STATEMENT OF JOHN WALKE

CLEAN AIR DIRECTOR

NATURAL RESOURCES DEFENSE COUNCIL

 

I.          Introduction

 

I would like to thank the chairmen of these committees for inviting me to testify on behalf of NRDC’s 500,000 members.  As an organization dedicated to safeguarding public health and the natural environment, NRDC has for over thirty years promoted actions to implement the Clean Air Act.  For just as long, NRDC has opposed efforts to turn the government away from fulfilling Congress’s commitment to protect Americans from harmful air pollution. 

 

The chairmen have convened these hearings to investigate the changes that the Environmental Protection Agency has announced it will make to the regulations that implement the Clean Air Act.  This investigation will reveal that the attempted changes represent the most sweeping and aggressive attack that the Clean Air Act has faced in its thirty-year history.  Through the mechanism of administrative rulemaking, EPA is attempting, in effect, to repeal an act of Congress.  These changes are not only unlawful, but also deadly.  They will result in tens of thousands of premature deaths, asthma attacks, and hospitalizations that would have been prevented had EPA elected to obey the law rather than break it.

 

This testimony will summarize the data that the public health community has presented to EPA showing that the impending rollbacks will result in illness and death on a massive scale.  The agency has not even attempted to rebut this evidence; its staff has performed no analysis of the impact that the announced changes will have on air quality and public health.  But EPA is going forward with the changes anyway.

 

Why is EPA doing this?  The agency’s top officials admit that it is making these changes because industry has called for them.  The owners of the country’s dirtiest power plants claim that the portion of the Clean Air Act known as New Source Review prevents them from undertaking routine maintenance at their plants and from upgrading their facilities to generate more electricity with less fuel.  But when asked for facts showing that the operation of New Source Review has had this negative effect, industry offers only undocumented anecdotes and sketchy hypotheticals.  This testimony will summarize the evidence demonstrating that the New Source Review provisions of the Clean Air Act do not hinder industry from carrying out routine maintenance or from meeting the country’s energy needs.  The only thing New Source Review prevents a company from doing is evading its duty to install pollution controls when it modifies its plants in ways that increase pollution.  The nation’s worst polluters resent the lawsuits that the federal government and the states have brought to enforce this statutory obligation, so they have instructed the current administration to eliminate it.

 

EPA has blindly adopted the polluters’ self-serving, unsubstantiated claims about New Source Review and initiated an unprecedented rollback without any analysis of the public health impacts.  Because the rollback will violate an act of Congress and adversely impact the health of tens of thousands of Americans, I ask that these committees do everything in their power to prevent the changes from taking effect.

 

II.        Background

 

            A.        What NSR Is[1]

 

In 1970, Congress amended the Clean Air Act to require that new industrial sources of air pollution be built with state-of-the-art pollution controls.[2]  The amendments did not require existing sources to install modern controls immediately.  Instead, they required existing plants to install controls when and if the sources underwent modification.[3]  Congress believed that the most efficient time to retrofit a facility was when the plant was already undergoing construction activity,[4] and it assumed that many existing sources would soon be retired and replaced anyway.[5]

 

The 1970 amendments failed to achieve the Act’s goal of healthy air in all areas of the country by 1975.  In response to this failure, Congress passed a new set of amendments in 1977.[6]  These amendments established the New Source Review (”NSR”) program, which requires a preconstruction review and the issuance of a permit for the construction of any new “major emitting facility,” or the modification of any existing facility.[7]  The program is designed to prevent modified or new facilities from causing increased emissions that could cause or contribute to violations of applicable air quality standards.[8]  Before a company can receive a permit to commence “construction,” it must show that the proposed project would not result in the violation of an air quality standard or any other applicable limit in any local or downwind area, and that the resulting facility would be “subject to the best available control technology for each pollutant subject to regulation under this chapter emitted from, or which results from, such facility.”[9]

 

The Act defines “construction” to include “modification.”[10]  The term “modification” is in turn defined as “any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted.”[11]  The statute does not further limit the definition of “modification”; however, EPA regulations promulgated after 1977 exclude “routine maintenance, repair, and replacement” from the term’s scope.[12]

 

Industry representatives often complain of difficulty determining what kinds of activity qualify as “routine.”  Although EPA has issued guidance in the form of individual applicability determinations, it has not promulgated any regulations specifying what types of projects are always “routine” and thus exempt from New Source Review.  In evaluating industry’s complaints about lack of clarity, it is important to keep in mind the fact that, as early as 1994, EPA staff circulated draft regulatory language that would have equated “routine” with “minor.”[13]  The draft stated that “routine activities would generally include . . . minor maintenance or repair of parts or components and the replacement of minor parts or components with identical or functionally equivalent items.”[14]  In response to industry comments, including a recommendation that “routine” be defined as “undertaken in an industrial category,”[15] EPA abandoned the effort to craft a regulatory definition of the term.

 

EPA thus continues to determine what is “routine” on a case-by-case basis.  In making these determinations, the agency weighs several factors, including “the nature, extent, purpose, frequency and cost of the work.”[16] 

 

The U.S. Court of Appeals for the D.C. Circuit has observed that “[i]mplementation of the statute’s definition of “modification” will undoubtedly prove inconvenient and costly to affected industries.”  The court nevertheless held that “the clear language of the statute unavoidably imposes these costs except for de minimis increases.”  While “[t]he statutory scheme intends to ‘grandfather’ existing industries[, ] the provisions concerning modifications indicate that this is not to constitute perpetual immunity . . . .”[17]

 

            B.        The History of NSR Enforcement

 

The regulations implementing the 1977 New Source Review provisions were not fully in effect until the early 1980s, after several rounds of judicial review and re-promulgation.  Thereafter followed a period, coinciding with the Reagan Administration, in which EPA did little enforcement of any kind.  During this period of non-enforcement, the utility industry essentially ignored the New Source Review requirements. 

 

One company, Wisconsin Electric Power (“WEPCO”), did approach EPA in 1988 to ask whether the construction planned at one of its coal-fired power plants could be considered “routine maintenance, repair, and replacement.”  WEPCO wanted to undertake renovations so that its plant could operate beyond its planned retirement date of 1992.  To that end, the company wanted to repair or replace the turbine-generators, boilers, rear steam drums, air heaters, mechanical and electrical auxiliaries, and common plant support facilities.  These refurbishments would require the company to take various units of the plant out of service for nine months.[18] 

 

When EPA told WEPCO that the planned renovations could not be considered routine, the company petitioned for review by the U.S. Court of Appeals for the Seventh Circuit.  In court, WEPCO argued that “Congress did not intend for simple equipment replacement to constitute a physical change for purposes of the Clean Air Act’s modification provisions.”[19]  The Seventh Circuit held, however, that “to adopt WEPCO’s definition of ‘physical change’ would open vistas of indefinite immunity from the provisions of NSPS and PSD [the latter being the version of New Source Review that applies in areas that are in attainment of air quality standards].”[20]  The court found that EPA had not acted arbitrarily or capriciously in determining that the proposed changes were not routine.[21]

 

The electric power industry’s response to the WEPCO decision was to stop seeking applicability determinations from EPA.  The power companies did not, for the most part, apply for NSR permits before undergoing construction at their existing plants, nor did they report the resulting emissions increases. 

