEI), which represents companies that produce 70 percent of the electricity generated in the United States, welcomed the new rule. In a press release issued the same day as the EPA announcement, EEI stated that the NSR changes " ... will enhance the affordability, reliability and safety of the nation's electric supply, while also ensuring power companies' efforts to continue improving the nation's air quality." EEI President Thomas R. Kuhn noted that, "Today's regulations will lift a major cloud of uncertainty, boosting our efforts to provide affordable, reliable electric service and cleaner air." http://www.eei.org/newsroom/press_releases/030827.htm

The reaction from the two national associations that represent the nation's state and local air pollution control agencies-the State and Territorial Air Pollution Program Administrators (STAPPA) and the Association of Local Air Pollution Control Officials (ALAPCO)-was highly critical of the new rule. STAPPA/ALAPCO Executive Director S. William Becker stated in an August 27 press release that "This rule eviscerates the NSR program and represents a huge step backward in our efforts to achieve and sustain clean air." STAPPA/ALAPCO argues that the NSR changes "will allow approximately 17,000 existing sources of air pollution to increase emissions and avoid installing modern air pollution controls."

http://www.4cleanair.org/RMRRFinalRule-PressRelease-August2003.pdf

STATE ACTION

California Passes NSR Bill

The California Legislature passed --and the governor signed --legislation on September 22 that effectively adopts the U.S. Environmental Protection Agency's (EPA) New Source Review (NSR) rules as they existed on December 30, 2002, the day before EPA issued changes to the rules in the Federal Register (see the December 2002 issue of NCSL's Clean Air Newsletter). Senate Bill 288 (enacted as Chapter 476), the Protect California Air Act of 2003, prohibits any air quality management district or air pollution control district-the local agencies that implement Clean Air Act provisions in the state-from amending their NSR rules "to be less stringent than those that existed on December 30, 2002." If the California Air Resources Board (CARB) determines that a local district has revised its NSR rules in violation of the statute, CARB must adopt appropriate rules for the district. The legislation applies to both the rule changes issued on December 31 and to proposed changes in the definition of what constitutes "routine maintenance, repair and replacement" for purposes of triggering NSR (which EPA finalized on August 27; see related article in this newsletter).

Senate Bill 288 makes a finding that EPA's changes to the NSR rules "substantially weaken" the NSR program, and that they will " ... drastically reduce the circumstances under which modifications at an existing [air emissions'] source would be subject to federal new source review." The legislation conditions the prohibition placed on local districts, however, by allowing revisions if the existing NSR rule "has been found to be unworkable due to engineering or other technical problems," or it "will cause substantial hardship to a business, or category of sources." Revisions are permitted only if the district "provides equivalent reductions in emissions of air contaminants to offset any increase in emissions" resulting from the change.

The rationale for California's legislation is found in Section 116 of the Clean Air Act which, as the legislation states, " ... preserves the right of states to adopt air pollution control requirements that are more stringent than comparable federal requirements." Senate Bill 288 points to the Federal Register notice that contained the NSR changes as further justification, noting provisions that " ... provide that the states may adopt permitting programs that are 'at least as stringent' as the new federal 'revised base program.'" A key unresolved question is whether EPA will determine that California's adoption of the previous NSR rules results in a program that is "at least as stringent" as the new NSR rules.

New England Governors Oppose NSR Changes

A resolution adopted on September 9 at the 28th Annual Conference of the New England Governors and Eastern Canadian Premiers expresses opposition to recent changes made by the U.S. Environmental Protection Agency (EPA) to the New Source Review (NSR) program. The resolution finds that the new rules " ... do not provide adequate protection for the public health of the citizens of the New England States and Eastern Canadian Provinces, and impose unfair economic conditions on their businesses."

