U.S. GOVERNMENT PUBLISHING OFFICE

32–790 WASHINGTON : 2019

LEGISLATION ADDRESSING NEW SOURCE REVIEW 

PERMITTING REFORM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENVIRONMENT 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

MAY 16, 2018 

Serial No. 115–129 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

GREG WALDEN, Oregon 

Chairman 

JOE BARTON, Texas 

Vice Chairman 

FRED UPTON, Michigan 

JOHN SHIMKUS, Illinois 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

MIMI WALTERS, California 

RYAN A. COSTELLO, Pennsylvania 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

JEFF DUNCAN, South Carolina 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, CaliforniaL RUIZ, 

California 

SCOTT H. PETERS, California 

DEBBIE DINGELL, Michigan 

SUBCOMMITTEE ON ENVIRONMENT

JOHN SHIMKUS, Illinois 

Chairman 

DAVID B. MCKINLEY, West Virginia 

Vice Chairman 

JOE BARTON, Texas 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

PETE OLSON, Texas 

BILL JOHNSON, Ohio 

BILL FLORES, Texas 

RICHARD HUDSON, North Carolina 

KEVIN CRAMER, North Dakota 

TIM WALBERG, Michigan 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

JEFF DUNCAN, South Carolina 

GREG WALDEN, Oregon (ex officio) 

PAUL TONKO, New York 

Ranking Member 

RAUL RUIZ, California 

SCOTT H. PETERS, California 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

JERRY MCNERNEY, California 

TONY CA ́ RDENAS, California 

DEBBIE DINGELL, Michigan 

DORIS O. MATSUI, California 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(III) 

C O N T E N T S 

Page 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Paul Tonko, a Representative in Congress from the State of New York, 

opening statement ................................................................................................ 4 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 5 

Prepared statement .......................................................................................... 7 

WITNESSES

William Wehrum, Assistant Administrator for the Office of Air and Radiation, 

U.S. Environmental Protection Agency .............................................................. 10 

Prepared statement .......................................................................................... 12 

Answers to submitted questions ...................................................................... 130 

Sean Alteri, Director, Division of Air Equality, Kentucky Department of Environmental Protection ........................................................................................... 39 

Prepared statement .......................................................................................... 41 

Answers to submitted questions ...................................................................... 134 

Paul Baldauf, P.E., Assistant Commissioner, Air Quality, Energy, and Sustainability, New Jersey Department of Environmental Protection ................. 46 

Prepared statement .......................................................................................... 48 

Ross E. Eisenberg, Vice President, Energy and Resources Policy, National 

Association of Manufacturers .............................................................................. 56 

Prepared statement .......................................................................................... 58 

Answers to submitted questions ...................................................................... 137 

Kirk Johnson, Senior Vice President, Government Relations, National Rural 

Electric Cooperative Association ......................................................................... 66 

Prepared statement .......................................................................................... 68 

Answers to submitted questions ...................................................................... 141 

Bruce Buckheit, Analyst and Consultant .............................................................. 80 

Prepared statement .......................................................................................... 82 

Jeffrey R. Holmstead, Partner, Bracewell LLP ..................................................... 103 

Prepared statement .......................................................................................... 105 

Answers to submitted questions 1 ................................................................... 146 

SUBMITTED MATERIAL

Statement of the American Forest & Paper Association ...................................... 125 

Statement of the National Parks Conservation Association ................................ 128 

1 The committee did not receive a response to Mr. Holmstead’s submitted 

questions for the record by the time of printing. 

(1) 

LEGISLATION ADDRESSING NEW SOURCE 

REVIEW PERMITTING REFORM 

WEDNESDAY, MAY 16, 2018 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENVIRONMENT, COMMITTEE ON ENERGY AND COMMERCE

Washington, DC. 

The subcommittee met, pursuant to call, at 10:15 a.m., in room 

2322 Rayburn House Office Building, Hon. John Shimkus (chairman of the subcommittee) presiding. 

Members present: Representatives Shimkus, McKinley, Barton, 

Harper, Olson, Johnson, Flores, Hudson, Walberg, Carter, Duncan, 

Walden (ex officio), Tonko, Ruiz, Peters, Green, Dingell, Matsui, 

and Pallone (ex officio). 

Also present: Representative Griffith. 

Staff present: Samantha Bopp, Staff Assistant; Daniel Butler, 

Staff Assistant; Kelly Collins, Legislative Clerk, Energy and Environment; Wyatt Ellertson, Professional Staff Member, Energy and 

Environment; Margaret Tucker Fogarty, Staff Assistant; Jordan 

Haverly, Policy Coordinator, Environment; Mary Martin, Chief 

Counsel, Energy and Environment; Drew McDowell, Executive Assistant; Peter Spencer, Senior Professional Staff Member, Energy; 

Austin Stonebraker, Press Assistant; Hamlin Wade, Special Advisor, External Affairs; Jeff Carroll, Minority Staff Director; Jean 

Fruci, Minority Energy and Environment Policy Advisor; Caitlin 

Haberman, Minority Professional Staff Member; Rick Kessler, Minority Senior Advisor and Staff Director, Energy and Environment; 

Jourdan Lewis, Minority Staff Assistant; Alexander Ratner, Minority Policy Analyst; C.J. Young, Minority Press Secretary; and Catherine Zander, Minority Environment Fellow. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. The Subcommittee on Environment and the Economy will now come to order. The chair recognizes myself for 5 minutes for an opening statement. 

At today’s hearing, we are examining a discussion draft led by 

Mr. Griffith which reforms the New Sources Review program. The 

goal of this discussion draft is to add greater certainty to the New 

Source Review permitting process, making it easier for industry to 

modernize existing facilities and carry out environmentally beneficial projects. 

At a February hearing in this subcommittee, we learned that the 

uncertainty, complexity, and burdens associated with New Source 

2 

Review permitting programs are deterring companies from properly 

maintaining and upgrading existing manufacturing plants, power 

plants, refineries, and industrial facilities. This is disappointing because it means we are missing out on opportunities to increase the 

Nation’s industrial capacity to create more American jobs and to 

improve our environment. 

The discussion draft before us today reforms the New Source Review program by clarifying which types of facility upgrades require 

an owner to obtain a New Source Review permit. Historically, there 

has been a great deal of controversy and uncertainty surrounding 

this very issue. The main reason for this controversy is due to the 

fact that the New Source Review program uses a complicated annual emissions projection approach to determine whether a project 

triggers New Source Review. 

Projecting future annual emissions is a difficult and confusing 

process, requiring the consideration of many complex factors, such 

as future demand of the product being produced and a facility’s future hours of operation. Because of this complexity, it is difficult 

for companies to know whether they are correctly projecting a facility’s future annual emissions and in many instances companies 

are being targeted by EPA enforcement actions for having carried 

out these emission projects incorrectly. The end result of this regulatory confusion and enforcement risk is that many companies are 

choosing to not modernize and upgrade their existing facilities because they fear that these types of activities could trigger the New 

Source Review permitting process. 

In contrast, the New Source Performance Standards program 

under the Clean Air Act uses a much better test to determine if 

an emissions increase has occurred, known as the hourly emissions 

rate test. This hourly rate test has proven to be much less controversial, much easier to carry out, and only relies upon engineering design factors, not complicated future emissions projections. 

The hourly rate test simply looks at whether a project at an existing facility will increase the facilities ability to release emissions at 

a higher hourly rate. 

In order to provide more certainty to the New Source Review program, the discussion draft takes the hourly rate test used by the 

New Source Performance Standard program, applies that same test 

to the New Source Review program. I am doing that because I don’t 

like to say NSPS and NSR all the time. This targeted reform to the 

New Source Review program would provide much-needed regulatory clarity and would make it easier for companies to properly 

maintain and modernize their facilities. 

Lastly, the discussion draft before us today includes provisions 

making it easier for owners to carry out pollution control projects, 

energy efficiency upgrades, and projects that keep facilities in good 

working order. The fact that the New Source Review program can 

be a barrier to projects that would result in better air quality is 

unacceptable. We have to remove the red tape that is discouraging 

companies from doing things like installing carbon capture technology or making manufacture equipment more fuel efficient. This 

discussion draft does exactly that. 

At our hearing this morning, we will first hear from EPA Assistant Administrator Wehrum who will explain the agency views on 

3 

this discussion draft. And then we will hear from a second panel 

of witnesses consisting of state air regulators, industry witnesses, 

and Clean Air Act experts who will provide important perspectives 

on how this bill address New Source Review reform. 

With that, I’d like to thank Congressman Morgan Griffith for the 

good work he has done on this bill and I’d like to thank our witnesses for joining us this morning. 

And I have 5 minutes left, so I yield back my time and I will 

yield to the ranking member of the subcommittee, Mr. Tonko, for 

5 minutes. 

[The prepared statement of Mr. Shimkus follows:] 

PREPARED STATEMENT OF HON. JOHN SHIMKUS

At today’s hearing we are examining a discussion draft lead by Mr. Griffith, which 

reforms the New Source Review (NSR) program. The goal of this discussion draft 

is to add greater certainty to the NSR permitting process, making it easier for industry to modernize existing facilities and to carry out environmentally beneficial 

projects. 

At a February hearing in this Subcommittee, we learned that the uncertainty, 

complexity, and burdens associated with the NSR permitting program are deterring 

companies from properly maintaining and upgrading existing manufacturing plants, 

power plants, refineries, and industrial facilities. This is disappointing because it 

means we are missing out on opportunities to increase the nation’s industrial capacity, to create more American jobs, and to improve our environment. 

The discussion draft before us today reforms the NSR program by clarifying which 

types of facility upgrades require an owner to obtain an NSR permit. Historically, 

there has been a great deal of controversy and uncertainty surrounding this very 

issue. The main reason for this controversy is due to the fact that the NSR program 

uses a complicated annual emissions projection approach to determine whether a 

project triggers NSR. 

Projecting future annual emissions is a difficult and confusing process, requiring 

the consideration of many complex factors, such as the future demand of the product 

being produced and a facility’s future hours of operation. Because of this complexity, 

it is difficult for companies to know whether they are correctly projecting a facility’s 

future annual emissions, and in many instances, companies are being targeted by 

EPA enforcement actions for having carried out these emissions projections incorrectly. The end result of this regulatory confusion and enforcement risk is that 

many companies are choosing to not modernize and upgrade their existing facilities 

because they fear that these types of activities could trigger the NSR permitting 

process. 

In contrast, the New Source Performance Standards (NSPS) program under the 

Clean Air Act uses a much better test to determine if an emissions increase has occurred known as the hourly emissions rate test. This hourly rate test has proven 

to be much less controversial, much easier to carry out, and only relies upon engineering design factors, not complicated future emissions projections. The hourly rate 

test simply looks at whether a project at an existing facility will increase that facility’s ability torelease emissions at a higher hourly rate. 

In order to provide more certainty to the NSR program, the discussion draft takes 

the hourly rate test used by the NSPS program and applies that same test to the 

NSR program. This targeted reform to the NSR program would provide much needed regulatory clarity and would make it easier for companies to properly maintain 

and modernize their facilities. 

Lastly, the discussion draft before us today includes provisions making it easier 

for owners to carry out pollution control projects, energy efficiency upgrades, and 

projects that keep facilities in good working order. The fact that the NSR program 

can be a barrier to projects that would result in better air quality is unacceptable. 

We have to remove the red tape that is discouraging companies from doing things 

like installing carbon capture technology or making manufacturing equipment more 

fuel efficient; this discussion draft does exactly that. 

At our hearing this morning, we will first hear from EPA Assistant Administrator 

Wehrum who will explain the Agency’s views on this discussion draft, and then we 

will hear from a second panel of witnesses consisting of State Air regulators, industry witnesses, and Clean Air Act experts, who will provide important perspectives 

on how this bill addresses NSR reform. 

4 

With that, I’d like to thank Mr. Griffith for the good work he has done on this 

bill, and I’d like to thank our witnesses for joining us this morning. 

OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK 

Mr. TONKO. Thank you, Mr. Chair, and we have a magic clock 

this morning. 

I also want to thank EPA Assistant Administrator Wehrum and 

other witnesses who are joining us today for attending the hearing. 

First, Mr. Chair, I want to congratulate you on getting the nuclear waste bill through the House last week. This subcommittee 

has demonstrated it can get difficult things done in a bipartisan 

fashion. However, I am afraid the discussion draft we are considering today will not be added to that list. I am not interested in 

Clean Air Act amendments that will result in dirtier air. 

EPA’s New Source Review program plays an important role to 

ensure that new and modified major sources utilize the best available pollution controls to limit emissions of criteria pollutants. But 

in recent months, EPA has issued a number of troubling Clean Air 

Act policy changes, including to the NSR program by memorandum. 

In December 2017, EPA announced that it will not second guess 

permit applicants’ analysis on emissions projections nor enforce 

against applicants that provide invalid estimates. In January 2018, 

EPA withdrew the long-standing ‘‘once in always in’’ policy for 

major source MACT standards, and in March 2018 the EPA decided to change the project emissions accounting formula that will 

allow facilities to ignore contemporaneous emissions increases. 

These are not new ideas. Some were tried over a decade ago by Administrator Wehrum during the Bush administration through the 

rulemaking process. 

Sadly, EPA’s political leadership has spent its time reviving 

these policies rather than taking any proactive steps to actually reduce air pollution and, make no mistake, today’s discussion draft 

is no different. The draft would make a number of changes to 

EPA’s New Source Review program. The NSR program is probably 

the most important Clean Air Act program for controlling pollution 

from new sources. It might surprise some of my colleagues to learn 

that was a quote from Mr. Holmstead’s testimony, who will be a 

witness on today’s second panel. And to be fair to him, he also said 

the NSR program was not intended to be a key program for controlling emissions from existing facilities. 

Now, if we are being honest, we also must acknowledge that in 

the 1970s, Congress did not intend for existing facilities to be able 

to avoid installing pollution control technology for 40 years. But 

that has been the case for many facilities across our country, which 

were grandfathered into the program until they underwent a major 

modification. The NSR modification rules attempted to ensure that, 

over time, existing sources add pollution controls when those facilities made investments and upgrades that increased emissions. 

Among other things, the discussion draft would change the definition of modification at an existing source to consider whether it 

would increase the maximum achievable hourly emissions rate 

rather than total annual emissions. This would permit facilities to 

5 

make upgrades that do not increase hourly emissions but do enable 

the source to operate much more frequently, which will greatly increase overall pollution. 

We will hear that the NSR program is preventing facilities from 

undertaking efficiency and reliability upgrades. But we are failing 

our constituents if we do not acknowledge that operation of these 

facilities comes with a serious cost—harmful air pollution and oftentimes a lot of it. That, frankly, could be drastically reduced with 

pollution controls. Today, many old coal-fired power plants are entering end of useful life unless they undertake significant capital 

investments. 

Under the current NSR program, if these facilities make a major 

modification, the grandfathering is over and modern pollution controls would need to be installed. This has caused these facilities to 

call the program unworkable. The reality is they just do not like 

how it works. The discussion draft before us today would enable 

those old facilities, which have put off adopting modern pollution 

controls for decades, to continue polluting out air indefinitely. 

Just yesterday, the Center for Public Integrity reported that in 

2017, nearly a quarter of the Nation’s coal-fired power plants 

lacked pollution controls limiting emissions of sulfur dioxide and, 

on average, plants without scrubbers discharged more than twice 

the amount of SO2. One hundred and seven of the 145 coal plants 

without control technology for sulfur dioxide were built prior to 

1978. 

We know how to reduce harmful air pollution, and I understand 

that businesses need time to transition and plan for the investments needed to install pollution controls. But many of these facilities have had four decades. The Clean Air Act has been successful 

because it is premised on making progress over time. 

Since the 1970s, we have made major strides in reducing air pollution. We have demonstrated that we can grow the economy while 

protecting public health. But allowing major polluters to extend 

their lives while avoiding installation of avoidable technology to 

prevent unnecessary pollution is unacceptable and runs counter to 

the bipartisan intent of the Clean Air Act. I believe we will not be 

able to find common ground based on the discussion draft under 

consideration today. 

Moving forward, I hope this subcommittee and EPA will abandon 

these notions and policy memos and get back to considering policies 

that will actually reduce air pollution and improve public health in 

our country. 

With that, Mr. Chair, I thank you and yield back. 

Mr. SHIMKUS. Gentleman yields back his time. 

The chair now recognizes the chairman of the full committee, 

Congressman Walden, for 5 minutes. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. Thank you very much, Mr. Chairman, and to everyone just thank you for being here today. 

Today’s legislative hearing represents another important step in 

this committee’s work to advance reasonable updates to our environmental laws. Our goal has always been to ensure more effective 

6 

environmental programs and also a more productive economy. A 

clean environment and a strong economy are not mutually exclusive. 

The draft legislation being developed under the leadership of 

Representative Morgan Griffith aims to address problems that 

have been identified in the Clear Air Act’s New Source Review program, and I know he has a very specific example that he shared 

with us about how we need to modernize these laws. This legislation reflects the Committee’s goal to implement reforms that will 

more efficiently preserve and improve air quality. It will also help 

responsibly reduce barriers to increasing productivity of manufacturers and industries in communities around our country. 

New Source Review was initially developed some 40 years ago. 

It’s well past time for reform. Over the past several decades, the 

program has evolved in regulatory complexity, leading to time-consuming permit decisions, expensive regulatory requirements, and, 

frankly, litigation. 

We learned in testimony 3 months ago how costly and lengthy 

reviews associated with NSR permitting can lead businesses to 

forego making beneficial investments in existing facilities and 

these investments can include efficiency upgrades, pollution control 

projects and other environmentally beneficial changes to operations. 

This does not make sense. Decisions to not make such investments deprive communities of the benefits gained from environmental improvements, in addition to the increased jobs and economic activity that flow from this activity. 

We learned that even when facilities choose to run the NSR 

gauntlet with efficiency projects, the result is unnecessary expense 

and costly delay, with the required bureaucracy providing no additional environmental benefit. In addition, state and local permit 

authorities are tied up on the NSR matters instead of working on 

more pressing environmental reviews. 

I mentioned before the needless costs of poorly administered environmental regulations and the example of a proposed data center 

expansion in my district in Pineville, Oregon. That expansion ran 

headlong into permitting issues because of a dispute over a single 

air monitor, which made it unclear whether the expansion could go 

forward. It was only after the city of Pineville persuaded the EPA 

to add an additional air sampling location that the issue cleared 

and the expansion was able to go forward. That instance involved 

hundreds of millions of dollars in investments and hundreds of construction jobs. 

At our NSR hearing earlier this year, we learned of a case in the 

pulp and paper and packaging industry in which a facility was 

forced to make more than $100,000 in additional assessments and 

incurred substantial delay for a project that would actually reduce 

pollution. 

In another project, a paper mill sought to shut down two older 

and inefficient boilers and upgrade a large boiler to meet the same 

power needs more efficiently. But due to EPA NSR interpretations 

that ignored the replaced boilers, this project was subject to 18 

months in costly red tape and scope adjustments, again, for a 

project that would not increase emissions. 

7 

We should have an NSR program that presents clear standards 

for when reviews are necessary. This will lead to more efficient 

business decisions, more efficient permitting decisions, and more 

environmentally beneficial operations. We should have a program 

that works within the broader framework of state decision making 

concerning permitting and meeting clean air standards. 

I am looking forward to hearing from EPA’s assistant administrator for Air and from our second panel, which includes state, industry, and legal perspectives. These discussions will go a long way 

in helping us perfect the discussion draft. 

So I want to thank Mr. Griffith. Morgan, thank you for your hard 

work on this specific piece of legislation. I think we are taking really important steps to both grow America’s economy and improve 

our air quality and the environment. Doing this will ultimately 

benefit American workers, consumers, and others around the country. 

With that, Mr. Chairman, unless someone wants the remainder 

of my time, Mr. Griffith, do you want to make any comments? With 

the remaining minute I would so yield. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

Today’s legislative hearing represents another important step in this Committee’s 

work to advance reasonable updates to our environmental laws. Our goal has always been to ensure more effective environmental programs and also a more productive economy. A clean environment and strong economy are not mutually exclusive. 

The draft legislation being developed under the leadership of Morgan Griffith, 

aims to address problems that have been identified in the Clean Air Act’s New 

Source Review program. This legislation reflects the Committee’s goal to implement 

reforms that will more efficiently preserve and improve air quality. It will also help 

responsibly reduce barriers to increasing productivity of manufacturers and industry 

in communities around the nation. 

New Source Review was initially developed some 40 years ago-and it is well past 

time for reform. Over the past several decades, the program has evolved in regulatory complexity, leading to time-consuming permit decisions, expensive regulatory 

requirements, and litigation. 

We learned in testimony 3 months ago how costly and lengthy reviews associated 

with NSR permitting can lead businesses to forego making beneficial investments 

in existing facilities. These investments can include efficiency upgrades, pollution 

control projects, and other environmentally beneficial changes to operations. 

This does not make sense: decisions to not make such investments deprive communities of the benefits gained from environmental improvements, in addition to 

the increased jobs and economic activity that flow from this activity. 

We learned that even when facilities choose to run the NSR gauntlet with efficiency projects, the result is unnecessary expense and costly delay—with the required bureaucracy providing no additional environmental benefit. In addition, state 

and local permit authorities are tied up on NSR matters instead of working on more 

pressing environmental reviews. I’ve mentioned before the needless costs of poorly 

administered environmental regulations in the example of a proposed data center 

expansion in Pineville, Oregon, in my district. That expansion ran headlong into 

permitting issues because of a dispute over a single air monitor, which made it unclear whether the expansion would go forward. It was only after the city persuaded 

EPA to add an additional air sampling location that the issue cleared and the expansion moved forward. That instance involved hundreds of millions of dollars in 

investments and hundreds of construction jobs. 

At our NSR hearing earlier this year, we learned of a case in the pulp, paper, and packaging industry in which a facility was forced to make more than $100,000 

in additional assessments and incurred substantial delay-for a project that would 

actually reduce pollution. 

In another project, a paper mill sought to shut down two older and inefficient boilers and upgrade a larger boiler to meet the same power needs more efficiently. Due 

8 

to EPA NSR interpretations that ignored the replaced boilers, this project was subject to 18 months of costly red tape, and scope adjustments-again, for a project that 

would not increase emissions. 

We should have an NSR program that presents clear standards for when reviews 

are necessary: this will lead to more efficient business decisions, more efficient permitting decisions, and more environmentally beneficial operations. We should have 

a program that works within the broader framework of state decision-making concerning permitting and meeting clean air standards. 

I’m looking forward to hearing from EPA’s Assistant Administrator for Air, Bill 

Wehrum, and from our second panel, which includes state, industry, and legal perspectives. These discussions will go far in perfecting the discussion draft. 

I also want to thank Mr. Griffith for his hard work on the draft to date. He is 

taking important steps that will provide for economic expansion, while maintaining 

environmental protections. Doing this will ultimately benefit American workers and 

consumers around the Nation. 

Mr. GRIFFITH. I thank you, Mr. Chairman, and I appreciate the 

kinds words. I will be discussing this but I think one thing we have 

to remember, as everybody else has pointed out, this is not just 

about the big businesses or the big electric plants. It’s about small 

businesses as well, and I will detail how a medium-sized business 

in my district has been impacted on this and how silly it is when 

you’re trying to deal with issues that have nothing to do with air 

pollution. You’re just trying to make your factory better. 

Also, we sometimes ignore, and I thought it was interesting in 

Mr. Tonko’s opening statement, he said, nobody intended for this 

to last for 40 years without people doing upgrades. The problem is 

the rule itself forced people not to do upgrades because they 

couldn’t afford to completely redo the facility. 

How much cleaner would the air be if we’d have had reasonable 

rules in place from the get-go that would have let them slowly 

move forward a little bit at a time instead of having to eat the 

whole apple in one swallow? 

I yield back. 

Mr. SHIMKUS. The gentleman—— 

Mr. WALDEN. And I yield back as well. 

Mr. SHIMKUS. The gentleman yields back his time. 

The chair recognizes the ranking member of the full committee, 

Congressman Pallone from New Jersey, for 5 minutes. 

Mr. PALLONE. Thank you, Mr. Chairman. 

We are here this morning to discuss draft legislation to amend 

the New Source Review permitting program of the Clean Air Act 

and I am pleased that Paul Baldauf, the Assistant Commissioner 

for Air Quality, Energy, and Sustainability at New Jersey’s Department of Environmental Protection, is here as a witness. Good to see 

you. 

The NSR program has existed since the 1970s but it’s not been 

as effective in reducing air pollution as Congress hoped. Lax enforcement and the ability to exploit legal loopholes have helped or 

have allowed old facilities to game the system, and too often these 

facilities have been able to avoid installing modern pollution controls, which has left neighboring communities exposed to tons of 

dangerous pollution. 

And these pollution problems are not only local; they also impact 

downwind states like New Jersey. With all the pollution control 

technology development over the past 40 years, there is no reason 

for any facility to operate without modern pollution control equipVerDate Nov 24 2008 11:30 Feb 08, 2019 Jkt 037690 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-129 CHRIS
9 

ment. The ultimate test for any legislation to reform the NSR program is simply this: Will it reduce air pollution? And by that test, 

this bill fails. 

There is no doubt this bill will increase pollution. Republicans 

are simply resurrecting previously rejected ideas promoted during 

the Bush administration by two of today’s witnesses—Assistant Administrator Wehrum and Mr. Holmstead. Together, they have 

worked for years to undermine the NSR program. And when we enacted the NSR program, Congress recognized that existing facilities 

would need time to plan for and install pollution controls and that’s 

why existing facilities were required to install new equipment 

when undergoing capital improvements, expansions, and life-extending renovations. 

But industries have spent years employing legions of attorneys 

with the sole mission of creating carve-outs in the NSR program 

for their clients just to avoid controlling their pollution. And so 

what happened? We ended up with the situation Congress tried to 

avoid—new facilities disadvantaged to the benefit of old polluting 

ones that have remained around well past their design life. 

The proponents of this bill claim it will fix this problem but it 

will not. Without a firm requirement that facilities reduce the levels of all the dangerous pollution they emit, they simply will be allowed to pollute more and that’s what the language in this bill on 

maximum achievable hourly emissions rate is all about. 

Rather than closing loopholes in the NSR program, this draft bill 

expands them. It continues to disadvantage new facilities by allowing old facilities to operate without modern pollution controls. If 

these changes go forward, air pollution will only increase. Communities that have fought to reduce toxic air pollutants including benzene, mercury, and other dangerous chemicals will see pollution 

and their health problems increase, and that means more asthma 

attacks and more people getting cancer and heart disease and lung 

disease. 

And Congress never intended to grant a permanent license to 

pollute to any facility. But that is exactly what this legislation 

would achieve. The provisions in this bill will guarantee that no existing facility will be subject to the NSR program when it’s modernized or expanded and it will ensure the public will be subject to 

greater pollution from these plants after they are modified. 

And no one has a choice about breathing. Each of us does it between 17,000 and 23,000 times every day. However, we can choose 

to limit air pollution so that each breath delivers the clean and 

healthy air we need. The NSR program can certainly be improved 

but not with this bill. 

It’s long past time for old coal-fired generation and refineries to 

reduce their emissions and do their fair share to keep the air clean 

and safe to breathe. 

I don’t know if anyone wants my minute or so. If not, Mr. Chairman, I will yield back. 

Mr. SHIMKUS. The chair thanks the gentleman and the gentleman yields back his time. 

We now conclude with members’ opening statements. The chair 

would like to remind members that pursuant to committee rules, 

all members’ opening statements will be made part of the record. 

10 

We want to thank all of our witnesses for being here today and 

taking the time to testify before this subcommittee. 

Today’s witnesses will have the opportunity to give opening 

statements followed by a round of questions from members. 

Our first witness panel for today’s hearing includes the Honorable William Wehrum, Assistant Administrator for the Office of Air 

and Radiation, U.S. Environmental Protection Agency. 

We appreciate you all being here today. We will begin the panel 

and, Mr. Wehrum, you’re now recognized for 5 minutes for your 

opening statement. Your full statement has been submitted for the 

record. 

STATEMENT OF THE HONORABLE WILLIAM WEHRUM, ASSISTANT ADMINISTRATOR FOR THE OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY 

Mr. WEHRUM. Thank you, Chairman Shimkus, Ranking Member 

Tonko, and members of the subcommittee. 

I appreciate the opportunity to testify today on the New Source 

Review permitting program. Although the administration does not 

have an official position on the draft, I am very supportive of the 

committee’s efforts to improve the NSR permitting program. 

I have long believed that the NSR permitting program stands as 

a significant barrier to the implementation of many projects that 

would improve facility and performance, enhance efficiency, and 

protect the environment. In addition, the program is unnecessarily 

complicated and confusing. The program can and should be improved. 

In accordance with the administration wide priorities for streamlining permitting requirements for manufacturing, we have undertaken an assessment of the agency’s implementation of the NSR 

program. 

We quickly and, I would have to say, predictably identified several areas that are ripe for improvement. In December 2017 and 

March of 2018, Administrator Pruitt issued memoranda to EPA’s 

regional offices to provide greater clarity as to how certain NSR 

rules should be interpreted. 

The December memo focused on NSR permitting applicability 

provisions. That memo set forth EPA’s interpretation of the procedures contained in the NSR rules for sources that intend to use 

projected actual emissions in determining NSR applicability and 

the associated pre- and post-project source obligations. 

The March memo set forth EPA’s interpretation that in determining whether a proposed project will result in a significant emissions increase, which is the initial step that a source must take in 

determining whether the project will result in an overall significant 

net emissions increase, that any emissions decreases that are projected to occur as a result of the project also should be taken into 

account in this first NSR applicability step. 

We have done other things as well. In April of 2018, we issued 

a memoranda on so-called significant emissions levels, which are 

common sense provisions intended to simplify and expedite the permitting process and the analysis that’s necessary to go along with 

the permitting process focus on air quality. 

11 

In January of 2018, although this is not strictly an NSR issue, 

as has been mentioned already we issued clarifying guidance on 

the so-called ‘‘once in always in’’ policy under our air toxics programs. Regarding the subcommittee’s discussion draft, the administration does not have an official position on the bill. But as I’ve 

said before, I personally strongly support the overall goals of the 

discussion draft. 

The principal focus of the discussion draft is on refining the definition of modification in the Clean Air Act, and that would go a 

long way towards simplifying application of the NSR program. It 

would make clear that a project undertaken in the existing stationary source will trigger NSR only when that project would result 

in an increase in the source’s maximum design capacity to emit. 

That is, the project would result in an increase in a source’s hourly 

emissions rate, which is how emissions increases have been determined under the New Source Performance Standard program since 

its inception. 

The bill would also resolve a long-standing and unfortunate 

anomaly in the NSR program, which is that the installation of pollution control equipment at existing sources by itself can trigger 

the onerous New Source Review program. 

I appreciate the opportunity to testify today. I support the Committee’s effort to provide clarity for the regulated community that 

can finally allow the private sector to invest in more efficient manufacturing in this country and I welcome any questions you may 

have regarding the discussion draft for the agency efforts to improve the NSR program. 

Thank you again. 

[The prepared statement of Mr. Wehrum follows:] 

12 


32790.001

Opening Statement of William L. Wehrum 

Assistant Administrator 

Office of Air and Radiation 

U.S. Environmental Protection Agency (EPA) 

EPA's New Source Review Program 

May 16,2018 

Chairman Shimkus, Ranking Member Tonko, and Members of the Subcommittee: 

thank you for the opportunity to testify today on the New Source Review (NSR) 

permitting program discussion draft. Although the Administration does not have 

an official position on this draft, I am very supportive of the Committee's efforts 

to improve the NSR permitting program. I have long believed that the NSR 

permitting program stands as a significant barrier to the implementation of many 

projects that would improve facility performance, enhance efficiency, and protect 

the environment. In addition, the program is unnecessarily complicated and 

confusing. The program can and should be improved. 

Toward that end, and consistent with the Administration's efforts on regulatory 

reform and permit streamlining, as well as Administrator Pruitt's back-to-basics 

agenda for the Agency, EPA is pursuing a series of targeted changes to the NSR 

program. In my testimony, I provide a brief background on the NSR program, 

discuss a few of our NSR improvement efforts, and provide some thoughts on the 

Subcommittee's discussion draft. 

The NSR permitting program is designed to protect air quality when large-emitting 

facilities like factories, industrial boilers, and power plants are newly built or 

undergo changes that result in significant emissions increases. NSR permitting 

assures that new or modified facilities employ state-of-the-art air pollution 

controls. The program is based on the sensible notion that significant 

investments in air pollution controls are most appropriately made when new, 

large-emitting facilities are built and when existing facilities are significantly 

modified. 
13 


32790.002

EPA established a framework for the NSR program in its federal regulations. 

States are required to implement an NSR program as part of their Clean Air Act 

"State Implementation Plan" (SIP). As with most SIP requirements, States have 

flexibility in how they design and implement their NSR programs. But, all state 

programs must be at least as environmentally effective as the base federal 

program. EPA implements the NSR program in states that do not have approved 

programs and in other areas of federal jurisdiction. 

In its current form, the NSR program is very complex and can be time consuming 

to implement. In the absence of additional statutory clarity, EPA is working on 

two separate but related tracks. First, we are looking at ways to simplify and 

improve the NSR permitting program. Second, we are looking at ways to expedite 

the federal permitting process. 

In accordance with Administration-wide priorities for streamlining permitting 

requirements for manufacturing, EPA undertook an assessment of the Agency's 

implementation of the NSR permitting program. We quickly (and predictably) 

identified several areas that are ripe for improvement. 

In December 2017 and in March 2018, Administrator Pruitt issued memoranda to 

EPA's regional offices to provide greater clarity as to how certain NSR rules should 

be interpreted. 

The December memorandum focused on the NSR permitting applicability 

provisions. That memorandum set forth EPA's interpretation of the procedures 

contained in the NSR Rules for sources that intend to use "projected actual 

emissions" in determining NSR applicability and the associated pre- and postproject source obligations. One key aspect of this memorandum is that it clarifies 

that so long as a company complies with the requirements of the required 

preconstruction projected future emissions analysis, EPA will not "second-guess" 

a company's reasonable analysis. 

The March memorandum set forth EPA's interpretation that, in determining 

whether a proposed project will itself result in a "significant emissions increase" 

(which is the initial step that a source must take in ascertaining whether its 

proposed project will result in an overall significant emission increase at the 

source) any emissions decreases that are projected to occur as a result of the 

project can also be taken into account in this first step of the NSR applicability 
14 


32790.003

analysis. This common sense reading of the plain language of our NSR rules will 

pay big dividends in simplifying the NSR permitting analysis while at the same 

time having no adverse environmental effects. 

These memoranda represent EPA's interpretation of existing regulatory language 

and reflect topics that could be further clarified for state and local permitting 

authorities and affected sources. While each state and local program is different, 

states generally should be able to implement the recently issued guidances 

without the need for changes to their state implementation plans. 

In addition to the memoranda, EPA has also developed policies on several related 

issues which may be of interest to the Subcommittee. 

• In April 2018, EPA's Office of Air and Radiation issued final guidance 

recommending "Significant Impact Levels" for ozone and fine particle 

pollution that may be used in the Prevention of Significant Deterioration 

(PSD) permitting program. These levels will reduce the cost and time for 

manufacturers to obtain this type of air pollution permit. 