 

At the same time, the industry prevailed upon the Office of Management and Budget to kill a broader examination of industry practices initiated by EPA.  The industry also pressured Congress to amend the Clean Air Act to create broad new exemptions for modification projects at power plants.  When they did not get new statutory exemptions, the power companies lobbied the first Bush Administration for regulatory loopholes.  In 1992, the Administration amended the NSR rules to give the electric utilities a more generous formula for calculating whether an emission increase had occurred.  The rule did not change the definition of routine maintenance, however.  When EPA initiated a new investigation to determine why so few NSR applications had been filed, industry again sought intervention by OMB, using the Paperwork Reduction Act as a pretext.  While this effort succeeded in delaying EPA’s investigation, OMB ultimately dismissed the industry’s claims.

 

In the mid 1990s, EPA focused its NSR enforcement efforts on refineries and pulp and paper mills.[22]  Budget cuts and Congressional attacks associated with the 104th Congress limited EPA’s ability to mount serious enforcement efforts against the power industry.  Moreover, efforts to revise the national ambient air quality standards for ozone and particulate matter, to address interstate ozone transport problems, and to strengthen mobile source controls dominated EPA’s air pollution control activity.

 

Finally, in 1996, EPA began to investigate the electric power industry in earnest.[23]  That investigation uncovered a capital investment strategy, starting in the 1980s, to upgrade existing coal-fired power plants to run longer and harder rather than letting them retire and be replaced by new, cleaner facilities (as Congress had anticipated).  Not only was the utility industry deliberate in pursuing this strategy, but industry representatives were even candid about it, or at least they were in non-environmental proceedings.  For instance, in January 1995, a plant manager for Ohio Power (“OPCo”), a subsidiary of American Electric Power (“AEP”), testified about his company’s “life-optimization programs” to the Public Utilities Commission of Ohio:

The company has recognized for some years the benefits of extending or optimizing the lifetimes of several of its older coal-fired generating units . . . and has developed and begun to implement life-optimizations programs to accomplish that objective.  The life-optimization programs extend over several years, and require significant capital expenditures during those years.  Without those expenditures, the units’ lives could not be extended, and they would most likely achieve more traditional lifetimes, on the order of 35-40 years.  As a direct result of the life-optimization programs, the company expects those units to achieve, instead, lifetimes on the order of 50 years for certain of those units and of 60 years for others . . . .[24]

Utilities today, including OPCo, have much greater incentives than in the past to keep existing generating units operating as long as possible beyond their nominal lifetimes, even at considerable expense, so as to put off the need for incurring the even greater expense of adding costly new replacement capacity.[25]

[T]he achievement of lifetimes in excess of 40 years is directly dependent on carrying out the life optimization program; such lifetimes simply could not be achieved without the unit modernization program, and without incurring the program’s considerable capital cost.[26]

In light of the industry’s “life-optimization” strategy, it is not surprising that EPA’s investigation of coal-fired power plants uncovered myriad construction projects that were anything but routine:

·       At the Tennessee Valley Authority’s Allen plant, the replacement of a reheater and other large components involved cutting a twenty-five-foot hole in the boiler wall at a location ten stories off the ground and constructing a mono-rail line and trolley system to transport the old components out of the boiler.  The project required a work force of over seventy people.[27]

 

·       AEP modified its Big Sandy plant in Kentucky in ways that allegedly led to an annual increase in sulfur dioxide emissions of 18,000 tons – more than the total emissions from a new coal-fired plant.[28]

 

·       At its Tanners Creek plant in Indiana, AEP replaced eleven furnaces.[29]

 

·       At its Scherer plant in Georgia and its Miller plant in Alabama, the Southern Company constructed entirely new units.[30]

 

The companies did not apply for NSR permits before undertaking any of these upgrades and reconstruction projects.

 

Beginning in 1999, EPA sent a number of referrals to the Department of Justice for civil enforcement actions against the owners and operators of some of the largest coal-fired power plants in the country, including those identified above, alleging widespread violations of the New Source Review provisions.  After reviewing the referrals, the DOJ in November 1999 filed seven enforcement actions in U.S. District Courts against nine companies.  That same month, EPA issued an administrative compliance order to the Tennessee Valley Authority alleging multiple NSR violations at nine of TVA’s eleven coal-fired power plants located in Alabama, Kentucky, and Tennessee.  The following May, TVA petitioned for review of the EPA order by the U.S. Court of Appeals for the Eleventh Circuit.  In December 2000, the DOJ filed an additional NSR enforcement action against Duke Energy alleging major modifications at the company’s coal-fired power plants in the Carolinas.[31]

 

One of these enforcement actions – against Tampa Electric – has been resolved with a consent decree.  The rest are still in litigation.[32]

            C.        The Backlash Against NSR

In response to the enforcement actions, industry renewed its political assault on New Source Review.  Lawyers and lobbyists for the coal and oil companies descended once again on Washington with claims that NSR was having a host of pernicious effects.  A review of the facts reveals each of these industry claims to be specious.

First, the lobbyists have asserted that NSR subjects companies to an expensive and interminable permitting process whenever they seek to undertake even the most minor maintenance at their facilities.  A popular claim is that NSR could potentially apply to the replacement of a single light bulb at a plant.

The reality is that NSR’s permitting requirements are only triggered by modifications that significantly increase air pollution emissions. What is more, EPA’s regulations already calculate the baseline against which increases are measured in a way that is generous to industry.  Only if emissions increase significantly above these generous levels does a facility trigger NSR.

The Department of Justice has not filed enforcement actions against companies for replacing light bulbs.  As the examples presented above demonstrate, the instances in which the government has asserted that NSR applied are ones in which companies undertook large-scale construction projects at their plants, refurbishing, replacing, and upgrading equipment in ways that greatly increased the amount of air pollution emitted from those facilities.

The second claim the lobbyists make is that NSR’s onerous requirements prevent industry from meeting the country’s power needs.  Nothing could be farther from the truth.

First of all, energy market analysts do not see environmental regulation as a driver of recent trends in electricity capacity expansion and utilization relative to other factors.[33]

Moreover, all signs indicate that this country will produce more than enough electricity to satisfy its needs.  PA Consulting has estimated that more that 245 GW of new capacity is under development; and that it is likely that 175 GW to 230 GW of that planned capacity will come on line by 2006.  To put that growth in perspective, the group states that 215 GW of capacity additions would be equivalent to “what the entire rest of the world built in three years.”  PA Consulting emphasizes that the total includes eleven GW of coal-fired generation capacity under development and that 20,000 MW of new coal-fired capacity had been announced in the six months preceding the report alone.  Finally, the group observes:

With the current wave of new plant announcements, it is even likely that the industry will overbuild, as players seek to increase market share by displacing older capacity.  By 2006, some 30-50 GW of ‘excess’ capacity might become operational and some regional markets might experience excess capacity and very low prices in the next 3-4 years.[34]

 

Likewise, the Cato Institute has estimated that 150 to 200 GW of new capacity is scheduled to come on line by 2004, threatening an “electricity glut.”[35]  Clearly, the current NSR regulations have not hindered the construction of new generating capacity.