The states and provinces are concerned about the effects of emissions from power plants in upwind states on pollution that drifts into the Northeast. They feel that the new NSR rules will exacerbate the threat by removing a Clean Air Act requirement " ... that existing [emission] sources that undergo significant expansion or upgrade should be held to the same standards" as new pollution sources, i.e., that they employ best available control technologies. While acknowledging that " ... reform of the NSR program is warranted and is designed to alleviate the financial demands of unnecessary transaction costs," the resolution goes on to state that " ... such reform should not come at the expense of environmental quality or economic equity" in the region.

Connecticut First to Regulate Mercury Emissions from Power Plants

The Connecticut General Assembly passed legislation that was signed by the governor on June 3 to regulate mercury emissions from electric utilities. House Bill 6048 (enacted as Public Act 03-72) requires coal-fired power plants to comply with an emissions rate equal to or less than 0.6 pound of mercury per trillion BTU of heat input or, alternatively, an emissions rate comparable to a 90 percent reduction in mercury emissions. The legislation would achieve compliance through the installation of best available control technology (the act notes that if a facility installs and properly maintains the best available control technology and still fails to meet the emissions rate, it can request an alternative emissions rate from the Department of Environmental Protection).

Connecticut becomes the first state to regulate mercury emissions from coal-fired power plants. Other states-including Massachusetts and New Hampshire-have either adopted rules or passed legislation to study potential controls on mercury emissions, but have not yet put programs in place. In Massachusetts, the Executive Office of Environmental Affairs issued a press release on December 10, 2002, containing the findings of a feasibility study stating that it is feasible to remove a significant amount of mercury emissions from the state's oldest power plants. Using data from power plant smokestack tests and other research, the office determined that the removal of 90 percent or more of mercury in flue gas is both technologically and economically feasible. It is anticipated that proposed mercury emission limits will be issued later this fall.

In New Hampshire, multi-pollutant legislation passed in 2002-House Bill 284, enacted as Chapter 130 (see June 2002 issue of NCSL's Clean Air Newsletter)-established a cap-and-trade program for nitrogen oxides, sulfur dioxide and carbon dioxide, but held off on mercury pending the results of a specific assessment of mercury emissions from the state's three power plants and proposed EPA mercury limits. The Department of Environmental Services anticipates recommending a cap on mercury emissions to the legislature early next year.

How was Connecticut able to pass legislation affecting a controversial contaminant that had previously been unregulated nationally? Representative Patricia Widlitz, House Chair of the Joint Environment Committee and one of the bill's sponsors, indicated that it would not have happened without consensus between the electric utilities and environmental groups. "The stakeholders reached agreement in advance," she noted, "and presented the legislature with a workable solution. We were fortunate."

Automakers Drop Suit over California's Zero Emission Vehicle Mandate

California's Air Resources Board (CARB) introduced the first incarnation of the zero emissions vehicle (ZEV) mandate in 1990 to spur the development of battery-powered cars, a technology that the automobile industry now regards as infeasible on a broad scale. CARB originally required pure ZEVs to make up 10 percent of the state's market share, a level that it subsequently reduced to 2 percent.

In 2001, an updated version of the ZEV regulation was issued that did not initially allow credit for certain low-emission vehicles (LEV). Three automakers-General Motors, DaimlerChrysler and Isuzu-filed lawsuits against CARB in 2002, challenging that version of the ZEV regulations. The lawsuits were subsequently combined.

The chief allegation of the lawsuit, which was upheld by a federal district court, was that federal fuel economy laws preempted a portion of the rule. It was held that the state overstepped its authority and was setting fuel efficiency policy -- policy that can be set only by the federal government -- with the ZEV regulations. A federal judge in Fresno put the regulations on hold in June 2002.

As a result of the federal court ruling, the state retooled the ZEV rule, even as it appealed the decision. The final language of the amended rule, issued on July 29, 2003, included an expanded inventory of hybrid vehicles eligible for ZEV credit (see June 2003 issue of NCSL's Clean Air Newsletter). The pure ZEV requirement now can be met by 250 fuel cell vehicles on the road by 2008, balanced with hybrid electric and other partial ZEV vehicles. On August 11, 2003, the automakers made the decision to drop the lawsuit due to the additional flexibility provided in the ZEV regulatory amendments while the state dropped its appeal of the suit brought by the automakers.

