O P E N I N G S T A T E M E N T

Senator George V. Voinovich

Joint EPW/Judiciary Hearing on NSR

Tuesday July 16, 2002

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1. I object to the majority=s grossly negative and sinister characterizations of the Administration=s effort to clarify NSR. Reminds me of the old buzzword of politics --characterize something as bad before you know what it is or before it has been finalized.

2. That being said, Mr. Chairman, thank you for calling today=s hearing on New Source Review. The New Source Review program has been around since 1977. It requires new facilities to install the “best demonstrated technology” to control emissions. The program also requires older facilities to update their equipment to Astate of the art@ as they undergo major modifications.

3. I think it is important to point out at the very beginning that it is a fallacy to say that any plants are so-called “grandfathered” from the Clean Air Act. On the contrary, every major facility is regulated by the Clean Air Act and must meet defined permit levels. Every plant must abide by the ozone and PM standards, the MACT standards, the NOx SIP Call, and every regulatory program applicable to each industry. It is important to note that emissions have been reduced significantly since 1977. Ohio utilities have spent more money to reduce pollution than all of the utilities in the Northeast.

4. It is also a fallacy to assume that NSR only applies to utilities and refiners. It applies to every stationary source in the country as evidenced by the testimony you will hear today from Intel.

5. The EPA issued the first NSR regulation, a 20-page document in 1980. Since then, they have produced over 4,000 pages of guidance documents in attempt to explain and reinterpret the regulations. It is important for the Committee to understand that the lawsuits blossoming all over the country were brought about by an EPA guidance in 1998 which changed the definition of routine maintenance. This has led to confusion and misunderstanding by the Agency, the States and the regulated community.

6. Mr. Chairman, this chart, which I used once before at a Government Affairs Committee Hearing, shows why companies are reluctant to subject themselves to NSR permits. Only fools would put themselves into this maze -- to do ordinary repair and maintenance of a generating facility. It is no wonder companies postpone making changes that would improve efficiency and the environment. We need clarification of this regulation.

7. We need to do everything possible to encourage new investments in more efficient equipment that produces fewer noxious emissions. That is why Senator Conrad and I, along with 24 of our colleagues sent a bipartisan letter to Administrator Whitman in May calling on her to “complete the [NSR] review and to undertake the necessary regulatory process in the near future to clarify and reform the NSR program.” [submit letter for the record]

8. Our letter was bipartisan, 9 Democrats and 17 Republicans, all calling for reform. While I=m sure that all 26 of us would not necessarily agree on exactly what the reforms should ultimately look like, we did all agree that we should move forward with reforms.

9. If members of this Committee have concerns with certain aspects of the proposed reforms, then this hearing should take place after the proposed changes are published. At that point we could debate the merits of the proposed regulations and whether the reforms go far enough.

10. In our letter to Ms. Whitman, we also stated that “we have heard of many situations in which confusion over the NSR program is having a dampening effect on utilities’ willingness to perform energy efficiency and environmental improvement projects.” Mr. Chairman, I would like to mention just a few of the examples I am aware of.

EXAMPLES

11. There is a new technology called the Dense-Pack, which enhances the efficiency of turbine blades in coal-fired power plants, and can result in significant improvements by generating more electricity with no additional use of fuel. If one assumes generating units could improve efficiency between 2% and 4% with this technology (a very conservative estimate), it would mean an additional output of 6,000 to 12,000 megawatts of power in the near term, and significantly fewer harmful emissions (of NO_x and SO_x). This is the equivalent of building 20-40 new power plants of 300 megawatts each with no new emissions. It is my understanding that these Dense-Packs would trigger NSR. (Electric Reliability Coordinating Council)

12. Another example, in 2000, EPA concluded that a plan by the Detroit Edison Company to replace worn turbine blades with new, improved blades was non-routine. The replacement would increase the efficiency of two turbines by 4.5% each, allowing each unit to produce 70 additional megawatts of additional power with no increase in fuel consumption, or to continue producing at past energy levels while reducing fuel consumption and emissions. (National Coal Council, 2001)

13. For refiners, I am aware of one example in which tubes on a reboiler furnace failed, resulting in a fire which damaged the remaining tubes. New tubes were installed and the unit was back in production within two weeks. However, they were in violation of NSR due to the actual to potential emissions test. If NSR regulations were followed, the unit should have undergone the PSD permit process, resulting in the refinery being out of commission for 5-18 months. I think my colleagues should remember that next time a refinery closes and prices spike.

14. Mr. Chairman, the 26 Senators who signed the letter are not the only ones to think that NSR has prohibited reductions in emissions. According to the National Coal Council study, commissioned by the Clinton Administration, if the EPA were to return to the pre-1998 NSR definitions, we could generate 40,000 new Megawatts of electricity from coal-fired facilities and reduce pollution at the same time.

15. One last point that needs to be made Mr. Chairman, the costs of NSR are passed on to the ratepayers. Somehow people forget that the customer always pays. Too often the environment and the ratepayer get lost in the constant duel between extremist environmental groups and recalcitrant companies. We have an interesting mix of witnesses today, I am particularly eager to hear from the Administration because those opposed to NSR reform have put a negative spin on this announcement. Isn’t that why we are here today?

17. Thank you, Mr. Chairman.