 

The fact is that a great deal of new capacity is being built, even with NSR requirements in place.  According to the North American Electric Reliability Council,[36] “Near term generation adequacy is deemed satisfactory.”  The NERC expects reserve margins in the 15-27% range, with 15% generally considered adequate.[37]  These estimates may need to be adjusted to account for recent investor reluctance owing not to NSR, but rather to disclosures of corporate fraud in the energy industry and elsewhere.

 

With respect to oil production, refiners have affirmed that the reason they did not build new refineries in the 1990s is that the low profitability of the business simply did not justify the investment.  Valero’s senior vice president has emphasized that it was “the poor margins that had the biggest impact, not the environmental rules.”[38]  Refiners and analysts also point to low profitability – not to NSR or other environmental requirements – when explaining why companies are not investing in new refineries.  For example, Exxon Mobil’s chairman and chief executive recently stated that no oil company is prepared to build a new refinery because they cannot make money from doing so.[39]  Finally, environmental requirements cannot be blamed for the low profitability of the industry and the resulting reluctance to invest in new refineries.  The EIA has concluded that environmental requirements accounted for only a very small share of the refining industry’s decline in profitability in the early 1990s.[40]

The third industry claim is that requiring older power plants meet modern pollution standards will mean higher electricity prices for consumers.  An analysis by MSB Energy Associates analysis demonstrates that the cost of requiring best available control technology on the fifty-one plants that have been charged with NSR violations is quite modest relative to industry revenues.  The annual cost (including the amortization of the capital cost) would be about four billion dollars.  This amounts to about eight percent of the revenues for the companies involved.  On average, the cost impact would be 0.5 cents per kWh based on year 2000 reported sales for the companies involved.  This must be compared to the health benefits, which are four-to-five times the cost of controls.[41]

 

The other important point to take away from MSB’s analysis is that the lion's share of the cost of the clean up will be eaten by the plant owners, who in a competitive power market cannot automatically pass-through those costs to consumers.  In fact, the Energy Information Administration in its recent Analysis of Strategies for Reducing Multiple Emissions from Power Plants found that requiring best available control technology at all of the nation's grandfathered power plants would not increase electricity prices appreciably.  Indeed, EIA found that relative to 1998 prices, even requiring modern controls at all power plants, electricity prices will fall. This is the so-called “McIntosh Report” that President Bush used as justification to reverse his pledge to control carbon dioxide from power plants.[42]

The fourth claim that the power companies make is that NSR prevents them from making improvements to increase the efficiency of their plants.  Specifically, they argue that fear of triggering NSR keeps power plant owners from making investments in heat rate improvement that would reduce emissions from those plants. 

To check this claim, environmental groups calculated the potential impact of heat rate improvements at coal-fired power plants on emissions and compared that to the potential emission reductions from enforcement of New Source Review standards.[43]  The comparison is striking.

The actual potential for heat rate improvement is small.  The Electric Power Research Institute investigated this a number of years ago and reported its findings in a 1986 report, “Heat-Rate Improvement Guidelines for Existing Fossil Plants.”  In this report EPRI found that, if cost were no object, there could be, on average, an improvement in heat rate of about 400 BTUs per kWh (about four percent).  Cost, however, is very much an important consideration.  Work done by a major northeast utility in the early to mid-1990s found that a fair amount of the heat rate improvement potential at their plants had already been tapped, and that any further improvements were extremely non-cost-effective.[44] 

 

Nevertheless, to give heat rate improvement the benefit of the doubt, the environmental groups assumed that half of the average heat rate improvement potential could actually be achieved in a cost-effective manner at every major coal-fired generating unit (over 1,000 generating units with a total installed capacity of almost 300,000 MW).[45] 

 

Even under these generous assumptions, heat rate improvement at coal-fired power plants would only reduce SO2 emissions by about 218,000 tons out of a total of 11.2 million tons (about 2%).  NOx emission would be reduced by 88,000 tons out of a total of 5.1 million tons (less than 2%).[46] 

 

In contrast, NSR enforcement at the fifty-one plants currently subject to enforcement actions under federal law would reduce SO2 by 2.8 million tons – over twelve times as much as the heat rate improvements, and NOx by one million tons – over eleven times as much as the heat rate improvements.  NSR enforcement at all coal-fired power plants would reduce SO2 by 8.8 million tons and NOx by 3.3 million tons.[47]

 

Heat rate improvements would reduce CO2 emissions by about thirty-eight million tons out of 2,454 million tons (1.5%).  It is more difficult to compare this to CO2 reductions from NSR enforcement, because those would be a byproduct of other actions taken.  However, we have estimated that NSR enforcement at all coal-fired power plants would reduce CO2 by ninety-five million tons, and NSR enforcement at the thirty-two plants initially charged with violations would reduce CO2 by forty million tons.[48]

 

In a speech before the National Association of Manufacturers on June 12, 2001, EPA Administrator Whitman said, “I have heard too many instances where we interpreted [NSR] so literally in the field that we, in fact, are hindering environmental progress . . . .”[49]  When NRDC submitted a Freedom of Information Act request seeking all documentation of those “instances,” EPA responded that “Administrator Whitman was referring to oral statements that had been made to her by various industry stakeholders” and that the agency did not have any information to substantiate the oral statements.[50]  In light of the analysis presented above, it is not surprising that industry has not been able to provided EPA with documentary evidence to support its claim that NSR undermines efficiency.

 

Finally, the industry lobbyists assert that the operation of NSR means higher electricity prices for consumers, and that those costs overwhelm the environmental benefits of the law.  The facts explode this specious claim as well.

 

First, an analysis by MSB Energy Associates demonstrates that the cost of requiring best available control technology on the fifty-one plants that have been charged with NSR violations is modest relative to industry revenues.  The annual cost (including the amortization of the capital cost) would be about four billion dollars.  That is approximately eight percent of the revenues for the companies involved.  On average, the cost impact would have been 0.5 cents per kWh based on year 2000 reported sales for those companies.[51]

 

The lion's share of this cost is borne by the plant owners, who in a competitive power market cannot automatically pass those costs through to consumers.  In fact, the Energy Information Administration found in its Analysis of Strategies for Reducing Multiple Emissions from Power Plants that requiring state-of-the-art control technology at all of the nation’s grandfathered power plants would not increase electricity prices appreciably.  Indeed, EIA concluded that even if best-available controls are required at all power plants, electricity prices will fall.[52]

 

Although money is not the measure of everything, monetized value provides one metric of the efficacy of these actions.  Data collected by Abt Associates on the fifty-one plants charged with NSR violations shows twenty-seven to forty-five billion dollars in annual benefits from requiring those plants to implement best available control technology.[53]  That figure dwarfs the four billion dollars estimated by MSB Energy Associates as the annual cost of clean up.

 

The lack of support for industry’s claims about New Source Review has not stopped the nation’s worst polluters from making them.  With the election of President Bush and the convening of Vice President Cheney’s Energy Task Force, the polluters found themselves with a friendly audience and a forum in which to make their pitch for the effective elimination of NSR.

