EPA Establishes Equipment Replacement Provision in New Source Review Permitting Program

August 29, 2003

EPA is establishing an equipment replacement provision as part of the routine maintenance, repair and replacement exclusion of the New Source Review (NSR) permitting program. EPA believes that this rule makes the program more effective and responsive to today's environmental, economic and energy challenges.

"The changes we are making in this rule will provide industrial facilities and power plants with the regulatory certainty they need," said Acting Administrator Marianne Horinko. "This rule will result in safer, more efficient operation of these facilities and, in the case of power plants, more reliable operations that are environmentally sound and provide more affordable energy."

"While today's rule is an important step in improving the New Source Review program, I also remind everyone that existing authorities under the Clean Air Act, including the Acid Rain Amendments of 1990, already control emissions from these facilities and will do so in the future," added Horinko.

Under the Clean Air Act Amendments of 1990, an Acid Rain control program was established that capped emissions of SO2 from power plants. The program went into effect in 1995, and SO2 emissions from these sources have already been reduced more than 40 percent from 1980 levels.

"Enforcement plays an important role in any pollution abatement effort," Horinko said, "but the most effective and efficient way to control emissions is through comprehensive approaches like those successful in controlling acid rain pollutants. These same approaches are embodied in the President's Clear Skies legislation now before Congress."

In this week's action EPA is finalizing changes to the definition of "equipment replacement" under NSR. These changes were proposed in December 2002. EPA opened a 120 day comment period and held five public hearings across the country to ensure ample opportunity for public comment on the proposed changes. EPA received over 150,000 written comments and heard from over 450 individuals who participated in the public hearings. After reviewing the comments, EPA decided to move forward to finalize part of the proposed rule. The final rule applies only to the equipment replacement part of the proposal.

Congress established the New Source Review program as part of the 1977 Clean Air Act to help control emissions from major new stationary sources of pollution. The NSR program does not generally apply to existing sources, but it does apply if they make a modification that results in a significant emissions increase.

EPA believes the action taken this week promotes the central purposes of the Clean Air Act, "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its populations" (Clean Air Act section 101). Under this rule, an equipment replacement activity will be excluded from NSR if:

  • 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 replaced component, plus the costs of any repair and maintenance activities that are part of the replacement activity (such as labor, contract services, major equipment rental, etc.), 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.

The rule allows sources to use the following approaches to determine the replacement value of a new process unit:

  • replacement cost;
  • invested cost, adjusted for inflation;
  • the insurance value of the equipment, where the insurance value covers complete replacement of the process unit; or
  • another accounting procedure, based on Generally Accepted Accounting Principles.

In addition, the final rule also:

  • defines a "process unit;"
  • specifically delineates the boundary of a process unit for certain specified industries;
  • defines a "functionally equivalent" replacement; and
  • defines how an owner or operator establishes basic design parameters for electric utility steam generating units and for other types of process units.

Additional information and copies of the final rule are available on the Web at http://www.epa.gov/nsr.

EPA Finalizes Two Rules on Metal Can Surface Coating Operations

On Aug. 14, EPA issued a final rule to reduce toxic air pollutant emissions from metal can surface coating operations. Metal can surface coating operations include processes that coat metal cans or ends (including decorative tins) or metal crowns or closures during any stage of the can manufacturing process. Metal can surface coating operations emit a number of toxic air pollutants including ethylene glycol monobutyl ether (EGBE) and other glycol ethers, xylenes and hexane. The health effects associated with exposure to these air toxics can include cancer, respiratory irritation and damage to the nervous system. This rule will reduce total emissions of air toxics by approximately 6,800 tons per year. This represents a 70 percent reduction from the estimated 1997 baseline.

