Background

Background on New Source Review

The New Source Review program was established more than two decades ago to reduce pollution from coal-fired power plants, oil refineries, and other large facilities. The program requires companies to install modern pollution control technologies in new plants, and in old plants when they make significant emissions-increasing modifications. While facilities in operation at the time the rule was implemented were exempt from the new requirements under a "grandfathering" clause, policymakers assumed that either they would be eventually replaced by new, cleaner facilities or upgraded with modern-day pollution controls. But the rule was not enforced adequately, so many older facilities are still operating without proper emissions reduction technology. The rule change adopted on New Year's Eve in 2002 made it even easier for facilities to avoid updating pollution controls by adopting new loopholes and pollution accounting gimmicks.

The Facts

The Bush administration's rule change opens up broad loopholes that allow prolonged and increased pollution:

• Under the NSR provision, changes at industrial facilities resulting in significant pollution increases (e.g., 40 tons per year) trigger cleanup obligations. To determine whether pollution increases, a company must compare its pollution before the change, known as its pollution "baseline," with pollution levels after the change. The administration's rule change allows a facility to pick a fictional pollution baseline that is worse than its actual pollution levels, essentially allowing the facility to pollute more and pretend it is not.

• The sole purpose of another loophole, called the "clean unit" exemption, is to allow facilities that significantly increase their air pollution to avoid having to clean up or install state-of-the-art pollution controls that were required under NSR rules.

• The new rules adopt a plant-wide applicability limit (PAL) concept that purports to be a 10-year "cap" on pollution covering an entire facility. It allows facilities to lock in excessive pollution levels – without having to reduce those levels – and avoid cleanup under NSR for 10 years and beyond. EPA does not mandate pollution control requirements for new or existing polluting equipment under a PAL. A PAL will last 10 years, allowing pollution decreases that occurred nine years ago to purportedly "offset" actual and significant pollution increases today, thereby avoiding cleanup today.

• Still another loophole allows facilities to emit more pollution if they claim market forces led them to increase emissions.