 

Documents that NRDC has obtained from the Department of Energy, the lead agency on the Cheney Task Force, reveal that the companies and industry groups who most sought the demise of New Source Review enjoyed extraordinary access to the task force:[54]

 

·       Edison Electric Institute had contact with the task force at least fourteen times (EEI contributed $598,169 to Republican candidates and the GOP from 1999 to 2002).

 

·       North American Electric Reliability Council had contact with the task force at least eleven times.

 

·       National Mining Association had contact with the task force at least nine times (NMA contributed $575,496 to Republican candidates and the GOP from 1999 to 2002).

 

·       Westinghouse had contact with the task force at least nine times (Westinghouse Electric Company contributed $65,060 to Republican candidates and the GOP from 1999 to 2002).

 

·       Electric Power Research Institute had contact with the task force at least eight times.

 

·       Southern Company had contact with the task force at least seven times (Southern contributed $1,626,507 to Republican candidates and the GOP from 1999 to 2002).

 

·       American Petroleum Institute had contact with the task force at least six times (API contributed $44,301 to Republican candidates and the GOP from 1999 to 2002).[55]

 

These firms made the most of their access.  On March 23, 2001, an executive of the coal giant, Southern Company, sent the task force coordinator at the Energy Department a memorandum arguing that “EPA has re-interpreted [the NSR] regulations in extreme ways that not only places [sic] in legal jeopardy past work conducted at facilities but also threatens the safe, reliable and efficient operation of energy production facilities across the country.”  The paper urged the Administration to undertake a “reaffirmation of historical interpretations” of the New Source Review provisions.[56]

 

The previous day, an official with the National Petroleum Refiners Association had written in a message to the same Energy Department official that “[t]he EPA’s enforcement campaign against U.S. refineries should be halted and reexamined.”  He characterized EPA’s enforcement actions as “nothing more than an attempt to discredit the industry and collect tribute in the form of fines on order to allow refiners to get on with their business.”  In concluding, he wrote that “this activity goes far beyond the pale of reasonable enforcement action and should cease.”[57]

 

This heavy-handed lobbying bore fruit in the form of two final recommendations issued by Vice President Cheney on May 16, 2001:

 

·       The NEPD Group [the task force] recommends that the President to [sic] direct the Administrator of the Environmental Protection Agency, in consultation with the Secretary of Energy and other relevant agencies, to review New Source Review regulations, including administrative interpretation and implementation, and report to the President within 90 days on the impact of the regulations on investment in new utility and refinery generation capacity, energy efficiency, and environmental protection.[58]

 

·       The NEPD Group recommends that the President direct the Attorney General to review existing enforcement actions regarding New Source Review to ensure that the enforcement actions are consistent with the Clean Air Act and its regulations.[59]

 

President Bush issued both of the recommended directions.  In January 2002, the Department of Justice responded to the second one with a report concluding that “EPA may reasonably argue that the new source review enforcement actions against coal-fired power plants are consistent with the C[lean ]A[ir ]A[ct], as well as with the A[dministrative ]P[rocedure ]A[act].”[60] 

 

EPA issued its report six months later.  The report concluded that

 

the NSR program has not significantly impeded investment in new power plants or refineries.  For the utility industry, this is evidenced by significant recent and future planned investment in new power plants.  Lack of construction of new Greenfield refineries is generally attributed to economic reasons and environmental restrictions unrelated to NSR.[61]

 

EPA also found that “preventing emissions of pollutants covered by NSR does result in significant environmental and public health benefits.”[62]  At the same time, however, it concluded that, with respect to existing power plants and refineries,

 

The NSR program has impeded or resulted in the cancellation of projects which would maintain and improve reliability, efficiency and safety of existing energy capacity.  Such discouragement results in lost capacity, as well as lost opportunities to improve energy efficiency and reduce air pollution.[63]

 

This conclusion is based largely on self-serving, anecdotal evidence submitted by industry commenters.  For example, EPA relies on one company’s complaint that it did not install new Teflon-coated nozzles in a process dryer for fear of triggering NSR.  EPA blindly accepts as true the company’s claims that the change it forwent would have actually triggered NSR, that the desire to avoid NSR was really the motivation for abandoning the change, and that the change would have improved the reliability, efficiency, and safety of the facility in question.[64]

 

EPA concedes that industry has offered little more than undocumented anecdotes and sketchy hypotheticals to support its critique of NSR.  The agency nevertheless takes the position that such material can substitute for verifiable data if industry shovels enough of it into the administrative record:

 

In light of the volume of anecdotal evidence presented, the EPA concludes that concern about the scope of the routine maintenance exclusion is having an adverse impact.[65]

 

Under the leadership of John Graham, the Office of Regulatory and Information Affairs at the Office of Management and Budget has repeatedly returned to agencies for reconsideration regulations that, in OIRA’s view, lacked adequate data to substantiate the purported grounds for the rulemaking.  For example, the office returned one regulation to the Office of Veteran Affairs because, “[w]hile VA staff have argued that there are currently inconsistencies in billing practices, OMB has not been presented with evidence of this problem or evidence of how this rule would reduce, rather than increase inconsistency.”[66]  It returned to the Department of Transportation a rule requiring the retrofitting of exterior piping on tanker trucks carrying hazardous substances, because while the Department presented an estimate of what the retrofitting would cost, the estimate was itself based upon “anecdotal evidence.”[67]  To date, OIRA has only returned rules that the private sector finds too onerous.  Dr. Graham insists, however, that he will apply the same standards to regulations that are criticized as not providing adequate protection to the public.  If this is in fact the case, then he will return EPA’s proposed changes to New Source Review, for EPA has failed to present adequate data to substantiate the purported problems that supposedly justify eviscerating the program.[68]

 

III.       The Announced Rollbacks

            On June 13, the day that EPA released its report on NSR, the agency announced that it would be making eight regulatory changes.  If these changes are allowed to take effect notwithstanding their incompatibility with the Clean Air Act, the New Source Review requirements will in effect no longer apply to the modification of existing facilities.

            A.        Dirtiest Two Years in Ten Baseline

            The New Source Review requirements are only triggered by changes that cause air pollution emissions to increase significantly, i.e., by at least forty tons per year.  To determine whether pollution will increase significantly, it is necessary to compare a source’s pre-change emissions, known as its “baseline,” with its post-change emissions.  With respect to the approximately 15,500 major industrial facilities in this country that are not electric utilities, EPA currently interprets the Clean Air Act to require that the baseline be calculated as the average of the source’s last two years of emissions, unless the source can demonstrate that another period is more representative of its pre-change emissions. 

