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US EPA proposes to formalize guidance relaxing air permitting for power plants

The U.S. Environmental Protection Agency on Aug. 1 released a proposal that would ease permitting requirements for power plants and other industrial facilities under a key Clean Air Act program that can trigger the need to install modern pollution controls.

The proposal would codify changes to the Clean Air Act's New Source Review, or NSR, program initially issued in March 2018 by then-EPA Administrator Scott Pruitt in the form of agency guidance.

The Trump administration has worked to reform the NSR program amid complaints from industry groups that the program can require plants to install more costly emissions controls and otherwise make facility expansions too expensive and burdensome. Environmental groups have already challenged the March 2018 guidance in federal appeals court, arguing the policy shift allows facilities to consider emissions decreases from a project that would relieve the facility operator from the need to consider contemporaneous pollution increases from the entire facility.

The EPA's Aug. 1 proposal clarifies that companies can consider projected decreases in emissions during the first step of the NSR permitting process when determining whether they must obtain a preconstruction permit. Under current EPA regulations, companies must go through a two-step process to decide whether a project requires the permit. Step one involves determining whether a proposed modification alone will significantly increase emissions. If a significant increase is expected, the project moves to the second step to determine whether the project, along with other recent facilitywide modifications, will cause a net emissions increase. If a net emissions increase is projected to occur under both of those steps, the facility must install modern pollution control equipment.

The proposal "is an important step towards President Trump's goal of reforming the elements of NSR that regularly discouraged facilities from upgrading and deploying the latest energy-efficient technologies," EPA Administrator Andrew Wheeler said Aug. 1 in a statement.

The proposed changes align with NSR revisions sought by electric utilities such as Duke Energy Corp. in response to a March 2017 executive order issued by President Donald Trump that directed agencies to review rules encumbering energy production.

Under an EPA docket that garnered more than 60,000 responses, Duke Energy specifically urged the agency to finalize proposed NSR changes originally issued in 2006. The revisions were proposed under then-EPA Air Chief Bill Wehrum, who abruptly resigned from the Trump administration in June. Similar to the EPA's Aug 1. proposal, the George W. Bush-era proposal would have allowed facilities, under the first step of NSR analysis, to use any decrease in emissions as a result of a project to determine if a significant emissions increase has occurred.

"Finalizing this rulemaking would help to remove a substantial burden to energy and manufacturing projects," Duke Energy said.

Environmental groups responded to the Aug. 1 proposal by arguing that the changes will prevent more projects from moving on to the second step of NSR determination, which is when important analysis is conducted to determine whether a project will actually increase emissions.

"Unsurprisingly, this results in NSR being triggered less often," John Walke, clean air director for the Natural Resources Defense Council, said Aug. 2 in an interview. Walke predicted the proposed changes could lead to uncontrolled facilitywide emissions increases on the order of hundreds or thousands of tons. "The same parties that challenged the guidance document will undoubtedly challenge the final rule, as well," he added.

Coal trade groups applauded the EPA's proposal, predicting the changes will remove a barrier to improving the efficiency of the nation's coal fleet. The changes will "improve ... environmental performance by reducing air emissions for each kilowatt-hour of electricity generated," Michelle Bloodworth, president and CEO of the American Coalition for Clean Coal Electricity, said Aug. 1 in a statement.

Nevertheless, power plant owners with plans to retire the most coal-fired capacity in the next several years, including Duke Energy, have indicated they are sticking to those plans despite the Trump administration's deregulatory efforts.