AIR POLLUTION

EPA Needs Better 

Information on New 

Source Review 

Permits

Report to the Chairman, Subcommittee 

on Oversight, Committee on 

Environment and Public Works, 

U.S. Senate

June 2012

GAO-12-590

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-590, a report to the 

Chairman, Subcommittee on Oversight, 

Committee on Environment and Public Works, 

U.S. Senate

June 2012

AIR POLLUTION

EPA Needs Better Information on New Source 

Review Permits

Why GAO Did This Study

Electricity generating units that burn 

fossil fuels supply most of the nation’s 

electricity and are major sources of air 

pollution. Under the Clean Air Act,

such units are subject to NSR, a 

permitting process that applies to (1) 

units built after August 7, 1977, and (2) 

existing units that undertake a major

modification. Owners of such units 

must obtain from the appropriate

permitting agency a preconstruction

permit that sets emission limits and 

requires the use of certain pollution 

control technologies. EPA oversees 

states’ implementation of NSR, 

including reviewing and commenting 

on draft permits issued by state and 

local permitting agencies. GAO was 

asked to examine (1) what information 

EPA maintains on NSR permits issued 

to fossil fuel electricity generating units; 

(2) challenges, if any, that EPA, state, 

and local agencies face in ensuring 

compliance with requirements to obtain 

NSR permits; and (3) what available 

data show about compliance with 

requirements to obtain NSR permits.

GAO reviewed relevant documentation

and interviewed EPA, state, and local 

officials, as well as representatives 

from industry, research, and 

environmental groups.

What GAO Recommends

GAO recommends that EPA, among 

other actions, consider ways to 

develop a centralized source of data

on NSR permits issued to electricity

generating units. EPA expressed its 

commitment to filling gaps in its data

systems, but disagreed with the

actions GAO recommended. GAO 

believes that its recommendations 

would enhance oversight of NSR 

permitting and enforcement.

What GAO Found

The Environmental Protection Agency (EPA) does not maintain complete

information on New Source Review (NSR) permits issued to fossil fuel electricity 

generating units. State and local permitting agencies track the NSR permits they 

issue, but EPA does not maintain complete or centralized information on permits, 

despite a 2006 recommendation by the National Research Council that it do so. 

EPA maintains several databases that compile data on draft and issued NSR 

permits, but these sources are incomplete and thus cannot be used to identify all 

of the NSR permits that have been issued nationwide. In addition, EPA has the 

opportunity to review and comment on every draft NSR permit issued by state 

and local permitting agencies, but it does not compile data on whether the 

permitting agencies address EPA’s comments in final permits. The absence of 

more complete information on NSR permitting makes it difficult to know which 

units have obtained NSR permits or to assess how state and local permitting 

agencies vary from EPA in their interpretations of NSR requirements. 

Officials from EPA, state, and local agencies face challenges in ensuring that 

owners of fossil fuel electricity generating units comply with requirements to 

obtain NSR permits. Many of these challenges stem from two overarching 

issues. First, in some cases it is difficult to determine whether an NSR permit is 

required. NSR applicability depends on, among other factors, whether a change 

to a unit qualifies as routine maintenance, repair, and replacement; and whether 

the change results in a significant net increase in emissions. The rules governing 

NSR are complex, however, and applicability is determined on a case-by-case 

basis. Second, it is often difficult to identify noncompliance—instances where unit 

owners made a major modification without first obtaining an NSR permit—partly 

because owners of generating units determine whether a permit is needed, and

in many cases their determinations are not reviewed by permitting agencies or 

EPA. State permitting agencies generally issue NSR permits, but EPA typically 

leads enforcement efforts, since identifying instances of noncompliance involves

extensive investigations that go beyond the routine inspections conducted by 

state and local permitting agencies. EPA identifies NSR noncompliance through 

a lengthy, resource-intensive process that involves reviewing large amounts of 

information on units’ past emissions and construction activities. 

Available data on compliance, although incomplete, suggest that a substantial 

number of generating units did not comply with requirements to obtain NSR 

permits. Complete NSR compliance data do not exist for two main reasons: (1)

EPA has not yet investigated all generating units for compliance, and (2) NSR 

compliance is determined at a point in time, and in some cases federal courts

have disagreed with EPA about the need for an NSR permit. Nonetheless, EPA 

has investigated most coal-fired generating units at least once, and has alleged 

noncompliance at more than half of the units it investigated. Specifically, of the 

831 units EPA investigated, 467 units were ultimately issued notices of violation,

had complaints filed in court, or were included in settlement agreements. In total, 

EPA reached 22 settlements covering 263 units, which will require affected unit 

owners to, among other things, install around $12.8 billion in emissions controls.