            On June 13, EPA announced that it will promulgate a final rule allowing the baseline to be calculated as the average of the source’s emissions during any two-year period that the company chooses from the last ten years.[69]  If this rule takes effect, a plant that currently emits 1,000 tons-per-year of an air pollutant could institute a change causing its emissions to go up to 1,640 tons-per-year without triggering NSR, provided that its emissions nine and ten years ago averaged 1,600 tons-per-year.  Under EPA’s new rule, in other words, a change that causes a source’s emissions to go from 1,000 tons-per-year to 1,640 tons-per-year will not be deemed a “modification,” even though the Clean Air Act defines that term to mean “any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source.”[70]

            During internal EPA discussions leading up to the June 13 announcement, officials within the agency included this change to the baseline calculation among the “proposals present[ing] a risk of significantly diminished program benefits.”  The officials elaborated on what they meant by “significantly diminished”:

Based on our review . . . , moving to a “high 2 in 5” from a “last two years” as the pre-change baseline will have some reduction (perhaps 20 percent) on the scope of the NSR program as it impacts non-utility sources . . . . A 10 yr baseline would substantially diminish the scope of the program.  Our best estimate is that it would reduce the number of facilities subject to NSR by 50 percent or more compared to a high 2 in 5 baseline.[71]

            B.        Using Accounting Gimmicks to Low-Ball Projected Future Emissions

            As noted above, one must compare a source’s pre-change emissions with its post-change emissions to determine whether the change is causing a significant increase in emissions.  EPA’s change to the baseline calculation will exaggerate pre-change emission levels.  The agency has also announced that it will take final action on a rule that will under-represent the post-change emissions attributable to the change.   Specifically, the new rule will allow a company to exclude from the calculation of post-change levels those emissions that can be attributed to old capacity, even if the source would not be able to continue using that capacity without making the proposed change.[72]  In essence, this rule will enable companies to cook the books in order to hide significant emissions increases that should trigger the New Source Review requirements.

C.        Exemption for Units That May Once Have Been Considered Clean

            EPA also announced on June 13 that it would promulgate a final rule making any source that goes through an NSR review for best available control technology exempt from having to go through the review again for a period of fifteen years – regardless of what changes the source undergoes and how much its emissions increase.  What is more, the exemption would apply retroactively, meaning that if, ten years ago, a source installed pollution controls that have long since been rendered obsolete by more effective technology, the source could nevertheless undergo dramatic renovations today that significantly increase emissions without installing new controls, and it could continue making such changes with impunity for five years into the future.[73]

            In the pre-announcement internal agency discussions, EPA’s attorneys noted the lack of a “solid legal rationale” for this change.[74]  Indeed, there is no authority whatsoever in the Clean Air Act for allowing a company to ignore the New Source Review requirements – when it undertakes radical changes that significantly increase emissions – just because the company long ago installed control equipment that may now be obsolete.

            D.        Exemption for Plantwide Applicability Limits

In Alabama Power Co. v. Costle, the U.S. Court of Appeals for the D.C. Circuit concluded that “EPA ha[d] properly exempted from best available control technology (BACT) and ambient air quality review those ‘modifications’ of a source that do not produce a net increase in any pollutant.[75]  The court noted that, under the Clean Air Act, “any offset changes claimed by industry” to demonstrate the lack of a net increase “must be substantially contemporaneous.”[76]

 

In response to the ruling in Alabama Power, EPA solicited public comment on whether the agency should “specify that no emission reductions which occurred more than three years before the date a[ pre-construction] application was complete may offset the increase that would result from the change proposed in the application.”[77]  After reviewing the voluminous industry comments submitted on this proposal, EPA selected five years as the outer limit of contemporaneity.[78] 

 

In 1996, EPA proposed a rule pursuant to which “a source, if authorized by a State in a SIP, may base its NSR applicability on a plantwide emissions cap, termed a plantwide applicability limit (“PAL”).  So long as source activities do not result in emissions above the cap level, the source will not be subject to NSR.”[79]  Although EPA never finalized this proposal, further analysis brought recognition that a PAL could not be a means for escaping the contemporaneity requirement enunciated in Alabama Power and quantified in the agency’s 1980 netting rule.  This recognition is reflected in a 1998 Federal Register notice, in which EPA renewed its proposed to authorize PALs:

 

Having again reviewed Alabama Power and the Agency’s subsequent interpretation of the case, the Agency is concerned that, because PAL’s may be characterized as a form of netting and result in the avoidance of major NSR, the contemporaneity requirement for netting set forth in Alabama Power may also need to be applied to PAL’s.  Therefore, EPA is soliciting comment on whether and when to provide for subsequent adjustment of PAL’s to address contemporaneity issues associated with Alabama Power.[80]

 

Although the Clinton Administration never finalized its 1998 PAL proposal, the Bush Administration has now, four years later, decided to promulgate a final PAL rule.  Despite the five-year netting limit promulgated in 1980 and EPA’s 1998 recognition that PALs are subject to the same legal requirement of contemporaneity that governs netting, the agency is now planning to finalize a rule under which a PAL could remain unchanged for ten years or more.[81]  This stretches the meaning of “contemporaneity” past the breaking point.  What is more, EPA’s rule would allow the plant-wide limit to be renewed at higher levels under certain circumstances.[82]

 

Internal EPA documents reveal that as late as January 2002, EPA lawyers still did not have a legal rationale for the Administration’s new PAL rule.  In fact, during a two-day meeting held that month at EPA headquarters, the agency’s lawyers informed their clients that the new PAL proposal was “in conflict” with the Clean Air Act.  The attorneys argued that any PAL approach must adhere to the legal framework of netting, a stricture which the political appointees refused to accept.  According to a memorandum memorializing the meeting, the lawyers also insisted that a “PAL must be based on [a] reasonably contemporaneous period, which is more consistent with a 5-year period.”  Again, the political appointees resisted.  The final PAL rule announced June 13 reveals that, in the end, the political appointees at EPA elected to ignore the law. 

If the change takes effect, a company will be allowed to pretend that a significant pollution increase at its facility in, say, 2010 is not occurring on account of a decrease that happened at the plant in 2001.  What is more, EPA has announced that its new method of calculating baselines will apply to PALs, meaning that the limits will be set so high as to allow massive pollution increases over current levels. 

E.        Exemption for “Pollution Control and Prevention Projects”

The last of the final rules that EPA announced on June 13 would exempt a proposed change to a source from the New Source Review requirements even if the change would cause a significant increase in the emissions of an air pollutant, so long as EPA deemed the change environmentally beneficial in the aggregate.  EPA has announced, moreover, that it will consider as environmentally beneficial a project that reduces emissions per unit of energy output, even if the project causes the source’s emissions to increase.[83]  In a recent applicability determination, EPA itself recognized the flaw in this type of exemption:  

[V]irtually any major capital improvement project at an existing source is designed in part to increase efficiency of production, and this will in turn almost always have the collateral effect of reducing emissions per unit of production, even though it may provide an economic incentive to increase total production, with the net result that actual emissions of air pollution to the atmosphere could increase significantly.  There is nothing in the statutory terms or structure or in EPA’s regulations which suggests that such major changes should be accorded exempt status under the NSR program.  To the contrary, major capital investments in industrial equipment, where they could result in an increase in emissions, appear to be precisely the type of change at an existing source that Congress intended should be subject to PSD and nonattainment area NSR permitting.[84]

The Clean Air Act has not changed in the two years since EPA made the above determination.  The exemption for improved heat rate projects announced June 13 is as unsound and unlawful now as it was in 2000.

