This Fact Sheet is posted on the Ozone, Particulate Matter, Regional Haze Implementation FACA area of the TTN bulletin board for background information only on the proposed new source review reform regulations. The regulations themselves are not subject to review by the Ozone Implementation FACA process and EPA has not asked for recommendations on these regulations from the Implementation FACA process. It is posted only for informational purposes.

FACT SHEET April 3, 1996

PROPOSED NEW SOURCE REVIEW REFORM REGULATIONS

TODAY'S ACTION...

The Environmental Protection Agency (EPA) today proposed important new reforms that would significantly streamline and simplify New Source Review, a construction permits program for new and modified large industrial facilities.

The proposed New Source Review reform initiative will provide industry with greater flexibility, reduce time delays in issuing permits, and will create incentives for use of innovative technology. The initiative reduces the regulatory burden on industry, while still ensuring sound environmental protection.

At the same time, EPA's proposal would promote strong environmental protection of critical natural areas, including the Grand Canyon, Yellowstone National Park, and the Shenandoah Valley. Through improved coordination among stakeholders, the New Source Review reform provisions will facilitate early resolution of Class I issues and thus help alleviate delay of projects located near these areas.

As part of the Clinton Administration's commitment to "reinventing" government, today's proposal provides an important example of reducing burden for industry and States by "cutting red tape" in environmental regulations. It is projected that the proposed rules would eliminate over 50 percent of the major source permitting actions that would otherwise take place under the existing regulations. It is estimated that the proposed revisions would reduce administrative burden of the program by over $13 million a year.

HOW DID EPA'S NEW SOURCE REVIEW REFORM INITIATIVE EVOLVE?

Congress added the New Source Review program to the Clean Air Act in 1977 to ensure that industrial expansion occurs in harmony with environmental protection. The New Source Review provisions require large industrial facilities to obtain permits before they build new facilities or significantly increase emissions at existing ones. Nonattainment New Source Review applies to large facilities in areas of the country that have air pollution levels that exceed the national air quality standards ("nonattainment areas") set for a number of air pollutants, including ground-level ozone. The Prevention of Significant Deterioration (PSD) Program applies to new or changed large facilities in areas of the country that have clean air and meet national air quality standards for the air pollutants to be emitted by a proposed source. Most states have New Source Review programs in place and have already implemented most of the New Source Review provisions in the 1990 Clean Air Act Amendments.

The requirements and procedures that have evolved under the New Source Review program are complex and prescriptive. Under certain circumstances, these requirements have limited facilities' operational flexibility, or inadvertently impeded the conversion of older higher-polluting processes to more efficient and environmentally beneficial new ones.

Therefore in 1992, EPA launched a voluntary initiative to simplify and streamline the New Source Review program. The goal of this effort is to reform the New Source Review process by addressing industries' and states' concerns about the complexity of the program, without sacrificing its environmental benefits.

Over the past three years, EPA has worked extensively in partnership with major stakeholders, including industry, environmental groups, State and local governments, and other Federal agencies to reform the New Source Review program. Under this initiative, EPA has already implemented several important reforms that were recommended by the stakeholders, including, exclusions for pollution control projects (approved on a case-by-case basis) and voluntary plantwide applicability limits (a voluntary limit or "cap" on a facility's total emissions). Today's proposal goes even further, significantly clarifying and simplifying New Source Review applicability procedures and permitting requirements for facilities and permitting authorities.

WHAT ARE THE MAIN COMPONENTS OF EPA'S NEW SOURCE REVIEW REFORM INITIATIVE?

EPA's New Source Review reform initiative ensures strong environmental protection while significantly reducing administrative burdens on industry.

Provisions that Reduce the Number of Sources Subject to New Source Review...

The proposed revisions include new criteria for determining whether or not New Source Review applies to modifications at existing facilities based on more realistic projections of actual emissions changes. In the past, a facility's potential emissions (or the maximum a facility is capable of emitting) were used to determine if it was subject to New Source Review requirements. EPA's reform initiative proposes that a facility is not subject to New Source Review if operational changes would not increase its actual emissions.