These settlements will reduce emissions of sulfur dioxide by an estimated 1.8

million tons annually, and nitrogen oxides by an estimated 596,000 tons annually.

View GAO-12-590 or key components. For 

more information, contact David C. Trimble at 

(202) 512-3841 or TrimbleD@gao.gov, or 

Frank Rusco at (202) 512-3841 or 

RuscoF@gao.gov. 
Page i GAO-12-590 EPA's Implementation of New Source Review

Letter 1 

Background 6

EPA Does Not Maintain Complete Information on Issued NSR 

Permits or Track the Impact of Its Comments 7

Regulators Face Challenges in Ensuring Compliance with NSR 

Permitting Requirements 12

Available Data on NSR Compliance Are Not Complete but Suggest 

Substantial Noncompliance 19

Conclusions 21

Recommendations for Executive Action 23

Agency Comments and Our Evaluation 23

Appendix I Scope and Methodology 27

Appendix II Comparison of Available Databases of NSR Permits for Electricity 

Generating Units 29

Appendix III Concluded NSR Settlements 30

Appendix IV Comments from the Environmental Protection Agency 32

Appendix V GAO Contacts and Staff Acknowledgments 39

Tables

Table 1: Comparison of Available NSR Permit Databases 29

Table 2: Concluded NSR Settlements Involving Electricity 

Generating Units 30

Figure 

Figure 1: New Source Review Permitting Process 8

Contents
Page ii GAO-12-590 EPA's Implementation of New Source Review

Abbreviations

DOJ Department of Justice

EIA Energy Information Administration

EPA Environmental Protection Agency

NSR New Source Review

OECA Office of Enforcement and Compliance Assurance

SCR selective catalytic reduction

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-12-590 EPA's Implementation of New Source Review

United States Government Accountability Office

Washington, DC 20548

June 22, 2012

The Honorable Sheldon Whitehouse

Chairman

Subcommittee on Oversight

Committee on Environment and Public Works

United States Senate

Dear Mr. Chairman:

The efficient and reliable operation of the electricity industry is critical to 

the health of the U.S. economy. Residential consumers rely on electricity 

to power their households, and electricity is a key input for businesses 

that produce trillions of dollars in products and services. The United 

States depends on a variety of fuels to generate electricity, including 

fossil fuels (coal, natural gas, and oil), renewable sources (such as wind, 

solar, and biomass), and nuclear power. Of these, fossil fuels have 

historically been the primary source of U.S. electricity because of their 

abundance, reliability, and relatively low cost. Yet in addition to providing 

about 70 percent of U.S. electricity, electricity generating units at fossil 

fuel power plants produce substantial amounts of harmful air emissions.1

Under the Clean Air Act, the Environmental Protection Agency (EPA) 

establishes national ambient air quality standards for six pollutants which 

states, primarily, are responsible for attaining.

In particular, fossil fuel-fired electricity generating units are among the 

largest emitters of sulfur dioxide and nitrogen oxides, which have been 

linked to respiratory illnesses and acid rain, as well as of carbon dioxide, 

the primary greenhouse gas contributing to climate change.

2

 

1

Fossil fuel units are responsible for nearly all emissions of carbon dioxide, sulfur dioxide, 

and nitrogen oxides from the electricity generating sector.

States attain these 

standards, in part, by regulating emissions of these pollutants from certain 

stationary sources, such as electricity generating units. Numerous Clean 

Air Act requirements apply to electricity generating units, including New 

2

EPA has set national ambient air quality standards for six pollutants, termed “criteria” 

pollutants: carbon monoxide, lead, nitrogen oxides, ozone, particulate matter, and sulfur 

oxides.

 
 

Page 2 GAO-12-590 EPA's Implementation of New Source Review

Source Review (NSR), a permitting process established in 1977.3 Under 

NSR, owners of generating units must obtain a preconstruction permit 

that establishes emission limits and requires the use of certain emissions 

control technologies.4 NSR applies to (1) generating units built after 

August 7, 1977, and (2) existing generating units—regardless of the date 

built—that seek to undertake a “major modification,” a physical or 

operational change that would result in a significant net increase in 

emissions of a regulated pollutant.5

Congress allowed units that existed as of August 7, 1977 to defer 

installation of emissions controls until they made a major modification in 

the expectation that, over time, all units would either install such controls 

or shut down, thereby lowering overall emissions. As we reported in April 

2012, however, many older units—those that began operating in or before 

Units built before August 7, 1977, are 

not required to undergo NSR unless they undertake a major modification. 