• In January 2018, based on a plain language reading of the Clean Air Act, EPA 

issued a guidance memorandum withdrawing the 1995 "Once In, Always 

In" policy for the classification of major sources of hazardous air pollutants 

(HAPs) under section 112 of the Clean Air Act. With the new guidance, 

sources of hazardous air pollutants previously classified as "major sources" 

(the source emissions threshold is 10 tons per year of any one HAP or 25 

tons per year of any combination of HAPs} may be reclassified as "area" 

sources (simply put, any source of HAP emission that isn't a "major source") 

when the facility limits its potential to emit below major source 

thresholds. EPA's old approach discouraged sources from taking 

enforceable measures to reduce their HAP emissions below the major 

source threshold. This new approach provides them an incentive to do so. 

EPA will be following up this memorandum with rulemaking. 

• While most NSR permits are issued by state or local air pollution agencies, 

EPA does issue permits in some cases. To expedite issuance of these federal 

permits, EPA is looking for ways to increase the efficiency of the permitting 

process and shorten the amount of time it takes to get an EPA issued 

permit under both Title V and NSR. 
15 


32790.004

Regarding the subcommittee's discussion draft, the Administration does not have 

an official position on the bill. Having said that, I strongly support the overall 

goals of the discussion draft. The principal focus of the discussion draft on 

refining the definition of "modification" in the Clean Air Act would go a long way 

towards simplifying application of the NSR program. It makes clear that a project 

undertaken at an existing stationary source will trigger NSR only when that 

project would result in an increase in the source's maximum design capacity to 

emit- that is, result in an increase in the source's hourly emission rate, which is 

how emissions increases have always been determined under EPA's New Source 

Performance Standards Program (NSPS} program. 

The bill also would resolve a long-standing and unfortunate anomaly in the NSR 

program, which is that the installation of pollution control equipment at existing 

sources can itself trigger NSR. This is because, sometimes, the operation of such 

equipment, while it results in tremendous emissions reductions for some 

pollutants, may in some instances actually lead to increases in the emissions of 

other pollutants. EPA has in the past attempted to incorporate into its NSR rules 

an exclusion for the installation and operation of pollution control projects, where 

the overall effect of such controls would be environmentally beneficial. But this 

prior regulatory effort was held to be unlawful by the D.C. Circuit, on the grounds 

that it would be inconsistent with the statutory language defining "modification." 

The proposed bill would fix this problem. 

I appreciate the opportunity to testify today. I support the Committee's effort to 

provide clarity for the regulated community that can finally allow the private 

sector to invest in more efficient manufacturing in the US. I welcome any 

questions you may have regarding the discussion draft or on the Agency's efforts 

to improve the NSR program. Thank you. 
16 

Mr. SHIMKUS. The gentleman yields back the time and the chair 

thanks you and I’ll now begin with the round of questioning with 

myself and I recognize myself 5 minutes for questioning. 

Mr. Wehrum, aside from your current role as Assistant Administrator for Air at EPA, you have a lot of experience with the New 

Source Review program both as a regulatory lawyer and working 

for EPA in past administrations. 

Given your experience, let me ask, from a big picture perspective, 

what is the role of the New Source Review in improving air quality? 

Mr. WEHRUM. New Source Review program is one but only one 

of many tools that we have under the Clean Air Act to protect air 

quality. 

The NSR is different than many of the other programs that we 

implement because, it doesn’t apply to you just because you exist, 

as many of our ambient air quality programs or air toxic standards 

do. 

It applies to you depending on what you do and that creates the 

real problems under the NSR program and as has been pointed— 

as I pointed out in my testimony and as several of the members 

here including yourself, Mr. Chairman, pointed out, because the 

applicability is based on what you do, then the program has an effect on decisions affected facilities make as to what projects they 

implement and which ones they don’t, and in many cases I firmly 

believe—and I’ve been doing this for a long, long time now and I’ve 

seen it—that facilities choose not to implement common sense improvements to their facility that would improve efficiency, would 

improve productivity, in a lot of cases would improve environmental performance because those projects stand the possibility of 

triggering the NSR permitting program. So they just don’t do them. 

That makes no sense whatsoever. 

Mr. SHIMKUS. We are talking today about the New Source Review permitting reforms that make it easier for existing sources to 

carry out efficiency improvements and other measures that would 

provide environmental benefits. 

Do you see the discussion draft reform approach as creating a 

large loophole that will lead to unhealthy emission increases? 

Mr. WEHRUM. No, Mr. Chairman, not at all. I see the discussion 

draft as significantly improving the program and how it operates 

right now. 

As I pointed out in my testimony, primarily what the discussion 

draft would do is align the applicability process under New Source 

Review with the applicability process under the new source performance standard program. 

They are closely aligned. They are both programs that apply to 

new modified sources and, interestingly, they both rely on the very 

same statutory definition of modification and yet, for the past 30, 

40 years the agency has used different definitions under the New 

Source Performance Standards program versus the New Source Review program to determine whether an emissions increase has occurred as a result of a project. 

So the primary benefit of the discussion draft is it would align 

the programs, make them simpler to implement, and I think significantly improve their implementation. 

17 

Mr. SHIMKUS. The discussion draft’s most significant policy 

change concerns a switch from the annual emissions projection test 

to an hourly emission rate test used under the New Source Performance Standards program to determine if a project will cause an 

emission increase. 

Would you speak to the benefits of reforming the New Source Review program to use an hourly emissions rate test? You kind of already did mention it but can you restate that? 

Mr. WEHRUM. Yes, Mr. Chairman. I certainly will. 

I mentioned it in passing in my testimony, but the other significant problem with the New Source Review program is it’s just confusing. It’s very complicated. It’s very confusing. It says something 

that, very sophisticated refinery operators, power plant operators, 

big companies that have a lot of resources on staff and available— 

have to hire people like me when I was in private practice to help 

them figure out how the program applies. 

That speaks volumes. So, in addition to eliminating the barriers 

to common sense projects I described before, I think a real value 

of the discussion draft would be it simplifies the program and gets 

people like me, a lawyer in private practice, before I rejoined the 

EPA, out of the equation and lets people on the plant floor do this. 

And I am sorry, I don’t want to take up too much of your time, 

Mr. Chairman, but I started my career as a chemical engineer. I 

worked in chemical plants and I was responsible for implementing 

this permitting program. 

And I can tell you it’s impenetrable to somebody like that and 

that’s part of why I went into law, part of why I came to EPA because fixing this program is a very high priority. 

Mr. SHIMKUS. We are going to hear from two states in the second 

panel. Do you think this change will undermine states’ efforts to 

ensure air quality? 

Mr. WEHRUM. I do not, not one bit, Mr. Chairman. 

Mr. SHIMKUS. And why? 

Mr. WEHRUM. Because this is but one of many, many elements 

of the Clean Air Act and all of these elements work together in concert. They each serve a purpose and the totality of the Clean Air 

Act requirements is what should be measured and not the function 

of each individual piece. 

So this is not going to result, in my judgment, in any significant 

reduction in the overall effectiveness of the act. 

Mr. SHIMKUS. I thank the gentleman, and now I yield back my 

time. 

The chair recognizes the gentleman from New York, Mr. Tonko, 

for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair, and Administrator Wehrum, 

thank you again for being here today. 

As I mentioned, many members have concerns about a number 

of EPA rulemakings, memos, and other regulatory actions that will 

have consequences for the Air Office. I particularly want to highlight the recently proposed strengthening transparency and regulatory science rulemaking, which will have significant impact on 

Clean Air Act regulations, including NAAQS. And a few days ago, 

the chair of the Science Advisory Board working group on EPA 

18 

planned actions for SAB consideration issued a memo recommending that this proposal merits further review by the board. 

Obviously, you oversee a number of programs that rely on epidemiological studies and private health data so you are more than 

qualified to weigh in on this. 

Do you believe the Science Advisory Board should have conducted a review of the proposal before it was published in the Federal Register? 

Mr. WEHRUM. No, Mr. Ranking Member, I don’t think that’s necessary at all. 

Mr. TONKO. Do you believe the Science Advisory Board should be 

asked to conduct the review now? 

Mr. WEHRUM. Mr. Ranking Member, taking a step back, I think 

the overall concept and the goal of the transparency proposal is indisputable, which is to make sure that the science the agency relies 

upon is replicable and—— 

Mr. TONKO. I understand that, but do you believe the Science Advisory Board should be asked to conduct a review now? 

Mr. WEHRUM. And Mr. Ranking Member, the—— 

Mr. TONKO. Yes or no. 

Mr. WEHRUM. The importance of making sure—— 

Mr. TONKO. Yes or no, sir. 

Mr. WEHRUM [continuing]. The science is replicable—well, it’s 

important to put this in context, Mr. Ranking Member, because 

you’re—it’s a basic scientific principle that science that—studies 

that scientists create, part of science is the ability of other scientists to replicate their work and either confirm the findings that 

were made or possibly refute—— 

Mr. TONKO. Well, I am not hearing a yes that the advisory board 

should be asked to conduct a review now so I’ll move on. 

Do you believe the Office of Air and Radiation should have been 

involved in the review of the proposals through a formal intra 

agency review process before it was published? 

Mr. WEHRUM. Yes, and in fact, we were. We had a copy of the 

draft before it was—— 

Mr. TONKO. Did—— 

Mr. WEHRUM [continuing]. Before it was proposed. We circulated 

it to our office directors and key staff and we had an opportunity 

to review and provide input. 

Mr. TONKO. Was that among political appointees only? 

Mr. WEHRUM. No. No. 

Mr. TONKO. There were career staff involved? 

Mr. WEHRUM. Yes. 

Mr. TONKO. Would you share the Air Office’s comments on the 

rule with this subcommittee and the committee? 

Mr. WEHRUM. I don’t know what form they take but I’d be happy 

to do that. 

Mr. TONKO. Well, we’d ask that you share those comments with 

us, please. So that’s a yes, you’ll offer them? 

Mr. WEHRUM. Yes, Mr. Ranking Member. 

Mr. TONKO. The SAB working group’s memo notes the proposed 

rule appears to have been developed without a public process for 

soliciting input from the scientific community. 

19 

A number of scientific organizations, state attorneys general, and 

members of Congress have called for an extension of the public 

comment period in order to more fully consider the impacts of the 

proposal. This is particularly important since the proposal sought 

comment on issues fundamentally related to its design. 

Do you believe this proposal warrants an extended public comment period in public hearings similar to what has been done for 

other consequential rulemakings? 

Mr. WEHRUM. Well, OAR is responsible for lots of things but this 

rulemaking is not one that’s actually in my office and I believe Administrator Pruitt is prepared to speak to that question in the 

hearing that he’s participating in as we speak. 

Mr. TONKO. So would he support extended public comment periods and public hearings? 

Mr. WEHRUM. I believe the administrator will speak to the issue 

and he’ll speak for himself. 

Mr. TONKO. Do you have a sense that he would want to see more 

comment period and more public hearings? 

Mr. WEHRUM. Well, what I would say is we have nothing to hide, 

which is a bit redundant. This is all about transparency. So it’s important. 

I’ll just speak for myself. The rulemaking process is enormously 

important. When we put out rules for public comment, that’s a 

meaningful thing. It allows for us to get input and data and 

thoughts from affected folks and people who are knowledgeable on 

the issues. And so—— 

Mr. TONKO. Thank you. 

Mr. WEHRUM [continuing]. I know the administrator shares those 

views. 

Mr. TONKO. Thank you. Last week, Administrator Pruitt issued 

a memorandum on the NAAQS standard-setting process. 

Moving forward, EPA intends to act the Clean Air Scientific Advisory Committee to address several issues, including any adverse 

public health, welfare, social, economic, or energy effects. 

Did EPA consider soliciting feedback from the public SAB or the 

CASAC before this memo was released? 

Mr. WEHRUM. We received input on a continuous basis in a variety of ways on how we do NAAQS reviews, on the NAAQS decisions that we make and the implementation decisions that we 

make. So—— 

Mr. TONKO. Would that include soliciting comments from the 

public? 

Mr. WEHRUM. We always solicit comments from the public when 

we set NAAQS standards and do implementation rules. 

Mr. TONKO. Mr. Chair, I yield back. 

Mr. SHIMKUS. The gentleman’s time has expired. 

And Mr. Wehrum, can you pull your mic a little bit closer? I 

think—— 

Mr. WEHRUM. Yes. 

Mr. SHIMKUS. OK. And the chair now recognizes the gentleman 

from Texas, Congressman Barton, for 5 minutes. 

Mr. BARTON. Mr. Chairman, could I pass and let you go to some 

members who’ve been here while I—— 

Mr. SHIMKUS. That would be great. 

20 

The chair recognizes the gentleman from West Virginia, Mr. 

McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman, and thank you, Mr. 

Wehrum, for being here. 

Mr. SHIMKUS. Come sit next to me. Get closer. It’s OK. 

Mr. MCKINLEY. Yes, I’ve heard that before. 

[Laughter.] 

And now they’ve already run off half a minute on me on this 

thing. Thank you. Thank you. Yes, there we go. 

I want to focus—I know a lot of the discussion is going to be 

about some of the other matters on NSR but I want to stay as focused as I could on energy and the coal-fired power plants and gaspowered power plants. 

And I am trying to reconcile the differences or the questions 

about the NSR versus—and grid reliability and ability of our electric grid, because we have had so many hearings about grid reliability, and over a dozen hearings we have had about grid reliability and the concerns we have, particularly when we hear from 

FERC—their comments about the concern of whether we are going 

to have enough power plants. 

So as a result of this uncertainty that I am trying to reconcile 

the differences between the two, I see how that many of our power 

plants are just simply saying because of the uncertainty that you 

referred to and our chairman has referred to, are just prematurely 

shutting down the power plant because they don’t want to go 

through the process of upgrading a facility that may not be used 

for 12 months and be faced with something that would cost hundreds of millions of dollars. 

So they are concerned. I want to get to one issue here, if I could, 

just quickly with you. Would you agree that if a power plant replaced a part in maintenance with, essentially, the original part 

maybe 40 years ago, would it not be exempt from the NSR ruling 

if they are just going to replace in maintenance a part that was the 

original part that had just worn out? 

Mr. WEHRUM. Congressman, there are a couple questions that 

would have to be asked and answered about that. One is would 

that project represent so-called routine maintenance and the very 

first part of the applicability process is if you’re doing something—— 

Mr. MCKINLEY. I am just saying, Mr. Wehrum, it’s a worn-out 

part that they are just—it’s routine maintenance—we are going to 

replace that part. 

Mr. WEHRUM. Right. So—— 

Mr. MCKINLEY. It may be a 40-year-old part. 

Mr. WEHRUM. So what you described very well could be considered routine maintenance and that may be the beginning and the 

end of the applicability determination. 

Mr. MCKINLEY. Thank you. 

So I want people to understand that what we are saying if Tonko 

is correct that 25 percent of our power plants don’t have fundamental SOCs and NOx air controls, here the plant now wants to 

do some work on their plant to do that. 

They are going to go through a delay process that might be a 

year or more and the uncertainty that perhaps it might cost $100 

21 

million to $200 million dollars to do something when they just simply want to put in some new control devices. 

So, again, I am trying to understand. If you don’t improve your 

air quality, you don’t follow the NSR, because if I am just doing 

routine maintenance, I am OK. 

But if I try to improve the efficiency and the operation and the 

emissions of my plant, then I fall into something else. 

Does that make sense to you? 

Mr. WEHRUM. Absolutely not, and you put your finger on one of 

the two key problems as I see with the New Source Review, which 

is it very much stands as a barrier to the implementation of 

projects that are necessary to maintain facilities, improve efficiency 

and, as I said earlier, in many cases improve environmental performance. 

And, as you pointed out, relatively minor projects in the grand 

scheme of the facility, an expansive view of NSR applicability could 

trigger the program and trigger the obligation to spend hundreds 

of millions of dollars on air pollution controls and as a result—I’ve 

seen it real live, first hand—companies decide not to go forward 

with those projects and they leave plants in a dilapidated condition 

and in a condition that’s worse for the environment than it would 

be if they were able to continue to maintain it. 

Mr. MCKINLEY. Not only worse, but doesn’t it put us in a concern 

for reliability of the grid when we don’t have these power plants 

available for implementation? 

Mr. WEHRUM. Yes. So I think it’s really important for EPA to 

stay in its lane. I am not a grid guy. I am an air guy, and I think 

part of the problem in the past with the EPA is it’s tried to assume 

responsibility for things it’s not responsible for. 

So I am going to take off my AA hat and put on my engineer hat 

and my common sense guy and just say yes, grid reliability is enormously important and there is a real live debate going on right 

now about all the coal plant retirements which are resilient. 

They have fuel onsite. They can operate for days and sometimes 

weeks without additional fuel delivery and that’s very different 

than a natural gas-fired plant that if the pipeline delivery is disrupted for whatever reason there is no onsite storage and there is 

no generation. 

So there is a real live debate going on right now about the issues 

that you raise. I am not the expert but I think it’s important to run 

that to ground. 

Mr. MCKINLEY. Perhaps on the next panel. I want to continue 

that line of reasoning, questioning. So thank you. I yield back. 

Mr. SHIMKUS. Gentleman’s time has expired. 

The chair recognizes the gentleman from Texas, Mr. Green, for 

5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and welcome to our subcommittee. 

The New Source Review program has been an important program for protecting air quality in districts like I have. I have a 

very urban district in east Houston that—we have lots of industry 

in the district that brings in many high-paying jobs for our constituents. 

22 

But Houston also struggles with meeting attainment levels under 

the Clean Air Act and I am worried that some of the EPA’s recent 

moves would threaten many of the gains we have made in recent 

years in improving the air quality in Houston. 

Again, thank you for being here today. It’s not always easy to get 

officials from our administration here to talk about legislation and 

I appreciate your involvement. 

In 1995, the EPA created the ‘‘once in always in’’ policy for regulation of hazardous air pollution, or HAPs. Many of these HAPs, 

like benzene, are produced by numerous plants in our district. Only 

‘‘once in always in’’ industrial facilities that were determined to be 

major sources of HAPs were required to employ strong pollution 

controls under the maximum achievable control technology measure, or MACT. 

Under the previous policy, sources must apply MACT if they are 

emitting more than 10 tons per year for a single hazardous chemical or 25 tons per year for combined hazardous chemicals. And 

your January 25th guidance changed this policy now for major 

sources to be classified as area sources under the Clean Air Act if 

they were below this threshold. 

While I understand that many facilities have done a great job of 

reducing their emissions through upgrades and would not now fall 

under the major source classification when ‘‘once in always in’’ was 

created in the tonnage decision or was based on defining a major 

source not on what level of emissions were necessarily safe. 

Under the new policy, our district will see as much as 200 more 

tons a year in emissions. Has the EPA done any of the new studies 

on what a safe level of emission is for the HAPs that prompted this 

decision? 

Mr. WEHRUM. Well, thank you for your question, Mr. Congressman. There is a lot packed into what you just said. 

Mr. GREEN. I know. Well—— 

Mr. WEHRUM. So let me just—— 

Mr. GREEN [continuing]. We all represent our districts. 

Mr. WEHRUM. Oh, absolutely. So let me take a shot and you can 

tell me if I get to the point that you want. 

So the ‘‘once in always in’’ policy is a very important policy. We 

issued the memo that we did because, like the NSR program, we 

think that policy stood in the way of people doing common sense 

things to reduce emissions. 

So, for instance, prior to issuance of the policy, there was absolutely no incentive for any industrial facility to reduce emissions to 

lower the major source thresholds because, it’s nothing but additional cost and expense for them and produces nothing in the way 

of regulatory benefit. 

So under the ‘‘once in always in’’ policy, if they take voluntary 

measures to reduce emissions further than the law requires and 

they take limits to below major source thresholds, then we will see 

emissions reductions and they see real regulatory relief and it’s a 

win-win situation. 

Now, there are those who say look at—so what I just offered is 

the glass half full perspective, which I think is absolutely right. 

But there is a glass half empty perspective and there are those who 

say, oh no, there is going to be huge emissions increases associated 

23 

with these people who are going to shuck off the standards that 

apply to them and then intentionally increase emissions all the 

way up to just under the major source thresholds. 

The studies that purport to show that are just shoddy, and I’ll 

tell you, if we try to rely on those kind of studies in a rulemaking, 

we’d get laughed out of court. 

Mr. GREEN. Well, I only have a very short time. Has the EPA 

done any new studies on what a safe level of emissions for these 

HAPs that prompted the decision? Has the EPA done that study? 

Mr. WEHRUM. Part and parcel of this toxics program that the policy applies to is a two-step program. Step one says we have to 

apply technology standards and step two says we have to follow up 

after a period of years with a risk assessment to make sure that 

there is no unacceptable remaining risk. So we are—— 

Mr. GREEN. OK. The emissions from HAPs from these facilities 

are they classified as area sources considered a safe level, that you 

know of? 

Mr. WEHRUM. I am sorry, Mr. Congressman. I don’t understand 

the question. 

Mr. GREEN. OK. Well, you can get back. 

Have you done any estimates on the potential increase in emissions that this guidance will allow that—— 

Mr. WEHRUM. Yes. We took a very hard look and, as was pointed 

out earlier in this hearing, in my prior tenure at EPA during the 

Bush administration this is an issue we talked about and actually 

proposed a rule to make a change in the regulations to accomplish 

what we did in the memo just a couple months ago. 

And so we have abundant public comments that were received 

when that rule was proposed and we have taken a hard look at 

those public comments. 

There, honestly, is no way to comprehensively analyze because of 

the broad, broad applicability of these programs. But what we have 

done is looked at very targeted sectors based on comments that we 

have received and what we have seen is a preponderance of information indicating that we think ultimately this policy is going to 

produce emissions reductions and is not going to result in the hypothetical increases that many people are worried about. 

Mr. SHIMKUS. The gentleman’s time has expired. 

Mr. GREEN. Mr. Chairman, I’ll submit the rest of the questions. 

Thank you. 

Mr. SHIMKUS. And the chair now recognizes the gentleman from 

Texas, Mr. Barton, for 5 minutes. 

Mr. BARTON. Thank you. Thank you, Mr. Chairman. 

Thank you, sir, for testifying. This is a very complicated issue. 

The average person doesn’t understand the difference between a 

New Source Review or whatever else we are talking about here. 

But it’s an important issue. So I am going to ask some questions, 

and I am not sure I understand myself what I am asking. But, 

hopefully, you will. 

Under current law, if an hourly emission per unit of output stays 

the same or goes down, is it possible to have an annual increase 

in emissions? So you change your process. You have equal or less 

emissions. 

24 

But on this annual standard, would it be possible in such a case 

for the annual standard to be violated? I would think the answer 

would be no. 

Mr. WEHRUM. Well, it is theoretically possible to not have an increase in hourly emissions but to have an increase in annual emissions. So that’s theoretically possible. 

Mr. BARTON. It is. 

Mr. WEHRUM. And one of the primary criticisms of the discussion 

draft is that it may allow that to—you may not see a short term— 

the hourly measured short-term emissions. You may not see a 

short-term increase in emissions. 

But there is a hypothetical possibility to see a long-term in annual emissions. 

Mr. BARTON. I would think it’s not possible unless you increase 

the output. 

Mr. WEHRUM. That’s exactly right. Mr. Congressman, that is exactly right. You put your finger on it, and I think it’s important to 

point out, and this must be kept in mind as work on the discussion 

draft goes forward, this is only one of many, many tools we have 

in the Clean Air Act toolbox. 

So I have said hypothetical possibility and I use that word intentionally because I believe it is just hypothetical and so let’s just 

talk about power plants, and this program applies to way more 

than just power plants. 

So just look at power plants. There is the acid rain program. 

There are interstate transport requirements that apply. There are, 

in some cases, nonattainment requirements that apply. There are 

state-level requirements that apply. There are air toxic standards 

that apply. There is a plethora of emissions limitations that apply 

to these standards. 

So is it hypothetically possible you’ll see an emissions increase 

with an hourly emissions test? Yes. But in reality, you can see 

that—— 

Mr. BARTON. Let’s—— 

Mr. WEHRUM [continuing]. But it’s hard to see because we are 

not operating in a vacuum. We are operating in a heavily, heavily 

regulated—— 

Mr. BARTON. Let’s use a real-world example. ERCOT, down in 

Texas, is predicting that there could be—there is a possibility of 

rolling power outages this summer in Texas because the maximum 

generation for electricity, if you had the worst case scenario—105 

in Houston, 105 in Dallas, 105 in Austin—I mean, just a hellacious 

hot summer all over the state—that we might not have the ability 

to handle that. 

So we try to get existing plants to generate electricity to expand 

so they can generate more electricity. OK. But their emission per 

unit of output, since they are going to use newer technology, you 

get more output than the old technology. But the overall emissions 

are going to go up because they are going to generate a lot more 

electricity. Would that trigger a New Source Review under existing 

law? 

You’ve got a potential shortage. You’re trying to plan for that. 

You don’t have time to build a brand new power plant so you’re 

going to expand and existing one but use new technology. 

25 

You get more output for the same level of emissions but the overall level of emissions will go up because you’re going to generate 

25 or 30 percent more output. So that would trigger a New Source 

Review? 

Mr. WEHRUM. It could. 

Mr. BARTON. Under new—— 

Mr. WEHRUM. Under current law, and one of the real benefits of 

the discussion draft is it would allow for the use of a so-called output-based measure of emissions increases. 

And so it would solve the problem you just described because it 

would recognize that in the situation you described we all want 

plants to run more and be more efficient because that is better for 

the environment. 

Mr. BARTON. So my time is about to go out. 

Does the Trump administration support the discussion draft as 

it’s currently drafted? 

Mr. WEHRUM. The administration has not taken a position on the 

draft but, in my capacity—as I said, in my testimony, I strongly 

support what you’re—— 

Mr. BARTON. You would recommend my support? 

Mr. WEHRUM. Yes, Mr. Congressman. 

Mr. BARTON. Thank you, Mr. Chair. 

Mr. SHIMKUS. The gentleman’s time has expired. 

The chair now recognizes the gentlelady from Michigan, Mrs. 

Dingell, for 5 minutes. 

Mrs. DINGELL. Thank you, Mr. Chairman. 

Chairman, I’ve got a number of questions for you today on ongoing policy changes at the EPA. I am going build on what my colleague, Mr. Green, was asking you. 

But I care very deeply about one of the activities that you were 

doing and that is the mid-cycle review on the fuel economy standards. 

First, given recent press reports, I thought there was a good 

meeting at the White House on Friday. But yesterday afternoon’s 

Post made me think that that was not the case. 

Mr. Wehrum, I understand that Administrator Pruitt sat down 

with the President and a number of the CEO automakers last Friday to discuss automotive fuel economy and GHG emission standards. 

In that meeting, I understand the President directed Administrator Pruitt and Transportation Secretary Chao to reach out and 

negotiate a possible deal with California to ensure that we have 

one national program in this country for fuel economy and that 

GHG standards are maintained. 

I was happy to hear that. That’s what the autos say that they 

need. California has said that they will work with everybody. But 

I am concerned that yesterday I heard that that was not the case— 

that you were not going to work with California, signaling the 

exact opposite of what we heard on Friday. 

It’s troubling, because the auto industry needs stability. They 

need to know where they are going. Can you tell me what EPA is 

doing on this, please? 

Mr. WEHRUM. Yes, Mrs. Congresswoman. 

26 

I wasn’t in the meeting with the President so I can’t speak to 

what was said or what was not said. Like you and like everyone 

else, I got no reports about it. So I am not going to do a he said, 

she said about that. 

But I can tell you we are working very hard on a proposed rule. 

You know the administrator issued the determination not long ago 

saying he thinks a change needs to be made to the current standards in the 2021 and 2025 time frame, and we are hard at work 

on that in conjunction with NHTSA on a proposed rule that would 

suggest some possible changes based on the administrator’s findings and Secretary Chao’s similar concerns. 

Mrs. DINGELL. But does EPA understand the importance to the 

auto industry of one national standard and that the importance of 

what was originally negotiated was having all players at one table 

and that if you care about jobs having two sets of standards so that 

they are producing one car for 14 states and another is not going 

to give the companies the certainty they need? 

Mr. WEHRUM. I’ll speak for myself and say absolutely. I understand the importance of that and what I would say is it’s a priority 

of my office and I believe a priority of the administration to try to 

maintain one national program. And so I think to the degree the 

press reports are saying that’s not a goal I would say that’s wrong. 

But what I would say is we think changes need to be made and 

we have started a dialogue with the state of California. I’ve personally been involved in those conversations. 

We plan to continue that dialogue consistent with what the 

President said in last week’s meeting and, in fact, as we speak are 

trying to set up the next discussion with our colleagues at CARB 

for Wednesday. They are going to be here this week for meetings 

and we are hoping to get together with them while they are here 

in town. So we have the dialogue underway. We intend to continue 

that dialogue and if we can find a way to maintain one national 

program we certainly want to do that. I know California wants to 

do it. I know the OEMs want to do it and we are going to try. 

Mrs. DINGELL. I find that reassuring. I would love your personal 

commitment to keep trying to make that happen because we all 

care about the health of the auto industry. 

Mr. WEHRUM. We are going to keep trying. 

Mrs. DINGELL. Let me go quickly, because I am going to run out 

of time, and build on what my colleague, Mr. Green, was asking 

about in ‘‘once in always in.’’ 

When Administrator Pruitt testified at a Senate Oversight hearing, he said that the decision to end ‘‘once in always in’’ policy was 

made outside of your office. 

Is that accurate? Was the decision to rescind the ‘‘once in always 

in’’ policy made outside of your office? What was your role, if any, 

in the decision to rescind this policy? 

Mr. WEHRUM. Well, I signed the memo. But anything I do is 

based on the authority of the administrator. 

So I can tell you that he was highly involved in the vetting. He 

was highly involved in setting the policy and I ultimately issued 

the memo. But it’s a reflection of the agency’s position. 

Mrs. DINGELL. So I’ve got 25 seconds left and I’ll probably ask 

you to do more of this for the record. But you were talking that you 

27 

studied the issue but we haven’t seen anything and we need to 

have more transparency about what the impact was going to be 

about when it was conducted, is it publicly available. 

We have got the Union of Concerned Scientists saying that 

there’ll be an additional 155 tons of hazardous air pollutants per 

year. Can we make that data available that you’ve analyzed? 

Mr. WEHRUM. Well, an important part of what we said when the 

memo came out is we intend to follow up the memo with the rulemaking so we can lock in our new policy as actually part of the 

codified regulations. 

So that will be an opportunity for everyone with an interest to 

look at our assessment, to look at our analysis, and to give us their 

comments as to whether they think it’s right or not. 

Mrs. DINGELL. Thank you. 

Mr. SHIMKUS. Gentlelady’s time has expired. 

The chair recognizes the gentleman from Ohio, Mr. Johnson, for 

5 minutes. 

Mr. JOHNSON OF OHIO. Thank you, Mr. Chairman, and I’d like 

to start out by thanking you and Representative Griffith for your 

work on this really important bill and for holding this legislative 

hearing today. I am also appreciative of the EPA’s work to date to 

inject some certainty and common sense into NSR permitting. 

It’s now incumbent on Congress to further that certainty through 

advancing this discussion draft. As Mr. Johnson, with America’s 

Electric Cooperatives, who will testify in the second panel, explains 

in his testimony, innovative technologies and systems to improve 

facilities are being left on the shelf because of current NSR processes, essentially undermining the goals and intent of the Clean 

Air Act. I think everyone here can agree that’s an issue. The discussion draft we are looking at and discussing today will rectify 

that issue while addressing much-needed other reforms and I am 

supportive of these efforts. 

So, Mr. Wehrum, seeing that there is only one definition for the 

term modification in the Clean Air Act, why has the EPA interpreted this definition differently for the NSR program than it did 

for the NSPS program? 

Mr. WEHRUM. That’s hard to answer, Mr. Congressman. That decision was made a long, long time ago. The NSR program was first 

put in place just by regulation in the mid-70s and then followed up 

with a revised program after the law was changed in 1977. 

But the fact is there has been a differently regulatory definition 

for a long, long time now and the idea of creating consistency between the two programs makes perfect sense. 

As I said earlier, there is a lot of overlap between the two programs. They are intended to accomplish a lot of same thing and 

creating that kind of consistency would improve understandability 

and implementation. 

Mr. JOHNSON OF OHIO. Well, it seems to me that if Congress 

wanted the definition to be different it would have provided a separate definition for each program. That’s the way I look at it. 

Mr. WEHRUM. That seems logical, Mr. Congressman. 

Mr. JOHNSON OF OHIO. OK. Thank you. 

State regulators and the EPA both play an important role in administering the NSR permitting program. In what ways are you 

28 

seeking to improve this Federal-State interaction related to the 

NSR program? 

Mr. WEHRUM. Well, you’re right. The Clean Air Act, in many respects, is an exercise in cooperative federalism. We, at the Federal 

Government level, have a lot of responsibility. 

But Congress intended states to take a lot of responsibility themselves and, in fact right at the beginning of the Clean Air Act it 

says air pollution control at its source is the responsibility of the 

states under the Clean Air Act. 

So Administrator Pruitt takes that very seriously. I take that 

very seriously. Part of our concern with the program is it has been 

too Federal heavy, as a lot of what we do has been Federal heavy. 

And so in addition to improving the Federal program. Our intention is to make sure the states understand they have flexibility in 

what they do and how they do it under the NSR program. 

The things we do we think make good sense and would be real 

improvements and we hope states pick up those ideas. But if they 

have other ideas they want to implement we are going to be flexible because we should be flexible. That’s how the law was intended 

to be implemented. 

Mr. JOHNSON OF OHIO. Well, while it’s not perfect I certainly applaud the efforts of the EPA to engage the states across the spectrum in policy making because I agree with you—I think that’s important. 

Can you talk about the role of the policy office and enforcement 

offices at the EPA? Specifically, should the policy office or the enforcement office determine what defines a modification under NSR? 

Mr. WEHRUM. As I like to say, they is us. I mean, the EPA is 

an entity and the EPA is part of a larger entity, which is the executive. 

So, as things currently stand, the responsibility of rulemaking 

sits with my office. But a responsibility for interpretation and implementation, in some cases, including NSR, sits in the enforcement office. 

So that was done intentionally during the Clinton administration 

for reasons but for a lot of reasons that doesn’t make a lot of sense 

and, we have had a conversation in the way as to whether those 

delegations should be reassigned because a lot of people think and, 

frankly, I believe that people who write the rules should be the 

people who interpret the rules. 

Mr. JOHNSON OF OHIO. In the last 30 seconds I’ve got, what are 

you doing to ensure that there is clear up-front guidance, which 

will reduce uncertainty about future enforcement penalties? 

Mr. WEHRUM. Oh, boy. Well, I said earlier I need to stay in my 

lane. So enforcement penalties is not in my lane. That’s a question 

that’s best asked to the enforcement office assistant administrator. 

Mr. JOHNSON OF OHIO. OK. All right. 

Mr. Chairman, I yield back. 

Mr. SHIMKUS. Gentleman yields back his time. 

The Chair recognizes the gentleman from California, Mr. Peters, 

for 5 minutes. 

Mr. PETERS. Thank you, Mr. Chairman. Thank you, sir, for being 

here. 

29 

As you well know, in 2011 the EPA entered into an agreement 

to settle a lawsuit brought by states and environmental groups in 

which EPA agreed to set standards for GHG emissions from new 

and existing fossil fuel-powered fired power plants under Section 

111 of the Clean Air Act. 

The Supreme Court ruled that EPA must regulate greenhouse 

gases if EPA finds that they endanger the health and welfare of 

current and future generations. 

