Lauded by both the Interstate Gas Association of America (INGAA)and the Natural Gas Supply Association (NGSA) as a boost for thegas industry, the Environmental Protection Agency’s program forreducing nitrogen oxide (NOx) emissions for 19 eastern andmidwestern states plus the District of Columbia was upheld by theDistrict of Columbia Circuit Court of Appeals recently. Barring anyfurther appeals, the NOx SIP Call rule will be added to the CleanAir Act, requiring the states included in it to reduce their NOxemissions by a total of 1.2 million tons, or 28% from currentlevels, annually. The court’s decision was passed March 3.

The rule almost certainly will have a major impact on gas demandas generators scramble to meet its requirements by relying more oncleaner gas-fired generation rather than dirty coal and oil-firedunits. The regulation is fuel neutral. Regardless of what fuel isused to generate electricity in these states, they all have to meetthe same standard of emissions.

“Natural gas benefits because for the first time in the historyof the Clean Air Act, natural gas is taking its rightful place in afuel-neutral energy portfolio,” said Rhone Resch, the NGSA’sDirector of Utility Regulations and Environmental Affairs. Whenoriginally issued, the NGSA was one of the regulation’s biggestproponents. The organization said at the time that the plan wouldcreate an additional demand of 1 Tcf of gas by 2003.

“This regulation was a major part of the EPA’s strategy toreduce smog,” said Resch. The NGSA was one of the intervenors inthe case on behalf of the EPA. “It was originally issued at thefederal level in the fall of 1998, but there had been many delaysduring the appeals process. The fact that the court ruled in favorof the bill so strongly I think surprised many people.” He addedthat the only major loss to the rule was that three states were cutfrom the original 22-state plan.

Yet that was not the only change. The Interstate Natural GasAssociation of America noted that the court ruled to strike therequirement that natural gas pipeline compressor engines reduce NOxemissions by 90% by 2007. This 90% reduction was an 11th hourincrease from a previously agreed upon 70%. Besides this issue,INGAA likes the regulations. “The [NOx SIP Call] rule issignificant for natural gas because gas generation gives utilitiesan economic option for reducing their overall emissions,” saidJerald Halvorsen, president of the INGAA. “This rule will helpdrive demand for a 30 Tcf gas market.”

Opposing the new regulations were a coalition of organizations,comprised mostly of coal utilities and headed by the state ofMichigan, Resch said. Overall, there were 31 petitioners and 65intervenors that agreed with Michigan and filed statements with thecourt against the regulation. On the other side, 22 intervenorsfiled statements in support of the EPA.

The new rule does not mandate which sources of NOx emissionsshould be reduced, but provides governors with flexibility toachieve the reductions from sources that make the most sense. ButEPA estimates reductions from power plants are the cheapest way theachieve the desired results.

Because of delays (Resch said the regulation suffered “several”setbacks during the appeals process), the timeline of the programhas to be reworked. Resch said the supporters of the regulationexpect to see the states start filing their plans in the nearfuture and expect to see emission reductions begin in 2004. Theoriginal plan required the states to have their plans filed in thefall of 1999.

“The bottom line is that 19 states and Washington D.C. will nowhave to develop state implementation plans to reduce NOx emissionsaccording to a budget established by the EPA,” Resch concluded.

John Norris

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