Despite the settlement, automakers remain opposed to the fuel cell vehicle mandate that remains in the final 2003 ZEV regulation. A spokesperson for General Motors has indicated that the industry remains hopeful that technology assessments to be conducted during the next several years will lead CARB to relax the fuel cell mandate. If this is not the case, more litigation is likely, according to automaker and state sources.

COURT ACTION

Federal District Court Upholds Application of NSR Rule

The U.S. District Court for the Southern District of Ohio ruled on August 7 that an Ohio power plant violated the New Source Review (NSR) provisions of the Clean Air Act by failing to obtain the requisite permits for modifications to its facility operations. In the case of United States vs. Ohio Edison Company, the court agreed with the U.S. Environmental Protection Agency (EPA) and the states of Connecticut, New Jersey and New York that the W.H. Sammis Station, a coal-fired power plant in Ohio, had made modifications to the plant's capacity that resulted in increased emissions of sulfur dioxide, nitrogen oxides and particulate matter in violation of the Clean Air Act.

The Clean Air Act exempted power plants constructed before 1970 from having to comply with the same tough air quality standards to which new plants must adhere unless modifications were made to the plant that resulted in increased emissions. At issue in the case was whether the changes made in the Ohio facility's electric generating units constituted the type of modification that would trigger NSR requirements. The court determined that the 11 construction projects undertaken by the plant between 1984 and 1998 fell within the NSR purview.

The court also found that EPA had been lax in its enforcement of the NSR provisions of the act over the previous 30 years. The judge in the case stated that, "By any standard, the enforcement of the Clean Air Act with regard to the Sammis Plant has been disastrous." Although many electric utilities have argued that the NSR rule defining what constitutes a modification of a facility that would trigger NSR review is not clear, the judge disagreed. "While the law has always been clear," he stated, "the enforcement strategies of the EPA have not. It is clear to this court that at various times since 1970 officials of the EPA have been remiss in enforcing the law and clarifying its application to specific projects." The inconsistent enforcement, however, did not remove the power plant from liability under the law.

Federal Appeals Court Rules Against New York Limits on Emissions Trading

On August 1, the U.S. Court of Appeals for the Second Circuit affirmed a lower court ruling in the case of Clean Air Markets Group vs. New York (Docket Nos. 02-7519, 02-7569). On April 9, 2002, 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 upwind states by attaching an air pollution mitigation offset fee equal to the dollar amount of the market transaction (see June 2002 issue of NCSL's Clean Air Newsletter). The judge determined that the law violated both the Supremacy Clause and the Interstate Commerce Clause of the U.S. Constitution. New York subsequently appealed the decision.

In affirming the lower court ruling, the appellate court determined that, "There can be no doubt that [the New York law] interferes with the method selected by Congress for regulating SO2 [sulfur dioxide] emissions." Title IV of the Clean Air Act established an emissions trading program to help reduce SO2 emissions that contribute to acid rain. The appellate court concluded that, "Although [the New York law] does not technically limit the authority of New York utilities to transfer their allowances, it clearly interferes with their ability to effectuate such transfers." As such, the court found that the statute violates the Supremacy Clause (it did not rule on the applicability of the Interstate Commerce Clause to the case).

REPORTS

The North Carolina Clean Smokestacks Act Update

The North Carolina Department of Environment and Natural Resources and the North Carolina Utilities Commission submitted their first annual report to the Environmental Review Commission and the Joint Legislative Utility Review Committee regarding Implementation of the "Clean Smokestacks Act" on May 30, 2003. The Clean Smokestacks Act, passed in 2002 as Senate Bill 1078, requires coal-fired power plants to reduce annual emissions of nitrogen oxides (NOx) by roughly two-thirds in 2007, and sulfur dioxide (SO2) by roughly the same amount in 2013 (see September 2002 issue of NCSL's Clean Air Newsletter). The power plants can decide how to achieve compliance, either through installing emissions control technology or emissions trading. The legislation authorizes the governor to enter into annual agreements with electric utilities to voluntarily transfer pollution allowances that they earn through compliance with the act. The state then retires the allowances, which reduces overall emission levels. The incentive for power companies to forego trading the allowances is the ability to recover their compliance costs through the electricity rate base (the legislation froze the rates-which were anticipated to go down-for five years).

