TCS Daily


New Source of Confusion

By Joel Schwartz - August 27, 2003 12:00 AM

Despite continued declines in emissions, environmentalists and their allies desperately want us to believe air pollution will skyrocket unless we impose far more aggressive regulations. Nowhere has their hyperbole been more extreme than for New Source Review, a Clean Air Act provision that requires older industrial plants to install modern pollution controls when they undertake major plant modifications.

 

A range of opinion leaders claim the Bush administration's proposed relaxation of some New Source Review requirements will cause massive increases in pollution and will in effect repeal the Clean Air Act. Ironically, the extremity of the rhetoric is matched only by its almost complete disconnection from reality. Not only will pollution not increase; no policymaker, no matter now tenacious or determined, can stop continued reductions in air pollution.

 

NSR is easy to criticize.[i] The program has actually slowed progress on air pollution by creating perverse incentives to keep older plants running well beyond their ostensible useful lives, rather than build more-efficient new ones. Thousands of pages of often-conflicting EPA guidance make it difficult to tell how and when the rules apply, creating endless conflict and litigation. And the case-by-case nature of NSR permitting creates long delays, and sets up regulators to micromanage companies' business decisions.

 

Eliminating these enormous costs is reason enough to reform NSR. That's why the Clinton administration had already proposed many of the changes now being implemented by the Bush administration -- including some over which activists are now crying foul.[ii]

 

Other analysts have already made a strong case for NSR reform. This essay will show that NSR reform can't have much of an effect on air pollution. On the contrary, actions we've already taken will eliminate most remaining air pollution during the next 20 years or so, regardless of the status of NSR.

 

Environmental activists, policymakers and media pundits have vigorously trashed the Bush administration's air pollution policies. Last year, when the administration announced plans to clarify and relax certain NSR provisions, environmentalists dubbed EPA the "Environmental Pollution Agency," and claimed "this unprecedented weakening of our clean air laws would allow millions more tons of soot, smog, and toxic pollution to be spewed into our air each year."[iii] After his State of the Union speech, the New York Times told readers that President Bush "has spent the last two years rolling back laws and regulations that have long guarded the nation's air."[iv] And Times columnist Paul Krugman warned "it might be a good idea to breathe deeply now, while you still can."[v]

 

With the administration about to finalize key revisions to NSR, the punditocracy is back with gusto. Last week the Natural Resources Defense Council leaked the final NSR rule to the Times, claiming the administration "is authorizing massive pollution increases."[vi] New York attorney general Elliot Spitzer asserted the rule changes show "the Bush administration has meant all along to repeal the Clean Air Act by administrative fiat."[vii] Democratic presidential hopeful John Kerry declared the President has "literally pulled the rug out from under every governor's efforts to curb pollution." And the Paper of Record called the rule changes "egregious," concluding they "could do the environment great harm."[viii]

 

These statements display a profound, and, perhaps in some cases, willful ignorance of the factors that really affect future air pollution, and the relative unimportance of New Source Review. As we will see below, while there are many good reasons to criticize Bush administration air pollution policies, a lack of stringent regulation is not among them.[ix]

 

NSR affects only large industrial pollution sources, such as utilities and refineries. According to EPA, in the eastern half of the United States where coal is a major electricity fuel, utility and industrial boilers emit about one-third of all nitrogen oxides (NOx), which help form ozone. But EPA's "NOx SIP Call" and "Section 126" regulations require a 60 percent reduction in these emissions during the May through September "ozone season" starting in 2004.[x] That's on top of a 25 percent year-round NOx reduction achieved between 1990 and 2000.[xi] These regulations put a hard, system-wide cap on NOx emissions, so NSR will have no effect on these required reductions.

 

Almost all other NOx emissions come from "mobile sources" -- automobiles, diesel trucks, and off-road vehicles and equipment. But a fleet of automobiles meeting EPA's "Tier 2" standards, which phase in starting this year, will be 90 percent cleaner than the average car currently on the road.[xii] EPA reduced NOx emission limits for new diesel trucks by 40 percent in 2003, and requires an additional 90 percent reduction starting in 2007.[xiii] Existing rules for construction and farm equipment, and other off-road diesel vehicles require a 70 percent NOx reduction by 2008, while a recently proposed rule would require an additional 90 percent NOx reduction beginning in 2010.[xiv] Already-adopted EPA rules require large NOx reductions from marine vessels, locomotives, and off-road gasoline engines as well.[xv]

 

Not only will existing requirements eliminate most remaining NOx from industry, they will eliminate most remaining NOx period. And none of these requirements are affected by New Source Review.