Following the Supreme Court’s decision, EPA issued what is 

known as an endangerment finding. That finding requires the EPA 

to take regulatory action under the Clean Air Act to curb emissions 

of carbon dioxide, methane, and four other heat-trapping air pollutants from vehicles, power plants, and other industries. 

That ruling allows the EPA to regulate greenhouse gases as air 

pollutants covered by the Clean Air Act. 

This led to the clean power plan and essentially the 

endangerment finding gave EPA its mandate to regulate fuel economy standards for vehicles, permitting requirements for new construction, or the GHG regulation of vehicles and new stationary 

sources. 

So now that you’re on the job, I wanted to ask you specifically 

do you believe that greenhouse gas emissions endanger the public 

health? 

Mr. WEHRUM. Well, as I said in my confirmation hearing, there 

is a progression you need to go through to kind of get to where you 

are and one question is, is the climate changing and I think the 

answer is, clearly, yes. 

The second question is do manmade emissions contribute to that 

and I think the answer is, clearly, yes. 

The third question is, how much do manmade emissions contribute to that, and what I said in my confirmation hearing and 

what I continue to believe is I am not sure. 

And what I said then was, for the last 10 years before coming 

here I was an attorney in private practice and nobody ever hired 

me to go dive into the mountain of data that exists on climate and 

so there is a lot I had to learn and that’s what I said 6 months 

ago. 

Mr. PETERS. So right now, you have no opinion on whether 

greenhouse gas is a danger to the public health? 

Mr. WEHRUM. Well, where I was going was I said I have a lot 

to learn and, I am putting my money where my mouth is and the 

climate protection division is, one of the divisions within my office 

and what I asked them, beginning a few months ago is to do a series of briefings on the state of climate science to help me better 

understand, what science is out there—— 

Mr. PETERS. Have you taken those briefings yet? 

Mr. WEHRUM. We are in the process. I’ve done several and we 

have more to go. There is a mountain. There is a lot out there 

and—— 

Mr. PETERS. Has the staff indicated that they’ve changed their 

conclusions about this at all? 

Mr. WEHRUM. Well, all decisions like that flow from the administrator. So that wasn’t a staff decision. That was a decision by the 

administrator at the time. 

30 

Mr. PETERS. Has the administrator expressed to you whether he 

has an opinion on whether greenhouse gases endanger the public 

health? 

Mr. WEHRUM. He has a process concern, at a minimum. His concern is the endangerment finding you describe was made without 

consideration of alternative views. 

Mr. PETERS. I want to get to that in a minute. But I am asking 

his particular opinion on whether—— 

Mr. WEHRUM. Well—— 

Mr. PETERS [continuing]. What’s the opinion of the administrator 

of whether greenhouse gases endanger the public health? Has he 

expressed that to you? 

Mr. WEHRUM. Well, I am not going to speak for the administrator. But, again, to complete the thought, he’s very concerned 

about process and believes—the way he talks about I think is the 

way to talk about it is, people with a different view haven’t had a 

voice so far in this process and he’s been trying to find a way to 

allow them to have some voice and—— 

Mr. PETERS. What’s the schedule for that process? Do you know 

what his process is going to be? 

Mr. WEHRUM. Well, there is no process in place and there is no 

schedule right now. So we have talked about it but we are not—— 

Mr. PETERS. Is it your intention or do you understand it to be 

the administrator to revisit the endangerment finding with respect 

to the greenhouse gases? 

Mr. WEHRUM. We don’t have any plans right now. As I said, we 

have talked a lot about the integrity of the process that led to that 

determination and so far we are focused on process and integrity 

and we haven’t talked about outcome. 

Mr. PETERS. I am totally willing to accept your answer except 

there is no process either. There is no answer on whether the administration believes that greenhouse gases pose a threat to 

human health and the environment. 

There is no answer. I don’t get it from the administrator. I don’t 

get it from you. Apparently, you haven’t gotten it yet from your 

staff. And then everyone talks about a process, but there is no process either. There is no process for these voiceless oil and gas companies to get their voices heard. 

I am uncomfortable staying where we are but I am suspicious 

that that’s not where you want to be. 

Mr. WEHRUM. Well, what I would say is it’s important to look at 

the broader context. Well, what I mean by that is Congresswoman 

Dingell asked me a question a second ago about car and truck 

standards that exist at least from an EPA standpoint because of 

greenhouse gas emissions. 

And my answer was we will work on a proposed rule to maybe 

change those standards. I didn’t say we are working on a proposed 

rule to eliminate those standards and we are not going to do that. 

Mr. PETERS. Just to conclude, there is no action right now to revisit the endangerment finding pursuant to greenhouse gas. Is that 

correct? 

Mr. WEHRUM. That’s correct. 

Mr. PETERS. Thank you. I yield back. 

Mr. SHIMKUS. The gentleman yields back his time. 

31 

The Chair recognizes the gentleman from Texas, Mr. Olson, for 

5 minutes. 

Mr. OLSON. I thank the Chair, and welcome, Mr. Wehrum. 

As you know, many projects we see being undertaken at large 

sites are designed to improve emissions. One of the best examples 

is from home, Texas 22. 

It’s called the Petra Nova Project. That’s a power plant owned by 

NRG. They have four coal generators and four natural gas generators. 

On their own, they had a goal to reduce greenhouse gas emissions. Their solution was to capture carbon emissions from the coal 

production and use the captured CO2 to increase oil production. 

Their capture right now the equivalent of 350,000 emissions 

daily from automobiles—a big amount of carbon captured by this 

one power plant. 

Its NRG—the capture system was designed by JX Nippon and 

the oil companies, Hilcorp, that has an old oil field that’s about 75 

miles southwest with a pipeline in existence that would get rid of 

that. 

I invite you to come down there, all my colleagues, to see what’s 

working. It’s the only one in the whole world that’s actually viable 

for carbon capture. 

But that’s unique. Can you talk about some of the other types 

of large-scale projects like Petra Nova that you have seen that 

make our air cleaner and what are you doing to clear the pathway 

for those guys to get through this bureaucracy and help us make 

our air cleaner? 

Mr. WEHRUM. Mr. Chairman, I am not aware of any other ongoing projects like Petra Nova. I think it’s a very unique facility—at 

least in the United States. I think there are some internationally. 

But I think enormous strides continue to be made in controlling 

air emissions generally and CO2 emissions, more specifically. So 

that’s a very unique technology doing a very unique thing. But 

when you set that aside and look at—just thinking about the world 

of power generation, tremendous progress has been made and continues to be made. 

And we have talked a little bit about the shift away from coal 

power into natural gas-fired and that’s happening for a variety of 

reasons. But as a result of that alone there have been substantial 

reductions in emissions from the power sector nationwide over the 

past few years. 

So I think substantial progress has been made. Substantial 

progress will continue to be made and our job as an agency is to 

be smart about how we implement our program so that we accomplish good results but don’t accomplish adverse results at the same 

time. 

Mr. OLSON. Again, Petra Nova is just one example of what we 

can do with our technology right now. 

My question is are there other projects out there, big ones, that 

you’re looking at that you can help them get through this bureaucracy, get that project online and make our air cleaner, like Petra 

Nova? Doing anything else out there in the country as a model that 

you’re working on? 

32 

Mr. WEHRUM. And, again, the Petra Nova technology is very, 

very specific. But the answer to your broader question is on a daily 

basis we work with individual facilities who come to us seeking 

help and understanding how to interpret and apply our regulations. 

So we do applicability determinations. We do interpretive memos 

of the sort that we have been talking about. So we put a tremendous amount of time and effort into helping affected facilities, understand how the program applies and help them navigate or, as 

you said, navigate the complex programs that do apply. 

Mr. OLSON. Thank you. 

Final question—you commented that the New Source Review 

process can be very complex and time consuming. It hurts my 

brain, it’s so time consuming. 

Can you talk about why reducing complexity does not mean necessarily improving air quality? If we have reduced complexity, can 

we have reduced air quality? Or is it direct tie? How does it work? 

No complexity—have to get more complex or can we do less complexity cleaner air? 

Mr. WEHRUM. Oh, I think we can have it all. You bet. 

Mr. OLSON. There we go. I’ve got 52 seconds—a colleague want 

my time? 

Mr. SHIMKUS. Yield back. 

Mr. OLSON. The chair will yield back. 

Mr. SHIMKUS. The gentleman yields back the time. 

The Chair recognizes the other gentleman from Texas, Mr. Flores, for 5 minutes. 

Mr. FLORES. Thank you, Mr. Chair, and I appreciate the witness 

for being here today. 

We talked through several of the concerns about the NSR program this morning and one of the ones we haven’t talked about is 

the penalties for lack of compliance. 

And it’s my understanding that by statute the EPA may impose 

fines of more than $95,000 per day for Clean Air Act violations. Is 

that correct? 

Mr. WEHRUM. I believe that’s true. 

Mr. FLORES. OK. So if the EPA believes that a facility should 

have gone through an NSR for a change at the facility it could 

threaten to fine that facility $95,000 for every day that the facility 

operated since that change was made? Is that also correct? 

Mr. WEHRUM. That’s correct, Congressman. 

Mr. FLORES. OK. So in this case, just hypothetically, if the EPA 

identifies a change more than 3 years after the fact, this could involve fines of more than $100 million. 

Would you agree that this type of penalty and the uncertainty 

driven by the penalty serves as a disincentive for companies to 

carry out efficiency improvements? 

Mr. WEHRUM. Well, Mr. Congressman, let me take a step back. 

Mr. FLORES. Sure. 

Mr. WEHRUM. I’ve said a couple times in this hearing it’s really 

important for me to stay in my lane and I am responsible for program development and implementation but not for enforcement. 

33 

So I have personal views on the questions you’re asking but I 

think from an institutional standpoint they are best directed to the 

assistant administrator for the enforcement. 

Mr. FLORES. But if you put yourself into the shoes of a company 

that’s trying to improve their efficiency and they make a determination that they didn’t need to do an NSR because they are trying to improve efficiency and to reduce their emissions, but then 

the EPA comes in after the fact and says, oh, here’s a $100 million 

penalty, then the folks making the decision about whether or not 

to invest may elect to not invest at all because of the uncertainty 

regarding the fines that could happen to them. 

Mr. WEHRUM. Mr. Congressman, so notwithstanding what I just 

said—— 

Mr. FLORES. I understand. 

Mr. WEHRUM [continuing]. The point you’re raising is, is there 

significant liability associated with possible violations with New 

Source Review, the answer is absolutely yes. 

You’ve been focusing in penalties, but penalties are one piece of 

the overall picture if there is an enforcement action. They can add 

up, as you say, over a period of years to a big number. But often 

the bigger number in the enforcement cases is the injunctive relief, 

which is the order to install air pollution controls and take other 

mitigation measures. 

So all of that together can turn into a very big number for a typical power plant, and your point is do affected facilities think about 

that as they are making decisions about how to implement projects 

and the risks that may come with that, and the answer is absolutely, positively, yes. 

Mr. FLORES. Right. And that sort of leads to the next question 

is does it make sense that a company making a small investment 

or a change in an existing facility should be required by the NSR 

program to spend hundreds of millions of dollars on new state of 

the art pollution control equipment if they were just trying to improve efficiency, reduce emissions already. 

Mr. WEHRUM. Right. And that doesn’t make sense at all. 

Mr. FLORES. OK. Also, some equipment manufacturers report 

that there is little demand for energy efficiency products that they 

are selling because companies are unwilling to retrofit old equipment with newer technologies due to the concern about triggering 

an NSR. 

This is the whole purpose of the hearing and that is how can we 

reform the NSR program so that companies certainly won’t be penalized for doing activities that actually reduce pollution. 

And that gets us into the discussion draft and I think you’ve said 

that you support the direction we are going in the discussion draft. 

Mr. WEHRUM. Yes, Mr. Congressman. I think it would mark real 

improvement. 

Mr. FLORES. OK. Thank you. I yield back. 

Mr. SHIMKUS. Gentleman yields back the time. 

The chair now recognizes the gentleman from Georgia, Mr. Carter, for 5 minutes. 

Mr. CARTER. Thank you, Mr. Chairman. 

Thank you, Mr. Wehrum, for being here. I appreciate you being 

here. 

34 

I wanted to change our focus. I know we are here to talk about 

NSR but there is the subject that is very important to me that I 

brought up in a number of meetings with Secretary Pruitt that I’d 

like to ask you about. 

And that is about marine engine waivers for pilot boats. That’s 

something that’s very important. I have two major seaports in my 

district. They are struggling with this issue. 

I brought it up, as I said, to EPA staff and to Secretary Pruitt 

when he’s been before our committee. Not only do I want to change 

the subject but I want to change the tone because I want to say 

thank you. You’ve responded, and I would ask that you convey my 

thanks to Secretary Pruitt as well. 

He committed, last time he was here, that he would personally 

look into this, and he did, and I want to thank you for that. And 

my confidence has been restored and I appreciate it very much, so 

kudos to EPA for this. 

I want to ask you, because what happened is that three staff 

members were sent out to one of the engine manufacturers to look 

at this and to study in and see what a problem it was and, particularly, for the high-speed commercial vessels between 45 and 80 

feet, which is what we use in the Savannah Harbor and what is 

very important to us. 

And we feel like we are the tip of the spear here because we are 

kind of the first ones that have had to deal with this. So we are 

trying to get it resolved as quickly as we can and it’s very important because if we don’t have those pilot boats out there, business 

stops and commerce is business for us down there. 

And I wanted to ask you, the staff that visited the boat manufacturer indicated that they were going to be putting together a report. 

Have they come back with any initial findings yet or any feedback that you might be able to share with us? 

Mr. WEHRUM. They have not, but they were just out there last 

Thursday. So they haven’t had much time to—— 

Mr. CARTER. I understand. I hate to be impatient but they are 

bearing down on me and this has, in all honesty, been going on a 

while—because we have heard that it may take up to 2 years and 

that is simply not acceptable. That’s just not going to work. 

Mr. WEHRUM. Well, we are moving expeditiously, Congressman. 

I’ve talked with my staff on a number of occasions about this issue. 

I understand exactly what’s going on. 

Mr. CARTER. Thank you. 

Mr. WEHRUM. It was important for our folks to get some boots 

on the ground out at the engine manufacturers. So we were happy 

to have that opportunity and we plan to press forward as quickly 

as we can. 

And, I think as you know, it may not be a few weeks kind of 

thing. It may be a few months kind of thing just because we may 

have to revise our rules to accommodate what’s going on. 

Mr. CARTER. Well, let me ask you this. 

Mr. WEHRUM. May was the key word there—— 

Mr. CARTER. OK. I understand. 

Do you not normally put waivers in your rules like that with anticipation that there will be exceptions to those rules? 

35 

Mr. WEHRUM. We do sometimes. But usually when we know 

there is an issue to be resolved. This was something we didn’t see 

coming. So there is nothing in the rule that says, there is a way 

to—well, there may not—again, may is the key word. 

Mr. CARTER. I understand. 

Mr. WEHRUM. We are trying to find a way. 

Mr. CARTER. Well, two more things real quick. First of all, I 

would just ask your commitment to keep this on the front burner 

and to please go back and if you can provide my staff with any information we would certainly appreciate it. 

Mr. WEHRUM. Absolutely. 

Mr. CARTER. And secondly, if you see any other regulatory hurdles that we are going to have to overcome if you’ll please let us 

know about those as well. 

Mr. WEHRUM. Will do. 

Mr. CARTER. And then, finally—and I’ll yield after this—again, 

please convey my sincere thanks to the secretary for acting on this 

and fulfilling his commitment. 

Mr. WEHRUM. We will do that. 

Mr. CARTER. Thank you, and I yield back, Mr. Chair. 

Mr. SHIMKUS. Gentleman yields back his time. 

The chair recognizes the gentleman from South Carolina, Mr. 

Duncan, for 5 minutes. 

Mr. DUNCAN. Thank you, Mr. Chairman. 

I want to begin by saying that I am supportive of Mr. Griffith’s 

efforts to improve and reform the NSR permitting program. 

In my opinion, the NSR program in its current form seems like 

a counterproductive policy that disincentivizes companies from pursuing projects that would increase efficiency and mitigate environmental pollution. 

And I would say that frustration with the American people and 

federal bureaucracies and the speed of permitting, whether it’s this 

or whether it’s getting a Class III license with ATF, it permeates 

the whole government the frustration of the American people. 

They expect our government to be more efficient and I think 

that’s what the purpose of Mr. Griffith’s efforts are—to make government and at least the EPA and its permitting process a little 

more efficient. 

So I agree with your remarks, Administrator Wehrum, that we 

need to simplify the program and provide clarity to companies regulated by this. 

I want to talk about some of the confusion on how much construction companies are allowed to do prior to obtaining an NSR 

permit. I do not believe that this is addressed in the discussion 

draft. 

Can you speak to this a little bit? What can construction companies do prior to getting approval? 

Mr. WEHRUM. This is another example of why the NSR program 

drives people crazy. So it’s a preconstruction permit program, 

which means you need to have the permit in hand before you begin 

constructing the permitted activity. 

So that sounds simple but it’s complicated in practice because 

what is the permitted facility? You go out and pour a foundation— 

is that part of the facility? You go out and if you build roads, secuVerDate Nov 24 2008 11:30 Feb 08, 2019 Jkt 037690 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-129 CHRIS
36 

rity gates, is that part of the permitted facility? You go out—if 

you’re building a boiler, wouldn’t you buy the boiler and put it in 

place? So a judgement has to be made as to what point in the physical construction process is the point that marks the beginning of 

the regulatory process. 

The EPA has spoken to that many times in the past but it’s a 

subjective thing, not an objective and there is no bright line here 

and EPA has made several case-specific determinations. 

I said in my opening remarks and in my written testimony, we 

have begun what I believe to be an aggressive process of identifying problems with rules and opportunities for improvement in the 

rules and the issue that you’ve raised is one of those things that’s 

on our radar right now. 

What we want to do is encourage investment in facilities, allow 

for projects to go forward in anticipation of getting the permits that 

are necessary. 

So the permits shouldn’t stand as an unnecessary obstacle to 

common sense activity. And I think we could put a finer point on 

this issue and it’s something that we intend to do, going forward. 

Mr. DUNCAN. And I appreciate that. Let me ask, how much technology is used? I applied for a big game permit for my son online. 

Got a notification we got accepted. I can dial up a buoy in the 

Charleston Harbor and find out what the weather conditions are. 

Is the agency using the technology to find out what the air quality emissions are at a plant in Easley, South Carolina, and whether 

they are in attainment or not, or a construction project that may 

be expanding an operation there, looking at current air quality and 

I guess the whole application process online with feedback from the 

agency. 

How are you guys using technology and what can you do better? 

Mr. WEHRUM. We are trying very hard to keep up. Technology 

and the air quality monitoring and information management areas 

is growing by leaps and bounds. So substantial improvement is 

being—— 

Mr. DUNCAN. Are all these monitors transmitting to Washington 

or wherever the field office is our is somebody having to drive their 

pickup truck out there and pull that data? 

Mr. WEHRUM. A little bit of both. A little bit of both. 

Mr. DUNCAN. Little bit of both? 

Mr. WEHRUM. Yes. So, the answer to your question is we have 

room for improvement and we are trying—I have a whole office 

down in North Carolina that’s focused on emissions measurement 

technology and I can tell you this is very much a focus of ours. 

Mr. DUNCAN. What do you need from Congress to help make that 

happen? To help make the technology into the 21st century? 

Mr. WEHRUM. I don’t think there are barriers under the law for 

us right now. I think what we need to do just as an institution is 

be smart about using our resources and be smart about keeping up 

with the technologies and we are committed to doing that. 

Mr. DUNCAN. OK. 

Mr. Chairman, I don’t have anything further. I yield back. 

Mr. SHIMKUS. The gentleman yields back his time. The chair now 

recognizes the gentleman from Virginia, Mr. Griffith, who’s been 

patiently waiting, for 5 minutes. 

37 

Mr. GRIFFITH. Thank you very much, Mr. Chairman. I greatly 

appreciate it and I want to thank you, the E and C staff and everyone who has helped get this bill to this critical point in the process 

and I do appreciate it. 

And I appreciate you, Administrator Wehrum, for being here as 

well today. The current EPA has made New Source Review reform 

a priority. I share this priority and appreciate your comments on 

my legislation today. 

I’ve heard from folks in my district as well as industries here and 

in the previous hearing how complicated and burdensome this program is and it was singled out multiple times in the Department 

of Commerce’s report on regulatory burdens for domestic manufacturing. 

That being said, I have a story in my own district which I think 

brings home the need for this reform. It doesn’t cause a lot of pollution nor any pollution at all. What we have is a manufacturer of 

furniture, and when touring that manufacturer of furniture who 

was—it was Vaughan-Bassett Company that was the subject of 

‘‘Factory Man,’’ the fight of John Bassett to keep American furniture going when it looked like China and the Asians were going 

to chase us out of the marketplace and he did a great job. 

But I am touring his factory and there is a conveyer belt that 

runs down and runs back and there is nothing out there, and they 

built ramps to get back over it again on the other side. And I said 

to him at the time, 5 or 6 years ago when I was first touring, and 

I said, ‘‘What’s this here for?’’ ‘‘Oh, we got some regulation. If we 

change it, we have to redo everything. So we have this conveyor 

belt that goes out to nowhere and comes back. And it’s not efficient, 

but we don’t want to deal with it.’’ 

In checking to make sure it was New Source Review before I 

came to this hearing, we checked on this last week. They had to 

check with their regulatory guy who handles all this because they 

are not really sure. They just know they can’t touch it. Goes to nowhere. Adds time to the production of the pieces of furniture. They 

don’t use what the original purpose was but they have to keep the 

conveyor belt going. That affects their factory, and let me detail 

from the book how I know it affects their factory. 

So he’s getting heavy competition from the Chinese and he’s 

going to have to do something about it. He’s taken apart one of the 

pieces they are doing to see what they are doing more efficiently 

than what he’s doing in his factory, and it states in this book by 

Beth Macy, ‘‘In his sweat-stained golf hat, John Bassett stood atop 

a conveyor belt and told his workers he had no intention of closing 

the factory. Bassett asked his workers to not only work faster but 

also suggest ideas for factory floor improvements. What he didn’t 

want to hear, what he never wants to hear, was the phrase, ’It 

can’t be done.’ If something was wrong with a machine and it was 

slowing production down, the workers should personally let him 

know.’’ 

That conveyor belt is slowing down that process. That conveyor 

belt means his factory is less efficient. He gets fewer pieces of furniture out every day than it might otherwise be able to do. That 

conveyor belt is a part of the problem and the New Source Review 

keeps him from changing that conveyor belt because they are 

38 

afraid that EPA will whisk in on changing that conveyor belt and 

make them comply with every new standard that’s come about 

since whenever it was they put their process in place. Instead of 

being able to make small improvements along the way or even 

change this conveyor belt, they can’t get it done because this regulation is too burdensome, so burdensome they had to even go check 

with the regulatory guy to find out for sure that that was the rule 

that caused the problem, and it was. 

I am not going to tell Mr. Bassett it can’t be done. We need to 

change this rule and I appreciate your help in that regard. 

So you disagree with anything I’ve just said? 

Mr. WEHRUM. I do not. 

Mr. GRIFFITH. And I appreciate that. 

We have heard a lot about electric generation and other things 

today, and I’ve just told you this story. 

But whatever it is, can you speak to what the EPA is doing on 

its own? I think the bill is the best way to do it but what’s the EPA 

doing on its own to try to reform the NSR? 

Mr. WEHRUM. So a couple comments. 

First of all, thank you very much for what you’re doing, Mr. Congressman. As you know, I’ve spent a lot of time on this program 

in my career. It’s a very high priority of mine to make it better and 

I appreciate your efforts. 

I think your example highlights an important aspect of NSR, 

which is it applies to everybody who emits stuff, not just power 

plants, not just petroleum refineries. 

So a big reason why we need to improve the program is for the 

furniture makers of the world and the brick plants of the world and 

the small businesses and the small entities and facilities that grapple with this on a daily basis. 

We at EPA are working very hard within the authority we have 

to improve the program through rule changes and interpretations 

and policy memos and we are going to continue to try as long as 

I am here. 

Mr. GRIFFITH. Well, and I am glad that we agree that narrow 

and targeted NSR is necessary but that we need to make some reforms. 

And with that, I yield back. 

Mr. SHIMKUS. Gentleman’s time has expired. 

The chair thanks Mr. Wehrum for being here and being patient 

and answering our questions, and seeing that there are no other 

members wishing to ask you questions, we will dismiss you and impanel the second group. 

[Pause.] 

OK. Thank you all for being here. You all saw the first panel so 

we will recognize each one of your for 5 minutes for an opening 

statement. 

Your full testimony is submitted for the record and we will start 

with Mr. Sean Alteri, Director, Division of Air Quality, Kentucky 

Department of Environmental Protection. 

Sir, you are recognized for 5 minutes. 

39 

STATEMENTS OF SEAN ALTERI, DIRECTOR, DIVISION OF AIR 

EQUALITY, KENTUCKY DEPARTMENT OF ENVIRONMENTAL 

PROTECTION; PAUL BALDAUF, P.E., ASSISTANT COMMISSIONER, AIR QUALITY, ENERGY, AND SUSTAINABILITY, NEW 

JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION; 

ROSS E. EISENBERG, VICE PRESIDENT, ENERGY AND RESOURCES POLICY, NATIONAL ASSOCIATION OF MANUFACTURERS; KIRK JOHNSON, SENIOR VICE PRESIDENT, GOVERNMENT RELATIONS, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION; BRUCE BUCKHEIT, ANALYST AND 

CONSULTANT; JEFFREY R. HOLMSTEAD, PARTNER, 

BRACEWELL LLP 

STATEMENT OF SEAN ALTERI 

Mr. ALTERI. Thank you. 

Good morning, Chair Shimkus, Ranking Member Tonko, and 

members of the subcommittee. 

My name is Sean Alteri and I currently serve as the director of 

the Division for Air Quality in Kentucky. I am honored to testify 

today and share a state’s perspective relative to New Source Review. 

As an air quality regulator, I applaud your efforts to address elements of the New Source Review permit program. The New Source 

Review permit program is necessary to protect public health and 

carry out the congressional declaration of purpose, which is to ensure that economic growth will occur in a manner consistent with 

the preservation of existing clean air resources. 

To effectively administer the New Source Review program, permitting authorities must be provided with regulatory certainty. 

During this February’s New Source Review hearing, Chairman 

Shimkus correctly noted that there are over 700 guidance memos 

and documents related to New Source Review. Under Kentucky 

law, unlike the Federal Government, the cabinet is prohibited from 

regulating by policy and guidance. Codification of EPA’s New 

Source Review guidance memos will provide regulatory certainty to 

the permitting authorities as well as the regulated community. 

Regarding the proposed reform legislative discussion paper included with this hearing, the narrow scope of the language further 

defined modification highlights issues related to routine maintenance, repair, and replacement. Pursuant to Section 111 of the 

Clean Air Act, a physical change to an emissions unit or a change 

in the method of operation constitutes a modification and it may 

subject the facility to New Source Review. Due to potential New 

Source Review requirements and the applicability of New Source 

Performance Standards, facilities have, unfortunately, foregone efficiency improvements that could provide significant environmental 

benefits. 

In an effort to reduce significant delays in permitting, the proposed amendment to the definition of modification does not apply 

to projects that implement the efficiency measures. The proposed 

amendment also addresses projects that are designed to restore, 

maintain, or improve the reliability or safety of the source and limits the emissions increases to the maximum achievable hourly 

emission rate demonstrated in the last 10 years. 

40 

These proposed amendments will provide the timely issuance of 

permits. Permitting energy efficiency projects effectively will be 

critical when EPA issues a clean power plant replacement rule and 

states are mandated to reduce its CO2 emission rates from its existing electric-generating units. 

In addition, the proposed legislative text also clarifies the term 

construction under the New Source Review program and when a 

modification should be subject to New Source Review as a major 

modification. The proposed statutory text clarification eliminates 

confusion as to when NSR applies. 

Currently, the most difficult aspect of permitting a major emitting facility under NSR is the air dispersion modeling. 

Last March, I testified before this subcommittee and expressed 

the need for EPA to fully develop and codify implementation requirements at the same time the EPA revises a national ambient 

air quality standard. H.R. 806 proposed to extend the review time 

of a NAAQS to a period of 10 years, which would allow EPA to resolve the technical deficiencies of the NAAQS evaluation and provide regulatory certainty to permitting authorities. Specifically, air 

dispersion modeling requirements necessary to evaluate the consequences of any decision to permit increased pollution in an area 

must be promulgated at the same time the EPA revises a national 

ambient air quality standard. 

As an example, EPA revised the national ambient air quality 

standard for particulate matter less than 2.5 microns in July of 

1997. However, due to technical issues and limitations associated 

with the inventories as well as the modeling techniques, EPA applied the PM 10 surrogate policy until March 23rd, 2010. EPA’s inability to promulgate clear regulatory requirements unnecessarily 

led to several Title V permit objections. 

And to reiterate, EPA must promulgate implementation requirements at the same time it promulgates a new or revised national 

ambient air quality standard to avoid costly unnecessary delays. 

Another example is the 2010 revision to the SO2 standard. Although the sulfur dioxide standard was revised in 2010, the EPA 

promulgated amendments to the modeling techniques in February 

of 2017. These amendments addressed significant unresolved technical limitations of the models. As a result of the regulatory uncertainty, several projects were not able to conduct the necessary evaluations required by the New Source Review program and thus limiting the potential for economic growth and development. 

In closing, state, tribal, and local permitting authorities must be 

provided with regulatory certainty throughout the New Source Review permitting process. The regulatory certainty is necessary to 

carry out our statutory obligations, which include providing for economic growth and development. 

And thank you for the opportunity to participate in today’s hearing and I look forward to any questions you may have regarding 

my testimony. 

[The prepared statement of Mr. Alteri follows:] 

41 


32790.005

MATTHEW G. BEVIN 

GOVERNOR 

ENERGY AND ENVIRONMENT CABINET 

300 $0\VER BotJLEV ARD 

FRANKFORT, KENTUCKY 40601 

TELEPHONE~ 502~564M3350 

TELEFAX: 502-564-7484 

TESTIMONY OF SEAN AL TERl 

ON 

CHARLES G. SNAVELY 

SECRETARY 

R. BRUCE SCOTT DEPUTY SECRETARY 

"LEGISLATION ADDRESSING NEW SOURCE REVIEW PERMITTING REFORM" 

BEFORE THE 

UNITED STATES HOUSE OF REPRESENTATIVES 

ENERGY AND COMMERCE SUBCOMMITTEE ON ENVIRONMENT 

May 16,2018 

Good morning, Chair Shimkus, Ranking Member Tonko, and members of the 

Subcommittee. My name is Sean A1teri and I currently serve as tbe Director of tbe Kentucky 

Division for Air Quality. I am honored to testify today and appreciate tbis opportunity to share a 

state's perspective on the New Source Review permitting program. 

As an air quality regulator, I applaud your efforts to address elements of tbe New Source 

Review permit program. The New Source Review program is utilized by EPA, State, Local, and 

Tribal air pollution control agencies to attain and maintain compliance with National Ambient · 

Air Quality Standards. The New Source Review program is necessary to protect public health 

and carry out the Congressional declaration of purpose "to insure that economic growth will 

occur in a manner consistent with the preservation of existing clean air resources."1 

1 Clean Air Act, CAA § 160(3) 

KentuckyUnbridledSpirit.com An Equal Opportunity Employer MIF!D 
42 


32790.006

In Kentucky, the New Source Review Program is codified into Kentucky law and 

approved into the State Implementation Plan by EPA. Prior to the construction of a major 

emitting facility, the Energy and Environment Cabinet must first issue a permit to the owner or 

operator of the proposed facility. 

To effectively administer the New Source Review program, permitting authorities must 

be provided with regulatory certainty. During this February's New Source Review hearing, 

Chair Shimkus correctly noted that there are over 700 guidance memos and documents related to 

New Source Review. Under Kentucky law, unlike the federal government, the Cabinet is 

prohibited from regulating by policy and guidance.2 Codification of EPA's New Source Review 

guidance memos will provide regulatory certainty to State, Tribal, and Local permitting 

authorities, as well as the regulated community. 

PROPOSED LEGISLATION 

Regarding the proposed reform legislative discussion paper included with this hearing, 

the narrow scope of the language further defining "modification" highlights issues related to 

"routine maintenance, repair, and replacement" or "RMRR." Pursuant to Section 111 of the 

Clean Air Act, a physical change to an emissions unit or a change in the method of operation 

constitutes a "modification" and may subject the facility to New Source Review. Due to 

potential New Source Review requirements and the applicability of new source performance 

standards, facilities have unfortunately forgone efficiency improvements that can provide 

significant environmental benefits. 

Under current New Source Review requirements, an efficiency project that substantially 

increases utilization of a unit, even if the project reduces emissions on an hourly basis, would 

require New Source Review. In an effort to reduce significant delays in permitting, the proposed 

z KRS !3A.l30 

2 
43 


32790.007

amendment to the definition of "modification" does not apply to projects that implement 

efficiency measures, which reduce the amount of any air pollutant emitted by the source per unit 

of output. The proposed amendment also addresses projects that are "designed to restore, 

maintain, or improve the reliability or safety of the source" and limits the emissions increases to 

the maximum achievable hourly emission rate demonstrated in the last ten years. 

These proposed amendments will provide for the timely issuance of permits related to 

energy efficiency measures. Permitting energy efficiency projects effectively will be critical 

when EPA issues a Clean Power Plan replacement rule and states are mandated to reduce its C02 

emission rates from existing electric generating units. 

In addition, the proposed legislative text also clarifies the term "construction" under the 

New Source Review program and when a modification should be subject to New Source Review 

as a "major modification." The proposed statutory text clarification provides regulatory certainty 

and eliminates confusion as to when New Source Review applies. 

Relationship to the National Ambient Air Quality Standards 

As mentioned previously, the New Source Review program establishes the 

preconstruction evaluation to determine whether a project will cause or contribute to a violation 

of the National Ambient Air Quality Standards. Currently, the most difficult aspect of permitting 

a major emitting facility under the New Source Review program is air dispersion modeling. 

Last March, I testified before this subcommittee and expressed the need for EPA to fully 

develop and codify implementation requirements at the same time EPA revises a National 

Ambient Air Quality Standard. HR 806 proposed to extend the review time of a NAAQS to a 

period of 10 years, which would allow EPA to complete the technical aspects of the NAAQS 

evaluation and provide regulatory certainty to the permitting authorities. Specifically, the air 

3 
44 


32790.008

dispersion modeling requirements necessary to evaluate the consequences of any decision to 

permit increased air pollution in an area must be promulgated at the same time EPA revises a 

National Ambient Air Quality Standard. 

As an example, EPA revised the National Ambient Air Quality Standard for particulate 

matter less than 2.5 microns in July of 1997. However, due to technical issues and limitations 

associated with the PM2.s emissions inventories and modeling techniques, EPA applied the 

"PM to Surrogate Policy" until March 23,2010.3 EPA's inability to promulgate clear regulatory 

requirements unnecessarily led to several title V permit objections. 

To reiterate, EPA must promulgate implementation requirements at the same time it 

promulgates a new or revised National Ambient Air Quality Standard to avoid costly, 

unnecessary delays. 

