CHAMBER OF COMMERCE

OF THE

UNITED STATES OF AMERICA

July 15, 2002

                                                                  

The Honorable James Inhofe

United States Senate

SR-453 Senate Russell Office Building

Washington, DC 20510

 

Dear Senator Inhofe:

 

I am writing on behalf of the U.S. Chamber of Commerce (U.S. Chamber), the world’s largest business federation, representing more than three million businesses and organizations of every size, sector, and region, to express our support for reform of the new source review (NSR) program. NSR, in its current form has impeded environmental progress and energy production for decades. The revisions recently announced by the U.S. Environmental Protection Agency (EPA) are a good beginning to reforming a deeply flawed program.

 

The NSR program concerns the Clean Air Act (CAA) emissions standards applicable to significant new and modified stationary sources. In 1980, EPA established a regulatory exclusion for “routine maintenance.” The scope of this term, however, remains subject to debate. A clear administrative interpretation of  “routine maintenance” would be an improvement over the present situation, which is mired in complexity and confusion.

 

Reducing the problems with the NSR program is vital. Governments should not unnecessarily impede the work of the private sector. The NSR program is a classic example of bureaucratic complexity. More than 20 years after the initial regulation, a plant manager cannot determine with any certainty whether planned maintenance activities will subject the facility to millions of dollars of extra costs.

 

The NSR program, as presently constituted, is a severe impediment to increasing domestic energy supply. Electric generating plants cannot make even minor changes to their operations without running the risk of ruinous enforcement actions that would impose huge fines and enormous compliance costs on their facility. National energy policy, indeed national security, requires the removal of every obstacle to increased domestic energy production.

 

The National Energy Policy Report directed EPA to review the NSR program, and report on its effect on environmental protection and energy production. EPA’s review found that the NSR program has impeded or resulted in the cancellation of projects that would maintain or improve reliability, efficiency, or safety of existing power plants and refineries.

 

On June 13, 2002, EPA announced a set of revisions to the NSR program. Among other changes, facilities would be able to make physical changes to their plants without obtaining an NSR permit, if their emissions do not exceed a plantwide cap. Projects would be excluded from NSR requirements if they result in a net overall reduction of air pollutants. EPA would also establish a safe harbor test. Projects whose aggregate costs are below the threshold established by the safe harbor test would be exempt from NSR requirements.

 

These proposals promise a major improvement to the NSR program. They will lead to improvements in the environment, as regulatory certainty will allow facilities to perform routine maintenance and repairs without the fear of triggering NSR requirements. Plants have deferred routine maintenance, which would have unproved safety and decreased emissions, due to the potential costs of NSR requirements. With the NSR program modifications, overall emissions will be reduced. The reforms, particularly the plantwide cap, will benefit facilities by allowing increased operational flexibility. The revised NSR program will simplify an overly complex program.

 

The recently announced NSR reforms are long overdue. The regulations to be made final later this year were proposed in 1996. The proposals requiring notice and comment rulemaking will not be in effect until 2004, at the earliest.

 

The U.S. Chamber supports reform of the NSR program. The U.S. Chamber urges the Senate to encourage these efforts to improve environmental progress and energy production.

 

Sincerely,

 

R. Bruce Josten,

Executive Vice President,

Government Affairs.