The American Gas Association (AGA) has found a lot to like about revisions announced Thursday by the Environmental Protection Agency in its New Source Review (NSR) program. The changes, EPA said, are aimed at clarifying and improving the operation of the rules for curbing pollution from energy and other production plants that are a source of emissions.

AGA has been a staunch defender of the NSR program as a door-opener for new operations using cleaner burning natural gas. One feature of the NSR is to require an upgrade of pollution controls at electric utility steam generating units which make major modifications to their facilities. Overall NSR is a pre-construction permitting program aimed at requiring installation of pollution controls when new major sources of air emissions are constructed or reconstructed.

AGA hailed the announcement of the EPA reforms, saying several are fixes that AGA has long advocated. The group said it would look forward to seeing the details of the plan when the EPA releases the regulatory language in the near future.

“It makes good energy and environmental sense for EPA to reform the convoluted New Source Review (NSR) program,” AGA said, noting that problems have developed since it was installed pursuant to the 1977 Clean Air Act Amendments.

Offsetting the AGA support were the cries of outrage from environmental groups who claimed the new rules would gut clean air measures intended to force the clean-up of coal-fired power plants and oil refineries. New York Attorney General Eliot Spitzer said that the measures would exacerbate his state’s pollution problems, and said he would go to court to block them. The announcement led to a characterization of the Bush Administration by Senate Majority Leader Tom Daschle (D-SD), as “the most environmentally unfriendly in the last 20 years.”

The report and recommendations are aimed at “encouraging pollution prevention projects, energy efficiency improvements and investments in new technologies and modernization of facilities,” EPA said. The rules as they now stand discourage companies from getting involved in plant improvements. The proposals would change the way emissions are calculated, provide for sitewide emissions caps, clarify the definition of routine repairs that are exempt from emissions review and clarify how NSR affects de-bottlenecking projects. It also would lay out the criteria for determining if multiple projects should be aggregated for NSR purposes.

AGA noted that EPA has interpreted the NSR as dictating onerous requirements even for projects that would not cause a significant increase in air pollution or projects that would actually decrease emissions. This would be remedied in part by comparing actual past emissions at a plant to potential future emissions under a reasonable run time, instead of projecting future emissions on a 365-day, 24-hours-per-day run time schedule. Also, facilities will be allowed to use any consecutive 24-month period in the previous decade as a baseline, as long as all current control requirements are taken into account. This, EPA says, will allow the facility to choose “a more representative period” for comparison.

The new rules also would clarify the test for what is routine maintenance, which companies currently may perform without being subject to NSR rules. AGA noted that under the past administration, EPA had changed its interpretation of what qualifies as routine repair and maintenance. “We support EPA’s plan to go back to the clear meaning of the Clean Air Act and EPA’s regulations on what qualifies as routine repair and maintenance,” AGA said in a statement.

AGA also lauded EPA’s intention to enforce plantwide applicability limits (PAL) that will measure emission reductions through an entire plant. This will benefit on-site distributed energy. “For example, if an industrial plant installs several combined cycle natural gas turbines to supply its energy needs, and stops obtaining its energy from an old central coal-fired power station, the plant will be more energy efficient and will cause a significant net reduction in nitrogen oxide, sulfur dioxide, and mercury. But the current NSR program will not recognize this big picture result.”

Several of the EPA measures are not new, but were first proposed in 1996. It proposes to finalize those, including the PAL site-wide emissions caps, changing the method of calculating comparative emissions, including baseline and projected future emissions, a simplified process for companies undertaking environmentally beneficial projects, and giving operational flexibility to plants that install state-of-the-art clean units, as long as they continue to operate within permitted limits.

Three other measures are new and would have to go through a rulemaking process: preparing guidelines for different industries as to what constitutes routine maintenance exempt from NSR, clarifying when NSR applies to debottlenecking projects and setting criteria for aggregating projects implemented in a short time frame for purposes of determining whether they will be subject to NSR.

To view a copy of the report and recommendations, go to www.epa.gov.

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