F.               Defining “Routine Maintenance, Repair, and Replacement”

In addition to announcing final rules on June 13, EPA announced that it would be submitting proposed rules for notice and comment.   Most significantly, the agency announced that it would propose to define certain parameters that industry will be able to follow safe in the knowledge that its activities will be deemed “routine maintenance, repair, and replacement.”[85] 

Under the first set of proposed parameters, any changes that a company makes at a facility – irrespective of how much increased pollution results – will be per se “routine” as long as the annual cost of the changes does not exceed fifteen percent of the cost of the entire plant.  Costs attributable to the installation of pollution control equipment and the remedying of unanticipated equipment failures would be excluded from the annual cap.[86]  The upshot would be that a company could replace every single part of its facility over the course of five or six years and never trigger NSR, regardless of the amount by which the plant’s emissions increased.

Under the second set of parameters, the replacement of existing equipment with new equipment that serves the same function and does not alter the heat input and fuel consumption specifications of the unit would never trigger New Source Review.  In other words, a power plant could replace all of its deteriorating boilers with new ones, and as long as the new ones had the same specifications as the old ones when they were new, the plant would not need to install state-of-the-art pollution controls.[87]  This rule would thus open the “vistas of indefinite immunity” that the WEPCO court found to be impermissible under the Clean Air Act.[88]

Under the third set of parameters, any change that fell within a set of categories identified by EPA would automatically be deemed “routine,” no matter how much new pollution the change caused.  EPA has announced that it is considering allowing its list of per se routine activities to be informed by ones that industry itself identifies as common practice.[89]

In its June 13 announcement, EPA took pains to emphasize that changes falling outside the proposed parameters would not be disqualified as “routine.”  All of the other announced limitations on NSR’s applicability (dirtiest two years in ten baseline calculation, new method of calculating post-change emissions, etc.) would still be available to industry.[90]

It is impossible to miss the fact that if this proposed rule were allowed to become final, the New Source Review requirements would never apply in the case of modifications at existing facilities.

G.             Exemption for “Debottlenecking”

EPA also announced that it would propose a new rule that would provide a company with additional leeway to under-represent the emissions increase caused by a change to a source.  Specifically, if a change to one emissions unit at a plant caused emissions to increase at an “upstream” or “downstream” unit at the same plant, that increase would not be considered in determining whether the change had caused a significant emissions increase such to trigger the NSR requirements.[91]

During the deliberations of the Cheney Task Force, EPA enforcement officials estimated that the “debottlenecking” proposal would reduce the effectiveness of New Source Review by approximately five percent.[92]

H.              Allowing Dis-aggregation of Modifications

Finally, EPA announced that it would propose a new rule that would make it easier for a company to evade NSR by taking a change that does cause a significant pollution increase, and treating it as a collection of sub-changes, no one of which causes a significant increase.[93]

IV.       What the Effects of the Rollbacks Will Be

            After some details of EPA’s regulatory plans became public in January 2002, the State and Territorial Air Pollution Program Administrators and the Association of Local Air Pollution Control Officials (“STAPPA/ALAPCO”) wrote to Administrator Whitman expressing “considerable trepidations regarding what we understand the reforms will allow and the impact that these changes will have on our nation’s ability to achieve and sustain clean, healthful air.”  STAPPA/ALAPCO pointed out that, “when taken in combination, these reforms will allow most source modifications to avoid NSR, resulting in unchecked emission increases that will degrade our air quality and endanger public health.”[94]

            EPA has ignored STAPPA/ALAPCO’s request for “a broad stakeholder meeting to allow for an open dialogue on the reforms under consideration”[95] and announced rollbacks every bit as extreme as the ones rumored to be under consideration in January.   The announced changes threaten, by operation of “no more stringent than” provisions in state statutes, to force states to weaken their air quality measures at a time when they will be struggling to achieve attainment of stricter national ambient air quality standards for ozone and particulate matter.  Indeed, EPA has indicated that it will require state implementation plans to include the announced changes to NSR program.  As a result, even states that do not want to adopt the changes will be forced to in order to retain control of their permitting programs.

EPA has long been on notice of the devastating impact that the changes the agency has now announced would have on public health and the environment.  In his February 2002 resignation letter, former director of EPA’s Office of Regulatory Enforcement Eric Schaeffer reminded Administrator Whitman that the agency stood to keep more than five million tons per year of combined SO2 and NOx pollution out of the air by means of the compliance orders and enforcement actions it had brought under the New Source Review provisions.[96]  Since all of those cases involve modifications, and the announced rules would effectively end NSR for modifications, it follows that the new rules would allow millions of tons more pollution to be emitted into the air every year than the proper application and enforcement of NSR as it exists today.

A report by the Clean Air Task Force reveals the stakes, in terms of public health, of the NSR enforcement cases alone. [97]   Key findings of this report include:

·       Pollution from the fifty-one plants that are targets of NSR enforcement actions shortens the lives of between 5,500 and 9,000 people every year.

 

·       Requiring these plants to meet modern pollution standards as required by law would avoid between 4,300 and 7,000 of these deaths.

 

·       Pollution from the fifty-one NSR plants leads to between 107,000 and 170,000 asthma attacks each year.

 

·       Between 80,000 and 120,000 of these asthma attacks could be avoided by requiring the plants to meet modern pollution standards as required by law.

 

·       Although all of the plants that are currently targets of NSR enforcement are located in the Midwest or Southeast, there is a “transport of death and disease.”  The pollution from these plants affects downwind states resulting in 1,500 to 2,100 premature deaths and 30,000 to 39,000 asthma attacks per year in the Northeast.

 

·       1,200 to 1,700 of the deaths and 23,000 to 31,000 of the asthma attacks in downwind Northeastern states would be avoided if the plants met modern pollution standards.

 

·       The pollution reductions from the announced settlements with Tampa Electric, Cinergy, Inc., and Dominion Power alone would result in avoiding between 780 and 1,150 premature deaths every year.

 

If NSR did not apply to the modification of existing units – a result EPA hopes to achieve with the rules announced on June 13 – then the prevention of death and disease outlined above would not be achieved.

 

On June 24, the Clean Air Task Force released another study.  It shows that prosecution of power plants charged with violating the New Source Review provisions is a highly cost effective way to clean up the air.  Using methodologies approved by EPA, the study demonstrates that the benefits of the NSR enforcement cases outweigh the costs by as much as ten to one.  Specifically, it shows that using New Source Review to force the fifty-one sued coal plants to reduce their soot and smog emissions would produce annual public health benefits valued at $24-38 billion in avoided deaths and avoided asthma attacks while costing utilities only about $3.5 billion per year in control costs.[98]

 

When EPA proposed to reform the New Source Review program in 1996, it prepared a Final Draft Regulatory and Economic Impact Analysis.  The agency characterized the results of that analysis in its notice of proposed rulemaking:

 

The EPA estimates that 20 percent fewer sources will be classified as major as a result of revising the period for establishing the baseline for actual emissions from which to calculate emissions increases to the highest 12 consecutive months operation by the source. Another 6% reduction is anticipated from the ‘‘clean unit’’ and ‘‘clean facility’’ tests and the exclusion for pollution control and pollution prevention projects. The EPA estimates still another 25 percent of modifications, which would otherwise be subject to major NSR, would be excluded due to allowing  sources to use projected future actual emissions to calculate emissions increases rather than requiring the calculation to be based on the source’s potential to emit in each case.[99]

 

EPA concluded, in other words, that only forty-nine percent of the sources that would otherwise be subject to NSR would be subject to those provisions in the event that the proposed rules entered into effect.  Those proposed rule changes were, in virtually every aspect, less extreme than the ones EPA announced on June 13.  One can only conclude, then, that the announced changes will have an effect on NSR applicability far more dramatic than the one EPA quantified in 1996.