 

How about volatile organic compounds (VOCs), which, along with NOx, help form ozone? The regulations described above will eliminate 90 percent of mobile-source VOC emissions. Since automobiles account for about two-thirds of all man-made VOCs, existing requirements will eliminate most remaining VOCs.[xvi]

 

But EPA also requires VOC reductions from industry. For example, as part of its regulation of hazardous air pollutants (HAPs), EPA in 1997 required an 80 percent VOC reduction from organic chemical manufacturing -- a reduction of more than 1,000,000 tons per year.[xvii] Refineries had to reduce emissions by 60 percent, or about 280,000 tons per year, in 1998. Those are just the biggest industrial sources.[xviii] A few dozen other HAP reduction requirements set limits on VOC emissions from other industries.[xix] EPA has also adopted regulations requiring reduced VOCs in paints, coatings, and cleaning fluids -- the major VOC sources in consumer products.[xx]

 

All of these VOC emission limits remain in place, regardless of changes to New Source Review.

 

What about particulate matter (PM)? Coal-fired power plants emit two-thirds of all sulfur dioxide (SO2). While more than 99 percent of SO2 monitoring locations attain the federal SO2 standard by a substantial margin, some SO2 gets converted to particulate sulfate, accounting for 25 to 40 percent of eastern PM. But the Clean Air Act's Acid Rain Program reduced these emissions by 30 percent between 1995 and 2000, and requires an additional 20 percent reduction by 2010.[xxi] Once again, all sources are under a declining system-wide cap that can't be exceeded. If enacted, the administration's Clear Skies Initiative would reduce SO2 emissions by an additional 50 percent in 2010. 

 

In the western half of the United States, NOx contributes 15 to 40 percent of PM through conversion to particulate nitrates. Gaseous VOCs can also be converted into particulates and account for about 20 to 40 percent of PM in urban and suburban areas. But we've already seen that existing requirements will eliminate most NOx and VOC emissions, and therefore most PM from these sources.

 

Diesel particulates contribute about five to 10 percent of PM in most urban and suburban areas, and as much as 30 percent or more in the densest urban business districts. But the mobile-source regulations described above require a 90 percent reduction in soot emissions from diesel trucks starting in 2007. The proposed rule for off-road diesel would require similar reductions starting in 2010.

 

HAPs include a wide range of organic compounds such as benzene, carbon tetrachloride, and acrolein (some of which are also VOCs), and toxic metals such as chromium, cadmium, and lead. But the Clean Air Act requires Maximum Achievable Control Technology (MACT) for industrial sources of HAPs. Under this requirement, EPA has already issued 73 National Emission Standards for Hazardous Air Pollutants (NESHAPs) covering a wide range of facilities.[xxii]

 

By EPA's estimation, hexavalent chromium and coke oven emissions together account for most of the cancer risk imposed by industrial emissions.[xxiii] But EPA required an 80 percent reduction in coke-oven emissions in 1996, and a 99 percent reduction in hexavalent chromium emissions starting in 1998. Other NESHAPs limit emissions from petroleum refining, organic chemical production, dry cleaning, waste incineration, polymer production, lead smelting, copper and aluminum production, printing, oil and natural gas production, pesticide production, cement manufacturing, and dozens of other more arcane industrial processes.[xxiv] An additional 15 proposed NESHAPs are in the regulatory pipeline.[xxv] All of the NESHAPs set limits on emissions from industrial facilities that are unaffected by New Source Review.

 

Despite the concern about HAPs from industrial sources, EPA estimates that most of the risk from toxic emissions comes from mobile sources, mainly in the form of diesel particulates, but also hazardous VOCs, such as benzene.[xxvi] But on-road measurements show that diesel truck soot emissions declined more than 80 percent between 1975 and 1999.[xxvii] Existing requirements for both on and off-road diesel will eliminate most remaining diesel soot emissions.