Other recent examples of regulatory uncertainty associated with the New Source Review 

program include the 2010 revisions of the National Ambient Air Quality Standards for oxides of 

nitrogen (with nitrogen dioxide as the indicator) and sulfur oxides (sulfur dioxide). Although tht 

Sulfur Dioxide standard was revised in 20 I 0, EPA promulgated amendments to the modeling 

techniques in February of 2017. These amendments addressed significant, unresolved technical 

limitations of the models. As a result of the regulatory uncertainty, several projects were not 

able to conduct the necessary evaluations required by the New Source Review program. And 

thus, limiting the potential for economic growth and development. 

In closing, State, Tribal, and Local permitting authorities must be provided with 

regulatory certainty throughout the New Source Review permitting process of new, modified, 

and reconstructed stationary sources. The regulatory certainty is necessary to carry out our 

3 EPA Memorandum, "Modeling Procedures for Demonstrating Compliance with PM2.5 NAAQS" issued March 

23, 2010 by Stephen D. Page, Director, Office of Air Quality Planning and Standards. 

4 
45 


32790.009

statutory obligations, which include providing for economic growth. Thank you for the 

opportunity to participate in today's hearing and I look forward to any questions you may have 

regarding my testimony. 

5 
46 

Mr. SHIMKUS. Thank you. 

The chair now recognizes Mr. Paul Baldauf, professional engineer, assistant commissioner, Air Quality, Energy, and Sustainability, New Jersey Department of Environmental Protection. 

Sir, you’re recognized for 5 minutes. 

STATEMENT OF PAUL BALDAUF 

Mr. BALDAUF. Thank you, Chairman Shimkus, Ranking Member 

Tonko, and members of the committee for the opportunity to testify 

today. 

My name is Paul Baldauf. I am the Assistant Commissioner for 

Air Quality, Energy, and Sustainability at the New Jersey Department of Environmental Protection. 

I have 30 years of engineering and management experience related to environmental protection. I would like to take the opportunity today to provide a state perspective on the regulatory challenges associated with our mission to protect and improve air quality. As we all understand, air pollution has no respect for state borders. Individual states with effective and robust regulatory programs have little influence to encourage upwind states to similarly 

control their emissions. The Environmental Protection Agency 

must lead to ensure a level playing field with all entities held to 

the same emission standards. Any discussion of New Source Review permitting reform must focus on emissions reduction. Amendments to the NSR process that have the potential the increase 

emissions cannot be tolerated and these amendments will cause 

New Jersey to fall out of attainment to the National Ambient Air 

Quality Standards. 

New Jersey is the most densely populated state in the Nation 

with a long history of air quality challenges. New Jersey has made 

major improvements in air quality over the last two decades. 

Today, New Jersey is attaining all the NAAQS except the 70 parts 

per billion ozone. About half of the air pollution responsible for 

causing ozone in New Jersey comes from outside of New Jersey. 

The NSR program and the cost-effective control technologies that 

exist to reduce emissions have been critical to the improvements of 

New Jersey’s air quality. If the proposed changes are adopted, 

emissions from out-of-state sources are likely to increase, not only 

for ozone but for other air pollutants including particulates and air 

toxics. Governor Murphy has set numerous ambitious climate 

change goals such as 100 percent clean energy by 2050 in New Jersey. States will be unable to attain the air quality benefits from 

clean energy if upwind states continue their current levels of emissions. 

Adverse health effects—adverse health impacts can come from 

both short-term and long-term exposure to air pollution. 

Maintaining the current NSR program and its associated requirements to reduce emissions with plant upgrades will not only 

improve the ability of states to attain or maintain NAAQS but will 

result in greater air toxic reductions. Co-benefit reductions are frequently called out in rulemaking as a secondary benefit. Annual 

emissions of mercury and hexavalent chromium, a known 

neurotoxin and a known carcinogen, respectively, both of which are 

trace elements in coal, would also increase with associated ton per 

47 

year increases of other pollutants. Mercury and hexavalent chromium are closely associated with coal power plants and any increase, short term or long term, will have detrimental effects on 

the environment and public health. 

The proposed amendments would alter when a source would be 

subject to NSR in two key ways—first, a project that increases the 

efficiency of a unit, regardless of whether the project also increases 

the annual emissions of the unit, would be exempted from NSR 

and its associated emission reductions. While increasing efficiency 

may be desirable, the increase in emissions associated with the 

change should be evaluated for their impacts. 

Second, the proposal would eliminate the requirement to evaluate the project for increases in annual emissions. This could result 

in major sources expanding the annual capacity of a plant, increasing the number of hours it operates each year without the inclusion 

of modern air pollution controls or the replacement of older equipment with modern, more efficient equipment and associated lower 

air pollution. 

These amendments would allow it to continue to keep operating 

at the same level of hourly emissions indefinitely, even though 

cost-effective technologies exist to reduce emissions, undermine the 

continuous emissions reductions we’ve achieved over the last 40 

years. Without the required air quality evaluation, there would be 

no way of knowing if the existing source operation was having adverse effects to the airshed and a source’s useful life could be extended indefinitely with no consideration for reducing air pollution 

leading to continued operation with old and inefficient equipment. 

These annual emission increases would negatively impact annual 

air quality standards. States such as New Jersey would find it 

challenging to remain in attainment within NAAQS if the NSR 

program eliminated the requirement to evaluate a project for increases in annual emissions. 

NSR amendments, as proposed, could result in extension of the 

life of older power plants with modifications that result in small 

improvements to energy efficiency while causing significant increases in annual emissions of air contaminants, including carbon 

dioxide, sulfur dioxide, nitrogen oxide, particulates, mercury, and 

other hazardous air pollutants. That would be inconsistent with the 

Clean Air Act, which requires its sources to install best available 

control technology, lowest achievable emission rate, and maximum 

achievable control technology when modifying equipment facilities 

including energy efficiency modifications that would increase emissions of applicable air contaminants. 

Thank you again for the opportunity to appear today and to convey New Jersey’s perspective on the importance of the NSR program. 

I welcome any questions you may have. 

[The prepared statement of Mr. Baldauf follows:] 

48 


32790.010

Testimony of Paul D. Baldauf, P.E. 

Assistant Commissioner 

New Jersey Department of Environmental Protection 

Before the House Committee on Energy and Commerce 

Subcommittee on Environment 

Hearing on 

legislation Addressing New Source Review Permitting Reform 

May 16,2018 

Thank you, Chairman Shimkus, Ranking Member Tonko, and the members of the committee for 

the opportunity to testify today. My name is Paul Baldauf, and I am the Assistant Commissioner 

for Air Quality, Energy and Sustainability at the New Jersey Department of Environmental 

Protection. 

I have over 30 years of engineering and management experience related to environmental 

protection. I would like to take the opportunity today to provide a State perspective to the 

regulatory challenges associated with our mission to protect and improve air quality. As we all 

understand, air pollution has no respect for state borders. Individual states with effective and 

robust regulatory programs have little influence to encourage upwind states to similarly control 

1 
49 


32790.011

their emissions. The Environmental Protection Agency must be the lead to ensure a level 

playing field with all entities held to the same emission standards. Any discussion of New 

Source Review (NSR) permitting reform must focus on emissions reduction. Amendments to the 

NSR process that have the potential to increase emissions cannot be tolerated, and these 

amendments will cause New Jersey to fall out of attainment for the National Ambient Air 

Quality Standards (NAAQS). 

New Jersey is the most densely populated state in the nation with a long history of air quality 

challenges. New Jersey has made major improvements in air quality over the last two decades. 

Today New Jersey is attaining all the NAAQS except the 70 ppb Ozone NAAQS. About half of the 

air pollution responsible for causing ozone in New Jersey comes from outside of New Jersey. 

The NSR program and the cost-effective control technologies that exist to reduce emissions 

have been critical to the improvements of New Jersey's air quality. If the proposed changes are 

adopted, emissions from out of state sources are likely to increase not only for ozone but for 

other air pollutants including particulates and air taxies. Governor Murphy has set numerous 

ambitious climate change goals such as 100 percent clean energy by 2050. States will be unable 

to attain the air quality benefits from clean energy if upwind states continue their current levels 

of emissions. 

Adverse health impacts can come from both short-term exposure and annual exposure to air 

pollution. PM-2.5 is a good example of a pollutant that has both a daily health standard and an 

annual standard. The existing NSR addresses both short term increases in air pollution and 

2 
50 


32790.012

annual increases in air pollution through technology evaluation (Best Available Control 

Technology) and air quality modeling to verify compliance with short term and annual NAAQS 

and the air quality modeling performed as part of an air quality evaluation. 

Maintaining the current NSR program and its associated requirements to reduce emissions with 

plant upgrades will not only improve the ability of states to attain or maintain NAAQS, but will 

result in greater air taxies reductions. Co-benefit reductions are frequently called out in 

rulemaking as a secondary benefit. Annual emissions of mercury and hexavalent chromium, a 

known neurotoxin and a known carcinogen respectively, both of which are trace elements in 

coal, would also increase with associated ton per year increases of other pollutants. Mercury 

and hexavalent chromium are closely associated with coal power plants, and any increase, 

short term or long term, will have detrimental effects on the environment and public 

health. Other pollutants of concern include fuel burning products of incomplete combustion at 

older, less efficient operations; increase in usage and releases (tons per year increase) is not 

acceptable. These include known air taxies, such as formaldehyde, acrolein, and dioxin. Many 

of these pollutants are still above acceptable health levels in New Jersey. 

The proposed amendments would fundamentally alter the NSR Program. Since its inception in 

1977, NSR was designed to allow existing sources to delay upgrades to air pollution controls 

until the source was engaged in capital expenditures that would increase emissions from the 

facility. NSR applicability is determined by an annual increase in emissions, caused by a 

3 
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32790.013

modification that increases annual use or hourly emissions. At the time of modification, the 

source would upgrade controls to the best available at the time of review. Thus, as sources age 

and are modified, emissions from existing sources would be reduced over the life of the 

equipment. 

The proposed amendments would alter when a source would be subject to NSR in two key 

ways. First, the proposed amendments would exempt sources when, " ... a change in the 

stationary source that reduces the amount of any pollutant emitted by the source per unit of 

output." Thus a project that increases the efficiency of a unit, regardless of whether the 

project also increases the annual emissions of the unit would be exempted from NSR and its 

associated emission reductions. While increasing efficiency may be desirable, the increases in 

emissions associated with the change should still be evaluated for their impacts. 

An example of this concern is an electric generating unit that undergoes changes to increase its 

efficiency while also increasing the maximum heat input, or amount of fuel burned per hour, to 

increase electric output. This project would decrease the pounds of COz and some other 

pollutants emitted per megawatt-hour, but would increase the megawatts generated. Without 

additional controls, such a project would result in both increased hourly and annual emissions 

of all its pollutants, including COz, criteria pollutants and air toxics, resulting from the increased 

fuel use. These increased emissions could likely result in adverse health impacts despite the 

increase in efficiency of the unit. 

4 
52 


32790.014

New Jersey has had several upgrades of gas turbine electric generating units to increase 

efficiency and electric output. One example is a project NJDEP approved in 2017 at the PSEG 

Fossil, LLC Bergen Generating Station in Ridgefield New Jersey. This project involved: 

• Replacing compressor inlet guide vanes, compressor blades and compressor stator 

vanes. 

• Replacement of existing turbine buckets, turbine nozzles, and shrouds in the hot gas 

path using parts with enhanced blade geometry design and coatings to withstand higher 

operating temperatures and pressures. 

• An increase in firing temperature and compressor mass flow, which improved the 

overall gas turbine output and efficiency across the operating range. 

To increase the firing temperature and compressor mass flow, it is necessary to increase the 

turbines hourly fuel use, otherwise known as heat input. In this case, the electric output was 

increased by approximately 6.3 percent, while the hourly fuel burned increased by 0.47 percent 

to 5.9 percent, depending on load and ambient temperature. 

As stated before, increasing the fuel burned increases the emissions of all pollutants associated 

with the turbine, even though the emissions per megawatt-hour of those pollutants might 

5 
53 


32790.015

decrease. In this case, it was determined that there would be an increase in actual hourly and 

annual emissions despite an increase in efficiency. 

Second, the proposal would eliminate the requirement to evaluate the project for increases in 

annual emissions. This could result in major sources expanding the annual capacity of a plant 

(increasing the number of hours it operates each year) without the inclusion of modern air 

pollution controls or the replacement of the older equipment with modern more efficient 

equipment and associated lower air pollution. 

By removing the requirement to upgrade air pollution controls and evaluate the air quality 

impacts of the existing facility when annual emissions increase, sources could continue to keep 

operating at the same level of hourly emissions indefinitely even though cost effective 

technologies exist to reduce emissions, undermining the continuous emissions reductions 

achieved over the last 40 years. Without the required air quality evaluation, there would be no 

way of knowing if the existing source operation was having adverse impacts to the airshed, and 

a source's useful life could be extended indefinitely with no consideration for reducing air 

pollution leading to continued operation of old and inefficient equipment. These annual 

emission increases would negatively impact annual air quality standards including PM-2.S. 

States such as New Jersey would find it challenging to remain in attainment with the NAAQS if 

the NSR program eliminated the requirement to evaluate a project for increases in annual 

emissions. 

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54 


32790.016

NSR amendments, as proposed, could result in the extension of the life of older power plants, 

with modifications that result in small improvements to energy efficiency, while causing 

significant increases in annual emissions of air contaminants, including carbon dioxide, sulfur 

dioxide, nitrogen oxides, particulates, mercury and other hazardous air pollutants. That would 

be inconsistent with the Clean Air Act, which requires that sources install best available control 

technology, lowest achievable emission rate, and maximum achievable control technology, 

when modifying equipment facilities, including energy efficiency modifications that would 

increase emissions of applicable air contaminants. 

Thank you again for the opportunity to appear today and convey New Jersey's perspective on 

the importance of the NSR program. I welcome any questions you may have. 

7 
55 


32790.017

Summary of Paul D. Baldauf's Testimony 

New Jersey has made major improvements in air quality over the last two decades. Today New 

Jersey is attaining all the National Ambient Air Quality Standards (NAAQS) except the 70 ppb 

Ozone NAAQS. About half of the air pollution responsible for causing ozone in New Jersey 

comes from outside of New Jersey. The NSR program is a critical part of the reason New 

Jersey's air has continued to improve. 

Adverse health impacts can come from both short-term exposures and annual exposures to air 

pollution. The existing NSR addresses both short term increases in air pollution and annual 

increases in air pollution through technology evaluation (Best Available Control Technology) 

and air quality modeling to verify compliance with short term and annual NAAQS and the air 

quality modeling performed as part of an air quality evaluation. 

NSR amendments, as proposed, could result in the extension of the life of older power plants, 

with modifications that result in small improvements to energy efficiency, while causing 

significant increases in annual emissions of air contaminants, including carbon dioxide, sulfur 

dioxide, nitrogen oxides, particulates, mercury and other hazardous air pollutants. That would 

be inconsistent with the Clean Air Act, which requires that when sources modify equipment 

facilities install best available control technology, lowest achievable emission rate, and 

maxfmum achievable control technology, for modifications, including energy efficiency 

modifications that would increase emissions of applicable air contaminants. 

8 
56 

Mr. SHIMKUS. Thank you very much. 

The chair now recognizes Mr. Ross Eisenberg, Vice President, 

Energy and Resources Policy, National Association of Manufacturers. 

You’re recognized for 5 minutes. 

STATEMENT OF ROSS EISENBERG 

Mr. EISENBERG. Thank you, and good morning, Chairman Shimkus, Ranking Member Tonko, members of the subcommittee. 

Thank you for the opportunity to be here today to talk about 

manufacturers’ continued dedication to reducing air emissions. 

The manufacturing sector is cleaner, more efficient, and, frankly, 

more responsible than we have ever been. This is not merely lip 

service. About 94 percent of the manufacturers listed on the Fortune 500 have in place a sustainability plan and they are keeping 

to it. Now, this commitment has yielded extremely positive results 

in terms of air emissions. Since 1970, the manufacturing sector has 

reduced its emissions of nitrogen oxides by 53 percent, carbon monoxide by 70 percent, sulfur dioxide by 90 percent, coarse particulate 

matter by 83 percent, and VOCs by 47 percent. Fine particulate 

matter, PM 2.5, is down by 23 percent since its peak for manufacturers in 1999 and greenhouse gases are down by 10 percent over 

the past decade. The industrial sector actually produces less greenhouse gas emissions than it did in 1990, which is considerably different than the broader economy. 

We appreciate the opportunity to testify today on a draft bill that 

would clarify the degree of physical or operational change to an 

emissions source that would constitute a modification under NSR. 

The NAM supports this bill because it would remove barriers that 

have prevented manufacturers from investing in efficiency projects 

and installing modern pollution control equipment at their facilities. 

The purpose of NSRs for requiring industrial facilities to install 

modern pollution control equipment when they are built or when 

they’re making a change that it results in significant increase of 

emissions. In practice, however, NSR does stand in the way of the 

technologies that the statute was supposed to promote. I realize 

this is well-worn territory here and one that EPA has for years 

tried to fix. 

But I believe the need today is even greater than it was before. 

First of all, there is near universal adoption, as I said, across the 

manufacturing sector—the sustainability plans that are driving 

continued targets and continued progress. It’s spurring a continuing need on shop floors to do things differently and make those 

technology upgrades. 

Secondly, there is the recently enacted tax reform package which, 

because of things like full expensing and other things, now provides an interesting little window for manufacturers to justify making these investments in more efficient emissions-friendly technologies. 

And then, finally, there’s, honestly, the regulatory reality—that 

there are significant new laws like MATS and boiler MACT that 

require—requiring and demanding cleaner and more efficient electricity generation. And if you believe, as we do at the NAM, that 

57 

the EPA should fill the void left by a repeal of the Clean Power 

Plan with a replacement regulation, you’re still going to need to fix 

NSR at some point to make that work. 

A significant portion of the existing gas turbine and steam turbine fleet could benefit from equipment upgrades to improve their 

efficiency and operational flexibility, particularly given that many 

are now being used in a different fashion because of the onset of 

renewable energy and the way that the grid operates. These upgrades for gas and steam turbines will ensure higher grade efficiency and lower emissions in supporting renewable energy use. 

However, NSR has stood in the way of customer adoption of 

these technologies. For example, an NAM member company that 

manufactures gas turbine upgrade technology could improve the 

vast majority of those in-service turbines by 2.5 percent and reduce 

their total CO2 emissions by 6.5 percent. They report their customers are choosing not to install this equipment simply because 

it triggers NSR. 

An inability to define what is routine maintenance has resulted 

in NSR notices of violation being issued for environmentally beneficial projects. The Utility Air Regulatory Group has cited more 

than 400 instances in which a regulated entity took on a project 

to improve the efficiency of a power plant only to face notices of 

violation or citizen suits over violating NSR. Same thing happens 

at industrial facilities. Our members have had trouble with projects 

involving switching from coal to gas or from number six fuel oil to 

low-sulfur distillate oil. 

Despite the obvious emission benefits of this, these projects have 

periodically triggered NSR because they—because of collateral 

emissions for carbon monoxide and VOCs, which becomes a barrier 

to undertaking the project. 

One of our members estimates that there’s 100 million tons of 

CO2 that could be possibly reduced by deploying the full suite of 

available turbine upgrades into power plants. If these were to happen, we are talking about the equivalent of more than 20 million 

cars being taken off the road. That’s 10 percent of the entire automobile fleet. And that’s just for the power plant sector. The same 

technologies would work for turbines and industrial facilities as 

well. Many of these upgrades have been impeded because they 

may, honestly, potentially trigger NSR. 

The draft legislation that is the subject of the hearing today 

would create flexibility in the definition of modifications so that 

these heat rate improvements and efficiency upgrades would not be 

deterred by NSR. 

It would eliminate a situation where a piece of this new modern 

equipment would trigger it because it generates collateral emissions of another pollutant and, most importantly, it would unlock 

a potentially massive market for the installation of energy efficient 

technologies that would drive our already impressive emissions reductions down even further. 

No matter our political, personal, or employment background, we 

all share the same goal, which is to permanently reduce pollution. 

We believe this bill will get us to that end goal by reducing barriers 

to the installation of efficient and environmentally beneficial technologies. 

58 

Thank you. 

[The prepared statement of Mr. Eisenberg follows:] 


32790.018
59 


32790.019

SUMMARY OF TESTIMONY 

The manufacturing sector is cleaner, more efficient and more responsible 

than it has ever been. This commitment has yielded extremely positive results in 

terms of emissions. The manufacturing sector has reduced its emissions of 

nitrogen oxides (NOx) by 53 percent since 1970, carbon monoxide (CO) by 70 

percent since 1970, sulfur dioxide (S02) by 90 percent since 1970, coarse 

particulate matter (PM10) by 83 percent since 1970, volatile organic compounds 

(VOC) by 47 percent since 1970, fine particulate matter (PM2.5) by 23 percent 

since its peak in 1999, and greenhouse gases (GHGs) by 10 percent over the 

past decade. The industrial sector actually produces less GHG emissions than it 

did in 1990, a considerably different story compared to the broader U.S. 

economy. 

The NAM appreciates the opportunity to testify regarding draft legislation 

that would clarify the degree of physical or operational change to an emissions 

source that would constitute a "modification" sufficient to trigger New Source 

Review (NSR). The NAM supports this bill because it would remove barriers that 

have prevented manufacturers from investing in efficiency upgrades and 

installing modern pollution control equipment at their facilities. 

The purpose of NSR is to require industrial facilities to install modern 

pollution control equipment when they are built or when making a change that 

increases emissions significantly. In practice, however, NSR often stands in the 

way of efficiency upgrades and environmentally beneficial projects. 

Control technologies are perpetually improving. Unfortunately, 

administration of the NSR program has contributed to a fair amount of inertia. 

NSR has stood in the way of customer adoption of technologies that would 

improve the efficiency of gas and steam turbines. It presents a huge impediment 

to the installation of more efficient technologies that would ultimately combat 

climate change. 

The draft legislation that is the subject of today's hearing would create 

flexibility in the definition of "modification" so that these heat rate improvements 

and efficiency upgrades will not be deterred by the threat of NSR. It would 

eliminate the situation where a piece of modern control technology triggers NSR 

because it generates collateral emissions of another pollutant. Most importantly, 

it could unlock a massive market for the installation of efficient technologies that 

would drive manufacturers' already-impressive emissions reductions down even 

farther. 
60 


32790.020

TESTIMONY OF ROSS EISENBERG 

BEFORE THE HOUSE COMMITTEE ON ENERGY AND COMMERCE 

SUBCOMMITTEE ON ENVIRONMENT 

Hearing on: 

"Legislation Addressing New Source Review Permitting Reform" 

MAY16, 2018 

Good morning, Chairman Shimkus, Ranking Member Tonko and members 

of the Subcommittee on Environment. My name is Ross Eisenberg, and I am the 

vice president of energy and resources policy at the National Association of 

Manufacturers (NAM). The NAM is the nation's largest industrial trade 

association, representing nearly 14,000 small, medium and large manufacturers 

in every industrial sector and in all 50 states. I am pleased to represent the NAM 

and its members and provide testimony on manufacturers' continued 

commitment to reduce air emissions. 

Manufacturers have sharply reduced our impact on the environment 

through a wide range of innovations, such as increasing energy efficiency, saving 

and recycling water, and implementing successful initiatives to reduce pollution 

and waste. Through these traditional and innovative measures, manufacturers 

have helped to usher in a new era of a cleaner and more sustainable 

environment. 

The manufacturing sector is cleaner, more efficient and more responsible 

than it has ever been. This is not merely lip service: 94 percent of the 

manufacturers listed on the Fortune 500 have a sustainability plan in place for 

their company. 

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32790.021

This commitment has yielded extremely positive results in terms of 

emissions. For every major air pollutant regulated by the Environmental 

Protection Agency (EPA), the manufacturing sector has made dramatic 

reductions for several decades. Today's manufacturing company is a sleek, 

technology-driven operation that looks nothing like the industrial facilities of the 

past. With that progress has come a smaller environmental footprint. 

Consider the following: 

• Manufacturing sector emissions of nitrogen oxides (NOx), a criteria 

pollutant and the primary precursor of ozone, have dropped by 53 

percent since 1970.1 

• Manufacturing sector carbon monoxide (CO) emissions have 

dropped 70 percent since 1970.2 

• Manufacturers have reduced our emissions of coarse particulate 

matter, or PM10, by 83 percent since 1970.3 

• The manufacturing sector has reduced emissions of fine particulate 

matter, or PM2.5, by 23 percent since their peak in 1999.4 

• Since 1970, the industrial sector has reduced its sulfur dioxide 

(S02) emissions by 90 percent. 5 

1 EPA National Emissions Inventory, available at htt\Js://www.epa.gov/air-emissions-inventories/nationalemissions-inventory-nei. 

2 Id 

3 Jd 

4 Jd 

5 Id 

3 
62 


32790.022

• Since 1970, manufacturers have reduced our emissions of volatile 

organic compounds (VOC), which mix with NOx to form groundlevel ozone, by 47 percent.6 

• Just over the past decade, manufacturers have reduced our 

greenhouse gas (GHG) emissions by 10 percent while increasing 

our value to the economy by 19 percent. The industrial sector 

actually produces tess (GHG) emissions than it did in 1990, a 

considerably different story compared to the broader U.S. 

economy.? 

Manufacturers are committed to sustainability and have taken strong, 

meaningful steps to address our past, present and future environmental 

challenges. Last month, the NAM and the U.S. Department of Energy (DOE) 

announced the Sustainabifity in Manufacturing Partnership.8 This partnership will 

provide a national platform to highlight manufacturers' environmental stewardship 

and en9ourage the adoption of energy-efficient and sustainable practices. This 

partnership means better access for manufacturers to DOE's Advanced 

Manufacturing Office (AMO) and the expertise and programs they provide to 

manufacturers seeking to improve their energy efficiency and sustainable 

practices. We intend for this to be a long-term partnership between DOE and the 

6Jd. 

7 Inventory of U.S. Greenhouse Gas Emissions and Sinks, 1990-2015, available at 

htt;ps://www.epa.gov/sites/production/files/20 17 -02/documents/20 17 complete report.pdf. 8 htt;ps://www.energy.gov/articles/us-department-energy-and-national-association-manufacturers-announcesustainability. 

4 
63 


32790.023

NAM to communicate what manufacturers are doing to protect the environment 

and work together to solve our emerging energy and environmental challenges. 

Comments on Draft New Source Review (NSR) Legislation 

The NAM appreciates the opportunity to testify regarding draft legislation 

that would clarify the degree of physical or operational change to an emissions 

source that would constitute a "modification" sufficient to trigger New Source 

Review (NSR). The NAM supports this bill because it would remove barriers that 

have prevented manufacturers from investing in efficiency upgrades and 

installing modern pollution control equipment at their facilities. 

The NSR program is a federal air permitting program under the Clean Air 

Act that applies to new facilities or major modifications to facilities. The purpose 

of NSR, according to the EPA, is to require industrial facilities "to install modern 

pollution control equipment when they are built or when making a change that 

increases emissions significantly."9 In practice, however, NSR often stands in the 

way of efficiency upgrades and the installation of modern pollution control 

equipment. 

A significant portion of the existing gas turbine and steam turbine fleet 

could benefit from equipment upgrades to improve their efficiency and 

operational flexibility, particularly given that many are now being used differently 

(e.g., as load-following) in conjunction with growing renewable generation. These 

upgrades for gas and steam turbines will ensure higher grid efficiency and lower 

9 https:/ /www .epa.gov/sites/productionlfiles/20 15-12/documents/nsrbasicsfactsheet 1031 06.pdf. 

5 
64 


32790.024

emissions in supporting renewable energy use. However, NSR has stood in the 

way of customer adoption of these technologies. 

For example, a NAM member company manufactures gas turbine upgrade 

technology that could improve the vast majority of in-service gas turbines by 2.6 

percent and reduce their total carbon dioxide (C02) emissions per megawatt-hour 

(MWh) by 6.5 percent. This company reports that its customers are choosing not 

to install this equipment simply because it triggers NSR. The company is facing 

the same impediments for large and small fossil steam turbines, such as steam 

path redesign technologies, rotor replacement, and steam turbine warming 

systems. 

NSR also presents a huge impediment to the installation of more efficient 

technologies that would ultimately combat climate change. An inability to define 

what is "routine maintenance" has resulted in NSR Notices of Violation being 

issued for environmentally beneficial projects like economizer replacement, 

steam turbine upgrades, feed water heater replacements, and similar activities. 

In comments to the EPA's draft Clean Power Plan, the Utility Air Regulatory 

Group (UARG) cited more than 400 instances in which a regulated entity took on 

a project to improve the energy efficiency of a power generation unit, only to be 

targeted by the EPA or citizen suits alleging that it had violated NSR 10 

Control technologies are perpetually improving. Unfortunately, 

administration of the NSR program has contributed to a fair amount of inertia. 

1

° Comments of the Utility Air Regulatory Group on Carbon Pollution Emission Guidelines for Existing 

Stationary Sources: Electric Utility Generating Units, Docket lD EPA-HQ·OAR-2013-0602-22768, 

Attachment A (Dec. 1, 20 14). 

6 
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32790.025

NSR should not operate as an incentive for manufacturers to operate their plants 

exactly as they were built, and only to replace parts with the exact same part that 

existed when the plant was built. 

The draft legislation that is the subject of today's hearing would create 

flexibility in the definition of "modification" so that these heat rate improvements 

and efficiency upgrades will not be deterred by the threat of NSR. It would 

eliminate the situation where a piece of modern control technology triggers NSR 

because it generates collateral emissions of another pollutant (e.g., technologies 

that reduce NOx but increase CO). Most importantly, it could unlock a massive 

market for the installation of efficient technologies that would drive 

manufacturers' already-impressive emissions reductions down even farther. 

Conclusion 

Manufacturers have established a strong record of environmental 

protection and strive to reduce the environmental footprint of our operations and 

to become more sustainable. The results are already impressive, and they get 

better with each passing year. The NAM supports legislation to remove barriers 

to the installation of energy efficient and environmentally beneficial technologies, 

key steps toward addressing the environmental challenges of current and future 

generations. 

7 
66 

Mr. SHIMKUS. The Chair thanks the gentleman. 

The Chair now recognizes Mr. Kirk Johnson, Senior Vice President, Government Relations, National Rural Electric Cooperative 

Association. 

You’re recognized for 5 minutes. Thank you. 

STATEMENT OF KIRK JOHNSON 

Mr. JOHNSON. Thank you, Chairman Shimkus, Ranking Member 

Tonko, members of the subcommittee. It’s a pleasure to be with you 

here. Thank you very much for the invitation. 

I am here representing 900 rural electric cooperatives, representing 47 states across the country. We, collectively, power rural 

America but we do much, much more than that. We are the engines of economic development across much of rural America and 

we are very proud of our history of doing that, doing things that 

other companies would not do. 

Mr. Eisenberg referenced Fortune 500 companies. We are not 

Fortune 500. We are purely Main Street and that’s who we represent. Being consumer owned means we have our consumers’ best 

interests at heart 24 hours a day, seven days a week, 365 days a 

year. We employ 71,000 people across the country. We serve 88 

percent of the counties across the country. One of every eight people gets their electricity from a rural electric cooperative nationwide. That’s 42 million Americans. 

We have a different generation portfolio than much of the rest 

of the industry at retail. Overall, 41 percent of our power comes 

from coal, 26 percent comes from natural gas, 17 percent comes 

from wind, hydropower, solar, and other renewable resources, and 

15 percent comes from nuclear. But we generate just 5 percent of 

the power generated in the country and we sell at retail 13 percent. 

So the remaining balance of the power that we provide at retail 

comes from other sources. But of the power that we self-generate, 

61 percent comes from coal—that’s down from 80 percent in 2003— 

26 percent comes from natural gas—up from 7 percent in 2003— 

10 percent from nuclear. 

We don’t self-generate much by way of renewables because the 

tax credits to incentivize those renewables are available to the taxpaying utilities, the investor-owned utilities, but not to—not to us. 

So we generally get that power through purchase power agreements. 

We’ve made significant reductions in our emissions profile over 

the past 15 years. Between 2009 and 2016, SO2 emissions are down 

66 percent, NOx emissions are down 24 percent, and CO2 emissions 

are down 8 percent. 

Let’s talk about New Source Review, the subject of this hearing. 

We have been seeking reforms to the NSR program for two decades 

now and we think the time is now to act. 

Representative Barton said this is a complicated issue. He’s absolutely right. When I first heard about New Source Review, I 

thought it was a one-hit wonder 1990s boy band name. But it certainly is not that. It’s something that actually impedes our ability 

to make progress on running our power plants as efficiently as we 

can and it certainly has a role in protecting the air quality of the 

country. 

67 

Well, we need to remember that the goal of the Clean Air Act 

is not to ensure that power plant X or power plant Y has a piece 

of equipment X or piece of equipment Y on it. The goal and purpose 

of the Clean Air Act is to protect the air quality of this country so 

that people can breathe well. As a child, I had asthma. I know 

what it feels like not to be able to breathe and none of us want 

that situation in our country anywhere in our country, and that’s 

why we continue to make these reforms. 

But the driving forces behind the emissions reductions coming 

from the electric cooperative sector and the electric utility sector 

overall don’t just come from the NSR program. In fact, that’s probably a very limited role. Under the other rules we have to follow, 

under the MATS rule, the CSPAR rule, our Title V permits, all of 

those are what keep our emissions on a downward trajectory, coupled with changes in the economy. So we should not and must not 

look at NSR in a vacuum and we must look at the overall effort 

that is under the Clean Air Act and whether we are making that 

progress or not. 

On NSR reform, we see NSR as a barrier to making common 

sense efficiency improvements in our power plants and there are 

circumstances in today’s power sector that are changing that are 

making it even more difficult for us to do that. 

Coal-based power plants didn’t used to cycle up and down. Now 

they’re being required to cycle up and down to follow renewable resources, especially in the Great Plains, and I know great examples 

in my home State of North Dakota. That cycling up and down puts 

more wear and tear on those power plants and the need to maintain those power plants then is even more central to keep that 

power flowing to the places that they’re going, even as we are 

building up more renewables in those areas. 

So being able to address that in today’s world. What was considered routine maintenance maybe 20 years ago may be different 

than what is routine today because of some of those changes in the 

power sector and the rules of the road need to recognize that. 

So we are seeking those common sense reforms such as those 

contained in Congressman Griffith’s draft bill. All we are asking 

and all we’ve ever asked is for clear rules of the road. We will follow them. We will make sure that we accomplish the objectives 

that are laid out in the Clean Air Act. But if we don’t have clear 

rules of the road, we become very risk averse and we leave opportunities on the shelf that can improve the performance of the electric power sector, keep our consumers’ costs down while continuing 

to meet all the clean air goals of this country. 

Thank you for the opportunity to be here, Mr. Chairman, and I 

look forward to your questions. 

[The prepared statement of Mr. Johnson follows:] 

68 


32790.026

NRECA 

America's Electric Cooperatives 

Testimony of Kirk Johnson 

Senior Vice President for Government Relations 

National Rural Electric Cooperative Association 

to the Environment Subcommittee of the 

Committee on Energy and Commerce 

U.S. House 

May16,2018 

Testimony of Kirk Johnson, Page 1 
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32790.027

Introduction 

Chairman Shimkus, Ranking Member Tonko, and members of the subcommittee, thank 

you for inviting me to testify. I am delighted to be here to discuss how America's 

electric cooperatives generate and distribute affordable, reliable electricity that powers 

the economy of rural America in ways that reduce emissions and improve the quality of 

life for those living in the communities served by electric cooperatives. 

