Upgrading pollution controls and the industrial infrastructure simultaneously makes economic and environmental sense. In general, it is more cost-effective for sources to install pollution control equipment such as scrubbers, electrostatic precipitators, or selective catalytic converters at the same time that they make major capital improvements. Because the NSR program relies on this principle, it minimizes emissions from new sources while maximizing opportunities for additional industrial and economic growth. It's a simple concept that has been working in the NSR program for almost a quarter-century, protecting our nation's air resources, and making up a critical component of our total air quality program.
Background
The NSR provisions of the Clean Air Act combine air quality planning, air pollution technology requirements, and stakeholder participation. NSR is a preconstruction permitting program. If new construction or making a major modification will increase emissions by an amount large enough to trigger NSR requirements, then the source must obtain a permit before it can begin construction. States are key partners in the program. Under the Act, states have the primary responsibility for issuing permits, and they can customize their NSR programs within the limits of EPA regulations. EPA's role is to approve state programs, to review, comment on, and take any other necessary actions on draft permits, and to assure consistency with EPA's rules, the state's implementation plan, and the Clean Air Act. (EPA also issues permits where there is no approved NSR program, such as on some Tribal lands). Citizens also play a role in the permitting decision, and must be afforded an opportunity to comment on each construction permit before it is issued.
The NSR permit program for major sources has two different components -- one for areas where the air is dirty or unhealthy, and the other for areas where the air is cleaner. Under the Clean Air Act, geographic areas (e.g., counties or metropolitan statistical areas) are designated as "attainment" or "nonattainment" with the health-based National Ambient Air Quality Standards (NEARS) -- the air quality standards which are set to protect human health. Permits for sources located in attainment (or unclassifiable) areas are called Prevention of Significant Deterioration (PSD) permits and those for sources located in nonattainment areas are called nonattainment NSR permits.
A major difference in the two programs is that the control technology requirement is more stringent in nonattainment areas and is called the Lowest Achievable Emission Rate (LAER). On the other hand, in attainment areas, a source must apply Best Available Control Technology (BACT) and the statute allows consideration of cost in weighing BACT options.
Also, in keeping with the goal of progress toward attaining the national air quality standards, sources in nonattainment areas must always provide or purchase "offsets" -- decreases in emissions which compensate for the increases from the new source or modification. In attainment areas, PSD sources typically do not need to obtain offsets. However, PSD does require an air quality modeling analysis of the impact of the construction project, and if the analysis finds that the project contributes to ambient air pollution that exceeds allowable levels, this impact must be mitigated. Sometimes these mitigation measures can include offsets in PSD areas. In addition to ensuring compliance with the NAAQS, states track and control emissions of air pollution by calculating the maximum increase in concentration allowed to occur above an established background level -- that change in concentration is known as a PSD increment.
Another key requirement is the provision in the PSD program to protect pristine areas like national parks or wilderness areas (referred to as Class I areas). If a source constructs or modifies in a way that could affect a Class I area, the law affords a federal land manager (for example, a National Park Service superintendent) an opportunity to review the permit and the air quality analysis to assure that relevant factors associated with the protection of national parks and wilderness areas are taken into consideration, and, if necessary, that harmful effects are mitigated.
(The Clean Air Act also requires states to regulate construction for smaller changes, and at sources that are not big enough to be classified as "major." This program is known as minor NSR. However, minor NSR is not part of the NSR Reform rule and is not the focus of today's remarks)
Current Status of the NSR Program
Let me give you a few statistics about the NSR program to put things in perspective. Preliminary estimates based on our most recent data indicate that approximately 250 facilities apply for a PSD or nonattainment NSR permit annually. That's out of the approximately 20,000 sources that would be classified as "major" under the Act, and the far larger number of additional stationary sources of air pollution in the United States that are not large enough to be called major. The nonattainment NSR and PSD programs are designed to focus on changes to facilities that have a major impact on air quality. And the NSR program is resulting in cleaner air. Recent data show that, each year, NSR permits at PSD sources have prevented about half a million tons per year of new emissions compared to what would be emitted if there were no federal or state permitting. Clearly, in the absence of NSR, Americans would be breathing less healthy air. Even in areas with clean air, there would likely have been significant declines in air quality in some places, as well as harmful impacts in national parks. As these reductions have been occurring, the United States is in the midst of a record-breaking economic expansion. Thus, the program is accomplishing its intended purpose.
In addition to the emissions reductions, the NSR program has sparked improvements and innovations in pollution control technology. Whenever demand for good control technology exists, vendors compete to supply better control technology at lower cost. This competition reduces the cost of controls as the control technology improves. This technology-forcing aspect of the program is an important reason why it has been so successful in allowing for continued economic growth while ensuring environmental protection. It also ensures that the U.S. will remain a leading exporter of pollution control technology.
NSR Reform
Despite the successes of the NSR program, some of those with a stake in the program -- EPA, regulated industry, state and local governments, environmental groups, federal land managers, and others -- have engaged in a long-running dialogue about how to make the program work more efficiently and effectively. The issues raised fall into five general categories. First, some argue that the process for determining exactly whether a permit is necessary for changes they are making to existing sources could be easier. Second, despite the statutory requirement that PSD permits be issued within 12 months of a complete permit application, some believe that the process for obtaining a permit can take too long, delaying construction. Third, some are concerned that the decisions made in the NSR process, such as the selection of a control technology, have been arbitrary, making it difficult to plan ahead. Fourth, stakeholders such as citizens and federal land managers want to be more involved in the decision-making process. In addition, some believe that the program needs to cover more sources and is not sufficiently rigorous, while others feel that the existing program is already too rigorous and too broad in scope.
For the past several years, the EPA has been undertaking a thorough multi- stakeholder process to understand and address the concerns associated with NSR in an effort to make the program work better. The NSR program protects the public from air pollution from large sources -- from every type of industry. EPA has been diligent about being inclusive and comprehensive in our analysis of industry concerns. Since 1992, we have held hundreds of hours of meetings actively seeking comments and recommendations from various stakeholders. We formed the NSR Reform Subcommittee of the Clean Air Act Advisory Committee, a group of experts from industry, environmental groups, and state and local government brought together for the purpose of making recommendations on improving NSR. We listened to analysis and debate from a wide variety of often conflicting points of view. We issued a proposed rule in 1996, took written comments, and held a public hearing. Since then, we continue to meet with stakeholders, and, as recently as this month, have had multiple meetings with outside groups representing industry.
Our fundamental principle during this reform effort has been to promote more certainty and flexibility in the permitting process while maintaining at least the same level of environmental protection as the current program. A few examples of the approaches we have proposed include: (1) promotion of flexible plantwide caps that would enable sources to make changes at their plants without triggering NSR applicability so long as the overall cap is not exceeded; (2) a more clearly defined and faster process for making control technology decisions; (3) deregulation of source modifications that have already recently installed good controls; (4) increased incentives for new or modified sources to incorporate pollution prevention or innovative control technology; and (5) opportunities for more meaningful participation in the permitting process for the public and federal land managers through increased availability of information and earlier involvement.
We are also considering other ways to better achieve the same goals as the current program. For example, we recently held a meeting of NSR stakeholders to obtain views on the concept of a sector-based approach to NSR at utilities. This approach would tailor NSR regulations specifically to the utility sector in an effort to address issues unique to utilities, while still providing the overall environmental protection of the NSR program. As noted, we continue to discuss several issues with stakeholders, and have not reached final decisions on the Reform package. However, we hope to complete an NSR Reform rulemaking later this year.
Mr. Chairman, this concludes my prepared statement. I appreciate the opportunity to be here today. I would be happy to answer any questions that you may have.