 

Automobiles account for most hazardous VOC emissions. But these have been declining rapidly as well. On-road measurements show average automobile benzene emissions declined 80 percent between 1994 and 2001, due to fleet turnover to cleaner vehicles and reformulated fuel.[xxviii] Nationwide monitoring data show benzene levels in air declined almost 70 percent between 1990 and 1999.[xxix] EPA's Tier 2 automobile requirements, described above, will reduce hazardous VOC emissions another 90 percent as the fleet turns over to Tier 2 vehicles.

 

Given the stringency and broad scope of actual air pollution requirements, and the virtual irrelevance of New Source Review to progress on air pollution, the doomsday alarmism of environmentalists, the Times, and other pundits seems bizarre and comical -- at least it would if these organizations weren't the public's most relied upon sources for information on the environment.

 

Perhaps we should expect better from environmentalists and elected officials. But their goals often do not coincide with the interests of the vast majority of Americans. Both succeed by positioning themselves as saviors, and a manufactured crisis does as well as a real one.

 

But the poor showing of the Times and other media outlets is more ominous. Reasoned public debate depends on objective and reliable information from the press. If reporters and editorialists don't start doing their homework on New Source Review, they are certain to remain a source of misinformation on air pollution.

 

Joel Schwartz is an adjunct fellow with the American Enterprise Institute and the author of the new AEI study "No Way Back: Why Air Pollution Will Continue to Decline."

 

References

 

[i] For details see, for example, B. Swift, "Grandfathering, New Source Review, and NOx-Making Sense of a Flawed System," BNA Environment Reporter, July 21, 2000, p. 1588-46, B. Swift, "How Environmental Laws Work: An Analysis of the Utility Sector's Response to Regulation of Nitrogen Oxides and Sulfur Dioxide under the Clean Air Act," Tulane Environmental Law Journal (Summer 2001), pp. 309-425, H. K. Gruenspect and R. N. Stavins, "New Source Review under the Clean Air Act: Ripe for Reform," Resources (Spring 2002), pp. 19-23, http://www.rff.org/multipollutant/resources_archive/pdf_files/147_gruenStavins.pdf.

 

[ii] For changes proposed by the Clinton administration, see G. D. McCutchen and W. J. Palermo, "The New Source Review Reform Proposal: On Target or Near Miss?" Environmental Manager (September 1998). For a discussion of the Bush administration's proposed changes as of September 2002, see G. D. McCutchen and W. J. Palermo, "NSR Reform-A Light at the End of the Tunnel?" Environmental Manager (September 2002), pp. 21-28. For the first set of implemented NSR changes see EPA, "Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR); Final Rule and Proposed Rule," Federal Register, December 31, 2002, pp. 80186-289, http://www.epa.gov/fedrgstr/EPA-AIR/2002/December/Day-31/a31899.pdf. For the proposed changes to the routine maintenance, repair and replacement rule, see EPA, "Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR): Routine Maintenance, Repair and Replacement, Federal Register, December 31, 2002, pp. 80290-314, http://www.epa.gov/fedrgstr/EPA-AIR/2002/December/Day-31/a31900.pdf. The final version of this rule should be issued on August 28, 2003.

 

[iii] S. Borenstein and P. Rogers, "Easing Air Rules for Power Plants Generates Scorn," San Jose Mercury News, June 14, 2002, p. A4, SaveTheCleanAirAct.org, Stop the Attack on the Clean Air Act!, http://www.savethecleanairact.org/public/.

 

[iv] Editorial, "Empty Promises," New York Times, January 31, 2003, p. A28.

 

[v] P. Krugman, "Every Breath You Take," New York Times, November 26, 2002, p. A27.

 

[vi] K. Q. Seelye, "Draft of Air Rule Is Said to Exempt Many Old Plants," New York Times, August 22, 2003.

 

[vii] Ibid.

 

[viii] Editorial, "Fouling the Air," New York Times, August 23, 2003.

 

[ix]  For a "report card" on the Bush administration's environmental performance, including a section by me on air pollution policy, see http://www.perc.org/pdf/reportcard.pdf.

 

[x] EPA, Addendum to the Regulatory Impact Analysis for the NOx SIP Call, FIP, and Section 126 Petitions (Washington, DC: September 1998).

 

[xi] EPA, EPA's Acid Rain Program: Results of Phase I, Outlook for Phase II (Washington, DC: October 2001), http://www.epa.gov/airmarkt/articles/phase2factsheet.pdf.

