US environmental agency proposes final New Source Review revision

Washington (Platts)--8Sep2006

The US Environmental Protection Agency Friday issued its final set of
proposals to revise the New Source Review program which, the agency said,
would "accelerate investments in cleaner energy-saving technologies."

The proposed changes would encourage investments in refining capacity,
improve industries' efficiency and reduce demand for natural gas, the agency
said in a statement. Existing permit limits on emissions would not be
affected.

The NSR program requires state-of-the-art technology to be installed at
new plants, or existing plants undergoing modifications if the changes
increase air emissions. Operators complained that the program was being
implemented in a manner that served as a disincentive to upgrading facilities
and making them more energy efficient.

Previous changes to the NSR program have been roundly criticized by
environmentalists and health groups that contend that the revisions would
allow major industrial facilities to emit greater volumes of air pollutants.
Frank O'Donnell, of Clean Air Watch, said the latest proposal "would create
new loopholes that would enable the oil industry to avoid installing modern
pollution controls."

Bob Slaughter, president of the National Petrochemical & Refiners
Association, said in a statement that the proposed changes "will provide
additional certainty to oil refiners, petrochemical manufacturers and many
other key industries as they modify facilities to meet increased demand for
their products."

The EPA proposal includes a "debottlenecking" provision that applies when
an owner or operator modifies a portion of a facility in a manner that
production or throughput in other unchanged portions of the facility
increases. Under the proposal, emissions from the unchanged portions of the
facility would not be subject to NSR regulations if they are already covered
by an air quality permit.

The agency is also proposing that when multiple projects are implemented,
they should be "aggregated" as a single project under NSR, if one of them
is dependent on another, rather than individual projects subject to NSR
requirements.

EPA proposal would also determine if NSR applies when emissions
increases and decreases are "netted" together. Under the current regulations,
such calculation requires a source-wide analysis of emissions increases and
decreases over a five year period. The agency is proposing to eliminate the
need for a source-wide netting analysis if the net effect of a project does
not result in a significant increase in emissions.

--Gerald Karey, gerry_karey@platts.com

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