EPA's New Source Review reform rules would provide facilities that are already well-controlled greater flexibility than those that are poorly controlled. For example, the proposal would allow simplified and less restrictive applicability tests for modifications at facilities that have already installed state-of-the-art control technology.

EPA's proposal encourages facilities to implement pollution prevention measures or use innovative technologies. Projects that reduce or prevent pollution would be excluded from New Source Review, significantly reducing the administrative burden on facilities.

Today's proposal would give facilities the flexibility to set an emissions limit or cap, known as plantwide applicability limits, whereby any changes or modifications could be made without triggering New Source Review as long as the emissions cap is not exceeded. This provision provides participating facilities with much greater flexibility in meeting their changing operating and production demands. Plantwide applicability limits have been used successfully at facilities owned by 3M, Chrysler, and Intel.

Under the proposal, pollution control projects that substitute less environmentally harmful compounds for stratospheric ozone-depleting substances would be exempt from New Source Review requirements. In addition, a significance level for ozone-depleting substances of 100 tons per year is proposed for changes at existing large sources.

Provisions that Reduce and Streamline New Source Review Requirements...

EPA's New Source Review reform rules would significantly reduce the administrative burden for affected facilities in determining the required control technology, best available control technology (BACT) or lowest achievable emissions rate (LAER), under New Source Review. For example, the universe of information a facility must consider in determining the required control technology would be more clearly defined; a cut-off date for considering new and emerging technology would be established; and facilities would be provided more flexibility to employ innovative control technologies, including pollution prevention techniques.

In addition, today's proposal would provide much greater flexibility to states in determining control technology requirements, while ensuring that the most effective control technologies are considered.

EPA's proposal would improve the process, consistent with the Clean Air Act, for environmental protection of important natural areas, such as national parks and certain wilderness areas (the so-called "Class I" areas). Today's proposal would greatly improve coordination among Federal land managers, State permitting authorities, and facilities applying for permits near these pristine areas. In addition, the proposal includes a mechanism for identifying and resolving issues specific to Class I areas early in the permit application and review process.

At the same time, EPA's proposed reforms would help alleviate potential delays of projects located near Class I areas by providing for earlier stakeholder involvement during the permit application process.

EPA is also asking for public input on the issue of allowing a broader range of preliminary construction activities at existing facilities to proceed before the issuance of a New Source Review permit.

EPA also proposes alternatives to lift certain restrictions on the use of emissions reductions that result from shutdown facilities as New Source Review offsets in nonattainment areas that lack EPA-approved attainment demonstrations. For example, in such nonattainment areas emissions reductions from source shutdowns could be used as offsets for new sources so long as the state properly includes the shutdown emissions in the base emissions inventory for the area.

In addition to the reform initiatives, today's proposal would revise certain provisions of the New Source Review program mandated by the Clean Air Act Amendments of 1990. The proposed revisions would clarify certain New Source Review requirements and would resolve a number of underlying issues that have caused uncertainties in the permitting process thereby delaying or preventing some projects. In addition, the proposed revisions would help States that have outstanding state implementation plan (SIP) obligations and revisions to resolve the underlying issues and expedite the SIP approval process.

For example, special provisions are proposed for modifications at major sources of volatile organic compounds (VOCs) and nitrogen oxides (NOx) in "serious" and "severe" ozone nonattainment areas. The significance threshold for these modifications is 25 tons per year. Today's proposal clarifies that when determining whether or not a proposed change is "significant", the "net" of the source's emissions reductions and increases over a five year period are considered. In some circumstances sources may avoid all or part of the nonattainment New Source Review provisions by providing emissions offsets from the existing source.

FOR MORE INFORMATION...

With a computer and a modem this rule can be downloaded from the Clean Air Act Amendments bulletin board under "Recently Signed Rules" and also from the New Source Review bulletin board under "News Bulletins" of EPA's electronic Technology Transfer Network by calling (919) 541-5742. For further information about how to access the board, call (919) 541- 5384. For further information about the proposed rule, contact Dennis Crumpler of EPA's Office of Air Quality Planning and Standards at (919) 541-0871.