Specifically, I appreciate the opportunity to address how the Clean Air Act's New 

Source Review program impacts those efforts. NSR has more often served as an 

impediment, rather than an enhancement, to maintaining and improving efficiency at 

power plants. NRECA believes Congressional action, including Congressman Griffith's 

draft legislation, can help improve the broken NSR process. 

Background 

I serve as Senior Vice President for Government Relations for the National Rural 

Electric Cooperative Association (NRECA). At NRECA, I am responsible for leading 

NRECA' s policy, advocacy, and political activities, an.d I have worked on energy and 

environmental issues in Washington, D.C. for more than 25 years. NRECA is the 

national service organization that represents the nation's more than 900 not-for-profit, 

consumer-owned electric cooperatives. This includes 62 generation and transmission 

(G&T) cooperatives, which provide wholesale power to distribution cooperatives 

Testimony of Kirk Johnson, Page 2 
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32790.028

through their own electric generation facilities or by purchasing power produced by 

other generators. 

Electric co-ops provide power to 42 million people across 56 percent of the nation's 

landmass and 88 percent of U.S. counties. Electric co-ops are also economic engines in 

their communities, providing 71,000 jobs across America and investing $12 billion 

annually in local economies. They own and maintain 42 percent of U.S. electric 

distribution lines, which provide power to more than 19 million businesses, homes, 

schools, and farms in 47 states. 

As not-for-profit utilities providing power at-cost to our member-consumers, however, 

electric cooperatives are ultimately responsible for consistent and reliable service while 

keeping costs down. Electric co-ops face very different economic challenges than others 

in the utility sector. Co-ops serve an average of 8 consumers per mile of electric line and 

collect annual revenue of only $19,000 per mile; compared to all other utilities which 

average 32 customers per mile and collect $79,000 in revenue per mile. And electric 

cooperatives serve more than 90 percent of the nation's persistent poverty counties 

within low or sparsely populated geographic areas. 

NRECA' s members generate power using a wide array of fuels including coal, natural 

gas, hydro, wind, solar, nuclear, and a very limited amount of oil and diesel. Electric coops generate approximately five percent of all the power produced in the country, and 

Testimony of Kirk Johnson, Page 3 
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32790.029

sell approximately 13 percent of all electricity sold at retail. Purchases from other 

generators make up the difference between the power we generate and the power we 

sell to end-use consumers. 

In 2016, the last year for which data is available, coal-based generation accounted for 41 

percent of the power sold by co-ops, while natural gas made up 26 percent, renewable 

resources accounted for 17 percent, and nuclear generation made up 15 percent of the 

power we sold to retail consumer-owners. (Oil and diesel fuel accounted for 

approximately one percent.) Electric cooperatives are also leaders in the development 

and deployment of renewable energy in rural America. Since 2010, cooperative nonhydropower renewable energy capacity has seen a 130 percent increase, and co-op solar 

capacity is more than four times what it was in 2015. 

Historical Context 

Most of the cooperative-owned coal-based power plants were constructed in the late 

1970s and early 1980s, which was a period of significant growth in electricity demand 

from rural America coupled with federal policies that heavily promoted the use of 

domestic coal as a generation resource. The policies laid out by Congress and President 

Ford in response to the 1973 oil crisis, and the subsequent Power plant and Industrial 

Fuel Use Act of 1978 under President Carter, essentially prevented the use of natural 

gas as a fuel to generate electricity. And the significant costs to construct nuclear power 

plants, compounded by the Three Mile Island accident in 1979, precluded nuclear as a 

Testimony of Kirk Johnson, Page 4 
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32790.030

viable option. As a result, many cooperatives invested in and constructed coal-based 

generation. 

By all estimates, coal-based generation will continue to play an important and 

significant role in keeping the lights on in rural communities across the nation. It is 

critical that we work together to ensure that these existing units can operate efficiently 

and reliably while also continuing to meet environmental standards. One of our Seven 

Cooperative Principles is 'Concern for Community,' which includes support for the 

sustainable development of our communities and care for a healthy environment. 

There's an old saying that in rural America we all live downstream from someone. 

Electric co-ops understand this, and work every day to care for their neighbors and to 

be the best environmental stewards they can be. That is why we have a proud legacy of 

managing and reducing emissions from the plants that power these communities. 

From 2009 to 2016, cooperatives have reduced sulfur dioxide emissions by 66 percent 

and nitrogen oxide emissions by 24 percent. They have also reduced carbon dioxide 

emissions eight percent since 2005 while increasing generation by 15 million megawatthours. NRECA is also a proud partner in the Wyoming Integrated Test Center (ITC), 

along with Tri-State Generation and Transmission Cooperate, Basin Electric Power 

Cooperative, and the State of Wyoming. This advanced test center is working to 

demonstrate carbon capture and utilization technologies using 20 MW of actual coalfired flue gas. The ITC will be a host-site next summer for the NRG COSIA Carbon 

Testimony of Kirk Johnson, Page 5 
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32790.031

XPRIZE, a competition to incentivize the development of technologies to convert COz 

into marketable products. 

Any and all costs incurred by our cooperative generators, including the construction 

and maintenance of generation sources, are ultimately passed on to the cooperative 

electric consumers. There are no equity investors that can share the burden of these 

costs. That is why our cooperative members are committed to running their plants as 

efficiently and cost-effectively as possible. NRECA supports our members in that goal. 

NRECA has worked with cooperatives and others in the utility sector, including the 

Electric Power Research Institute, to research and develop new and improved 

technologies, processes, and systems for their facilities. This includes work on boiler 

tubes, turbines, condensers, cyclical operations best practices, and other unit 

maintenance needs. The Department of Energy also supports these efforts through its 

own innovative work to improve operations at coal- and gas-based power plants. 

New Source Review 

But federal regulatory policies such as New Source Review often get in the way of 

utilities adopting such technologies that would actually improve power plant efficiency 

and reliability as well as reducing emissions. The NSR program is overly complicated 

and creates significant litigation uncertainty for regulated entities. One significant 

obstacle of the NSR permitting program is its application to equipment repair and 

replacement as well as even routine maintenance activities at existing generating units. 

Testimony of Kirk Johnson, Page 6 
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32790.032

Although routine maintenance, repair, and replacement are supposedly excluded from 

being considered as "major modifications," (and thus not subject to NSR) what qualifies 

as these NSR exemptions often changes with shifting EPA interpretations. This has led 

to utilities performing what they thought qualified as routine maintenance, repair, and 

replacement, only to be cited for NSR violations years after the fact. Second, the 

inherently flawed annual emissions rate test in use today has created many missed 

opportunities for power plants to operate to their full potential. Innovative technologies 

and systems to improve facilities have been "left on the shelf" because under today's 

rules (a) these projects unnecessarily trigger NSR even though the projects reduce 

hourly emission rates, and (b) the costs to meet overly stringent NSR requirements may 

make the plant no longer cost-effective to operate. As a result of these concerns, NSR in 

its current form can often undermine the goals and intent of the Clean Air Act. 

Clear and targeted direction from Congress can help fix the NSR challenges. Even as 

EPA is taking steps to update guidance and address specific issues, legislation from 

Congress would provide an additional layer of certainty. Rep. Griffith's draft legislation 

would take a major step forward in simplifying the program and providing greater 

certainty for power generators. One of the most effective ways the legislation would 

help is by amending the definition of a "modification" under NSR so that the "trigger" 

is based on the maximum achievable hourly emission rate rather than on annual 

emissions. This improvement will better align the NSR program with other Clean Air 

Testimony of Kirk Johnson, Page 7 
75 


32790.033

Act permitting programs, particularly the New Source Performance Standard program 

under section 111 of the Act. Without this legislative change, power plants would 

continue to be deterred from undertaking various projects for fear that running more 

often throughout the year - even if they reduce their hourly rate of emissions -might 

result in unjustifiable additional costs and regulations from the EPA. We also appreciate 

Rep. Griffith's efforts to ensure that any projects undertaken to actually increase energy 

efficiency, reduce pollution, or ensure reliability of the source would not trigger similar 

obstacles under NSR. Overall, this legislation will assist electric cooperatives as they 

continue providing affordable and reliable electricity to the communities they serve. 

Thank you again for inviting me to testify on this important issue. I would be happy to 

answer any questions you may have. 

Testimony of Kirk Johnson, Page 8 
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32790.034

America's Electric 

Cooperatives 

I From booming suburbs to remote rural farming communities, America's 

electric cooperatives are energy providers and engines of economic 

development for more than 19 million American homes, businesses, 

farms and schools in 47 states. 

833 distribution 

and 62 generation 

& transmission 

cooperatives 

Power 

of the nation's 

landmass. 

Own and maintain 

(2.6 million miles) 

of U.S. electric 

distribution lines. 

1 

businesses, homes, 

schools and farms. 

Distribution cooperatives are the foundation 

of the electric cooperative network. They 

are the direct point of contact with co-op 

members in the delivery of electricity 

and other services. 

Serve 

people 

Generation & transmission cooperatives 

provide wholesale power to distribution 

co-ops through their own electric generation 

facilities or by purchasing power on behalf 

of the distribution members. 

For more information, visit: www.electric.coop @NRECANews 
77 


32790.035

Electricity use and fuel mix 

Electric cooperatives play a vital role 

in transforming the electric sector. 

Advanced communications and 

automation technology enable 

co-ops to improve the resiliency 

and efficiency of their systems as 

they reduce environmental impacts 

by adding renewable resources. 

Note: Non-hydro renewab!es includes owned and 

directly purchased generation, plus generation in 

the mix from wholesale market purchases. 

Co-ops added 295,995 new members in 2016 

• 84% of electric co-ops had a net increase 

in members in 2016 

• Electricity demand at co-ops increased about 

one-half of a percent in 2016, with co-op retail 

sales reaching 435 billion kilowatt-hours 

Co-op residential electricity sales increased 0.4% 

• Commercial & industrial increased 0.3%; 

irrigation sales jumped 10.5% 

Electricity sales growth 

Co-op sales growth rates generally surpass that of the electric utility industry as a whole. 

Percentage 

8 

7 

6 

s 

4 

3 

2 

0 

_, 

-2 

-3 

-4 2000 2003 2006 2009 

0 Industry Sales Growth 0 Co-op Sales Growth 

2012 2015 

Source: EIA 

Sourte: NRECA 

Co-ops 

generate 

5% 

of total U.S. 

electricity 

sell 

13% 

of all U.S. 

electricity 
78 


32790.036

Co-ops are reducing emissions .•• 

Cleaner air: 

Cooperatives 

are reducing 

emissions 

through a 

combination 

of emissionreduction 

measures at 

power plants and 

fuel switching 

to natural gas 

and renewables. 

0 

Co-ops have: 

Reduced sulphur 

dioxide emissions 66% 

during 2009-2016. 

TOTAL SO, EMISSIONS 

Thousands 

(short tons) 

450 

400 

350 

300 

250 

200 

150 

100 2009 2016 

Reduced nitrogen 

oxide emissions 24% 

during 2009-2016. 

TOTAL NOx EMISSIONS 

Thousands 

(short tons) 

200 

190 

180 

170 

160 

150 

140 

130 2009 2016 

Reduced carbon 

dioxide emissions 

8% since 2005 while 

increasing generation 

by 15 million 

megawatt-hours. 

TOTAL CO, EMISSIONS 

Millions 

(short tons) 

200 

190, 

180 

170 

160 

150 2009 2016 

Source: EPA and EIA 

... and jump starting 

renewable energy growth 

• Since 2010, co-op non-hydro 

renewable energy capacity 

has more than doubled from 

4 gigawatts to 9.2 gigawatts 

Cooperative solar is skyrocketing 

-a 130% increase. More than 90 

percent of electric co-ops provide 

electricity generated by renewable 

energy resources. 

Co-ops purchase 10 gigawatts of 

hydropower from federal power 

marketing administrations. 

• More than 560 co-ops in 37 states 

use 6.9 gigawatts of wind energy. 

Total solar energy capacity at 

electric cooperatives is more than 

four times what it was in 2015, 

capable of generating more than 

860 megawatts of electricity. 

• A Department of Energy 

partnership with 17 electric 

co-ops has supported the 

development of 23 megawatts of 

utility-scale solar in 15 states. 

Solar Capacity 

(megawatts AC) 

900 

800 

700 

600 

500 

400 

300 

200 

100 35 48 0-- 2010 2011 2012 2013 2014 2015 2016 2017 

NOTE: Co-op solar capacity owned or purchased under contract 

Source: NRECA 
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32790.037

The cooperative difference 

Electric co-ops are local energy and technology 

providers. They are shaped by the specific 

needs of the communities they serve. This 

local, member-owned structure is one reason 

why cooperatives enjoy the highest consumersatisfaction scores within the electric industry, 

according to J.D. Power and Associates and the 

American Consumer Satisfaction Index. 

• Co-ops earned the top spot in the 

J.D. Power and Associates 2017 Electric 

Utility Customer Satisfaction Study. 

• Electric cooperatives, on average, score 

three points higher than all other energy 

utilities, according to the 2017 American 

Consumer Satisfaction Index. 

provide 

71,000 

jobs 

own $183 

billion in 

assets 

Invest $12 

billion 

annually 

in local 

economies 

Committed to serving the last mile 

Co-ops serve an average of 8 consumers 

per mile of electric line; collect annual 

revenue of $19,000 per mile of line. 

All other utilities average 

32 customers per mile of line; 

collect $79,000 per mile. 

Electric cooperatives are guided by 

seven principles: 

Voluntary and open membership 

Democratic member control 

Members' economic participation 

Autonomy and independence 

Education training and information 

Cooperation among cooperatives 

Concern for community 

pay $1.3 

billion 

annually in 

state/local 

taxes 

The entire 

electric power 

sector generates 

$880 billion 

in economic 

impact annually 

(5 percent of 

America's GDP) 

~A R& L&J &Sial!~ 

For more information, visit: www.electric.coop @NRECANews 
80 

Mr. SHIMKUS. Thank you very much. 

Now I would like to recognize Mr. Bruce Buckheit, and the title 

is analyst and consultant. Maybe I can have that title someday. 

That sounds pretty cool. Simple. 

You’re recognized for 5 minutes. 

STATEMENT OF BRUCE BUCKHEIT 

Mr. BUCKHEIT. Chairman Shimkus, Ranking Member Tonko, and 

distinguished members of the subcommittee. Yes, that’s an easy 

title to come by when you work out of your house. 

As Senior Counsel for the Department of Justice and then as Director of EPA’s Air Enforcement Division, I’ve investigated and enforced and, most important, settled NSR cases starting in 1984 including leading the enforcement initiative against the coal-fired 

power plants for their NSR violations. 

And so my view of the world is not the 50,000-foot high altitude 

overview. My experience is in the trenches, working with the plant 

managers and their counsel and others to parse the difference between these sort of theoretical arguments and the real world realities of what they need to do to keep their plants going and how 

these programs actually work on the ground. 

And so that’s my focus over the next couple of minutes is how 

do these things actually work on the ground. Before I go there, I 

just want to touch on one point and that is that Congress did intend in the 1977 amendments that over time, gradually, the existing sources that were grandfathered would lose that grandfathered 

status. They expected plants to modify and have to put on controls 

and that would end a competitive advantage that those old uncontrolled plants would have over new plants that have to spend hundreds of millions of dollars to put on controls and those controls 

add operating costs that continue thereafter. 

So the overall intent was to level the playing field over time. Let 

me touch on some of these arguments that are floating at the 

50,000-foot level that aren’t true on the ground. First of all, it’s 

been said that the NSR rules prevent operators from making repairs needed to improve safety. That is not true. Ongoing maintenance occurs all the time. There is no plant manager that I ever 

came in contact with who would tell you that he would defer a 

project needed for safety because of some potential Clean Air Act 

rule. The current rules actually encourage ongoing maintenance because if you let your plant decline hugely and then you do a 

project, you have a risk of liability. If you do your ongoing maintenance year in year out to maintain your plant in a good state, you 

don’t trigger NSR. 

The issues respecting the complexity in the NSR permitting process—first of all, NSR permitting for existing sources is extremely 

rare. Other than a handful of plant expansions in some industrial 

settings, these permits are simply not needed with any frequency 

and so don’t pose a substantial burden. I am not aware of any 

power plant that has ever gone through an NSR permitting process, OK, for anything other than expanding the size of the unit. 

The reason for this is simple. If you don’t increase emissions, you 

don’t need an NSR permit. You have a number of other options 

rather than going through the full NSR permitting process. It inVerDate Nov 24 2008 11:30 Feb 08, 2019 Jkt 037690 PO 00000 Frm 00084 Fmt 6633 Sfmt 6633 I:\MY DOCS\HEARINGS 115\HEARINGS\115-129 CHRIS
81 

cludes incorporating a limit in your operating permit so that you 

do the project but your emissions are capped. You can also avoid 

NSR by decreasing emissions elsewhere in your facility to offset the 

emissions from the project. And thirdly, you can do incremental 

pollution controls, such as the use of slightly lower sulfur coal to 

offset any minor increases without having to go, you know, the 

route of the $100 million pollution controls. 

And further—last point here—is that if a project actually improves the efficiency of a unit, emissions go down. You burn less 

coal to make the same amount of electricity or the same number 

of widgets. 

And so all of this focus on energy efficiency, I think, is overblown. With the power plants, the issue is life extension programs—programs where not routine maintenance but replacing 

large chunks of the plant—an equivalent to replacing the engine in 

the car, not just changing the spark plugs, and it was those sorts 

of projects and case law that stems from 1988 that got us at EPA 

involved in the forcing of these provisions. 

Today, roughly, half of the existing coal-fired plants don’t have 

state-of-the-art controls for SO2 and three-quarters of them don’t 

have full controls for NOx. This is the best most economic place to 

get your emissions reductions, not the small factories and not from 

individuals. 

I see I am out of time so I will say thank you to the Chair. 

[The prepared statement of Mr. Buckheit follows:] 

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Testimony of Bruce C. Buckheit before the 

House Committee on Energy and Commerce 

Subcommittee on Environment 

Hearing on 

Legislation Addressing 

New Source Review Permitting Reform 

May 16,2018 

Chairman Shimkus, Ranking Member Tonko, and distinguished members of the 

Subcommittee, thank you very much for inviting me to participate in today's hearing. My name 

is Bruce C. Buckheit. I served in the Federal government's efforts in the management of 

environment and safety issues through the Administrations of Presidents Ford through George 

W. Bush. From 1984, when I filed my first action on behalf of EPA to enforce a New Source 

Review (NSR) violation until my retirement in 2003 I was directly involved in the 

administration and enforcement of the Clean Air Act, initially as a Senior Counsel in the 

Environmental Enforcement Section of the Department of Justice, then as Deputy Director and 

then Director of the Air Enforcement Division at the Environmental Protection Agency. Upon 

my retirement I served for four years as a member of the Virginia Air Pollution Control Board, 

which oversees the rulemaking, permitting and enforcement activities of the Virginia 

Department of Environmental Quality. I have also provided research and consulting services to 

a variety of corporations, state and Federal agencies, and non-governmental organizations, 

principally in the areas of energy and air pollution management in this country. In recent years 

I have also addressed such issues in a number of foreign countries including Armenia, the 

European Union, Israel, India, Indonesia, Kosovo, Myanmar, and VietNam. I appear today on 

my own behalf and without compensation. 

In my judgment the discussion draft before the Committee today is not in the public 

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interest and should not be adopted. As I will explain in further detail below, the draft is not 

needed by the regulated community for any purpose and would not advance one of the 

fundamental purposes of the Clean Air Act-to eliminate, over time, the disparate treatment of 

new and existing sources. It would severely impair the ability of the modification rules to 

effect this purpose and would exacerbate the current barrier to investment in new 

manufacturing and electric generating facilities created by the difference in the treatment of 

new and existing facilities. Several of the provisions in the discussion draft pose significant 

policy issues and enforcement concerns including (1) the addition of the word "actual" in the 

revisions to sections 169(2) and 171(4) of the CAA; (2) the change in the baseline period for 

electric generating units; (3) the elimination of the annual emission increase test; (4) the 

"output" based test; ( 5) the "intent to restore, maintain or improve the reliability or safety of the 

source" test; (6) the safety valve for the "reliability" test and (7) the "savings provision" to 

ensure that there is no benefit to the enviromnent from the draft. 

In the course of preparing these remarks I reviewed some of the testimony presented at 

the February 14,2018, hearing before this Committee. I will explain below why I disagree with 

a number of criticisms leveled at the current program during that hearing, specifically (1) the 

suggestion that the NSR program makes it difficult to maintain the reliability and safety of their 

facilities; (2) that only short term emissions of pollutants matter; (3) that "most of the things" 

required under NSR enforcement consent decrees are things the companies are required to do 

under other CAA programs anyway; ( 4) that over the past 15 years EPA enforcement officials 

have tried to expand the definition of modification; and (5) that companies are unable to 

determine whether a proposed modification will increase annual emissions and (6) that the NSR 

program, especially as it relates to modified facilities, is counterproductive and far less efficient 

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than other available CAA options. 

BRIEF HISTORY OF NSR AND NSR ENFORCEMENT 

The central legislative compromise of the 1967, 1970 and 1977 CAA amendments was an 

initial focus on new sources. This focus was based on the representation of industry advocates 

that one did not need to worry about existing sources, since they'd soon be retired, and so they 

were initially "grandfathered" out of an across the board obligation to install pollution controls. 

Thus, we have a program for "New Source Performance Standards", but unlike the European 

Union and a number of other countries, Congress did not impose across-the-board emission 

limitations for large combustion plants. 

While air pollution controls are highly effective in reducing health care and lost 

productivity costs, and add only minimally to consumers' electric bills, Congress did recognize 

that these controls can add hundreds of millions of dollars to the cost of new large combustion 

plants such as power plants and aluminum smelters and impose operating costs that are not 

insignificant when a well-controlled facility is competing against a grandfathered, poorlycontrolled factory. Understanding that this cost advantage would discourage investment in new 

factories and power plants that would have to use these controls, Congress adopted the NSR 

modification rules that are at issue today intending that these rules would, over time, require 

that existing sources add modern pollution controls. The D.C. Circuit recognized this policy 

choice out 30 years ago in the Alabama Power case, 

"[t]he statutory scheme intends to 'grandfather' existing industries; but the provisions 

concerning modifications indicate that this is not to constitute a perpetual immunity 

from all standards under the PSD program." 

In seeking a middle ground between perpetual immunity and immediate upgrading of all 

existing major sources, Congress could have considered a number of different options, including 

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the age of the unit (as several Canadian states and the EU have done). But, in the 1970s 

industry argued that, as an environmental program, the test should be whether there is an 

emissions increase. And now, having benefited for several decades from the exemption they 

sought, some in industry want to renegotiate the deal. 

During my Federal service NSR enforcement actions were relatively rare. Enforcing 

these rules require a significant amount of information and resources, but, within stationary 

sources (as distinct from mobile sources), these violations lead to the greatest environmental 

harm- and so, where detected, are a priority. I fa source exceeds an emission limit by 10 

percent 800 hours per year, the excess emissions associated with the violation are less than onepercent of the source's pennitted emissions. In contrast, enforcing compliance with NSR rules 

leads to emission reductions of up to 90-98 percent per year, (depending on the effectiveness of 

the controls for the pollutant at issue) each year thereafter. EPA has encountered several 

instances where there were sector-wide, gross violations of the NSR rules. And, in my 

experience, it is these enforcement actions, not the general experience of those who have 

complied, that have generated the hostility towards the NSR program that has been expressed to 

you. 

In the wood products sector several dozen new factories were built by Louisiana-Pacific, 

Georgia Pacific and Weyerhaeuser on the assertion that no pollution would be emitted by those 

facilities. EPA's first knowledge of the existence of such facilities carne when an EPA permit 

writer, on a back country vacation carne around a bend in a stream and saw a facility which he 

would have been responsible for. In the refinery sector, there was a period where refining 

capacity had increased by fifty percent, even though the number of refineries had not changed. 

EPA enforcement's initial information on these plant expansions carne about through reading 

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back issues of"The Oil and Gas Journal." The first information about the potential for large 

modifications at utilities came via an article in the Washington Post about how the process at the 

time of deregulating the power sector was prompting a resurgence in the use of coal-fired power 

plants. In each of these instances, significant investigative resources and extensive negotiations 

(at times after protracted litigation) were required to fully document the violations and 

subsequently compel the companies to comply with these rules. Since my retirement, EPA/DOJ 

has completed an additional sector wide enforcement effort involving the carbon black 

manufacturing sector. 

Anticipating a large expansion in nuclear generation, operators of coal-fired power plants 

let existing units decline to the point where large component failures and lengthy forced outages I 

became more common. Subsequently, when it became apparent that nuclear generation would 

not take over the sector, a number of companies went about what the industry termed "life 

extension programs", where major components costing tens of millions of dollars were replaced 

in toto, adding decades to the life expectancy of these units- and increasing annual emissions by 

thousands of tons per year. Rather than adding pollution controls as they refurbished and 

upgraded these old units with wholly new components - the analogy is replacing the engine in a 

car rather than the spark plugs and air filter -many in the sector simply got lazy and relied on an 

interpretation of the rules -- "the routine maintenance" exemption- promoted by several 

Washington-based law/lobbying firms. They did so even though there was clear precedent, 

commencing with EPA Administrator Reilly's interpretation under President George H.W. Bush 

Administration and the ensuing litigation in the WEPCO case, warning that the "routine 

maintenance" exemption was indeed limited to routine maintenance and not these large capital 

projects. 

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Power plants have an engineering useful life of 30-40 years, but their economic useful 

life may be longer. The vast majority of our coal-fired power plants were built before 1972 and 

so many are nearing at the end of their useful lives, unless they now undertake substantial, 

capital intensive, life extension programs. Ironically, the industry's unwillingness to comply 

with the modification rules (and EPA's inability or unwillingness to enforce them)- or retirediscouraged construction of new coal-fired power plants in the 1980-2010 time frame, when new 

coal-fired plants could have competed with natural gas fired units or renewables. Today's 

discussion draft is intended to largely, but not completely, reverse the 1988 WEPCO decision 

and allow these life extension programs to proceed, even where they increase annual emissions 

by thousands of tons per year. This would severely undermine earlier Congressional policy to 

gradually limit the competitive advantage that large polluters have over clean factories. 

The NSR process is simply this -- you can modifY your plant however you wish -

without going through NSR permitting-- if you don't increase annual emissions by more than a 

nominal amount. There are many options for doing this -- one is to simply take an annual 

limitation on emissions that is only slightly above your highest emission rate in recent years. If 

the source operator wants make a modification that is going to increase emissions by 10 percent 

but does not want to constrain production, it can add some incremental pollution controls, such 

as low NOx burners or commit to use a slightly cleaner fuel such as natural gas or lower sulfur 

coal. Of course, the source also has the option to do the unthinkable and simply add modem 

controls as Congress intended. And so, while compliance, with some planning, is normally 

relatively modest, the consequence of a violation is not. Under the CAA, if a source makes a 

"major modification", "grandfathering" under the original legislative compromise is over and the 

source is treated as a new source. That means retrofitting with today's state of the art 

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controls. In the past, enforcing this obligation reduces S02 and NOx emissions by millions of 

tons per year. 

Maintaining the ability to enforce these obligations against the power sector is both good 

environmental policy and good economic policy. State and local air pollution control agencies 

need to find emission reductions to meet health based air quality standards, but utilities often can 

generate substantial political pressure in a state. Emission reductions from coal-fired EGUs are 

far, far cheaper than trying to get them from smaller businesses or individuals. And, unlike 

manufacturing, you can't "offshore" production of electricity. Approximately half of the 

existing coal-fired units do not have state of the art controls for S02 (FGD) and three-fourths of 

such units do not have the full suite of modem controls for oxides of nitrogen (NOx, SCR). 

There are a number of coal-fired power plants with extremely high emission rates that will 

effectively be exempted from these requirements per the discussion draft. 

CONCERNS ABOUT SPECIFIC PROVISIONS IN THE DISCUSSION DRAFT 

1. The addition of the word "actual" in the proposed revisions to sections 169(2) and 171(4) 

oftheCAA. 

The NSR program is a pre-construction program. Sources are currently expected to 

determine in advance of commencing construction of the project whether the project will need 

to undergo PSD review and install advanced pollution controls. Accordingly, the source and the 

permitting authority must each know (1) the baseline- i.e., the emissions before the project and 

the post-project emissions and (2) the post-project emissions. At one point in time the postproject emissions were the "potential to emit"; i.e., the maximum post-project emissions. For 

utilities, the WEPCO rule establishes a procedure for utilities that do not expect to run all of the 

time where, prior to commencement of the project the source would project future emissions. 

This test is known as the actual-to-projected-future-actual test and allows the utility to estimate 

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future emissions based, among other things, any increase in utilization that the project will allow. 

Some industry advocates have over the years pushed for a relaxation of this test so that NSR is 

only triggered if there is an actual increase in emissions in the first few years. This concept is 

unworkable for several reasons. A source can escape the obligation to install and thereafter 

operate pollution controls for decades thereafter merely by keeping emissions below the 

applicable threshold for a few years and thereafter increase emissions in an unlimited fashion. 

This, in itself is inconsistent with the notion of the modification rule being a rational way to 

gradually end grandfathering of poorly controlled plants. 

This notion also reduces the ability of authorities to enforce the program and encourages 

gaming of the system. There is no way for regulators to contest, at the time of a project, a claim 

that actual emissions will not increase. Emission testing of sources is not conducted sufficiently 

frequently to allow authorities to know of an increase in emissions. I've recently reviewed the 

permitting file for a particular plant - prior to the entry of an EP AIDOJ consent decree a few 

years ago measurement of PM emissions from that plant had occurred only twice in 25 yearseven though several large modifications had been undertaken. And since there would be no 

obligation to seek a permit at the time of the modification, authorities may not be able to tie an 

increase in emissions to a specific activity. Finally, Federal law in this area provides for a 

general five year statute of limitations for penalties for civil violations and several circuits have 

held that this limit applies to injunctive relief as well as civil penalties. In those circuits, if 

authorities do not bring an enforcement action within 5 years of when they "knew or should have 

known" of the violation, the source cannot be required to comply. Based on my experience as an 

enforcement manager, one cannot readily dismiss the possibility that some sources may file 

seemingly innocuous disclosures at random points in time to unsuspecting permitting authorities 

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to establish that the government "should have known" of the increase in emissions even though 

there has been no emission testing. 

2. The proposed change in the baseline period for electric generating units. 

In determining whether a contemplated project will increase annual emissions source 

operators and regulators need to have a common understanding of what the emissions of the 

plant were just before commencement of the project. Initially, this was determined by looking at 

emissions for the two years immediately prior to commencement of the project. Then, EPA 

adopted a test for utilities emissions during the highest two years in the last five years and 

subsequently, for other sources, the baseline period is the highest year in the last ten years. This 

latter decision was based on an argument that non-utilities needed a longer look back period 

because of swings in the business cycle. Now,. the discussion draft proposed to extend this 

dubious option to utilities. There is no particular argument to support the notions of large 

decadanal swings in electric demand. Indeed, the data show a long, gradual decline in demand. 

Further, the rules provide that any increase in emissions that is associated solely with an increase 

in demand for the product (including electricity) that could have been accommodated before the 

project does not trigger the NSR obligation. The sole purpose of the proposed change in baseline 

is to allow for a greater increase in emissions occasioned by the project than would otherwise be 

allowed. 

3. The proposed elimination of the annual emission increase test 

The elimination of the annual emission increase test will effectively shield old-coal fired 

power plants from most liability under the NSR rules and undercut the notion of a gradual phase 

out of old units. Here it should be noted that while, in today's market current coal-fired plants 

are highly challenged to remain competitive against natural gas-fired and renewable generation, 

they are also competing against other coal-fired plants for whatever market share is available to 

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coal generation. The proposed elimination of the annual increase test will continue to 

disadvantage well controlled coal-fired units in competition with poorly controlled plants for 

decades to come. Where power plants are regularly maintained, the annual increase test, which 

includes the demand growth exception discussed above, does not create a burden for utilities. 

But, when those plants are "shot" and are engaged in major capital investments to extend their 

useful life for decades, it is time for them to include modem controls in the program. 

4. The proposed "output" based test. 

The proposed "output" based test necessarily includes elimination of the annual increase 

test and for that reason should not be adopted. It is also unnecessary. If a project merely 

increases the efficiency of a unit, the annual "input-based" emission rate will go down just as the 

"output- based" emission rate declines. If a modification allows a plant to make the same 

amount of electricity while burning less coal, the S02, NOx and other pollutant emission rates 

will go down, not up. The discussion draft provides an option to increase the size of the unit 

(and associated hourly and annual emissions), recover lost utilization, and extend its useful life 

for decades, without adding modern controls as long as the output based emission rate for any 

pollutant declines. While it is not clear that the drafters intend that a minor decrease in, for 

example CO or C02 emissions per MWh, would allow unlimited increases in other pollutants, 

this appears to be allowed by the language ofthe discussion draft. Some advocates have in 

other settings put forth the "poster child" of one form of efficiency improvement - a particular 

design of turbine blade upgrade, where the major effect is to increase the power of the unit, along 

with an efficiency improvement, such that both hourly and annual emissions may increase. This 

particular design is not the only option for turbine upgrades, but those who want to employ it 

need only manage emissions by nominal upgrades to pollution controls or --- by fully controlling 

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their plants as initially intended by Congress. It should also be noted that in the utility 

enforcement actions some attempted to argue that simply putting in new economizers, boiler 

walls and other components of the original design would improve efficiency. On careful 

examination it was determined (and accepted by the courts) that this increase would only be true 

while those components were new and clean and that the benefit would decline after a relatively 

short period of operation. 

5. The "intent to restore, maintain or improve the reliabilitv or safetv ofthe source" test. 

For most sources subject to the NSR requirements an "intent of the operator" test is 

unenforceable. A refiner who adds 5 percent capacity may claim that the overall intent of the 

project was to improve reliability and safety, and the added capacity was incidental. Such a 

claim would be difficult, if not impossible, to determine objectively and certainly could not be 

ascertained without highly intrusive investigations. For utilities, the reason they engage in life 

extension programs is to restore, maintain or improve the reliability or safety of the source. 

And so, this provision, as most of the discussion draft, is not a clarification of the modification 

rule, but a straightforward elimination of those parts of the modification rule that are most likely 

to impact aged and poorly controlled coal-fired power plants. 

6. The proposed safety valve for the proposed "reliability" test. 

The discussion draft offers a proposed safety valve that would impose liability for a 

change that would otherwise be exempt because (1) it reduced the output-based emission rate of 

any air pollutant or (2) did not increase hourly emissions above the 10 year baseline if the 

Administrator determines that such increase harmful to human health or the environment and 

that the change is not environmentally beneficial. I cannot see how this provision would be of 

any significant practical utility. As drafted, the safety-valve provision refers to "such increase" 

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and does not directly refer to the output-based exemption. More importantly, this provision 

would seem to be unenforceable since a source would not know that its modification was subject 

to the NSR provision until after the "violation" had occurred. Further, the language of the safety 

valve- "harmful to human health or the environment" AND (not or) "that the change is not 

environmentally beneficial" is extremely vague, leaving the ultimate test for this retroactive 

liability in the Administrator's unfettered discretion. Note that the source would be exempt even 

though the Administrator determined that the modification is "not environmentally beneficial", 

as long as the Administrator did not also determine that the modification is "harmful to human 

health and the environment." One can imagine a scenario where, in some Administrations, all 

such changes would be exempt, while in another, no changes would be exempt. 

7. The "savings provision" to ensure that there is no benefit to the environment from the 

discussion draft. 

