As part of the Bush Administration's energy initiatives of 2001, a review was undertaken by the EPA of the New Source Review/Prevention of Significant Deterioration (NSR/PSD) program under the Clean Air Act. This review included the solicitation of comments from the public concerning the effectiveness of the program and the impact the program had on the energy efficiency of industry and the ability to cost-effectively expand energy resources. Just prior to Thanksgiving of 2002, the Bush Administration released a package of final rule amendments and proposed rule amendments modifying key provisions of the program. The final rules and proposed rules amending provisions of 40 CFR Part 52 were published in the Federal Register on December 31, 2002. The final rules are to be effective in March of 2003. The proposed rules will proceed through comment before EPA promulgates a final version.
In reaction, nine northeastern states filed suit challenging the new rules (New York v EPA No.02-1387, D.C. Cir., 12-31-02). These states assert that the new rules weaken the program, putting the public health and the environment in the north east further at risk from sources including Midwestern power plants. In promulgating the new final rules, EPA administratively relied upon proposed rules for modifying the NSR/PSD circulated by the Clinton Administration, although the adopted rules depart significantly from the rules proposed several years ago. EPA has expressed no intention to voluntarily stay the effective date of the rules pending resolution of the legal challenge. As a consequence, unless the federal appellate court enters a stay, the rules will be effective in March. Even though the NSR/PSD program is administered mainly by the states, the rules will be binding in March on Michigan and other states that operate under delegation authority from EPA.
The intent of the NSR/PSD program from its inception was to mandate the implementation of BACT or LAER emission control technology when constructing a new major source of criteria pollutants or undertaking a "major modification" at an existing major source. The rules proposed for adoption are focus on resolving long-standing controversies over whether replacement of equipment or other changes at an existing facility constitute a "modification" potentially triggering implementation of new emission control technologies at an existing facility. The final rules, which become effective in March 2003, address whether changes at an existing facility which are a "modification" will be treated as "major," thereby triggering NSR/PSD review.
Whether a modification was "major" for sources other than certain electric utilities has been dependent upon whether the modification would result in a significant increase in emissions as determined by comparing the actual emissions of the existing facility to the potential emissions of the facility after modification. The new rules alter the test, allowing a facility to compare actual emissions to future potential actual emissions. If the facility, using this test as defined in the new rules, determines that its emissions increase is not significant, then it does not have to undergo NSR/PSD review. Further, the new rules allow for greater flexibility in determining existing actual emissions by altering the method for calculating the baseline actual emissions.
The rules create other revisions intended to provide greater operational flexibility. For example, the rules create a concept known a "Plantwide Applicability Limitations" or PALs. With a PAL, a facility may accept a plantwide actual emission cap and proceed to make modifications without triggering NSR/PSD review as long as concomitant changes in operations allow the plant to stay under the emission cap. Other provisions of the new rules exempt from NSR/PSD review certain facilities that can be designated "Clean Units" or "Pollution Control Projects".
The new rules should afford major sources greater operational flexibility, and shorten significantly the time it ought to take to obtain a permit to install under Rule 201 for many modifications which would previously have been scrutinized as potentially triggering NSR/PSD review.