The report concludes that, "Actions taken to date by Progress Energy and Duke Energy [the two companies operating the affected power plants] appear to be in compliance with the provisions and requirements of the Clean Smokestacks Act." To illustrate how compliance with the NOx limits will be achieved, Duke Energy plans to install selective catalytic reduction equipment on three of its generating units, and selective noncatalytic reduction technology with low NOx burners on its remaining 24 units. For SO2 reduction, the company will install wet scrubbers on its 12 largest units. These measures are projected to reduce NOx emissions at Duke Energy plants to below the 35,000 ton limit for NOx in 2007 (34,706 tons), and 31,000 tons in 2009 (30,464 tons). For SO2, the company expects to come in below the 150,000 ton threshold in 2009 (130,809 tons), and meet the 80,000 ton limit in 2013 (79,181 tons).

Duke's compliance costs in 2002 were $3.6 million; Progress Energy spent $830,000. The two companies project total compliance costs at $1.5 billion and $823 million, respectively.

The report is available online.

MEETINGS

Indiana Senator Participates in White House Roundtable on "Clear Skies"

On September 17, Indiana State Senator Beverly Gard, chair of the Indiana Senate Environmental Affairs Committee and former chair of NCSL's Environment Committee, participated in a White House discussion of the Bush Administration's "Clear Skies" proposal, which is designed to reduce emissions of nitrogen oxides, sulfur dioxide and mercury through a national cap-and-trade program. The President hosted the roundtable discussion, which included Interior Secretary Gale Norton, Acting Administrator of the U.S. Environmental Protection Agency Marianne Horinko, and other elected state and local government officials.

Senator Gard has been seeking to balance the effects of environmental regulations designed to protect public health and the environment with maintaining a viable manufacturing economy in the Midwest. She expressed support for the President's initiative, noting that "As chairman of the Indiana Senate Environmental Affairs Committee, I strongly believe that Clear Skies will build on the progress achieved under the Clear Air Act by cutting pollution faster, and will do it at less cost to consumers and companies than other proposals being discussed." The President complemented Senator Gard for her input, noting that "She had an eloquent testimony about the need for us to make sure we have manufacturing jobs in America. Clear Skies ... addresses that issue."

NCSL Air Quality Workshop in Baltimore on September 25

NCSL held a workshop for Northeastern and Mid-Atlantic state legislators on air quality issues affecting the region and state and regional policy options to address them. The workshop was held in Baltimore, Md., at the Sheraton Inner Harbor Hotel, on September 25, 2003. "Improving Air Quality in Eastern States: A Legislative Forum" was designed to help legislators better understand 1) federal policies that affect air quality in the region; 2) the role of regional organizations in developing and coordinating innovative solutions; and 3) options available to state legislatures within a national and regional policy context.

• Ozone transport,
• EPA's NOx State Implementation Plan (SIP) Call and what goes into a SIP,
• New Source Review,
• The effectiveness of regional NOx cap-and-trade programs in reducing ozone, and
• State multi-pollutant strategies to reduce NOx, sulfur dioxide, mercury and carbon dioxide emissions.

For additional information, contact Larry Morandi or Sia Davis in NCSL's Denver office by telephone at (303) 364-7700, or e-mail at larry.morandi@ncsl.org or sia.davis@ncsl.org.

The agenda is available on NCSL's Web.

STATE LEGISLATION

Summaries of Selected 2003 State Air Quality Bills

 Cleanair newsletter page

Visitor counts for this page.