To ensure that there are only "wiuners" and no "losers" within the regulated community, 

the discussion draft provides a "rule of construction" that provides that the discussion draft does 

not accidentally create any additional liability for modifications. Thus, there can be no 

suggestion that, in "clarifying" the modification rule, the environmental benefits of the existing 

Clean Air Act are preserved. 

RESPONSE TO CERTAIN COMMENTS RAISED DURING THE FEBRUARY 14,2018 

HEARING 

1. The NSR program makes it difficult to maintain the reliability and safety of their 

facilities. 

The NSR process has never been intended or enforced so as to interfere with true "routine 

maintenance" or with the ability of a facility to respond to increases in demand for its product 

that could have been accommodated without the modification. As expressed earlier an operator 

can modify its plant however it wishes, if it pays modest attention to the actual rules and avoids 

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risky legal theories. Most manufacturing sectors maintain high unit availability on a constant 

basis, and so, as a practical matter, compliance for these sources is simply a matter of not 

increasing capacity - or offsetting emissions elsewhere at your facility if you decide to increase 

the capacity (and associated emissions) of an individual unit. For a power plant, liability 

generally only arises if the operator fails to maintain the reliability of the unit over time. In 

either case, if the source operator wants make a modification that is going to increase emissions 

by l 0 percent without constraining production, it can add some incremental pollution controls, 

such as low NOx burners or commit to use a slightly cleaner fuel such as natural gas or lower 

sulfur coal. 

2. Only short term emission rates matter. PM2.s is the pollutant that creates the greatest public 

health risk and the greatest impacts from PM2.s are associated with chronic, long term exposure 

to PMz.s. This pollutant is generated by direct emissions of very fine particulate matter and from 

secondary atmospheric reaction ofS02 and NOx emissions. We do not even aspire to meet 

levels for annual PM2.s recommended by the World Health Organization and much of the 

population of this country lives in areas that do not meet the annual PM2.s standard that we have 

adopted. 

3. "Most of the things" required under NSR enforcement consent decrees are things the 

companies are required to do under other CAA programs anvway. 

I was in the negotiating room for many of the NSR consent decrees and can affirm that 

this is simply not correct. However, if it were true, there would then be no basis for the myriad 

other complaints lodged against the NSR program. If these companies were going to "put on 

these controls anyway" why didn't they just sign up to put on the controls when they were 

rebuilding their units and avoid all of the expense and irritation of litigation? And what would 

be the harm of continuing the program as it is? 

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Where there are upcoming regulatory programs that will require power plants to add 

pollution controls at the same time NSR enforcement proceedings are underway (often years 

after the modification), there may be some overlap, but this is not a bad outcome and, in fact, is 

routinely relied upon by the EPA air program office in developing and evaluating new programs. 

For example, in evaluating the potential cost for the Mercury and Air Toxics rule (MATS), the 

air program office included the NSR consent decrees in the "base case", thereby reducing the 

projected cost of that rule. Compliance with the MATS rule at certain plants was also facilitated 

by other EPA rules, including NSPS standards, dating back to 1979. 

The NSR Consent Decrees are generally more stringent than the MATS rule and so, 

complying with the Decrees enabled those sources to meet the MATS rule with only minimal 

additional expenditures. However, those same sources could have complied with the MATS rule 

with far less protective measures than required by the NSR Consent Decrees. 

Further, there are going to be periods where ongoing enforcement activities are not 

accompanied with new environmental regulation and there have been numerous NSR 

enforcement actions in other sectors where there were no upcoming additional regulations. 

Finally, I would note that the NSR consent decrees include provisions, often included at the 

request of the air program, that advance the overall objectives of that program. These include the 

adoption, for the first time in a given sector, of advanced pollution control technologies such as 

regenerative thermal oxidation (RTO) in the wood products sector, SCR and PM CEMs in the 

utility sector and advances in controls for fluidized catalytic cracking units (FCCU) and boilers 

and heaters in the refinery sector. These requirements were strongly opposed by settling 

companies, but paved the way for the air program office to incorporate these advances more 

broadly in subsequent rulemakings. It should also be noted that the NSR Consent Decrees 

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include provisions for surrender of allowances under the Acid Rain trading program so that, 

contrary to what had been represented to the Committee, the emission reductions from the NSR 

Consent Decrees do not "pop up" as additional allowable emissions from other facilities. 

4. Over the past 15 years EPA enforcement officials have tried to expand the definition of 

modification. 

There were no novel theories involved in the wood products and refinery NSR 

enforcement actions. These were straightforward matters. In the wood products cases new 

green field plants were constructed without permits or modem controls. In the refinery cases 

the capacity, hourly emissions and annual emissions of the plants increased and there were no 

issues of "routine maintenance." At the time of our initial filing of the early utility NSR cases, 

we asked ourselves whether we needed to file a test case in advance of the first wave of cases 

and decided that we would rely on the earlier WEPCO decision. I've not reviewed the briefs 

filed by DOJ over time, but I have had occasion recently to review one of the more recent 

judicial decisions concerning the "routine maintenance issue." In that decision the government 

made a slightly different argument than I recalled, but the Court relied on the WEPCO decision 

and the early decisions in our initiative that also relied on WEPCO. And so, irrespective of how 

DOJ or EPA may have attempted to argue the particular point the law as applied to utilities is as 

it was 15 years ago. 

5. Companies are unable to determine whether a proposed modification will increase 

annual emissions. 

I find this argument perhaps the least credible of any presented by the opponents of the 

NSR program. In the course of our investigations, we obtained the procurement documents 

where plant managers justified the expense of the proposed modifications. In those documents 

company officials set out data showing how many operating hours (and how much revenue) was 

being lost due to forced outages of specific components of the plant. They then forecast the 

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degree to which those forced outages would be reduced and the additional operating hours (and 

revenue) that would be realized by the proposed project. Such projects would only be approved 

where the increased revenues associated with the increased annual hours of operation were 

sufficient to pay for the investment in a relatively short period of time. Since we and they know 

the hourly emission rate of the unit, those internal company projections formed the basis of our 

proof of the violations and document that companies can and do know whether a project will 

increase annual emissions. 

6. The NSR program is the least successful and most counterproductive of all the Clean Air 

Act programs. The benefits achieved by the NSR program can be preserved by relying on 

more effective CAA programs that regulate the same pollutants from the same facilities. 

The NSR program has clearly not achieved the goal of leveling the playing field between 

"new" and "grandfathered" large sources over any reasonable timeframe. But that is an 

argument to strengthen, not weaken, the program. NSR permitting has replaced the NSPS 

program as the driver for better controls for new facilities; the latter program serves only as the 

"floor" for NSR limits for new sources. Through NSR and, in particular NSR enforcement at 

violating facilities new technologies, such as SCR, RTO and PM CEMS have been introduced 

into the toolbox for state and local permitting authorities. I know of no CAA program that 

regulates all of the same pollutants from the same facilities as are subject to the current NSR 

rules. 

Within my community the lead phase-down program- an old "command and control" 

program is widely regarded as the most successful CAA program. While we have made 

substantial progress in reducing ambient concentrations of certain pollutants, we still have 

significant issues in several areas- notably PM2.s and ozone. After modest reductions for 

several decades, ozone levels are essentially unchanged over the past decade. 

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One can offer critiques of many of the other CAA programs. The SIP process has proven 

to be exceedingly slow, ineffective and politically charged; NSPS standards are woefully out of 

date; MACT standards are generally toothless, designed not to force all facilities to actually meet 

the level of the top 12 percent, but merely to force some reduction from the worst emitters, the 

Acid Rain Program was a one-shot effort that did not completely address the acid deposition 

issue, particularly in the Appalachian region and so on. But each of these programs moved the 

ball forward, so too, the NSR program is flawed as it is so easily evaded. Fifteen years ago I 

suggested a "birthday" provision, where a plant operator would have to make a decision as to 

whether to retire or control a facility on its 50th anniversary (or the 50th anniversary of the Clean 

Air Act). I suggest that one appropriate "reform" for the NSR modification rule is to create such 

an age test- a date by which certain very large emitters (similar to the EU's group oflarge 

combustion plants) must meet some level of additional control for key pollutants. Such an 

option would provide greater certainty to facility operators and provide a clearer path to 

eliminating one barrier to investments in new manufacturing facilities in this country. 

BACKGROUND AND QUALIFICATIONS 

I received a B.S. (Physics) from Manhattan College in 1969, a M.S. (Physics) from the 

College of William and Mary in 1971 and a J.D. (Law) from the College of William and Mary 

in 1974. From 1971 to 1974 I was employed at the Naval Logistics Engineering Center where, 

along with other engineering and testing matters, I researched seaborne solid waste disposal 

issues and potential solutions for the U.S. Navy. From 1974 until my retirement in 2003, I was 

employed by the Federal government in the administration or enforcement of Federal laws 

relating to the environment and safety. This service began in the Office of Chief Counsel with 

the National Highway Traffic Safety Administration (NHTSA), where I was responsible for a 

time with ensuring the agency's compliance with environmental matters and later investigated 

and prosecuted a number of substantial safety defect matters 

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In 1984 I transferred to the Environmental Enforcement Section of the Department of 

Justice (DOJ) and served in several positions, culminating as Senior Counsel. While at the DOJ, 

I served as lead counsel in a number of significant environmental cases, including Conservation 

Chemical (CERCLA), Marine Shale Processors (RCRA, CW A, CAA); Metro-Denver. St. Louis 

MSD and the Ocean Dumping cases (CW A) and the Louisiana- Pacific. General Motors, 

Bethlehem Steel and Kobe Steel cases (CAA). During this period I prosecuted a number of 

violations of the New Source Review provisions of the CAA and specialized in other highly 

technical cases, such as the GM "defeat device" matter. From August, 1996 to December, 2003, 

I was Deputy Director and then Director of the Air Enforcement Division in EPA's Office of 

Enforcement and Compliance Assurance. The Air Enforcement Division is comprised of a mix 

of attorneys, engineers and scientists and is responsible for major case development and 

prosecution as well as policy development and national program management respecting 

stationary sources regulated under the CAA. The Division is also directly responsible for mobile 

source and clean fuels enforcement under the CAA. 

During my tenure at DOJ and EPA, I worked closely with the EPA Office of General 

Counsel, the EPA program offices responsible for developing regulations to implement the several 

regulatory programs of the Clean Air Act and with the Regional EPA offices responsible for dayto-day State Implementation Plan1 (SIP) approval and enforcement activities. Based on 

information developed during serial investigations of PSD/NSR violations within the wood 

products industry that occurred while I was at DOJ, I instituted what we termed "investigationsbased" enforcement at EPA, focused on environmentally significant violations to supplement the 

traditional "inspection-based" enforcement model. Investigations using this new approach were 

more technical and far more time-consuming than traditional inspections, but revealed 

widespread noncompliance with the NSR provisions of the CAA within the coal-fired utility, 

refining and pulp and paper sectors. Since the unlawful emissions and political issues associated 

with the PSD/NSR violations within the utility sector were so significant, I was directed by my 

superiors to personally manage the national investigations in the utility sector. Accordingly, I 

managed the development of the initial round of cases referred to DOJ for prosecution and the 

development of the EPA administrative action against the Tennessee Valley Authority (TVA). I 

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also managed EPA's involvement in settlement discussions 1 with a number of utilities, including 

Tampa Electric Company (TECO), Southern Indiana Gas and Electric Company (SIGECO), 

Virginia Electric Power Company (Dominion), Duke Power, Southern Company, TV A, and 

PSEG aimed at resolving these longstanding violations and personally attended many of those 

discussions. These discussions included issues respecting feasibility of construction schedules, 

potential performance of pollution control devices and cash flow and affordability issues. 

Since my retirement from Federal service, I have occasionally been retained by business, 

states and environmental groups to provide advice, analysis or testimony on a variety of 

environmental matters. As relevant to this matter, I was retained by the National Association of 

Clean Air Administrators (NACAA), the professional association of state and local air regulators) 

to develop a model rule to assist state and local permitting authorities to develop "case-by-case" 

MACT limits for industrial, commercial and institutional boilers (ICI Boilers).2 I have also been 

retained to review and develop comments on EPA's several rulemakings associated with 

development of the Mercury and Air Toxics Standards that are relevant to this matter. This effort 

included a detailed evaluation of EPA's MACT floor determinations, compliance demonstration 

procedures and overall regulatory structure and impact. I have also been retained by various 

clients to evaluate energy and energy policy issues, particularly those involving the development 

and control of new and existing coal-fired power plants in the European Union, Kosovo, 

Armenia, Myanmar, VietNam, Indonesia, India and Japan. 

From 2006 to 2010, I served on the Virginia Air Pollution Control Board ("VAPCB"). 

The V APCB is a statutory non-salaried citizen board that has the authority to conduct research 

into the causes and effects of air pollution, adopt regulations to prevent or control air pollution, 

and issue permits and enforcement orders to implement and enforce air pollution regulations and 

the Virginia air pollution control law. During this time a permit to construct what is today one 

of the last coal-fired power plants in the U.S. came before the VAPCB. I researched applicable 

BACT and case-by-case MACT requirements, leading the Board to adopt stringent, but 

1 Not all of these discussions led to settlements prior to my retirement. 2 Where EPA fails to meet a statutory deadline for issuance of a National Emission Standard for Hazardous Air 

Pollutants (NESHAP) pursuant to section 112 of the CAA for a sector, states are required to develop limits for 

covered sources on a case-by-case basis. The model rule set out relevant statutory guidance and data that allowed 

states to meet this obligation. 

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32790.057

achievable S02 and mercury emission limits3 for that plant. 

Thank you for the opportunity to appear before the Subcommittee. I hope my testimony 

will be helpful to you as you review the New Source Review program and decide whether 

Congress should take action to modify it. Please do not hesitate to have your staff contact me if 

you need additional information. 

3 The operator has consistently demonstrated compliance with the more stringent limits. 

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SUMMARY OF TESTIMONY OF BRUCE C. BUCKHEIT 

In my judgment the discussion draft before the Committee today is not in the public 

interest and should not be adopted. The draft is not needed by the regulated community and 

would not advance one of the fundamental purposes of the Clean Air Act- to eliminate, over 

time, the disparate treatment of new and existing sources. It would severely impair the ability of 

the modification provisions of the Act to effect this purpose and would exacerbate the current 

barrier to investment in new manufacturing and electric generating facilities created by the 

difference in the treatment of new and existing facilities. Several of the provisions in the 

discussion draft pose significant policy issues and enforcement concerns, including (1) the 

addition of the word "actual" in the proposed revisions to sections 169(2) and 171 ( 4) of the 

CAA; (2) the change in the baseline period for electric generating units; (3) the elimination of the 

annual increase test; ( 4) the "output" based test; (5) the "intent to restore, maintain or improve 

the reliability or safety of the source" test; ( 6) the safety valve for the "reliability" test and (7) 

the "savings provision" to ensure that there is no benefit to the environment from the draft. 

I disagree with criticisms leveled at the NSR program during the February 14,2018, 

hearing that (1) the NSR program makes it difficult to maintain the reliability and safety of 

facilities; (2) only short term emission rates matter; (3) "most of the things" required under NSR 

consent decrees are things companies are required to do under other CAA programs anyway; ( 4) 

over the past 15 years EPA enforcement officials ha:'e tried to expand the definition of 

modification; (5) companies are unable to determine whether a proposed modification will 

increase annual emissions and (6) that the NSR program, especially as it relates to modified 

facilities, is counterproductive and far less efficient than other available CAA options. 
103 

Mr. SHIMKUS. Thank you very much. 

And then I will turn to Mr. Jeffrey Holmstead, partner of 

Bracewell LLP—testified numerous times before this committee— 

recognized for 5 minutes. 

STATEMENT OF JEFFREY HOLMSTEAD 

Mr. HOLMSTEAD. Thank you very much for giving me the chance 

to be here today. I hope, during the questions, I can maybe address 

a couple of things. 

Where I don’t necessarily agree with my friend, Bruce, and explained why—and EPA’s theory by which they prevent energy efficiency projects and a rather strange theory about how you calculate 

emissions increases, but I want to focus on something different 

during my oral statement. I just have a minute. 

Look, we are talking about just one of the many programs that 

regulate emissions from manufacturing plants and power plants. 

New Source Review, and despite the name we are not talking about 

how it applies to new sources. We are only talking about how it applies to existing sources. 

In their testimony, Mr. Buckheit and Mr. Baldauf both focused 

primarily on power plants and how they believe the NSR program 

should work to reduce SO2 and NOx emissions from these plants. 

The problem is that the NSR program has been in place for more 

than 40 years and it has never worked that way. As Bruce said, 

very few power plants—in fact, unless they expand their capacity, 

they don’t voluntarily go through NSR and even if the program 

worked the way that they want it to, you would not get overall reductions in power emissions because we have cap and trade programs in place. So if one facility goes through NSR and installs 

controls, that doesn’t reduce the total number of allowances that 

plants are allowed to emit. 

You might be surprised to hear that there are actually 14 different Clean Air Act programs that regulate these very same emissions that we are talking about—SO2 and NOx emissions from 

power plants. Thankfully, although the NSR program has essentially done very little to reduce emissions from these plants, other 

programs have been very effective. 

My friend Bruce, Mr. Baldauf, did not discuss any of these other 

14 programs. Based on their testimony, you might be left with the 

misimpression that the NSR program is the only way to require 

power plants to reduce their emissions. They appear to believe that 

if we just leave the NSR program alone, all power plants will be 

forced to install what Mr. Buckheit calls the full modern suite of 

controls that he would like them to have. 

So even though all these plants have been covered by the NSR 

program for decades, in some cases more than 40 years, we just 

need to give the NSR program a little more time. 

But when Congress passed the 1990 Clean Air Act amendments, 

it gave EPA much more effective programs that were specifically 

designed to reduce emissions from power plants and these programs have been remarkably effective. 

One of these programs, the acid rain program, as some of you remember, was the centerpiece of the 1990 amendments. It was specifically designed to reduce SO2 and NOx emissions from power 

104 

plants and it seems odd that if Congress expected the NSR program would force all those plants to install emission controls, it 

seems odd that it would have spent so much time and effort developing the acid rain program. 

Here are just a few things that I hope you will keep in mind. The 

Clean Air Act was passed in 1970. The NSR program came into 

place a few years later. Between 1970 and 1990 when the amendments were passed, SO2 emissions from U.S. power plants decreased by about 9 percent. NOx, during that same period when 

they were covered by NSR and only NSR, NOx emissions actually 

increased by 30 percent. 

Now, since 1990 when Congress passed the acid rain program to 

reduce emissions from power plants and also gave EPA authority 

to impose other cap and trade programs when further reductions 

were needed, here is what has happened. Since 1990, SO2 emissions from power plants have been reduced by more than 92 percent—more than 92 percent from almost 15—almost 16 million 

tons to 1.3 million tons. Since 1990, NOx emissions from power 

plants have fallen by about 83 percent. What regulatory programs 

have been responsible for these reductions? 

Well, according to EPA’s own analysis, it’s not the NSR program. 

EPA itself says that these reductions have come because of a series 

of cap and trade programs, and I don’t have time to go through 

them but there’s been four that have been put in place by successive administrations, a Democrat and Republican. The NSR program does make it harder and more expensive for facilities to 

maintain their plants and make them more efficient. The NSR program is long and can often be very costly. I know of several companies that have teams of engineers and lawyers who devote their 

time to figuring out how they can maintain their plants without 

triggering NSR. 

I have sat in rooms where companies have evaluated projects 

that would make their plants more efficient and then decided not 

to do them because of concerns that they would trigger NSR. 

Look, these policies are very complicated and I am grateful that 

we are having this discussion. I sincerely hope that this committee 

will show that Republicans and Democrats can work together to remove unnecessary regulatory burdens. 

The bill being considered today would do just that and I hope 

that you will give it serious consideration. 

Thank you. 

[The prepared statement of Mr. Holmstead follows:] 

105 


32790.059

Testimony of Jeffrey R. Homestead 

before the 

House Committee on Energy and Commerce 

Subcommittee on Environment 

Hearing on 

Legislation Addressing New Source Review Permitting Reform 

May 16,2018 

Chainnan Shimkus, Ranking Member Tonko, and distinguished members of the Subcommittee, 

thank you very much for inviting me to participate in today's hearing. My name is Jeff 

Holmstead. I am a partner in the law finn of Bracewell LLP and have been the head of the finn's 

Environmental Strategies Group (ESG) since 2006. 

For almost 30 years, my professional career has been focused on policy, regulatory, and legal 

issues arising under the Clean Air Act. From 1989 to 1993, I served in the White House 

Counsel's Office as Associate Counsel to President George H.W. Bush. In that capacity I was 

involved in many of the discussions and debates that led to the passage of the 1990 Amendments 

to the Clean Air Act- and was then deeply involved in the initial efforts to implement the 1990 

Amendments. From 2001 to 2005, I was the Assistant Administrator of EPA for Air and 

Radiation and headed the EPA Office in charge of implementing the Clean Air Act. I am well 

acquainted with the legal, policy, and practical issues associated with the Clean Air Act and the 

many regulatory and permitting programs that have been designed to protect and improve air 

quality in the U.S. 

When not in the federal government, I have been an attorney in private practice, representing a 

wide variety of clients on Clean Air Act (CAA) and other environmental issues. Since I joined 

Bracewell in 2006, I have worked primarily with companies and trade groups in the energy and 

manufacturing sectors. Today, however, I am not appearing on behalf of my finn or any of my 

clients, and I have not submitted my testimony to anyone else for their review or approval. 

Instead, I speak as someone who has worked on CAA issues for many years- as a policymaker, 

a regulator, and an attorney in private practice representing companies who are trying to 

manufacture products or develop energy resources in the U.S. in an environmentally responsible 

marmer. 

Based on my experience at EPA and in the private sector, I can say that the CAA's New Source 

Review (NSR) program is badly in need ofrefonn. In terms of reducing unnecessary and 

unwarranted regulatory burdens, the draft legislation being discussed 'today to amend the NSR 

program would easily be the most important CAA refonn ever adopted by Congress. 

Over the years, the NSR program has become a complicated mess that makes it more difficult for 

companies to do things that we should all want them to do -like maintaining the reliability and 

safety of their facilities and making them more efficient. In some parts of the country, it 
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effectively bans the construction of new facilities even if they use state-of-the-art pollution 

controls and would not have a meaningful impact on the environment - and even if the 

communities where they would be located desperately want them to be built. 

It is certainly true that the NSR program does result in environmental benefits, especially as it 

applies to new facilities. But these benefits can be preserved by reforming NSR in a thoughtful 

way that would provide regulatory certainty and dramatically reduce the burden that it imposes 

on U.S. businesses and workers. 

Background 

The Clean Air Act has been a remarkable success. Since it was adopted in 1970 - and especially 

since the passage of the 1990 Amendments - air quality has dramatically improved in virtually 

every part of the country. Since 1970, emissions of the six common pollutants that EPA has 

targeted for reduction -particles (generally called particulate matter or PM), ozone, lead, carbon 

monoxide (CO), nitrogen dioxide (N02) and sulfur dioxide (S02)- have dropped by more than 

70 percent while gross domestic product has grown more than 250 percent. 

More importantly, the emissions reductions have dramatically improved the quality of the air that 

we breathe. Between 1990 (when the current CAA was put in place) and 2015, national 

concentrations of air pollutants improved 85 percent for lead, 84 percent for CO, 67 percent for 

S02, and 60 percent for N02. 

Most important of all have been the recent reductions in concentrations of fine particles (PM2.5), 

which EPA and many outside researchers have identified as representing the greatest risk to 

public health of all pollutants. Just since 2000, shortly after EPA began to regulate fine particles, 

daily average concentrations of fine particles have improved by more than 40 percent 

nationwide. 

However, these very substantial emission reductions and improvements in air quality do not 

mean that everything about the Clean Air Act is working well. The CAA created dozens of 

different regulatory programs, and, using the authority of the CAA, EPA has issued hundreds of 

different regulations. Since 1990, when Congress last amended the CAA in a meaningful way, 

we have learned a great deal about regulatory policy. We now understand that some CAA 

programs are very effective and others are not. Some programs actually create unforeseen 

problems that make them counterproductive. 

Because the CAA and regulations issued under the CAA have been developed over time, there 

are often several different regulations that apply to the same pollutants from the same facilities. 

Some of these programs have been very successful at reducing pollution and improving air 

quality cost-effectively -like the acid rain program and the various cap-and-trade programs 

around the country that have been modeled on it. Yet there are other CAA programs that target 

the same pollutants from the same facilities and impose significant costs with little benefit. 

Because there are so many overlapping programs, we, as a society, are paying much more than 

we should for preserving and improving air quality. If we take advantage of the lessons that 

have been learned over the last 30 years and use the most effective and efficient approaches for 

reducing air pollution, we can achieve our air quality goals at a much lower cost. 

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As noted above, I have spent almost 30 years working on and studying the various regulatory 

programs created under the Clean Air Act. I can say with confidence that the NSR program, as it 

applies to existing facilities, is the least successful and most counterproductive of the many 

programs created by the Clean Air Act. To the extent that it provides environmental benefits, 

those same benefits can be preserved by reforming the program in a thoughtful way and by 

relying on other, much more effective CAA programs that regulate the same pollutants from the 

same facilities. 

Inaccurate Claims Made by Proponents of Current NSR Program 

Proponents of the current NSR program like to point to settlements (usually in the form of 

consent decrees) that have been reached over the years in a number ofNSR enforcement cases. 

They argue that the current program should remain unchanged so that EPA enforcement officials 

can bring more NSR cases. 

If you take the claims made in goverrunent press releases at face value, you might think that 

these NSR settlements have achieved large reductions in air pollution- especially from coalfired power plants. But if you look carefully at the terms of the settlement agreements, you'll 

find that most of the things that a company has agreed to do in terms of reducing pollution from 

its plants are things that the company is already required to do under other Clean Air Act 

regulations. If you look at some settlements, you'll see that, in some cases, the companies are 

simply agreeing to do things that they have already done. This means that government 

enforcement officials, in their press releases, are claiming credit for things that have already been 

done or pollution reductions that would be achieved anyway - i.e., even without the settlement. 

And if you're familiar with the other CAA programs that regulate the same emissions from the 

same facilities, you would see that all the pollution reductions that have been claimed for these 

NSR enforcement could be achieved by other, more cost-effective CAA programs. 

Again, it is instructive to look at the NSR program as it has been imposed on the power sector. 

The NSR settlements that have required companies to reduce emissions from their coal-fired 

power plants apply almost exclusively to plants located in areas that, under other CAA programs, 

have "caps" on the total amount of pollution that can be emitted by the coal-fired plants in these 

areas. Because of the area-wide cap, a settlement requiring emission reductions from certain 

plants does nothing to reduce total emissions in that area. It simply ensures that they are achieved 

at some plants rather than others- and not necessarily where the emission reductions are most 

needed or where they can be achieved most cost-effectively. 

Inaccurate Claims that Proposed Reforms Would Cause Increases in Pollution 

In written testimony submitted as part of this Subcommittee's February 14, 2018, hearing on 

NSR, a representative of the Natural Resources Defense Council (NRDC) made some rather 

remarkable claims about the legislation being considered today. A word search shows 10 

different places where his written testimony says that the reforms in the discussion draft would 

allow either "massive" or "enormous" increases in "harmful air pollution." 

Statements like this are just plain silly - and demonstrably untrue. They ignore the fact that 

every single existing facility that is covered by the NSR program is also regulated by multiple 

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other Clean Air Programs- in the case of coal-fired power plants, as many as 13 other programs 

that regulate the very same pollutants covered by NSR. I can guarantee that, even if the NSR 

program for existing facilities completely disappeared tomorrow, there would not be a "massive 

increase in air pollution." In fact, there would not be any increase in emissions from the group of 

facilities covered by the NSR program. Because of the many. other programs that regulate the 

same pollutants from the same facilities, air pollution would continue to decrease as it has since 

1990. 

As I explain in my written statement, the reforms being proposed by Mr. Griffith would simply 

re-introduce some common sense into the NSR program and make sure that it does what it was 

intended to do: 

• Ensure that, when a new industrial facility is built or an existing facility is significantly 

expanded, modem pollution controls will be used to minimize its emissions; and 

• Ensure that the NSR program does not make it hard for companies to keep their facilities 

in good working order and, where possible, to reduce the operating cost of these facilities 

by making them more efficient. 

Some critics of the draft legislation suggest that they will not support it unless there is a 

guarantee that it will not allow any increase in emissions from any industrial facility. But even 

with the current NSR program, no one could offer such a guarantee because NSR does not 

prevent facilities from increasing their emissions. Because most facilities do not operate at full 

capacity, they can usually increase their production (and thus increase emissions) without 

triggering NSR. A facility triggers NSR only if (1) it makes a non-routine change and (2) this 

change (and not an increase in demand) would cause an increase in annual emissions. 

Even if a facility does trigger NSR, this does not necessarily prevent it from increasing its 

emissions. The NSR program is designed to ensure that new facilities and facilities that undergo 

major modifications will be well controlled. If a facility increases its capacity and thus must go 

through NSR, it can still increase its emissions, but it must use the best available control 

technology to minimize the emissions increase. 

No Clean Air Act programs ensure that there can never be "any increases in air pollution" from 

"any source." But this is hardly the point. Air quality problems are caused by the combined 

emissions from many different sources. What we should all care about is improving and 

protecting air quality, which involves reducing the collective emissions from many different 

sources. The NSR program has not played a significant role in reducing air pollution from 

existing sources in the past, and there is no reason to believe that it will do so in the future. 

The NSR Program as it Applies to New Facilities 

In a recent paper published in the Environmental Law Reporter (ELR), Art Fraas (a Visiting 

Fellow at Resources for the Future), John Graham (the Dean of the School for Public and 

Environmental Affairs at Indiana University), and I discuss the NSR Program at some length and 

outline a number of reforms that would make it easier to build new manufacturing facilities in 

the U.S. as long as they use the best available technology to control their emissions. That paper, 

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entitled "EPA's New Source Review Program: Time for Reform?" is focused primarily on the 

ways in which the NSR Program applies to new facilities. Rather than summarize that paper 

here, I have asked that it be included in the record for this hearing. That said, I would be happy 

to answer questions that any members of the Subcommittee might have about it. 

The NSR Program as it Applies to Existing Facilities 

As the name implies, the New Source Review or NSR program was designed primarily for "new 

sources" of emissions (new manufacturing facilities and power plants). Before any new major 

source can be constructed, it must first go through a permitting process that identifies the "best 

available control technology" to minimize emissions from the new facility. The permit applicant 

must then obtain an NSR permit that requires the new facility to meet emission limits that can be 

achieved with that technology. The basic theory of the program is that modern pollution controls 

should be part of the design and construction of any new major source of emissions. The NSR 

program is probably the most important CAA program for controlling pollution from new 

sources. 

The NSR program also applies to existing sources, but only if they make "major modifications" 

as defined under EPA regulations. Again, the theory is that, when there will be a modification to 

an existing plant that will significantly increase emissions, modern pollution controls should be 

designed into the modification. Although the NSR program is the primary regulatory tool for 

controlling emissions from new plants, it was not intended to be a key program for controlling 

emissions from existing facilities. As EPA stated in a 2002 Report on the NSR program: 

The NSR program is by no means the primary regulatory tool to address air 

pollution from existing sources. The Clean Air Act provides for several other 

public health-driven and visibility-related control efforts: for example, the 

National Ambient Air Quality Standards Program implemented through 

enforceable State Implementation Plans, the NOX SIP Call, the Acid Rain 

Program, the Regional Haze Program, etc. Thus, while NSR was designed by 

Congress to focus particularly on sources that are newly constructed or that make 

major modifications, Congress provided numerous other tools for assuring that 

emissions from existing sources are adequately controlled. 

New Source Review: A Report to the President (2002) at pp. 3-4. 

The question of what is a "major modification" that triggers NSR at an existing source has been 

the source of much controversy and is discussed in several EPA regulations, more than a 

thousand pages of guidance documents and Federal Register notices, and dozens of court casesand there is still much uncertainty about how to determine whether something is a major 

modification. 

This is important to industry because, if a company makes a "major modification" to a facility, 

the cost of going through NSR, and the delays it can cause, are very substantial. In some cases, 

companies that have undertaken a $500,000 project that, according to EPA, is a "major 

modification" that would force them to spend hundreds of millions of dollars in new control 

equipment. Even without the cost of new equipment, the time it takes to go through the NSR 

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permitting process can be very long- about a year on average but, in some cases, many years. 

Because of the cost and delays, companies are very reluctant to do anything that might trigger 

NSR. 

Over the last 15 years, EPA enforcement officials have tried to expand the definition of major 

modification in an effort to capture more facilities into the NSR program. At the same time, 

companies have spent much more time and effort figuring out how they can maintain their 

facilities without triggering NSR. I know of companies that actually employ teams of people 

full-time to make sure that the investments they make to maintain their facilities do not trigger 

NSR, and companies often make suboptimal decisions about investing in their facilities because 

of the current NSR program. As a result, the NSR program makes it more difficult for 

companies to do things that we should all want them to do - like maintaining the reliability and 

safety of their facilities and making them more efficient. 

The Emissions Increase Test 

Under the statute and EPA's regulations, a major modification is a "physical change or change in 

the method of operations" at an existing source that will cause a "significant emission increase," 

which is defined as an increase in annual emissions that is greater than certain thresholds (which 

are different for different pollutants). As EPA has noted, this definition essentially creates a twostep test that a plant operator must use in order to determine the applicability ofNSR 

requirements to any particular project at an existing source: "first, you will determine whether a 

physical or operational change will occur. If so, then you will proceed to determine whether the 

physical or operational change will result in an emissions increase over baseline levels." 67 

Fed. Reg. 80186,80187 (Dec. 31, 2002). 

Under EPA regulations, "routine maintenance, repair, and replacement" projects are exempted 

from the defihition of a physical change, so there has been much litigation over whether certain 

specific projects are "routine." But, perhaps surprisingly, there has also been much controversy 

over the question of how to determine if a physical or operational change will result in an 

emissions increase. 

Another CAA program, referred to as the New Source Performance Standards or NSPS program, 

employs the exact same definition of the term "modification." In fact, when Congress added the 

NSR program to the CAA in 1977, it simply adopted the existing statutory definition of 

"modification" that had been used since 1970 for the NSPS program. Under the NSPS, EPA 

determines whether a project at a plant is a "modification" by looking at the maximum hourly 

emission rate of the plant before the project and comparing it to the maximum hourly emission 

rate of the plant after it. If a project does no't increase this rate- that is, if the plant has not been 

changed in a way that would increase its maximum hourly emissions rate -then the project is not 

a modification. There is rarely any controversy about this issue because the maximum hourly 

emission rate is a readily available number that is based on the design of the facility. 

Under the NSR program, however, EPA has adopted a very different approach for determining if 

a physical or operational change will cause an emissions increase - not based on plant design but 

on projections of future annual emissions that depend on many other factors besides the physical 

design of a facility. First, a company must determine its "baseline" emissions. For power plants, 

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this is annual average emissions of the highest 2-year period of operation over the last 5 years. 

For other facilities, it is the highest yearly emissions during the last 10 years. 

Then, a company must make a projection of what its future annual emissions will be during the 

5- or I 0-year period after the change (depending on the type of project being undertaken). If 

projected future emissions are higher than baseline emissions by more than the "significance 

thresholds," then the company is allowed to subtract the amount of its projected future emissions 

that are unrelated to the physical change at the facility (such as increased demand for the product 

being produced). If projected future emissions are still higher than the "significance threshold," 

then the physical change is a "major modification" that triggers NSR. 

