Politics & Policy

New Source Review Revue

How the president's critics distort the EPA's regulatory reforms.

If some Democrats have their way, the environment will emerge as an important political issue in 2004. Democratic partisans and environmental activists seek to brand the Bush administration “anti-environmental” and exploit the Republican party’s traditional political weakness on environmental matters. Their reports and press releases make exaggerated claims about the Bush environmental record. The administration has launched an “endless assault” on the nation’s basic environmental protections, according to Bradley Campbell, a former Clinton-administration official now heading up New Jersey’s environmental agency. For the past two-and-one-half years, most such attacks went largely unanswered by the administration, but there are signs this is starting to change.

A primary target of environmental activist ire is the Bush administration’s reform of New Source Review (NSR) regulations under the Clean Air Act. Under NSR, new power plants and industrial facilities must meet stringent pollution-control requirements. Plants built prior to NSR’s adoption in 1977, however, are “grandfathered,” and only required to install such controls when they are expanded or substantially upgraded. Plants may undertake routine repair and maintenance without triggering NSR’s requirements.

For years independent environmental analysts counseled that NSR was in need of reform. As Robert Stavins of Harvard University and Howard Gruenspecht of Resources for the Future noted in January 2002, NSR “retards environmental progress and wastes resources.” By requiring facilities that enhance or upgrade facilities to undertake a lengthy permitting process and install costly additional pollution controls, NSR discourages companies from making cost-effective plant modifications that can improve efficiency and thereby reduce air pollution from energy production. According to Stavins and Gruenspecht, “Not only does the New Source Review deter investment in newer, cleaner technologies, it also discourages companies from keeping power plants maintained.” This is bad for the environment, not to mention worker safety and plant reliability.

To address these concerns, the Bush administration has sought to reform NSR so as to facilitate repairs and improvements of existing facilities. The basic idea is to relieve industry of the NSR burden when it invests in improving the efficiency, safety, and reliability of plants, so long as the repairs and part replacements do not increase overall emissions. This reform process actually began during the prior administration, but was not completed before Clinton left office. The Bush administration picked up where the Clinton team left off and finalized key parts of its NSR reforms on August 27. Additional changes are still under consideration.

After the Bush administration released its new rules, the New York Times erroneously reported that the rule will allow facilities to increase their pollution levels. A Times editorial called the rule ” a particularly egregious example” of Bush-administration “rollbacks” of environmental protections that “discomfit[] its friends” in industry, “and one that could do the environment great harm.” Vermont’s “independent” Senator James Jeffords claimed “the administration’s deregulatory agenda, specifically the gutting of the New Source Review program, will lead to more pollution and therefore more disease and premature deaths.” New York Attorney General Elliott Spitzer called the changes “flagrantly illegal” and plans to challenge them in court.

Many of the charges against the Bush Administration’s NSR reforms are simply untrue. The Natural Resources Defense Council, for instance, claims that the regulatory changes allow facilities to increase their emissions if they qualify for certain exemptions. Not so. Under the rules finalized this summer month, upgrades or repairs that increase a facility’s emission potential are still required to adopt state-of-the-art pollution controls under NSR. The rule only exempts proposed repairs and modifications that will not increase emissions above permitted levels, and that also meet several other conditions designed to prevent wholesale reconstruction of facilities under the guise of maintenance and repair. The point of these changes is to facilitate modifications and repairs that enhance the safety, reliability, and efficiency (and therefore the environmental performance) of existing plants.

On September 15, President Bush spoke out in his own defense in two speeches on environmental policy. Speaking at a Detroit Edison power plant in Monroe, Michigan, the president explained “power plants are discouraged from doing routine maintenance because of government regulations. And by routine maintenance, I mean replacing worn-out boiler tubes or boiler fans. And all that does is it makes the plant less reliable, less efficient and not as environmentally friendly as it should be.” In his speech, Bush made the environmental case for loosening existing regulations. Such arguments are essential, and yet rarely made by Republican advocates of regulatory reform. On this score, the president’s remarks are welcome–if a bit overdue.

Bush’s critics made light of the president’s choice of location to speak on air pollution. “The backdrop of President Bush’s latest environment photo op–the dirtiest power plant in Michigan–says it all,” commented Connecticut Senator and Presidential hopeful Joe Lieberman. The Monroe plant is the largest emitter in the state of Michigan, but at 3,000 megawatts it is also the state’s greatest producer of electricity–indeed, it is the second largest coal-fired power plant in the nation. The next largest Michigan facility does not produce even half as much power.

“The president knows his plan won’t help clean up the Monroe power plant,” charged Angela Ledford of “Clear the Air.” The facts on the ground tell a different story. For years Detroit Edison has sought to replace the turbines at the facility to increase its operating efficiency. Now that some of the Bush NSR reforms are finalized, the replacement will proceed. A more efficient plant will produce more energy without increasing its emissions. As this energy needs to be produced somewhere, the net result of the Detroit Edison upgrade will be less air pollution, not more.

While environmental alarmists claim that the administration’s NSR reforms will lead to increased pollution, the likely impact of the rules is just the opposite. As with the Detroit Edison plant, the new rules facilitate efficiency upgrades that can reduce emissions, but do not exempt modifications that increase a facility’s permitted pollution level. At worst, the changes to NSR might slow the rate at which industrial emissions decline, but this is unlikely.

It is also important to place the NSR changes in perspective. Overall air-pollution levels have declined dramatically over the past 30 years. Joel Schwartz of the American Enterprise Institute makes a compelling case that this trend would continue irrespective of what the administration does with NSR. Plant efficiency and emission-control technology continue to improve, and numerous stringent air pollution regulations remain in place. Nothing the Bush administration has implemented or proposed would loosen existing air quality standards.

The old NSR regulations are but one example of obsolete environmental rules due for revocation or reform. Too many existing environmental regulations are both costly and inefficient. More importantly, overly proscriptive regulations often frustrate the goal of environmental protection. Just as NSR dissuaded many companies from improving plant efficiency, and thereby reducing the environmental impacts of meeting the nation’s energy needs, other regulations discourage other environmental goals from waste reduction and recycling to the protection and restoration of endangered species habitat. The Bush administration’s NSR reforms, and the President’s most recent environmental speeches, suggest a Republican leader is finally willing to make the environmental case for environmental reform.

NRO Contributing Editor Jonathan H. Adler is an assistant professor of law at the Case Western Reserve University School of Law.

Members of the National Review editorial and operational teams are included under the umbrella “NR Staff.”


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