 

Executive Order 12866 states in part:

 

Each agency shall assess both the costs and the benefits of the intended regulations and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.[100]

 

Where a regulatory action is likely to result in a rule that may “[h]ave an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments of communities,”[101] the same executive order requires the agency to provide OIRA, “as part of the agency’s decision-making process,”

 

An assessment, including the underlying analysis, of costs anticipated from the regulatory action (such as, but not limited to, the direct cost both to the government in administering the regulation and to businesses and others in complying with the regulation, and any adverse effects on the efficient functioning of the economy, private markets (including productivity, employment, and competitiveness), health, safety, and the natural environment), together with, to the extent feasible, a quantification of those costs.[102]

 

As indicated above, EPA is in possession of evidence indicating that the announced changes to New Source Review will result in tens of thousands of premature deaths, asthma attacks, and hospitalizations, tens of billions of dollars’ worth of forfeited public health benefits each year, and – on account of increased haze in national parks and acid deposition across the Northeast – serious detriment to the nation’s tourism industry.  EPA has nevertheless refused to perform an analysis of the impacts that the announced rules will have on public health, the environment, and the economy.  That refusal flies in the face of Executive Order 12866.  I am thus compelled to call upon OIRA Administrator Graham – again – to return any NSR rulemaking package to EPA pending the agency’s submission of the required analysis.

 

Whenever political appointees at EPA are confronted with the devastating effects that the announced NSR rollbacks will have on public health and the environment, they assert that President Bush’s Clear Skies Initiative will obviate New Source Review.[103]  This assertion ignores a key fact: whereas the announced NSR rollbacks will apply to all of the approximately 17,000 large industrial facilities in this country, the caps proposed for the CSI would only apply to the nation’s approximately 1,500 power plants.  CSI would actually allow fifty percent more sulfur emissions than current law, and delay safer standards by eight years.  It would also permit three times more toxic mercury emissions than existing law, and it would allow hundreds of thousands of tons of additional nitrogen oxide pollution.  And of course, whereas EPA has announced final rules eviscerating New Source Review, the Clear Skies initiative has not even been introduced as legislation yet.

 

The Administration thus fails to offer any effective rebuttal to the evidence indicating that rules announced on June 13 will impose a staggering cost on this country – in the form of premature deaths, asthma attacks, birth defects, heart attacks, haze, acid rain, and all the attendant horrors of climate change.  For that reason, and because the announced rules purport to repeal a vital portion of the Clean Air Act, I respectfully ask that these Committees do everything in their power to prevent these rollbacks from ever taking effect.

 

 

 

 


[1]              The description of the New Source Review program provided in this section derives largely from the U.S. Department of Justice’s January 2002 report entitled “New Source Review: An Analysis of the Consistency of Enforcement Actions with the Clean Air Act and Implementing Regulations” (“OLP Report”).

[2]              See Pub. L. No. 91-604, 84 Stat. 1676, Section 111 (codified at 42 U.S.C. § 7411).

[3]              See id., Section 111(a)(2) (codified at 42 U.S.C. § 7411(a)(2)).

[4]              See H.R. Rep. No. 95-294, at 185-86 (1977), reprinted in 1977 U.S.C.C.A.N. 1077, 1264-65 (“Building control technology into new plants at time of construction will plainly be less costly than requiring retrofit when pollution ceilings are reached.”).  See also Wisconsin Electric Power Co. v. Reilly (“WEPCO”), 893 F.2d 901, 909 (7th Cir. 1990) (finding that the purpose of the “modification” rule is to ensure that pollution control measures are undertaken when they can be most effective, at the time of new or modified construction).

[5]              See H.R. Rep. No. 95-294, at 186 (“For some of the older and smaller sources, it is not physically or economically feasible to retrofit sulfur oxide control technology.”).

[6]              Pub. L. No. 95-95, 91 Stat. 685 (codified at 42 U.S.C. §§ 7401-7642).

[7]              See 42 U.S.C. §§ 7475, 7501-7503.

[8]              See id. § 7470(5).

[9]              Id. § 7475(a).

[10]            Id. § 7479(2)(C).

[11]            Id. § 7411(a)(4).  In the words of Senator Edmund Muskie, one of the principal supporters of the 1977 amendments, “A source . . . is subject to all the nonattainment requirements as a modified source if it makes any physical change which increases the amount of any air pollutant . . . .”  123 Cong. Rec. 26,847 (1977).

[12]            40 C.F.R. §§ 51.166(b)(2)(I); 52.21(b)(2)(iii)(a); 52.24(f)(5)(iii)(a); 60.14(e)(1).

[13]            See New Source Review Reform 106-09 (EPA, Preliminary Staff Draft 1994).

[14]            Id.

[15]            Letter from Mary Nichols to Bill Lewis, May 30, 1995, at 19.

[16]            WEPCO, 893 F.2d at 910.

[17]          Alabama Power Co. v. Costle, 636 F.2d 323, 400 (D.C. Cir. 1980).  See also Legislative History of the Clean Air Act Amendments of 1990, 6675-76, Senate Debate on S. 1630, Remarks of Senator Baucus (“The issue is whether old facilities that are substantially renovated and refurbished should continue to be allowed to emit at much higher rates or to emit more pollution, and with little or no pollution control equipment, compared to new sources.  The obvious answer is that they should not, so long as common sense exceptions to the rules [de minimus exceptions and exceptions for pollution control equipment] continue to apply . . . .”).   

[18]            WEPCO, 893 F.2d at 906-08.

[19]            Id. at 908.

[20]            Id. at 909.  See also id. (“The legislative history suggests and courts have recognized that in passing the [1977] Clean Air Act Amendments, Congress intended to stimulate the advancement of pollution control technology. . . . The development of emission control systems is not furthered if operators could, without exposure to the standards of the 1977 Amendments, increase production (and pollution) through the extensive replacement of deteriorated generating systems.”) (citations omitted).

[21]            Id. at 913.

[22]            OLP Report at 17-19, 31, Appendix II.

[23]            Id. at 13.

[24]            Public Utilities Commission of Ohio, Case No. 94-996-EL-AIR, Supplemental Testimony of Myron D. Adams on behalf of Ohio Power Company, July 20, 1994, at 6-7.

[25]            Id. at 23.

[26]            Id. at 25.

[27]            In re: Tennessee Valley Authority: Transcript of Proceedings at 240-242; Direct Testimony of Plant Manager Alan Heckking at 17.

[28]            September 15, 1999 letter from Eliot Spitzer, Attorney General of New York, to William J. Lhota, president of Kentucky Power Company.