The surface coating of miscellaneous metal parts and products is a process of applying a protective, decorative, or functional coating to metal parts of items such as railcars, steel drums, construction equipment, iron and steel pipe, structural steel, extruded aluminum products, motorcycles and musical instruments. The EPA final rule issued on Aug. 14 will reduce total emissions of air toxics by approximately 26,000 tons per year. This is a 48-percent reduction from the estimated 1997 emissions levels. Miscellaneous metal parts and products surface coating operations emit a number of toxic air pollutants including xylenes, toluene, methyl ethyl ketone, methyl isobutyl ketone, phenol, ethyl benzene and glycol ethers. Health effects associated with these pollutants can include irritation of the eye, lung, and mucous membranes; effects on the central nervous system; and damage to the liver. For more information, see http://www.epa.gov/ttn/oarpg/new.html.

EPA Finalizes Rule on Toxic Air Emissions from Cleanup Sites

On Aug. 21, EPA finalized a rule to control hazardous air emissions from site remediation activities. Site remediation involves the removal of hazardous substances from contaminated soil or groundwater and occurs at a variety of sites such as industrial facilities (chemical manufacturers, petroleum refineries etc.), and military bases. The site remediation rule will affect approximately 250 facilities and will reduce air toxic emissions by an estimated 570 tons per year - a 50 percent reduction from current levels.

For more information, see http://www.epa.gov/ttn/oarpg/new.html.

EPA Denies Petition to Regulate Greenhouse Gas Emissions from Motor Vehicles

EPA signed a notice denying a petition to regulate greenhouse gas (GHG) emissions from motor vehicles under the Clean Air Act (CAA). The petition was filed by the International Center for Technology Assessment and a number of other organizations.

The Agency is denying the petition to regulate greenhouse gas emissions from motor vehicles for two primary reasons:

  • Congress has not granted EPA authority under the Clean Air Act to regulate CO2 and other greenhouse gases for climate change purposes.
  • EPA has determined that setting GHG emission standards for motor vehicles is not appropriate at this time.

"Congress must provide us with clear legal authority before we can take regulatory action to address a fundamental issue such as climate change," said Jeff Holmstead, Assistant Administrator for the Office of Air and Radiation. "We cannot try to use the Clean Air Act to regulate for climate change purposes because the Act was not designed or intended for that purpose."

"We already are taking a number of actions, at home and abroad, to address climate change" said Mr. Holmstead. "Regulating the transportation sector for climate change purposes would have enormous economic, practical, and societal impacts. The U.S. is advancing realistic and effective long-term approaches to deal with this issue."

In February 2002, President Bush announced a comprehensive approach for addressing climate change that encourages substantial voluntary reductions in GHG intensity and pursues fuel economy improvements. This approach sets a national goal of reducing the GHG intensity of the U.S. economy by 18 percent over the next ten years. This strategy sets the U.S. on a path to slow the growth of GHG emissions and, as the science justifies, to stop and then reverse that growth.

The Administration's policy supports vital climate change research, and lays the groundwork for future action by investing in science, technology, and institutions. In addition, the policy emphasizes international cooperation and promotes working with other nations to develop an efficient and coordinated response to global climate change.

"EPA does have a number of very effective, non-regulatory programs that address climate change. Programs such as Climate Leaders, Energy Star, Green Power, SmartWay and Best Workplaces for Commuters are making substantial progress in reducing greenhouse gases," added Mr. Holmstead.

In February 2002, EPA launched Climate Leaders, a voluntary industry-government partnership under which companies work with EPA to evaluate their GHG emissions, set aggressive reduction goals, and report their progress toward meeting those goals. To date, more than 40 companies from almost all of the most energy-intensive industry sectors have joined. Through EPA's Green Power Partnership, more than 150 companies have already committed to purchase about 1 billion kilowatt hours of green power across the nation.

EPA's Energy Star is a voluntary labeling program that provides critical information to businesses and consumers about the energy efficiency of the products they purchase. Reductions in GHG emissions from Energy Star purchases were equivalent to removing 14 million cars from the road last year.