This is complicated enough, but there has been substantial controversy as to how future annual 

emissions should be projected. Some power companies have projected future emissions using 

sophisticated computer modeling techniques that they use to plan future investments - only to 

have EPA enforcement officials insist that they should have used another method that would 

have predicted higher emissions and thus that the project triggered NSR. Like virtually every 

other NSR issue, this has been the subject of protracted litigation. 

Because of all the uncertainty and controversy caused by the "emission increase test," it would 

be helpful for Congress to clarify this issue. In my view, the best approach would be to make 

clear that there is not a "major modification" under NSR if there is not a "modification" as 

defined under NSPS. Thus, companies (and EPA) would evaluate a project to determine whether 

it would increase the maximum hourly emission rate at the plant. If not, then the project does not 

trigger NSR. If so, then the project would be a modification and would then be evaluated under 

the current NSR test to determine whether it would be a "major modification" that would trigger 

NSR. 

There are at least two important reasons for Congress to consider such an approach. First, it 

would provide much more certainty to EPA, states, and the regulated industry. As opposed to 

the current NSR approach, the maximum hourly emission rate is an objective measure based on 

the design of the facility and is easily ascertainable. As recent experience has shown, there is 

much subjectivity under the current approach and many different ways to project future annual 

emissions and then determine the amount of those emissions that are unrelated to the project 

being evaluated. 

Second, from an environmental perspective, a one-hour test is much more meaningful because 

the most stringent EPA standards are based on maximum concentrations of a pollutant averaged 

over one hour (for S02 and N02), eight hours (for ozone and CO), and 24 hours (for PM2.5). 

The only pollutant for which a longer "averaging time" is meaningful is lead, for which the airquality standard is based on a 3-month average (and which has rarely, if ever, been addressed by 

NSR.) Simply put, in terms of protecting human health, the maximum amount of a pollutant that 

a facility emits in one hour is much more important than the amount it emits in a year. 

Energy Efficiency Projects 

I believe that Congress should also consider legislation to ensure that NSR is not an impediment 

to improving energy efficiency. There is much interest in reducing carbon dioxide (C02) 

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emissions in the U.S. and around the world. And I believe that there is a consensus that the most 

cost-effective way to reduce C02 from existing facilities is to improve their energy efficiencythat is, to make physical or operational changes that would enable them burn less fossil fuel 

(coal, oil, or natural gas) to produce a given amount of product (whether it be electricity or 

gasoline or widgets). 

However, the current NSR program is a significant impediment to energy efficiency projects 

because EPA, in a number ofNSR enforcement cases, has argued that energy efficiency projects 

trigger NSR- i.e., that an existing facility must go through the cumbersome and costly NSR 

permitting process before it can do such a project. I am aware that, for this reason, a number of 

companies have identified energy efficiency projects that they would like to undertake but have 

decided not to do them for fear of triggering NSR. 

It may seem strange that EPA would take a position that actively discourages energy efficiency, 

but here is the theory espoused in several NSR enforcement cases against power plants: When a 

facility owner makes a physical or operational change at a facility to make it more energy 

efficient, this reduces the cost of operating the facility, because it uses less fuel per unit of 

production. For this reason, the more energy efficient facility would have a competitive 

advantage over other facilities that make the same product. As a result, the more energy efficient 

facility will take away business from less efficient facilities and operate longer hours. Because it 

operates longer hours, it will increase emissions and, as a result, the energy efficiency project 

triggers NSR. 

If you have followed this convoluted reasoning, I think you will be outraged by it. For one thing, 

if a more energy efficient facility takes away business from its competitors, then it will certainly 

reduce total C02 emissions - because less fuel will be burned per unit of production. As a 

general rule, I think we should all agree that the government should adopt policies that encourage 

energy efficiency. 

However, in its zeal to bring NSR enforcement actions, EPA has implemented the NSR program 

in a way that clearly makes it more difficult and costly to make energy efficiency improvements 

to existing plants. If Congress wants to encourage energy efficiency, it should adopt legislation 

to make it clear that any physical or operational change at an existing facility that makes it more 

energy efficient - that enables it to reduce its C02 emissions per unit of production- does not 

trigger NSR. 

Pollution Control Projects 

As noted above, the NSR process is long, cumbersome, and often very costly. As a result, 

facility owners try to avoid it whenever they can. In some cases, it would be in their interest to 

carry out pollution control projects, but they choose not to do so because they do not want to 

trigger NSR. If there were an NSR exemption for pollution control projects (as there already is 

for NSPS), it would remove this disincentive, and we would see more facilities carrying out such 

projects. 

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Reliability and Safety Projects 

Under both the NSR and NSPS programs, routine maintenance, repair, and replacement (RMRR) 

projects are specifically have always been excluded from the definition of a modification. This 

exclusion was designed to ensure that plant owners could properly maintain their facilities 

without the need to go through NSR permitting. Over the last two decades, however, EPA has 

tried to narrow the scope of this exclusion in order to capture more facilities in the NSR program. 

As a result, companies have often made suboptimal decisions about maintaining and improving 

the reliability and safety of their facilities. To address this concern, Congress should amend the 

Clean Air Act to ensure that projects that are specifically designed to maintain or improve 

reliability or safety are not "modifications" that trigger NSR. 

Authorizing the Administrator to Require NSR Review of Individual Reliability, Safety, 

Energy Efficiency, and Pollution Control Projects 

To address concerns that any exclusion for reliability, safety, energy efficiency or pollution 

controls projects might be too broad, Congress could authorize the Administrator to force such a 

project to go through NSR if it would otherwise be a modification (because it would increase 

hourly and annual emission) and if he or she determines that the increase in emissions would 

harm human health or the environmental and that the overall project would not be 

environmentally beneficial. This is similar to the approach that has long been used for pollution 

control projects under the NSPS program, which excludes such projects from the definition of an 

NSPS modification except when the Administrator determines that a project would not be 

environmentally beneficial. 

* * * * * 

Again, I very much appreciate the opportunity to appear before the Subcommittee and hope my 

testimony will be helpful to you as you review the legislation under discussion today. I would be 

happy to answer any questions that you may have. 

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Mr. SHIMKUS. Thank you very much. 

I will now recognize myself for the round of questions. I recognize 

myself for 5 minutes and I want to start with Mr. Alteri. 

The discussion draft seeks to make it easier for companies to 

carry out energy efficiency and pollution control projects. 

Would accelerating efficiency improvements and pollution control 

adoption even on just existing sources be a net benefit for meeting 

clean air standards? 

Mr. ALTERI. Yes. 

Mr. SHIMKUS. Let me go to Mr. Eisenberg. In your testimony you 

described how the National Association of Manufacturers’ member 

companies are struggling to sell gas turbine upgrade technologies 

because customers are not willing to buy and install equipment 

that would trigger New Source Review permitting. 

That being the case, would you agree that New Source Review 

is slowing innovation and the adoption of newer technologies? 

Mr. EISENBERG. I would agree. 

Mr. SHIMKUS. Very simple answers. 

Would today’s discussion draft make it easier for companies to 

install newer and cleaner equipment at existing facilities? 

Mr. EISENBERG. We believe it would, and it’s a massive potential 

market. I mean, as I said during my oral remarks, that one particular manufacturer, just looking at its own turbine, said it could 

be somewhere on the order of over a 100 million tons of CO2 potential reduced if everyone were to upgrade the steam turbine and gas 

turbine efficiency upgrades that they make available. 

Mr. SHIMKUS. And I think you made a good point with our tax 

bill that was passed—the expending provision. We are seeing it 

throughout, really, the country—a great increase in capital for new 

development and expansion and stuff like that. So this would segue 

very well into the ability of modernizing, retrofitting facilities, refineries, and even small furniture makers. 

Mr. EISENBERG. That’s absolutely true and the idea wasn’t mine. 

It came from a member of ours who said hey, let’s change the internal rate of return on a project we were thinking about undertaking, 

and now we can do it and it’s beneficial to the environment. So we 

are going to look more into that ourselves, too. 

Mr. SHIMKUS. Great. Thank you. 

Mr. Holmstead, concerns have been raised that the discussion 

draft reforms would enable existing facilities to collectively produce 

higher annual emissions. 

Even if hourly emission rate at the facility goes down, how do 

you respond to this concern? 

Mr. HOLMSTEAD. It’s just not true. These facilities are covered by 

many, many other different programs that would—that would assure that emissions continue to decrease over time. 

So anybody who claims that this bill would increase emissions is 

just wrong. 

Mr. SHIMKUS. Yes. We have a pretty good record, I think, on the 

subcommittee of trying to find that middle ground. This one’s going 

to be a little bit tougher, I assume. 

And it’s really over this debate about the question that I just 

posed is I think that my friend’s concerns are that emissions are 

going to go up. 

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I think you make a good point—there’s a lot of other air standards out there that are going to make sure that that doesn’t happen. 

Mr. Buckheit, riddle this for me, will you? Is there a lot of other 

clean air rules and regs that’ll prohibit that from increasing? 

Mr. BUCKHEIT. With all due respect to my good friend Jeff, we’ve 

had these debates for decades. There are a lot of other programs 

there, none that would specifically address this issue. 

It is only the NSR program that will prevent each of these plants 

that we’ve been talking about from increasing annual emissions, 

and it’s not all about power plants but it’s mostly about power 

plants. Refineries and the like—they tend to run 87/60 full time 

year round and so the hours of operation are not the issue for them 

so much. But and so reducing it—there’s already an embedded 

hourly test for them. 

If you increase your hourly emissions you’re going to increase 

your annual emissions. This is more about the power sector where 

because of forced outages they can’t run for 3 weeks a year and 

then they make the plant more reliable and they run those 3 weeks 

a year. 

Mr. SHIMKUS. Well, my time’s almost expired. I want to go to Mr. 

Alteri. 

Do states and other permitting authorities have other tools besides New Source Review to control existing facilities’ annual emissions? 

Mr. ALTERI. We do, and I think you really have to look at the 

nexus between the National Ambient Air Quality Standards. Previously, the standards were on an annual basis. 

Now they’re hourly basis, and really, it is imparative that the 

maximum hourly emission rate is limited and not allowed to violate 

those standards. 

Mr. SHIMKUS. And that’s what Congressman Griffith in his bill 

is attempting to do—marry a successful standard with what is 

viewed out there as an unsuccessful. Would you agree? 

Mr. ALTERI. I would, and you have the New Source Performance 

Standards also that play a role. 

Mr. SHIMKUS. Great. Thank you very much. My time is expired. 

The chair now recognizes the ranking member, Mr. Tonko, for 5 

minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

It’s been suggested that short-term such as hourly emission rates 

are more meaningful from an environmental perspective, since the 

number of NAAQS are based on short time frames. 

Mr. Buckheit, I want to ask you what you think about that assertion and let me perhaps put it in the context of communities that 

are in that range of those facilities. 

Do these communities located near these facilities, which may be 

dealing with unsafe levels of particulates or other pollutants, benefit from maintaining an hourly emissions rate even if it causes a 

significant increase in overall pollution? 

Mr. BUCKHEIT. It’s kind of both, Congressman. There are some 

local impacts, particularly for the 1-hour SO2 standard where if 

you’re near a power plant such as the facility in Alexandria here, 

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you can have certain weather conditions where you will get 

unhealthy levels on a short-term basis. 

The larger public health issue is chronic exposure to PM 2.5, 

which is annual or multi-year exposures to lower levels. That is the 

more consequential form of air pollution—most consequential form 

of air pollution in this country. 

Mr. TONKO. Thank you. 

And Mr. Buckheit, you said that NSR permits for existing power 

plants are very rare. I believe that was the term you used. 

Why do you think that permits are rare? Is it because they’re 

costly, over burdensome, or easily avoided? 

Mr. BUCKHEIT. I would say easily avoided is the right answer. 

Mr. TONKO. And your testimony mentioned that the courts have 

weighed in on the so-called routine maintenance exemption in the 

past, and to make it clear, it was only for legitimate maintenance 

and not large capital projects. 

Is it fair to say there’s been a strategy over the years by these 

facilities to find loopholes that might enable them to make modifications without needing to undergo NSR program requirements? 

Mr. BUCKHEIT. Yes. The case you’re referring to, Congressman, 

is the Webco case back in 1988, which the courts enforced a decision under the Bush I administration where replacing these large 

projects would not be considered routine maintenance. 

Thereafter, a number of those lobbying law firms in town continue to press the notion that you could do anything or almost anything and call it routine maintenance and the number of the large 

utilities followed that advice, did projects without offsetting, without any of the other legal routes to avoid NSR permitting and without going through NSR permitting and that was the basis of our 

enforcement initiative back 10 years—1998 and thereafter. 

Mr. TONKO. Thank you. 

Can you give us a sense of the current operating status at facilities that have been putting off these major modifications? Generally speaking, are they in need of significant investments in 

order to keep running? 

Mr. BUCKHEIT. Well, our fleet is getting pretty old—our coal 

fleet. Most of the coal-fired power plants came online in 1972 and 

before, and more and more the maintenance budgets have been cut 

at the plants as cost becomes an issue and competition in the electric market with natural gas and others become an issue. 

So I can forecast that as these plants—they’re now 60 years old, 

then coming on 70 years old and then coming on 80 years old. 

There’s going to be a time when engineering is going to force them 

to replace these components all over again. 

Mr. TONKO. So if the modification definition is expanded to allow 

projects designed to ‘‘restore, maintain, or improve the reliability or 

safety of the source,’’ would that essentially cover any investment 

needed for life extension projects? 

Mr. BUCKHEIT. Yes. You could fundamentally replace the plant. 

Well, you can’t go all the way there because then you might trigger some part of the NSPS rule. But you could spend 20, 30, 40 

percent of the cost of the new plant replacing these very large components without having to put on controls. 

117 

Mr. TONKO. And, finally, do you believe this discussion draft is 

just the latest attempt to create new loopholes to enable these 

sources to avoid some of the NSR program’s requirements such as 

installing pollution controls? 

Mr. BUCKHEIT. This is the current wave. It happens every 8 

years or so. 

Mr. TONKO. OK. Thank you for your response and, Mr. Chair, I 

yield back. 

Mr. SHIMKUS. Gentleman yields back his time. 

The Chair now recognizes the gentleman from West Virginia, Mr. 

McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

Mr. Holmstead, if I could direct perhaps my comments to you. 

Earlier, I think you were in the room when we were asking the 

previous speaker whether this idea of routine maintenance, because I had had conversations with some utility companies that 

have considered replacing the fins on their boiler as routine maintenance and that’s apparently been deemed that is a routine maintenance type of work. 

So if that’s the case that they can maintain their existing boiler, 

which is probably inefficient because it’s 40 or 50 years old, and 

then I go back to what Congressman Tonko and I have been working on now for 3 or 4 years getting research money to upgrade our 

and improve our turbine efficiency, here we have an opportunity to 

either replace the fins due to turbidity or erosion or whatever that 

might have caused and keep the efficiency low or we can use the 

research that we’ve paid for to implement a new technology, a new 

boiler, in that and improve the operation of that plant. 

But in so doing, that potentially triggers and likely triggers an 

NSR, and then you have to keep into consideration that from the 

February testimony we had here that you can go back as long as— 

there’s 700—I think, Mr. Allen, you said this, 700 documents that 

have to be filed to comply. But in Region 9, the average approval 

is 777 days to get that approval. 

You may find it’s over 2 years to get an answer of whether or 

not you’re going to be in compliance with the NSR. 

How would you react to that? Am I reasonable about what’s the 

incentive for people to improve the efficiency of their plant if it may 

take 2 and a half years to get the approval? 

Mr. HOLMSTEAD. Well, you have highlighted a big problem, that 

in a series of cases EPA has argued that if you improve the efficiency of a power plant you trigger NSR. 

So it might be in your interest to invest in something that would 

reduce your CO2 emission rate. It would reduce the emission rate 

of other pollutants. 

But here’s the theory that Bruce has propounded in several 

cases. If you make your plant more efficient you will reduce the operating costs. So the cost of producing a megawatt hour will go 

down. That will make you more competitive than other plans so 

your plant will run more often, will run more hours. So the claim 

is that if you make your plant a little bit more efficient you might 

have a lower operating cost. Therefore, you would run more hours. 

Therefore, you can’t make your efficiency improvement unless you 

go through this NSR process that can take, for a coal-fired power 

118 

plant, 2 years. It would be the blink of an eye, and you might have 

to install brand new controls that would cost several hundred million dollars. 

So how many companies are actually going to make a decision 

to become more efficient if those are the consequences? 

Mr. MCKINLEY. Thank you. 

I yield back. 

Mr. SHIMKUS. Gentleman yields back his time. 

The chair now recognizes the gentleman from Michigan, Mr. 

Walberg, for 5 minutes. 

Mr. WALBERG. Thank you, Mr. Chairman. Thanks to the panel 

for being here. 

Mr. Eisenberg and Mr. Johnson, I’ve got a question I would like 

to ask you here. 

Due to the positive impacts of the recently enacted tax reform 

bill, many companies are looking to make greater investments in 

new construction projects and facility upgrades. I’ve seen it in my 

district in plenty of sites. 

What effect does NSR have on a company’s ability and willingness to pursue new projects or upgrade existing facilities? 

I will go with Mr. Eisenberg first. 

Mr. EISENBERG. Thank you, Congressman. 

So it’s a barrier. It’s a barrier that is in the way of a pretty 

amazing window that we are seeing on the ground in real time— 

manufacturers taking on new projects because of tax reform. 

I appreciate that this has been a coal-dominant discussion. But 

for us, I want to make clear that it is very much about manufacturing. 

We asked our members at the beginning of last year, tell us what 

you care about in the regulatory space that we should be working 

on, and this issue was number one in the environmental space. 

So, when I talk about NSR I hear from aerospace and defense 

and steel and aluminum and cement and pulp and paper and 

chemicals. These are the folks that are doing those things on the 

ground that you just mentioned because of tax reform and other 

things that real or perceived have to deal with NSR and need a 

clear signal that NSR is a problem. 

To borrow a phrase from another context, the first step to solving 

a problem is admitting you have a problem. 

Mr. WALBERG. Yes. 

Mr. EISENBERG. We have a problem, and we really hope that 

Congress and EPA will help us fix it. 

Mr. WALBERG. Mr. Johnson. Thank you. 

Mr. JOHNSON. Thank you, Congressman. 

In the not for profit sector, the tax bill has not had as big of an 

impact on us but we are constantly looking for ways to improve the 

economics and the efficiency of the power plants that we run to 

generate electricity to keep our costs down for the electricity in 

much of rural America and that’s just a constant effort by all of our 

generation and transmission cooperatives to do that, and NSR is a 

barrier. 

We have had a number of our member cooperatives who have indicated they’ve considered undertaking projects and have decided 

not to do that because of the uncertainty of the NSR permitting 

119 

program. But they have undertaken other projects. We’ve installed 

lots of pollution control equipment and Mr. Buckheit’s testimony 

implied that older units have not added pollution control equipment. That is just not the case. The utility industry has invested 

over $100 billion on pollution control equipment to reduce those 

emissions and make the accomplishments that have been documented here. 

So we are constantly looking for those opportunities this is in 

fact a barrier and the bill would help remove that barrier. 

Mr. WALBERG. And, of course, you have that symbiotic relationship with business and manufacturing that goes with it. You have 

to be prepared for it and I’ve seen those upgrades at a great expense in my district as well in the utilities. 

Mr. JOHNSON. A big part of what we do is try to make sure the 

economies of our communities are strong and that we are investing 

in businesses and bringing those jobs to our communities. 

Mr. WALBERG. OK. Let me follow up with both of you. Does the 

NSR program create an incentive for manufacturers and utilities to 

operate their plants exactly as they were built, and secondarily, so 

what challenges is this creating? 

Mr. EISENBERG. So yes, and not every time but by and large it 

does create a perverse sort of incentive to only replace your equipment with the vintage of the equipment that was from when it was 

first manufactured.It doesn’t really make any sense in the grand 

scheme of things. Certainly, technology develops and gets better 

and manufacturers have an interest in installing that. 

NSR is a barrier and I’ve had countless companies say, look, the 

timeline that we needed to get through to upgrade this boiler or 

do this or do that, NSR, my fear of waiting 2 years to get a permit 

and maybe having to litigate it isn’t worth that expense. I can’t justify it to my board and my CEO. 

So it is a barrier. It is not the only barrier but it is one that we 

hope we can fix. 

Mr. JOHNSON. And Congressman, the utility sector—not to be 

evasive, but there are lots of things we have to consider when making determinations about how to improve plants, what to go 

through. 

This is but one of those, but it is one that slows things down, 

doesn’t speed things up. 

Mr. WALBERG. Yes. To have a drag on your process is just that 

and we take as many drags away from it then it works better. 

So thank you. I yield back. 

Mr. SHIMKUS. The gentleman yields back his time. 

The chair recognizes the gentleman from Georgia, Mr. Carter, for 

5 minutes. 

Mr. CARTER. Thank you, Mr. Chairman, and thank all of you for 

being here. We appreciate your presence here today and the work 

that you’re doing. 

Mr. Johnson, I will start with you. In your testimony, you talked 

about the current system and how flawed it is for companies and 

organizations that are wanting to do the right thing and trying to 

do the right thing and how easy it is for them to receive enforcement actions. 

120 

How important is it for us to change the metric that’s used to 

determine emissions from the annual emissions rate to an hourly 

rate? 

Mr. JOHNSON. Going to the hourly emissions rate would harmonize the rules between the NSR and the NSPS programs. 

So it would make some internal consistency. It would give our 

members much more clarity about what the rules of the road are 

and then they can make informed decisions about what they would 

to do to improve the efficiency of their power plants or do other 

maintenance activities because they would know what that clear 

line is between routine maintenance and what a major modification 

is. 

Giving them that clarity would speed their processes, cut our 

costs, while maintaining the environmental performance of the 

plant—— 

Mr. CARTER. Have you communicated that to the EPA? Do they 

ever ask for any input or—— 

Mr. JOHNSON. We went through a process during Bush II administration. Mr. Holmstead was at EPA at the time, trying to clarify 

rules of the road on New Source Review. 

Ultimately, that was not successful. We’ve asked for legislative 

clarifications, as I’ve testified, we’ve been looking for some clarity 

in this program for 2 decades and now is a good a time to act as 

any. 

Mr. CARTER. Wow. Do you have any examples of any plants and 

they just had to shut down as a result of the NSR being triggered? 

Mr. JOHNSON. I can’t point to at this moment a particular plant 

that closed because of NSR, per se. But where we’ve had plants 

that have closed or reduced their operations has been due to a multitude of factors and there have been times when plants have considered making, say, turbine upgrade projects or other improvements that improved the efficiency of the plant, that, as I said, 

they declined to do because of the uncertainty of the NSR process, 

its timeline, the litigation that would follow from that, and ultimately our members tend to operate in a small C conservative 

business manner to try to keep those costs down and avoid risks 

when possible. 

Mr. CARTER. OK. Thank you. 

Mr. Alteri, Chairman Shimkus has mentioned in our February 

meeting that—and when we were talking about the New Source 

Review there were over 700 guidance memos. 

How do you sieve through all that? That’s got to be unbelievable. 

Mr. ALTERI. It surely is. EPA does a nice job out of Region 7 of 

trying to capture all of those applicability determination through 

an index. But there’s also ongoing litigation that we have to be 

aware of because, ultimately, they decide. 

But, again, in Kentucky we are prohibited from regulating by 

policy and guidance and it should be noted that kind of the basis 

for what all NSR permitting actions are taken are through the 

1990 puzzle book and it is still in draft form. 

And so we just want EPA to give us the certainty that when we 

make a decision that it’s a final decision and then the companies 

can make the adjustments and the changes without fear of ongoing 

litigation. 

121 

Mr. CARTER. Let me ask you, from your perspective, if we were 

to shift to an hourly emissions rate would that help? 

Mr. ALTERI. Well, again, the idea is that you’re going to make 

that unit as efficient as possible and, to Mr. Buckheit’s point is 

that it would be utilized more in increased emissions. 

But now with the 2010 standards for NOx and SOCS, they’re 1- 

hour standards and that’s what the health-based standards are. 

They’re not annual-based standards any longer. 

So I think it makes sense to focus on the hourly emission rates. 

Mr. CARTER. Good. Good. 

Thank you all, again, for being here and, I hope you will not be 

discouraged. I hope you will continue work. I want to think it’s a 

new day at EPA and that they’re more receptive and more input 

from you. So thank you for what you’re doing. 

Mr. Chairman, I will yield back. 

Mr. SHIMKUS. The gentleman yields back his time. 

The chair now recognizes again the very patient author of the 

legislation, Mr. Griffith from Virginia, for 5 minutes. 

Mr. GRIFFITH. Thank you very much. If we could get the map put 

up on the board. 

Mr. Eisenberg, I’ve told the story earlier about the conveyor belt 

to nowhere because they didn’t want to mess with the conveyor belt 

because—and maybe they’re wrong. 

But the confusion and the concern about NSR is a problem. In 

response, we heard from Mr. Baldauf that they were concerned 

about New Jersey’s mercury and other chemicals going up, and I 

knew I had this map somewhere in the back and if you can read 

it—and if we need the bigger one we can bring it out—but that’s 

a listing of the mercury deposited in the United States from foreign 

sources and you can see New Jersey is in the 40 to 45 to 50 percent 

range of foreign sources. 

Am I not correct that a large amount of that comes from manufacturing and electrical generation in Asia and other—I see Florida’s got a high percentage so I would assume some of it may be 

from Central America, too. 

Wouldn’t that be correct, yes or no? 

Mr. EISENBERG. That would be correct, and not just on mercury 

but other pollutants as well. 

Mr. GRIFFITH. And so when we have situations where the confusion in the United States is a manufacturer of furniture can’t 

change the conveyor to nowhere because he’s no longer putting the 

lacquer on at that end of the conveyer belt, that tends to make our 

Asian competitors more competitive, does it not, when they’re manufacturing goods? 

Mr. EISENBERG. It does. 

Mr. GRIFFITH. And in fact, I would submit—and I want to know 

if you agree—that in some ways, by having rules that don’t make 

sense we actually might increase the mercury being deposited from 

foreign sources in New Jersey that Mr. Baldauf is worried about, 

aren’t we? 

Mr. EISENBERG. Well, certainly, if we are not promoting more efficient generation and more efficient technologies, yes. It would 

only exacerbate the problem. 

122 

Mr. GRIFFITH. But usually we are trying to be more efficient but 

we’ve got this rule in the way. 

Mr. Holmstead, I don’t know if you can answer this question or 

not, and if not if you can get back to me later—I think it’s interesting, as I’ve been listening to the discussion. 

My understanding is is that the Obama administration EPA, 

which was very aggressive on a lot of these issues—a lot of these 

issues never tried to take the New Source Review rule and implant 

that into the New Source Performance Standards. Am I not correct 

on that? 

Mr. HOLMSTEAD. No, that is right. 

Mr. GRIFFITH. And if the New Source Review rule was so much 

better, because we heard from Mr. Johnson earlier, the language 

is the same in the bill but it’s been interpreted differently. And if 

that was so much better, I would have thought they would have 

done that. 

Now, the hourly emissions rate test utilized by the New Source 

Performance Standards program and included in this legislation 

provides an objective measure based on the facility’s design and 

we’ve heard that it’s easily determined by facility operators. 

Why is it easier to calculate and what is so complicated about the 

current emission project process? 

Mr. HOLMSTEAD. So the hourly emission rate is really the capacity of the plant and people who design the plant, people who buy 

that equipment, that’s what they care about. 

That’s an objective number, and I am not aware that there’s ever 

been an issue whether that was triggered under the NSPS. 

People do trigger it sometimes which means that they have to 

meet more efficient standards. With the annual test, Mr. Buckheit 

said something that’s very revealing. 

So if you have a plant that in some time over the last 5 years 

had a forced outage, so you had a part that broke down and you 

had to shut down your plant for a day, even half a day, if you replace that part, then under the theory of—that EPA has taken in 

these cases, you increase your emissions because it was shut down 

for 24 hours or 8 hours, during some period and now that that 

part’s not going to break down, the theory is well, you’re going to 

increase your annual emissions. 

Some courts, but not all, have accepted that, and that’s one of 

the other problems. We have different NSR rules around the country based on decisions by circuit courts on some of these theories. 

Mr. GRIFFITH. So, basically, if you’re more efficient, that’s bad 

from the viewpoint of those that don’t want to—— 

Mr. HOLMSTEAD. Or—— 

Mr. GRIFFITH [continuing]. Or if you’re just not closed down 

some—— 

Mr. HOLMSTEAD. Or more reliable. 

Mr. GRIFFITH. Or more reliable. 

Mr. HOLMSTEAD. Right. So if you’re more reliable then you can 

operate more hours and that should trigger NSR. 

Mr. GRIFFITH. And whether we are dealing with manufacturing 

or we are dealing with electric generation or refining, we actually 

want those people to be more reliable, don’t we? 

123 

Mr. HOLMSTEAD. I would think so. But we also want them to reduce their pollution where we can and we have all these other 

tools. 

We are not waiting for them to trigger some program. We are 

saying, here’s how you need to reduce your pollution and we are 

going to focus on it. 

Mr. GRIFFITH. I think you pointed out earlier there are 14 overlapping programs with the NSR. Is that accurate? 

Mr. HOLMSTEAD. Well, for the power sector there’s at least 14 

other programs that regulate the very same pollutants from the 

same plans. 

Mr. GRIFFITH. Kind of makes it hard for folks to comply when 

you have got all these overlapping and sometimes confusing regulations, isn’t it? 

Mr. HOLMSTEAD. Well, it’s good for Clean Air Act lawyers. 

Mr. GRIFFITH. Yes, sir. I can appreciate that. As a lawyer, I am 

not sure I would be upset about that part of it but I hate it for the 

American people. 

I yield back. 

Mr. SHIMKUS. The gentleman yields back his time. 

Before I do the closing document, I was asked by the minority— 

I am going to ask unanimous consent to allow Mr. Baldauf to at 

least respond to the air transport issue, if you would like, since the 

State of New Jersey was mentioned in my colleague’s comment. 

Is that correct? Is that what you wish. 

Mr. BALDAUF. Sure. So, generally, the transport issue just has to 

do with the simple fact that, you know, as a state we are probably 

almost in the top couple cleanest energy-generating states in the 

country. 

But the reality is no matter how clean your in-state generation 

is, if there’s no control on the upwind states, you have the same 

amount of pollution, unfortunately, for your citizens as the other 

states do. 

One of our focus is on NSR. There’s been talk about all the tools 

in the toolbox. Well, at the end of the day, these grandfathered facilities have remained unchanged for 40 years. So those other tools 

don’t seem to be helping. 

I agree that the NSR rules are flawed. They’re complicated, and 

I do think they need to be revised. But they need to be revised in 

such a way to make sure these grandfathered facilities reduce 

emissions and not increase emissions. 

Mr. SHIMKUS. Well, I thank you very much and you’re welcome 

to give us some input on—we do try to get to some type of compromise. 

We’d sure like to get this fixed. This might be a bridge too far 

but we could give it a try, right, Congressman Griffith? 

Mr. GRIFFITH. Absolutely. 

Mr. SHIMKUS. So with that, seeing no other further members 

wishing to ask questions, I would like to thank you all for being 

here again today. 

Before we conclude, I would like to ask unanimous consent to 

submit the following documents for the record: a joint letter from 

the American Forest and Paper Association and the American 

Wood Council. 

124 

We also have a letter from the National Parks Conservation Association. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. SHIMKUS. In pursuant to committee rules, I remind members 

that they have 10 business days to submit additional questions for 

the record and I ask that witnesses submit their responses within 

10 business days upon receipt of the questions. 

Without objection, the subcommittee is adjourned. 

[Whereupon, at 12:48 p.m., the committee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

125 


32790.068

American 

Forest 8c Paper 

Association 

The Honorable John Shimkus 

May 15, 2018 

House Energy and Commerce Committee 

Chairman, Subcommittee on Environment 

2123 Rayburn House Office Building 

Washington, D.C. 20515 

The Honorable Paul Tonko 

House Energy and Commerce Committee 

Ranking Member, Subcommittee on Environment 

2322A Rayburn House Office Building 

Washington, D.C. 20515 

Dear Chairman Shimkus and Ranking Member Tonko, 

AMERICAN WOOD COUNCIL 

I would like to thank you for holding the hearing entitled, "Legislation Addressing New 

Source Review Permitting Reform" on May 16, 2018. This hearing provides an important 

opportunity for the Subcommittee to examine the challenges posed by EPA's New 

Source Review Program (NSR) and how it can be improved -- consistent with the twin 

purposes of the Clean Air Act to promote public health and welfare, as well the 

productive capacity of the nation. 

The American Forest & Paper Association (AF&PA) serves to advance a sustainable 

U.S. pulp, paper, packaging, tissue and wood products manufacturing industry through 

fact-based public policy and marketplace advocacy. AF&PA member companies make 

products essential for everyday life from renewable and recyclable resources and are 

committed to continuous improvement through the industry's sustainability 'initiative -

Better Practices. Better Planet 2020. The forest products industry accounts for 

approximately four percent of the total U.S. manufacturing GDP, manufactures over 

$200 billion in products annually, and employs approximately 900,000 men and women. 

The industry meets a payroll of approximately $50 billion annually and is among the top 

10 manufacturing sector employers in 45 states. 

The American Wood Council (AWC) is the voice of North American wood products 

manufacturing, an industry that provides approximately 400,000 men and women in the 

United States with family-wage jobs. AWC represents 86 percent of the structural wood 

1101 K Street NW, Suite 700 • Washington, DC 20006 

• 202 463-2700 Fax: 202 463-2785 • www.afandpa.org 

222 Catoctin Circle SE, Suite 201 • Leesburg, VA 20175 

• 202-463-2766 Fax: 202-463-2791 • www.awc.org • 
126 


32790.069

Representatives Shimkus and Tonko 

May 15,2018 

Page 2 

products industry, and members make products that are essential to everyday life from 

a renewable resource that absorbs and sequesters carbon. Staff experts develop stateof-the-art engineering data, technology, and standards for wood products to assure their 

safe and efficient design, as well as provide information on wood design, green building, 

and environmental regulations. AWC also advocates for balanced government policies 

that affect wood products. 

EPA's complex NSR air permit program affects practically every major manufacturing 

facility in the United States, and unfortunately, it has become a significant impediment to 

the modernization and growth of the U.S. manufacturing sector. U.S. air permitting and 

regulatory requirements are out of date, overly conservative, rigid, and time-consuming. 

The air quality permitting process for new and modified facilities is slow and 

cumbersome and relies on unrealistic modeling and assumptions, resulting in 

unnecessary delays, costs and impediments for projects that would benefit both our 

economy and our environment. 

Recently, this problem has become more acute with substantial tightening of EPA's 

National Ambient Air Quality Standards (NAAQS) closer to ambient background levels. 

Simply put, when stringent NAAQS are combined with unrealistic air quality modeling 

and assumptions, there is little or no "headroom" for new or modified facilities in many 

areas to show that their residual emissions will not contribute to a violation of the 

NAAQS, even after the installation of the best available pollution control technology. 

It doesn't make sense to discourage upgrading plants already subject to myriad other 

regulatory requirements, or to block beneficial projects using best controls simply due to 

unrealistic air quality modeling and assumptions. The reality is that energy efficiency 

and modernization projects for existing sources are delayed, modified or thwarted by 

complex NSR interpretations that have accumulated and evolved over time. The 

program requires expensive but unrealistic air modeling that frequently delays projects 

many months or more and can cost $100,000 or more to complete. Unreasonable 

permitting delays tie up investment capital and undermine the economic benefits from 

expansion projects. 

