trending Market Intelligence /marketintelligence/en/news-insights/trending/TsMUwHk7usPZ9of0CdQIAg2 content esgSubNav
In This List

EPA clarifies current status of new source review program as reforms are studied

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


EPA clarifies current status of new source review program as reforms are studied

The U.S. Environmental Protection Agency has clarified its stance on the new source review program, a complex provision of the Clean Air Act that sets the threshold under which projects trigger the need to install more stringent, state-of-the-art emissions controls.

In a memo to EPA regional administrators dated Dec. 7, Administrator Scott Pruitt said the agency will not second-guess preconstruction analyses conducted by companies to determine the potential emissions increases of their project so long as those companies otherwise comply with all procedural requirements and the analyses contain no obvious errors.

In a statement provided to S&P Global Market Intelligence on Dec. 8, the agency said the memo was issued to ensure certainty as facilities plan projects that may change or expand their operations.

The new source review, or NSR, program is much maligned by industry, which says it forces companies to reconsider undertaking power plant upgrades that may reduce emissions out of fear of triggering increased emissions control requirements. The EPA's new assistant administrator for the Office of Air and Radiation, William Wehrum, is conducting a review of the program in an effort to provide more clarity. But in the interim, Pruitt's memo seeks to clarify the agency's current role in applying NSR.

Under the NSR program, the owner or operator of a facility is required to project whether a construction project will cause a significant increase in emissions before that construction actually begins, the EPA explained. If so, the NSR triggers the need for more stringent emissions controls at the facility. For those projects that do not trigger increased controls, the EPA said owners/operators still must report emissions for five to 10 years following completion of construction. Critics have said the preconstruction analysis is unreasonable and complex and the country's court system has offered a confusing array of rulings that have further muddied the waters for facilities seeking to add emissions controls.

Pruitt's memo explained that the obligation to perform preproject NSR applicability analyses is on facility owners or operators. Those owners/operators must make such a determination and maintain records to that effect, and then take steps to apply more stringent emission controls when necessary. If NSR does not apply, the owner or operator still must notify the EPA and the applicable state regulator of the project. Moreover, if the project's emissions exceed the NSR threshold following completion of construction, the EPA will use the reported five to 10 years of required post-construction emissions data to determine if an enforcement action is appropriate.

"The EPA does not presently intend to initiate enforcement in such future situations unless post-project actual emissions data indicate that a significant emissions increase or a significant net emissions increase did in fact occur," the memo explained.

While a number of projects have been the subject of litigation related to the NSR program, Pruitt focused on just one in his memo: U.S. v. DTE Energy Co. and Detroit Edison Co. In that matter, the U.S. Court of Appeals for the 6th Circuit was asked to review a maintenance project at DTE Energy Co.'s Monroe power plant in Michigan.

At issue in that dispute is whether the EPA had discretion to challenge DTE's assertion that a 2010 renovation project at the facility did not trigger NSR. The court ultimately held that the agency may pursue enforcement when a facility owner or operator has failed to perform the preconstruction analysis or has failed to follow the post-construction requirements, regardless of the level of emissions that occur after construction is completed.

Pruitt's memo explained that the agency has wide discretion to consider and pursue violations of the Clean Air Act. Pending further review of these issues in the courts, Pruitt said the EPA does not intend to pursue new enforcement actions under circumstances similar to that presented in the DTE matter. Put another way, the EPA suggested that it will not base enforcement actions simply on the fact that a facility's preconstruction analysis ultimately was found to be incorrect.