 

[xii] J. Schwartz, No Way Back: Why Air Pollution Will Continue to Decline (Washington, DC: American Enterprise Institute, July 2003), http://www.aei.org/docLib/20030804_4.pdf. EPA's emissions model makes a similar prediction. See R. A. Giannelli et al., Sensitivity Analysis of MOBILE6.0 (Ann Arbor, MI: Environmental Protection Agency, December 2002), http://www.epa.gov/otaq/models/mobile6/r02035.pdf.

 

[xiii] EPA, Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements (Washington, DC: December 2000), http://www.epa.gov/otaq/diesel.htm, Schwartz, No Way Back: Why Air Pollution Will Continue to Decline.

 

[xiv] EPA, Draft Regulatory Impact Analysis: Control of Emissions from Nonroad Diesel Engines (Washington, DC: April 2003), http://www.epa.gov/otaq/diesel.htm.

 

[xv] EPA, Regulatory Announcement: Environmental Benefits of Emission Standards for Locomotives (Washingon, DC: December 1999), http://www.epa.gov/otaq/regs/nonroad/locomotv/frm/42097049.pdf, EPA, Regulatory Announcement: Emission Standards for New Nonroad Engines (Washingon, DC: September 2002), http://www.epa.gov/otaq/regs/nonroad/2002/f02037.pdf, EPA, Regulatory Announcement: Frequently Asked Questions from Facility Managers and Other Owners of Industrial Spark-Ignition Engines (Washington, DC: September 2002), http://www.epa.gov/otaq/regs/nonroad/2002/f02041.pdf.

 

[xvi] J. G. Watson et al., "Review of Volatile Organic Compound Source Apportionment by Chemical Mass Balance," Atmospheric Environment, vol. 32 (2001), pp. 1567-1584. EPA's official inventory claims gasoline vehicles account for only about 40% of VOCs. Real-world measurements summarized in the reference above typically find anywhere from 50% to 75% coming from automobiles.

 

[xvii] EPA, Taking Toxics out of the Air (Washington, DC: August 2000), http://www.epa.gov/oar/oaqps/takingtoxics/airtox.pdf. Also see the specific NESHAP at http://www.epa.gov/ttn/atw/mactfnlalph.html.

 

[xviii] Ibid. Also see the specific rules at http://www.epa.gov/ttn/atw/mactfnlalph.html.

 

[xix] See the specific rules at http://www.epa.gov/ttn/atw/mactfnlalph.html.

 

[xx] EPA, "National Volatile Organic Compound Emission Standards for Consumer Products; Final Rule," Federal Register, pp. 48819-47, EPA, "National Volatile Organic Compound Emission Standards for Architectural Coatings; Final Rule," Federal Register, pp. 48848-87.

 

[xxi] EPA, EPA's Acid Rain Program: Results of Phase I, Outlook for Phase II.

 

[xxii] Detailed information on each adopted NESHAP can be downloaded from EPA at http://www.epa.gov/ttn/atw/mactfnlalph.html.

 

[xxiii] See EPA's bar charts of estimated air toxic risks at http://www.epa.gov/ttn/atw/nata/chartrisk.html.

 

[xxiv] Detailed information on each adopted NESHAP, including the ones discussed here, can be downloaded from EPA at http://www.epa.gov/ttn/atw/mactfnlalph.html.

 

[xxv] Detailed information on EPA's proposed NESHAPs can be downloaded from http://www.epa.gov/ttn/atw/mactprop.html.

 

[xxvi] See EPA's bar charts of estimated air toxic risks at http://www.epa.gov/ttn/atw/nata/chartrisk.html.

 

[xxvii] A. W. Gertler et al., "Measurements of Mobile Source Particulate Emissions in a Highway Tunnel," International Journal of Vehicle Design, vol. 27 (2002), pp. 86-93.

 

[xxviii] A. J. Kean et al., Trends in Exhaust Emissions from In-Use California Light-Duty Vehicles, 1994-2001 (Warrendale, PA: Society of Automotive Engineers, 2002).

 

[xxix] Based on analysis of national benzene monitoring data downloaded from EPA at http://www.epa.gov/ttn/atw/nata/montcomp.html.

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