The Smartway transport partnership works with the trucking and railroad industry to develop and deploy fuel-efficient technologies and practices to achieve substantial fuel savings and emission reductions. Idling strategies alone have the potential to save 1 billion gallons of diesel fuel per year, while reducing greenhouse gases by 2.5 MMTCE and NOx by 200,000 tons.

Best Workplace for Commuters offers innovative solutions to commuting in order to reduce vehicle trips and miles traveled. The government expects that 3.7 million employees will be covered by this program in 2005. EPA is also playing a leadership role in advancing fuel cell vehicle and hydrogen fuel technologies and policies to support the U.S. environmental, energy and national security goals.

The Response to the Petition is available online at http://www.epa.gov/airlinks/co2petition.response.pdf.

EPA Approves Thirteen New MACT Standards

EPA approved this week thirteen rules requiring industrial facilities to install the Maximum Achievable Control Technology (MACT). The new MACT standards or rules will protect Americans from eye, lung, and skin irritation, liver and kidney damage, cancer and other health problems by reducing national emissions of toxic air pollutants by more than 68,000 tons per year.

EPA is required by the Clean Air Act (CAA) to regulate the emissions of 188 listed toxic air pollutants. The 1990 CAA Amendments charged EPA to identify industrial or source categories that emit one or more of the toxic air pollutants. Once identified, EPA must develop regulations that require stringent air pollution reduction measures for each source category. The 1990 Amendments required an aggressive schedule for EPA to control emissions of the listed pollutants from over 170 source categories.

"By the end of August, EPA will have issued 92 MACT standards. When fully implemented, these rules will keep nearly two million tons of toxic compounds out of our nation's air each year," said Acting Administrator Marianne Lamont Horinko. "These actions will make significant gains in protecting public health."

The August final rules apply to the following industries: Organic Liquids Distribution; miscellaneous Organic Chemical Production; miscellaneous Coating Manufacturing; Site Remediation; miscellaneous Metal Parts & Products (Surface Coating) & Asphalt/Coal Tar Application on Metal Pipes; Iron and Steel Foundries; Primary Magnesium; Metal Can (Surface Coating); Taconite Iron Ore processing; Plastic Parts (Surface Coating); Combustion Turbines; Lime Manufacturing; Mercury Cell Chlor-Alkali Production; and Chlorine Production (delisting).

EPA will propose an air toxic standard for utilities by December 15. This rule will be finalized in 2004. The remaining MACT rules will be completed by February, 2004 and they cover: Industrial, Commercial and Institutional Boilers and Process Heaters; Reciprocating Internal Combustion Engines (RICE); Plywood and Composite Wood Products; Automobile and Light Duty Trucks Manufacturing (Surface Coating).

Copies of the recently signed standards and fact sheets are available at http://www.epa.gov/ttn/oarpg/new.html.

NRDC States Equipment Replacement Provision of New Source Review "Guts" Clean Air Act

The Natural Resources Defense Council (NRDC) believes that EPA's final rule on the Clean Air Act's definition of "routine maintenance" would allow more air pollution from approximately 17,000 industrial facilities across the country.

Under this the new rule, all of the Clean Air Act violations the Justice Department is prosecuting at nine Tennessee Valley Authority power plants and those at a recently convicted Ohio Edison plant would have been allowed, according to NRDC. The upgrades at those plants increased air pollution by hundreds of thousands of tons, but because they cost less than 20 percent of the replacement value of the process units, TVA and Ohio Edison would not have had to install modern pollution controls under the new rule.

"The Bush administration, using an arbitrary, Enron-like accounting gimmick, is authorizing massive pollution increases to benefit Bush campaign contributors at the expense of public health," said John Walke, director of NRDC's Clean Air Project. "Corporate polluters will now be able to spew even more harmful chemicals into our air, regardless of the fact that it will harm millions of Americans."