AF&PA and AWC support the draft legislation under consideration by the Subcommittee 

as it makes important strides in reforms to the NSR program that can ultimately result in 

more efficient manufacturing while still achieving the goals of the NSR program. Among 

other things, the draft legislation overrides past adverse Court decisions including one 

invalidating a NSR exclusion for installing new pollution control equipment. 

Specifically, the EPA 2002 Pollution Control Project (PCP) Exclusion would have 

allowed such environmentally beneficial projects to proceed quickly and efficiently. The 

exclusion was invalidated by the D.C. Circuit in 2005. Because PCPs are no longer 

excluded from NSR, facilities that want to install more efficient pollution controls, switch 
127 


32790.070

Representatives Shimkus and Tonko 

May 15, 2018 

Page 3 

to cleaner fuels, and make modifications to improve energy efficiency must go through 

the NSR permitting process. For example, a mill wants to upgrade its control system on 

a bark boiler from a wet scrubber to an electrostatic precipitator (ESP) to get greater 

particulate reductions. However, the pollution control project increases other emissions 

from the fuel used to operate the ESP so the project is subject to NSR. In many cases, 

the inflexible and overly conservative nature of the NSR process forces such beneficial 

projects to trigger PSD review. In this way, the current NSR permitting program creates 

a disincentive for companies to pursue PCP and/or energy efficiency improvement 

projects because the process results in delay and increased costs in implementing the 

project and could result in an environmentally beneficial project not moving forward at 

all. The bill's primary purpose test ensures that projects intended to reduce emissions 

such as installation of control devices avoid the burdens of NSR and get installed and 

working sooner. 

Providing an exclusion for PCP projects from NSR would benefit the environment 

because it would encourage facilities to invest in environmentally beneficial projects. 

The exclusion will create incentives to reduce emissions. Overall, the bill provides NSR 

protection for any "efficiency," "reliability" or pollution control project that may be 

projected to increase hours of operation, but will not increase the maximum achievable 

hourly rate. 

The NSR permitting program is broken and must be updated to allow for growth and 

innovation while promoting the best available technologies to protect our environment. 

The forest products industry is one of the largest manufacturing sectors in the nation, 

has invested billions of dollars on environmental stewardship and remains committed to 

innovative and sustainable business practices. Yet, an inflexible NSR permitting 

program impedes beneficial projects and job creation and undermines paper and wood 

product manufacturers' ability to effectively plan for our future. Thank you for examining 

this important issue and our industry looks forward to working with you and the 

Subcommittee as the legislative process moves forward. 

Best regards, 

PauiNoe 

Vice President Public Policy 

American Forest & Paper Association 

American Wood Council 
128 


32790.071

NPCA Position on Draft Legislation Addressing New Source Review 

Permitting Reform 

May 151\ 2018 

Dear Representative, 

Since 1919, the National Parks Conservation Association (NPCA) has been the leading 

voice of the American people in protecting and enhancing our National Park System. On 

behalf of our more than 1.3 million members and supporters nationwide, I urge you to 

oppose the draft legislation addressing new source review permitting reform that will 

be before the Energy and Commerce Subcommittee on Environment on Wednesday, 

May t6•h. If passed, this bill would weaken air pollution safeguards relied on by millions 

of people and could lead to increased air pollution and related damage to national parks 

and surrounding ecosystems. It would also limit public stakeholder engagement in 

important decisions affecting our air and our climate. 

The draft bill would allow industrial sources to increase pollution without environmental 

review and without requiring application of the best available control technology. This 

bill undermines the fundamental compromise of "grandfathering" built into the Clean 

Air Act, in which outdated facilities must install pollution reducing technology when 

they make modifications to keep a facility running. 

The bill would exempt industrial sources from environmental review by changing the 

test for what constitutes a "modification" under the Clean Air Act's New Source Review· 

(NSR) Program from an annual emissions test to an hourly emissions test. Often, older 

facilities undergo significant renovations that do not increase hourly emissions, but 

instead allow the source to operate for more hours per year, increasing overall pollution. 

Such sources would evade the appropriate application of control technology. 

Similarly, the bill seeks to limit NSR applicability to projects that deal with reliability or 

safety. These projects are also often designed to give new life to outdated equipment, and 

ultimately allow increased annual pollution. Requiring a lower level of scrutiny for them 

undercuts the progressive improvements anticipated by the Clean Air Act. 

The bill also exempts sources making changes that reduce the emission rate of an air 

pollutant without considering possible increases in other pollutants. Pollution controls 

sometimes decrease one air pollutant at the cost of increasing another. This means that a 

minor decrease in pollution of one kind could negate a regulatory agency's obligation to 

address significant increases of another type of pollutant. 

The real-world outcome of the changes specified in this bill is that few, if any, 

modifications to outdated industrial sources would undergo New Source Review. It is 

precisely during this review that federal land managers responsible for protecting the 

777 6th Street. NW. Suite 700 I Washinaton. DC 20001-3723 I P 202.223.6722 I F 202.872.0960 I noca.ora 
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32790.072

nation's public lands get the opportunity to consult with the permitting agency, 

reviewing impacts of proposed modification and engaging in the NSR rulemaking 

process to ensure that these sources comply with modern standards and laws. The draft 

bill would amend the Clean Air Act so that a major source of pollution could increase its 

emissions without notifYing the public or federal land managers. This would limit the 

opportunity for stakeholders to engage in a comment process necessary to ensure 

transparency in decision-making aud accountability. 

While we appreciate the desire to encourage projects improving efficiency and reducing 

emission rates, because these projects can also end up increasing emissions or overall 

pollution, eliminating review and application of appropriate controls and the 

opportunity for public review does not make sense. 

Thank you for considering our views. For further information, please contact Stephanie 

Kadish at (865) 329-2424 x28 or skodish@noca.org. 

Sincerely, 

Ani Kame'enui 

Director of Legislation and Policy 

777 6th Street, NW, Suite 700 I Washington, DC 20001-3723 I P 202.223.6722 I F 202.872.0960 I npca.org 
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32790.073

GREG WALDEN, OREGON 

CHAIRMAN 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

C!tongrt.£S.£S of tbt 'itntttb ~tatt.£S 

~ou!St of l\ept:t!Stntatibe!S 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN House OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 Majority !202l2"25-o2927 

Minority (;ro2J2i5~3641 

June 25, 2018 

The Honorable William Wehrum 

Assistant Administrator, Air and Radiation 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue, N.W. 

Washington, DC 20460 

Dear Mr. Wehrum: 

Thank you for appearing before the Subcommittee on Environment on May 16, 2018, to 

testify at the hearing entitled "Legislation Addressing New Source Review Pennitting Reform." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record 

remains open for ten business days to permit Members to submit additional questions for the record, 

which are attached. To facilitate the printing of the hearing record, please respond to these 

questions with a transmittal letter by the close of business on Monday, July 9, 2018. Your responses 

should be mailed to Kelly Collins, Legislative Clerk, Committee on Energy and Commerce, 2125 

Rayburn House Office Bullding, Washington, DC 20515 and e-mai1ed in Word format to 

kelly.col!ins@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

John Shimkus 

Chairman 

Subcommittee on Environment 

cc: The Honorable Paul Tonko, Ranking Member, Subcommittee on Environment 

Attachment 
131 


32790.074

Attachment-Additional Questions for the Record 

The Honorable John Shimkus 

1. Do you think this discussion draft under consideration today reforms the NSR program 

while still ensuing air regulators have the tools they need to protect air quality? 

Response: I believe the reforms contained in the discussion draft would reduce the 

likelihood that the program will be a barrier to the implementation of beneficial projects, 

such as energy efficiency projects. The reforms would not affect any of the numerous other 

air quality management programs and tools that air regulators will continue to have at their 

disposal to ensure air quality protection. 

2. An important component of the NSR program focuses on how an owner determines if a 

potential project will cause an emissions increase, thereby requiring an owner to obtain an 

NSR preconstruction permit. 

a. Why is the NSR program's current annual emission projection approach problematic 

for determining whether an emissions increase will occur? 

Response: As noted above, the current annual emissions projections approach can be a 

disincentive to certain projects that improve facility operations and result in environmental 

benefits most notably, energy efficiency projects. The current approach also causes 

confusion because it is inconsistent with the emissions test used in the NSPS program. The 

discussion draft would help address both problems. 

b. Are their scenarios where the EPA's annual emission projection approach will 

predict on paper that a project will cause. an emissions increase when in reality the 

project will not actually cause an emissions increase 

Response: Because the current annual emissions projection is a projection, it is possible that 

the actual emissions resulting from the implementation of a project would be less than 

initially anticipated. This is particularly the case for the current "actual-to-projected-actual" 

applicability test which relies on the source's pre-project estimates of future actual operating 

conditions and emissions. 

3. Some opponents ofNSR reform believe that the NSR program is a critical program to force 

existing sources to adopt new pollution control technologies. 

a. Besides the NSR program, what other Federal and State programs exist that can 

require or incentivize a facility to adopt new pollution control technologies? 

Response: The discussion draft under consideration does not change the control technology 

component of the NSR program. As such, NSR will continue to be an emissions control 

program that requires sources to adopt state of the art pollution control technologies as 

appropriate and necessary. In addition to NSR, there are many other Federal and State 

programs authorized by the Clean Air Act that require or incentivize air pollution controls. 

Examples include: 

• State plans developed pursuant to CAA § 110, including minor NSR programs 
132 


32790.075

• New Source Performance Standards developed pursuant to CAA § 111 

• National Emissions Standards for Hazardous Air Pollutants pursuant to CAA § 112 

• The Acid Rain Program established under title IV of the CAA 

• Interstate transfer programs established under the 'good neighbor' provisions of 

CAA § 110 (e.g., the Cross-State Air Pollution Rule) 

• The Regional Haze Program under CAA § 169 

4. The current NSR program has been characterized as "self-implementing," meaning that 

companies are able to determine the applicability ofNSR requirements on their own and do 

not require preapproval from the EPA before carrying out projects at existing facilities that 

do not trigger NSR. Is there anything in the discussion draft that would undermine the selfimplementing nature of the NSR program? 

Response: As currently drafted, the discussion draft reforms are not expected to affect the 

self-implementing nature of the NSR program. 

The Honorable Frank Pallone, Jr. 

1. Mr. Wehrum, at the hearing you committed to sharing the Office of Air and Radiation's 

comments on the recent Strengthening Transparency in Regulatory Science proposed rule. 

Please provide the Committee with those comments. 

Response: During the intra-agency deliberative process to develop the proposal, the Office 

of Air and Radiation's immediate office worked with senior leadership in its respective 

programs to solicit verbal feedback regarding the potential implications of the concepts in 

the proposal on program priorities. This feedback was provided to the proposal development 

team prior to interagency review. 

The Honorable Debbie Dingell 

On January 25th, EPA issued guidance that reversed the long standing "once in, always in" policy 

for major sources of hazardous air pollutants. In response, I sent EPA a letter in April, along with 86 

colleagues, calling for the decision to be reversed. 

In April, Administrator Pruitt told this committee that EPA conducted a review to determine which 

sources, and how many, would be covered by this policy change, and the magnitude of hazardous 

air pollution that could increase as a result. 

1. Mr. Wehrum, did this review take place? If yes, when was it conducted, and is it publicly 

available? Please provide a copy of EPA's analysis. 

Response: The January 25, 2018 Wehrum guidance memo builds upon a 2007 proposed 

rule that addressed the same issue. In that proposal, EPA asserted that, "The environmental, 

economic, and energy impacts of the proposed amendments cannot be quantified without 

knowing which sources will avail themselves of the regulatory provisions proposed in this 
133 


32790.076

rule and what methods of HAP emission reductions will be used. It is unknown how many 

sources would choose to take permit conditions that would limit their PTE to below major 

source levels. 

Within this group it also is not known how many sources may increase their emissions from 

the major source MACT level (assuming the level is below the major source thresholds). 

Similarly, we carmot identify or quantify the universe of sources that would decrease their 

HAP emissions to below the level required by the NESHAP to achieve area source status." 

(72 FR 77, January 3, 2007). In the 2007 proposed rule, EPA concluded that, "we believe it 

is unlikely that a source that currently emits at a level below the major source thresholds as 

the result of compliance with a MACT standard would increase its emissions in response to 

this rule. However, even if such increases occur, the increases will likely be offset by 

emission reductions at other sources that should occur as the result of this proposal. 

Specifically, this proposal provides an incentive for those sources that are currently emitting 

above major source thresholds and complying with MACT, to reduce their HAP emissions 

to below the major source thresholds." (72 FR 73-74, January 3, 2007). 

In a recent report released by the Union of Concerned Scientists, 7 industrial facilities in my district 

alone could release an additional ISS tons of hazardous air pollutants per year with the rescission of 

this policy. It is still not clear whether EPA has looked at the full ramifications and potential health 

effects of this decision. At the April 26th hearing, Administrator Pruitt did not know whether EPA 

had analyzed the potential health effects of this policy, and pledged to "assess and provide" more 

information. I am still waiting for a response. 

2. A. Mr. Wehrum, yes or no, before releasing the January 25th guidance did EPA conduct any 

scientific analysis of the potential human health effects of this decision? 

Response: As explained above, EPA looked at the implications of the policy in the 2007 

proposal and found it was "unlikely that a source that currently emits at a level below the 

major source thresholds as the result of compliance with a MACT standard would increase 

its emissions in response to this proposal." 

EPA is aware of the Union of Concerned Scientists report referenced in your question. As 

we noted in the 2018 Memo, EPA anticipates that it will be publishing a Federal Register 

notice to take comment on adding regulatory text that will reflect EPA's plain language 

reading of the statute. Further, as we proceed through the rulemaking process, we will 

prepare appropriate economic and other analyses with respect to the action and provide 

details about the length of the comment period and location of any public hearing. 

3. If your answer to 2a is yes, when was the analysis conducted, and is it publicly available? 

Please provide a copy of this analysis to the Committee. 

Response: See above. 

4. If your answer to 2a is no, has EPA conducted such an analysis since releasing the January 

25th guidance? · 

Response: See above 
134 


32790.077

GREG WALDEN, OREGON 

CHAIRMAN 

Mr. Sean Alteri 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

Cll:ongre~~ of tbt Wnttd.J ~tate~ 

~oul3e of l\eprel3entatibes 

COMMITIEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE 0FACE BuiLDING 

WASHINGTON, DC 20515-6115 Mnjor!ty (202)225-2921 

Minority l202) ns~3641 

June 25,2018 

Director, Division for Air Quality 

Kentucky Department of Environmental Protection 

300 Sower Boulevard, 2nd Floor 

Frankfort, KY 40601 

Dear Mr. Alteri: 

Thank you for appearing before the Subcommittee on Environment on May 16, 20 I 8, to 

testify at the hearing entitled "Legislation Addressing New Source Review Permitting Reform." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record 

remains open for ten business days to permit Members to submit additional questions for the record, 

which are attached. To facilitate the printing of the hearing record, please respond to these 

questions with a transmittal letter by the close of business on Monday, July 9, 2018. Your responses 

should be mailed to Kelly Collins, Legislative Clerk, Committee on Energy and Commerce, 2125 

Rayburn House Office Building, Washington, DC 20515 and e-mailed in Word format to 

kelly.collins!lilmail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

John Shimkus 

Chairman 

Subcommittee on Environment 

cc: The Honorable Paul Tonko, Ranking Member, Subcommittee on Environment 

Attachment 
135 


32790.078

MATIHEW G. BEVIN oo......,. CD 

ENERGY AND ENVIRONMENT CABINET 

DEPARTMENT FOR ENVIRONMENTAL PROTECTION 

300 SOWER BOULEVARD 

FRANKFORT, KENTUCKY 40601 

July9, 2018 

Ms. Kelly Collins, Legislative Clerk 

Committee on Energy and Commerce 

2125 Rayburn House Office Building 

Washington, D.C. 20515 

Dear Ms. Collins: 

CHARLES G. SNAVELY 

~~ARY 

ANTHONY R. HATTON 

""""""'""' 

On May 16,2018, I appeared before the Subcommittee on Environment to testify at the 

hearing entitled, "Legislation Addressing New Source Review Permitting Reform." Included in 

this letter, please find my responses to Chairman John Shimkus' additional questions for the 

record. 

The Honorable Jobn Shimkus 

1. Do you think this discussion draft under consideration today reforms the NSR program while 

still ensuing air regulators have the tools they need to protect air quality? 

Yes. The discussion draft under consideration limits the emissions increases to the 

maximum achievable hourly emission rate demonstrated in the last ten years. This 

limitation will provide the necessary enforceable conditions to protect the relevant 

National Ambient Air Quality Standards. 

2. An important component of the NSR program focuses on how an owner determines if a 

potential project will cause an emissions increase, thereby requiring an owner to obtain an 

NSR preconstruction permit. 

a. Why is the NSR program's current annual emission projection approach 

problematic for determining whether an emissions increase will occur? 

The annual emission projections disincentives energy efficiency projections that 

would lead to an increase in performance, demand, and utilization. The increased 

utilization of a facility may increase annual amounts; however, a project would 

actually reduce the amount of any air pollutant emitted by the source per unit of 

output after implementation of efficiency measures. 

KcntuckyUnbridlcdSpirit.com An Equal 01't"'rtunity Employer MIFID 
136 


32790.079

b. Are their scenarios where the EPA's annual emission projection approach will 

predict on paper that a project will cause an emissions increase when in reality the 

project will not actually cause an emissions increase? 

Yes. For instance, the widely-accepted emission factors developed and utlilized 

for predicting emissions of PMl.l from the combustion of natural gas are 

conservative by an order of magnitude. The conservative emission factors often 

trigger NSR applicability, although post-construction monitoring and performance 

testing often reveal that the actual emissions increase remained below the 

significant emissions rate increase. 

3. Some opponents ofNSR reform believe that the NSR program is a critical program to force 

existing sources to adopt new pollution control technologies. 

a. Besides the NSR program, what other Federal and State programs exist that can 

require or incentivize a facility to adopt new pollution control technologies? 

The General Duty to prohibit a facility from violating, or interfering with the attainment or 

maintenance of, ambient air quality standards may require or incentivize a facility to adopt 

new air pollution control technologies beyond what may be required through the applicability 

of a standard. Also, a new, modified, or reconstructed facility may be required to install new 

air pollution control equipment by the New Source Performance Standards established under 

Section Ill of the Clean Air Act. Likewise, an existing facilty may be incentivized to install 

new air pollution control technologies through a state plan issued under Section lll(d) of the 

Act. Further, the National Emission Standards for Hazardous Air Pollutants often requires 

facilities to install additional air pollution control equipment. 

lf you have questions regarding these responses, please do not hesitate to contact 

me at your convenience. 

Division for Air Quality 
137 


32790.080

GREG WALDEN, OREGON 

CHAIRMAN 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

C!ongre~~ of tbe Wntteb ~tate~ 

}!.)oust of l\rprestntatibts 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BUILDING 

WASHINGTON, DC 20515-6115 Majority 1202)225-2927 

Minority 12021225-..1641 

June 25, 2018 

Mr. Ross E. Eisenberg 

Vice President, Energy and Resources Policy 

National Association of Manufacturers 

733 lOth Street, N.W.; Suite 700 

Washington, DC 20001 

Dear Mr. Eisenberg: 

Thank you for appearing before the Subcommittee on Environment on May 16, 2018, to 

testify at the hearing entitled "Legislation Addressing New Source Review Permitting Reform." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record 

remains open for ten business days to permit Members to submit additional questions for the record, 

which are attached. To facilitate the printing of the hearing record, please respond to these 

questions with a transmittal letter by the close of business on Monday, July 9, 2018. Your responses 

should be mailed to Kelly Collins, Legislative Clerk, Committee on Energy and Commerce, 2125 

Rayburn House Office Building, Washington, DC 20515 and e-mailed in Word format to 

k~lly.collins@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

~ John Shimkus " 

Chairman 

Subcommittee on Enviromnent 

cc: The Honorable Paul Tonko, Ranking Member, Subcommittee on Enviromnent 

Attachment 
138 


32790.081

Ross E. Eisenberg 

Vice President 

Energy & Resources Polley 

NATIONAl 

Manufacturers 

July 6, 2018 

The Honorable John Shimkus 

Chairman 

Subcommittee on Environment 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable Paul Tonko 

Ranking Member 

Subcommittee on Environment 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Shimkus and Ranking Member Tonko: 

Thank you for your follow-up questions for the record from the Subcommittee's recent 

hearing, "Legislation Addressing New Source Review Permitting Reform." Enclosed are my 

responses. The National Association of Manufacturers looks forward to working with the 

Subcommittee on these and other issues affecting manufacturers. 

Sincerely, 

Ross Eisenberg 

Vice President 

Energy and Resources Policy 

Leading Innovation. Creating Opportunity. Pursuing Progress. 

73310111 Street. t#V, Suite 700, Washington, DC 20001 P 202·637·3173 F 202·637·3182 www.nam.org 
139 


32790.082

RESPONSES TO QUESTIONS FOR THE RECORD 

ROSS EISENBERG, NATIONAL ASSOCIATION OF MANUFACTURERS 

HOUSE COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON ENVIRONMENT 

HEARING ON "LEGISLATION ADDRESSING NEW SOURCE REVIEW PERMITTING REFORM" 

MAY 16,2018 

Question from the Honorable John Shimkus (R-ILl 

1. An important component of the NSR program focuses on how an owner 

determines if a potential project will cause an emissions increase, thereby 

requiring an owner to obtain an NSR preconstruction permit. 

a. Why is the NSR program's current annual emissions projection approach 

problematic for determining whether an emissions increase will occur? 

Manufacturers have struggled for many years with the way the Environmental Protection 

Agency (EPA) has interpreted its regulations concerning emissions accounting during the twostep NSR applicability determination process. One such challenge stems from a requirement 

that manufacturers consider only a project's emission increases-and not its decreases-in 

determining whether Step 1 of the NSR is triggered. Decreases can only be considered during 

Step 2 of NSR in the context of "plant-wide netting," which can be a time-consuming and costly 

process for a manufacturer to undertake. 

b. Are there scenarios where the EPA's annual emission projection approach 

will predict on paper that a project will cause an emissions increase when 

in reality the project will not cause an emissions increase? 

That is correct. Such scenarios could occur when a manufacturer takes on a project that 

would result in switching of fuels, such as a project to replace an oil-fueled process heater with 

a natural gas-fired process heater. Although the overall project would result in significantly lower 

emissions of nitrogen oxides (NOx), the emissions decreases would not be counted during Step 

1 of NSR; only the additional NOx that would occur from the natural gas process heater may be 

counted. Step 1 of NSR therefore results in an emission increase on paper, when the project 

would actually result in an emission decrease. 

2. Some opponents of NSR reform believe that the NSR program is a critical program 

to force existing sources to adopt new pollution control technologies. 

a. Besides the NSR program, what other Federal and State programs exist 

that can require or incentivize a facility to adopt new pollution control 

technologies? 

As Mr. Holmstead testified at the above-referenced hearing, there are no less than 13 

other Clean Air Act programs that regulate the same pollutants covered by NSR. 

1 
140 


32790.083

In addition, the Energy Policy Act of 2005, the Energy Independence and Security Act of 

2007 and the energy portions of the American Reinvestment and Recovery Act of 2009 all 

enacted multitudes of federal programs to research, develop and deploy new technologies that 

have helped manufacturers reduce their emissions. NAM member companies participate 

actively with the Department of Energy (DOE) and the EPA on legacy programs like the Better 

Plants Initiative, the Diesel Emissions Reduction Act, energy saving performance contracts and 

the many resources available to manufacturers at the national laboratories. 

Finally, it is worth acknowledging that decisions to invest in new capital can be triggered 

by forces other than environmental policy. Tax and trade policies are excellent examples. 

b. Additionally, what are the scenarios where existing facilities may choose to 

adopt new pollution control technologies for reasons other than being 

required to by government regulation? 

The first is the suite of voluntary programs managed by the DOE's Advanced 

Manufacturing Office-programs the NAM is actively promoting with our membership. We 

recently announced a partnership with the DOE, called the Sustainability in Manufacturing 

Initiative, whereby we will help the DOE with its outreach to the manufacturing community. We 

have seen a great deal of our members become partners with the DOE's Better Plants Program, 

a voluntary program to improve energy efficiency in the industrial sector. Better Plants partners 

set a goal and DOE helps them achieve it. A typical goal is a 25 percent improvement in energy 

intensity over 1 0 years. 

Similarly, we are hearing from our members that the recently-passed tax reform package 

is providing opportunities to upgrade to more efficient equipment and reduce emissions. One of 

the challenges with using Clean Air Act regulations as the driver of change is that the 

regulations typically only apply to new sources of emissions. It is much more difficult, as we 

have learned from the Clean Power Plan, to make changes to the existing stock of equipment. 

Provisions in the tax reform package such as full and immediate expensing are changing the 

internal rate of return on energy efficiency projects and making them more compelling for 

manufacturers, which is incentivizing manufacturers to upgrade their existing equipment. The 

NAM is still investigating the emissions reduction potential of the tax reform law, but we have 

already heard several positive stories from our members in this regard. 

2 
141 


32790.084

GREG WALDEN, OREGON 

CHAIRMAN 

Mr. Kirk Johnson 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

C!ongress of tbe Wniteb ~tates 

Atou!le of ~eptt!ientattbes 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 Majority (202) 225--2921 

Minority !202) ~25~3641 

June 25,2018 

Senior Vice President, Government Relations 

National Rural Electric Cooperative Association 

4301 Wilson Boulevard 

Arlington, VA 22203 

Dear Mr. Johnson: 

Thank you for appearing before the Subcommittee on Environment on May 16,2018, to 

testifY at the hearing entitled "Legislation Addressing New Source Review Permitting Refonn." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record 

remains open for ten business days to permit Members to submit additional questions for the record, 

which are attached. To facilitate the printing of the hearing record, please respond to these 

questions with a transmittal letter by the close of business on Monday, July 9, 2018. Your responses 

should be mailed to Kelly Collins, Legislative Clerk, Committee on Energy and Commerce, 2125 

Rayburn House Office Building, Washington, DC 20515 and e-mailed in Word format to 

kellv.collins@mail.house.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

John Shimkus 

Chainnan 

Subcommittee on Environment 

cc: The Honorable Paul Tonko, Ranking Member, Subcommittee on Environment 

Attachment 
142 


32790.085

July 9, 2018 

The Honorable John Shimkus 

Chairman, Subcommittee on Environment 

House Committee on Energy and Commerce 

2125 Rayburn House Office Building 

Washington, DC 20515 

Chairman Shimkus: 

Thank you again for the opportunity to testify at the May 16'h hearing entitled "Legislation 

Addressing New Source Review Permitting Reform." 

Please find enclosed my responses to your questions for the record. 

National Rural Electric Cooperative Association 

4301 Wilson Blvd. 1 Arlington, VA 22203-1860 1 Tel: 703.907.5500 I electric.coop I @NRECANews 
143 


32790.086

Responses to Questions for the Record for Chairman John Shimkus 

Kirk Johnson 

Senior Vice President for Government Relations 

National Rural Electric Cooperative Association 

July9, 2018 

The comments below in la. and lb. specifically address your questions as they relate to the 

existing New Source Review (NSR) regulatory program. While some partial solutions are outlined 

below, the underlying problems with the existing program that discourage commonsense facility 

repairs and replacements to allow continued economic and reliable operation remain and would 

likely remain so unless the definition of NSR modification is changed. The best way to accomplish 

this change and ensure that it remains part of the NSR regulatory program is to insert clarifying 

and unambiguous language is the Oean Air Act statute. The language in the draft discussion bill 

before your subcommittee would provide such language defining modification that would 

effectively overcome NSR regulatory barriers addressed below. 

Question la. 

The current New Source Review (NSR) regulations include a "project future emissions and report 

system." This system requires that projects be evaluated prior to construction to project future 

emissions under anticipated operating conditions after the project completion. If such analysis 

results in a "significant" emissions increase because of the project, NSR is triggered before 

construction, I£ no significant emissions increase is projected, the entity must monitor facility 

emissions after project completion to ensure no significant emission increase has occurred. 

There are many factors that can make future emissions projections challenging, but it's EPA's 

interpretation of the requirements under this program that makes it problematic. 

For example, the regulations require emissions increases attributable to" demand growth'' where 

the facility was already" capable of accommodating" the increase without the project or facility 

modification to be excluded from future emissions projections for determining whether actual 

emissions have increased because of the project. In contested cases, EPA often disagrees with the 

entity's calculations regarding the demand growth accommodation and the associated emissions 

increase. Additionally, EPA has alleged entity failure to include other emission increases 

associated with reduced maintenance outages and dispatch order elevation leading to increase 

facility utilization because of the project. This agency" second guessing" of a facility's pre-project 

emissions calculations, even when actual data on facility operation after of construction is not yet 

available, is a major concern and can be a driver in NSR enforcement actions. 

4301 Wilson Blvd, I Arlington, VA 22203-1860 1 Tel: 703.907.5500 I electric.coop I @NRECANews 
144 


32790.087

Responses to Questions for the Record for ChairmanJolm Shimkus 

July 9, 2018 

A reasonable reading of the statute and the ensuing NSR regulations seemingly dictates that NSR 

violations can only occu1· if a facility modification results in a significant emissions increase. 

However, in one recent EPA enforcement action, EPA "second guessed" an emissions projection 

that resulted in an NSR violation even though post project emissions did not result in any emissions 

increase, in fact emissions decreased. 

Question lb. 

Yes, as detailed above there are certainly scenarios where EPA projections of post project future 

emissions will be wrong. The DTE Energy Monroe 2 electric generating facility and recent related 

NSR litigation is a case in point where there was an emission decrease at the facility, but an NSR 

violation was found nonetheless. 

This is not to say entities acting in good faith cannot wrongly project future emissions. The simple 

solutionis if post project emissions "significantly" increase (as defined in the regulations) because 

of the p1·oject, the facility undergoes NSR at that time. Seemingly the current NSR regulations 

require just that. Additionally, entities should not be subject to NSR violations if in fact there was 

no emissions increase regardless of EPA calculations to tl1e contrary. 

Question 2a. 

NRECA believes the NSR program addressing existing source modifications has contributed very 

little to the fossil-fuel fired electric generation fleet pollution control retrofits. Since 1992 the 

electric utility industry has spent $133 billion on a 2016-dollar basis on capital investments for 

retrofitting existing units. Major drivers for these actions include Acid Rain Control, National 

Ambient Air Quality Standards (NAAQS) for ozone and particulate control, mandates including 

addressing interstate air pollution, Utility Maximum Available Control Technology (UMACT) 

standards, and Regional Haze mandates. The tinling of tl1e instsllation of these controls syncs with 

the regulatory mandates under these programs and demonstrates that a very small percentage of 

these total retrofits can be reasonably attributed to NSR enforcement programs. 

Under the Federal Clean Air Act, states and their political subdivisions can impose emission 

controls on stationary sources that are more stringent than federal mandates. States do in1pose 

emission control requirements in accordance with their state in1plementation plans to address 

federal Clean Air Act NAAQS attainment and other issues. But NRECA is not aware of state 

specific programs that exceed Federal Clean Air Act requirements aside from several regional 

greenhouse gas mitigation programs. 

Question 2b. 

As referenced above, since most electric utility entities have been under continuing legal mandates 

to install additional emission controls over the past several decades, there is little incentive to go 

4301 Wilson Blvd. I Arlington, VA 22203-1860 I Tel: 703.907.5500 1 electric.coop 1 @NRECANews Pg. 2 
145 


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Responses to Questions for the Record for Chairman John Shimkus 

July 9, 2018 

above and beyond mandated requirements that would ultimately result in saddling electric 

consumers with additional costs for electric service, However, there are several instances when an 

entity might install or enhance pollution control technologies above that required by government 

regulation. The most obvious example is the installation or enhancement of emissions controls to 

create emission credits for either emissions averaging with other facilities or to sell. Another 

example is the enhancement of emission controls to increase a byproduct for use or sale as a 

feedstock. Some electric utilities utilize flue gas desulfurization (FGD) units coupled with forced 

oxidation to produce gypsum as a byproduct for wall board manufacturing. Their incentive is to 

maximize sulfur dioxide removal in amounts not necessarily required by regulatory mandate to 

increase gypsum production .. Of course, whether increasing emissions reductions to emissions 

average or to increase feedstock for other uses, economics dictates cost effectiveness and thus 

rationale to do so. 

4301 Wilson Blvd.J Arlington, VA 22203-1860 1 Tel: 703.907.5500 1 electric.coop 1 @NRECANews Pg. 3 
146 


32790.089

GREG WALDEN, OREGON 

CHAIRMAN 

ONE HUNDRED FIFTEENTH CONGRESS 

FRANK PALLONE, JR., NEW JERSEY 

RANKING MEMBER 

({ongre~~ of tbt W.ntttb ~tate~ 

;!.)oUS'e of ll\tprc~entatl\le~ 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE BuiLDING 

WASHINGTON, DC 20515-6115 

Mr. Jeffrey R Holmstead 

Partner 

Bracewell LLP 

2001 M Street, N.W.; Suite 900 

Washington, DC 20036 

Dear Mr. Holmstead: 

Majority {202)22!1-2927 

Minority (2()2)125-3641 

June 25, 2018 

Thank you for appearing before the Subcommittee on Environment on May 16, 2018, to 

testifY at the hearing entitled "Legislation Addressing New Source Review Permitting Reform." 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record 

remains open for ten business days to permit Members to submit additional questions for the record, 

which are attached. To facilitate the printing of the hearing record, please respond to these 

questions with a transmittal letter by the close of business on Monday, July 9, 2018. Your responses 

should be mailed to Kelly Collins, Legislative Clerk, Committee on Energy and Commerce, 2125 

Rayburn House Office Building, Washington, DC 20515 and e-mailed in Word format to 

kelly.collins@maiLhouse.gov. 

Thank you again for your time and effort preparing and delivering testimony before the 

Subcommittee. 

L John Shimkus 

Chairman 

Subcommittee on Environment 

cc: The Honorable Paul Tonko, Ranking Member, Subcommittee on Environment 

Attachment 
147 

Æ 


32790.090

Attachment-Additional Questions for the Record 

The Honorable John Shimkus 

1. An important component ofthe,NSR program focuses on how an oWner determines if a 

potential project will cause an emissionsincrease, thl;lrebyrequiring an owner to obt<ll.n an 

NSR preconstruction permit. 

a. Are their scenarios where the EPA's annual emissionprojection approach will 

predict on paper that a project Will cause an emissions increase when in reality the 

project will not actually cause an emissions increase? 

2. Some opponents ofNSR reform believe that the NSR program is a critical program to force 

existing sources to adopt new pollution control technologies. 

a Besides the NSR progt'am, what other Federal and State programs exist that can 

require or incentivize afacility to adopt new pollution control technologies? 

b. Additionally, what ate the s,cenatios where existing facilities may choose to adopt 

new pollution control technologies for reasons other than being required to by 

government regulation? 

3. The current. NSR program has been .characterized as "self-implementing," meaning that 

companies are able to determine the applicability ofNSR requirements on their own and do 

not require preapproval from th~JEPA before carrying O\lt projectsatexistingJaciliti-es that 

do not \rigger NSR Is there anything in the discilssion draft that would undermine the selfimplementing nature ofthe NSR program?