[29]            United States v. AEP, Complaint.

[30]            United States v. Alabama Power Co. and Georgia Power Co., Complaint.

[31]            OLP Report at 13-17.

[32]            Id. at 15, 17.

[33]            See, e.g., Economists Tell Senate Committee that FERC May Need More Economic Expertise to Monitor Power Markets Effectively, Foster Electric Report, June 20, 2001 (comments by Severin Borenstein); Power Companies and Regulators Must Take Steps to Avoid Spread of California Power Virus, Business Wise, April 24, 2001; Charles J. Cicchetti and Colin M. Long, Politics as Usual: A Roadmap to Backlash. Backtracking and Re-Regulation, Public Utilities Fortnightly, October 1, 2000, at 34.

[34]            PA Consulting Group, The President’s 2001 US Energy Blueprint: What Does It Mean For the Utility Industry? (May 25, 2001) (emphasis in original).

[35]            Jerry Taylor, Just Say “No” to the Energy Plan, May 19, 2001, at http://www/cato.org/dailys/05-19-01.html.

[36]            “Reliability Assessment 2000-2009”, North American Electric Reliability Council, October 2000.

[37]            Clean Air Task Force, et al., Comments on Review of Interpretation, Implementation, & Enforcement of Clean Air Act New Source Review Programs, EPA Docket No. A-2001-19, July 24, 2001 (“Environmental Comments on NSR Background Paper”), at 47.

[38]            Nelson Schwartz, Is Dick Cheney the New Hillary? Fortune, June 11, 2001, at 37.

[39]            Alexei Barrionuevo, Exxon-Mobil CEO Doubts Anyone Would Build US Refinery, Dow Jones News Service (May 30, 2001).

[40]            ICF Consulting, Review of Data on the Impact of New Source Review on Investment Decisions: Power Generation and Refinery Sectors, Draft Report (June 22, 2001), at 53.  See also Energy Information Administration, The Impact of Environmental Compliance Costs on US Refining Profitability.

[41]            Environmental Comments on NSR Background Paper, Appendix D.

[42]            See id., Appendix K.

[43]            Id. at 49-50.

[44]            Id. at 49.

[45]            Id.

[46]            Id. at 50.

[47]            Id.

[48]            Id.

[49]            Remarks by Christine Todd-Whitman, Administrator of the U.S. Environmental Protection Agency, at the National Association of Manufacturers, June 12, 2001.

[50]            Letter from William T. Harnett, director, EPA Information Transfer and Program Integration Division, to NRDC, October 1, 2001.

[51]            See Environmental Comments on NSR Background Paper, Appendix D.

[52]            See id., Appendix K.

[53]            See id. at 49.

[54]            See http://www.nrdc.org//media/pressreleases/020521.asp.

[55]            Industry’s intimate access to the Cheney Task Force stands in stark contrast to the limited access afforded environmental groups.  See http://www.nrdc.org/air/energy/taskforce/bkgrd2.asp.

[56]            See http://www.nrdc.org/air/energy/taskforce/doc150.html.

[57]            See http://www.nrdc.org/air/energy/taskforce/doc6368.html.

[58]            Report of the National Energy Policy Development Group, ch. 7, at 14 (May 16, 2001).

[59]            Id.

[60]            OLP Report at 4.

[61]            EPA, New Source Review: Report to the President, at 1 (June 13, 2002).

[62]            Id. at 2.

[63]            Id. at 1.

[64]            Id. at 34.

[65]            Id. at 17.

[66]            Letter from OIRA Administrator John Graham to VA General Counsel Tim McClain, October 3, 2001 (posted at http://www.whitehouse.gov/omb/inforeg/va_medical_care_rtnltr.html).

[67]            Letter from OIRA Administrator John Graham to DOT General Counsel Rosalind Knapp, August 8, 2001 (posted at http://www.whitehouse.gov/omb/inforeg/wetlines_return_letter3.html).

[68]            See Exec. Ord. 12866, Section 1(b)(7) (Sep. 30, 1993) (“Each agency shall base its decisions on the best reasonably obtainable scientific, technical, economic, and other information concerning the need for, and consequences of, the intended regulation.”).

[69]            EPA, New Source Review: Recommendations (June 13, 2002), at 4.

[70]            42 U.S.C. §7411(a)(4).

[71]            Internal EPA document provided to NRDC.

[72]            New Source Review: Recommendations at 3-4.

[73]            Id. at 2.

[74]            Internal EPA document provided to NRDC.

[75]            636 F.2d at 401.

[76]            Id. at 402. 

[77]            45 Fed. Reg. 6802, 6803 (January 30, 1980).

[78]            45 Fed. Reg. 52676, 52701 (August 7, 1980).

[79]            61 Fed. Reg. 38249, 38264 (July 23, 1996).

[80]            63 Fed. Reg. 39857, 39863 (July 24, 1998).

[81]            New Source Review: Recommendations at 1.

[82]            Id.

[83]            Id. at 2-3.

[84]            Detroit Edison Applicability Determination, at 5-6, n.1 (May 23, 2000).  See also Puerto Rican Cement Co. v. EPA, 889 F.2d 292, 297-98 (1st Cir. 1989) (modification of emissions unit that decreases emissions per unit of output, but may result in sufficient production increase such that actual emissions will increase, is subject to the New Source Review requirements).

[85]            New Source Review: Recommendations at 4-6.

[86]            Id. at 4-5.

[87]            Id. at 5-6.

[88]            WEPCO, 893 F.2d at 909.

[89]            New Source Review: Recommendations at 6.

[90]            Id. at 4.

[91]            Id. at 6.

[92]            Internal EPA document provided to NRDC.

[93]            New Source Review: Recommendations at 7.

[94]            Letter from STAPPA President Lloyd Eagan and ALAPCO President Arthur Williams to EPA Administrator Christine Todd-Whitman, January 23, 2002.

[95]            Id.

[96]            Letter from Office of Regulatory Enforcement Director Eric V. Schaeffer to Administrator Christine Todd-Whitman, February 27, 2002.

[97]            Power to Kill, Clean Air Task Force, July 2001.  The report draws upon data from Abt Associates, Inc., The Particulate-Related Health Benefits of Reducing Power Plant Emissions (October 2000).  See also, Clean Air Task Force, Death, Disease, and Dirty Power: Mortality and Health Damage Due to Air Pollution from Power Plants (October 2000) (posted at www.cleartheair.org).

[98]            L. Bruce Hill, A Preliminary Analysis of the Benefits and Costs of Current New Source Review Litigation, June 24, 2002 (posted at http://www.clnatf.org/press_room/index.html).

[99]            61 Fed. Reg. 38,250 38,319 (July 23, 1996).

[100]           Exec. Ord. No. 12866, Section 1(b)(6) (Sept. 30, 1993).

[101]           Id., Section 3(f)(1) (Sept. 30, 1993).

[102]           Id., Section 6(a)(3)(C)(ii).

[103]           See, e.g., BNA Daily Environment Report, “Whitman Says Clear Skies Proposal Will Reduce Emissions Faster Than Clean Air Act,” April 8, 2002.