The Clean Air Act's new source review provision was instituted in 1977 to reduce pollution from coal-fired power plants, oil refineries and other large industrial facilities. The provision requires companies to install modern pollution control technologies in new plants, and in old plants when they make significant emissions-increasing modifications. While facilities operating at the time the rule was implemented were exempt from the new requirements under a "grandfather" clause, policymakers assumed that either they would be eventually replaced by new, cleaner facilities or upgraded with modern-day pollution controls. But the rule was inadequately enforced, so many older facilities are still operating without proper emissions reduction technology.

At the same time that the Bush administration has been preparing this new rule, the Department of Justice, state attorneys general, NRDC and other organizations have successfully prosecuted or settled new source review lawsuits that the Clinton administration brought against the 12 owners of the country's oldest, largest and dirtiest coal-fired power plants. According to a study performed by Abt Associates, a technical consulting firm that frequently works for EPA, the failure to install modern pollution controls at the 51 plants at issue in the enforcement cases is responsible for 5,000 to 9,000 premature deaths and 80,000 to 120,000 asthma attacks every year.

The Justice Department has obtained settlements from five of the companies, and, on August 7, won a landmark case against another -- Ohio Edison. The five settlements will force the companies to reduce their annual emissions of smog- and soot-forming pollution by more than 500,000 tons each year. Meanwhile, the victory over Ohio Edison is expected to force that company to reduce its annual emissions by tens of thousands of tons.

Altogether, EPA officials have estimated that if it won all of the enforcement cases involving the 51 plants, it would cut nearly 7 million tons of harmful air pollution annually. That would amount to a 50 percent reduction of air pollution generated by U.S. electric utilities.

NRDC also pointed out that the timing of the final rule announcement is likely motivated by the fact that Congress is on recess and much of the nation is on vacation and, perhaps most important, by the Bush administration's desire to insulate its nominee for EPA administrator from criticism. The nominee, Utah Gov. Michael Leavitt, is an exponent of what he has coined "enlibra" principles, which include empowering states to protect the environment without federal interference and developing environmental policy collaboratively with all stakeholders.

At March 31 EPA public hearings, state and local officials blasted the proposed rule for violating the very principles Gov. Leavitt espouses. EPA developed the rule without state or public input, they pointed out, and noted that it would interfere with states' abilities to protect their residents from harmful air pollution. Gov. Leavitt's own air quality director, Rick Sprott, testified in opposition to what is now the final rule, calling it a "train wreck."

NRDC also asserts that the same companies that are currently being prosecuted for new source review violations are major contributors to the Republican Party and had easy access to Vice President Cheney's secret energy task force. For example, the Edison Electric Institute, an industry trade group comprising the power plant defendants in the Justice Department new source review cases, had at least 14 contacts with the Cheney task force and contributed nearly $600,000 to the Republican Party from 1999 to 2002.

EPA Accepting Nominations for IRIS Chemical Assessments

EPA will begin health risk assessments for six new chemicals through the Agency's Integrated Risk Information System (IRIS) program, and will accept nominations from the public for additional chemicals to be assessed.

IRIS provides EPA consensus opinions on the possible adverse human health effects from exposure to chemical substances in the environment. The chemicals selected by EPA for review are: acrylonitrile, beryllium (cancer update), n-hexane, methylene chloride (dichloromethane), trichloroacetic acid, and 1,2,3-trichloropropane. For each chemical in IRIS, information is provided on hazard identification and dose-response evaluation, the first two critical steps of the risk assessment process.

IRIS currently contains information on more than 500 chemical substances and is considered a major source of health risk data for U.S. scientists. In past years, chemicals were nominated for review exclusively by EPA program and regional offices. This year, for the second time, as part of EPA's commitment to increase citizen involvement in the Agency's work on public health protection, the call for nominations will be extended to the public. Public nominations will be due 60 days after the publication of the Federal Register notice, and may be submitted on-line at http://www.epa.gov/iris/whatsnew/2004nominations, by e-mail or U.S. postal mail. Detailed information on submission requirements can be found in the Federal Register or on the IRIS Web site at http://www.epa.gov/iris/whatsnew/2004nominations/fr_notice.htm.