However, EPA’s regulatory definition of major modification excludes 

certain activities; generating units can undertake these activities without 

obtaining NSR permits or installing any additional controls. For example, 

activities that qualify as “routine maintenance, repair, and replacement” 

are not considered major modifications and therefore do not trigger NSR.

 

3

This report focuses solely on fossil fuel electricity generating units and major New Source 

Review at those units, although NSR also applies to certain other major stationary sources 

of air pollution, such as other industrial facilities. NSR also applies to minor modifications 

at major stationary sources, as well as to new and modified minor sources (known as 

minor NSR).

4

In areas that meet EPA’s national ambient air quality standards—known as attainment 

areas—the NSR permitting process includes a review for “prevention of significant 

deterioration” to ensure that the emissions will not exceed maximum allowable increases 

for three criteria pollutants: nitrogen oxides, sulfur dioxide, and particulate matter. In areas 

that do not meet the standards—known as nonattainment areas—the permitting process 

is known as “nonattainment NSR.” Throughout this report, the term NSR includes both 

types of review.

5

What constitutes a significant net increase in emissions depends on whether the 

generating unit is located in an attainment or nonattainment area and the type of regulated 

pollutant being emitted. For example, in all areas, a 100-ton-per-year increase is 

significant for carbon monoxide, while a 40-ton-per-year increase is significant for nitrogen 

oxides or sulfur dioxide. In attainment areas, increases of noncriteria regulated pollutants 

can also be significant.
 

Page 3 GAO-12-590 EPA's Implementation of New Source Review

1978—continue to produce electricity.6 According to our analysis of EPA 

data, 1,485 older units (43 percent of fossil fuel units) were still in 

operation in 2010.7

Throughout its history, NSR has been characterized by complexity and 

controversy, involving disputes between EPA and industry about, among 

other issues, whether certain changes to generating units qualified for 

exclusion as routine maintenance, repair, and replacement. In December 

2002, EPA finalized revisions to NSR regulations, including exemptions 

for certain pollution control projects from NSR. These revisions were 

intended to maximize operating flexibility, improve environmental quality, 

and promote administrative efficiency, among other aims. In addition, in 

October 2003, EPA finalized a rule that categorically excluded certain 

activities from NSR by defining them as “routine maintenance, repair, and 

replacement.” This rule was intended to provide more certainty to 

generating units and permitting authorities. These NSR reforms, as the 

two rulemakings were known, provoked considerable controversy. Some 

states and industry groups agreed with EPA’s position, while a number of 

public health and environmental groups, as well as a group of states 

primarily from the Mid-Atlantic and Northeast, filed lawsuits challenging 

the legality of the two rules. Since their issuance, two of the five 

A substantial number of these older units did not have 

emissions controls; for example, 1,201 units (74 percent of older units) 

did not have controls for sulfur dioxide. In addition, 564 units (38 percent 

of older units) did not have any controls for nitrogen oxides, and 1,277 

units (86 percent of older units) had not installed selective catalytic 

reduction (SCR) equipment, the type of control most effective at reducing 

nitrogen oxides. The reduction in emissions from the use of emissions 

controls can be substantial: SCR equipment, for example, can reduce 

nitrogen oxides emissions by 70 to 95 percent. Emissions controls can 

also be expensive; for example, installing SCR equipment in a typical 

coal-fired generating unit could cost from $108 million to $129 million.

 

6

GAO, Air Emissions and Electricity Generation at U.S. Power Plants, GAO-12-545R 

(Washington, D.C.: Apr. 18, 2012). Analysis is limited to generating units that (1) listed a 

fossil fuel as a primary fuel; (2) generated electricity in 2010; and (3) had a net summer 

capacity greater than 25 megawatts, making them subject to EPA’s emissions monitoring 

and reporting requirements. 

7

These 1,485 older units produced 45 percent of the electricity from fossil fuel units in 

2010. The remainder was produced by 1,958 newer units (those that began operating 

after 1978).
 

Page 4 GAO-12-590 EPA's Implementation of New Source Review

provisions in the 2002 rule, as well as the 2003 rule, were struck down in 

court.8

As with many environmental laws, responsibility for implementing NSR, 

including issuing NSR permits, generally rests with state and local 

agencies, with oversight by EPA’s 10 regional offices and EPA 

headquarters. Owners or operators of generating units wishing to make 

major modifications must prepare and submit a permit application to the 

appropriate state or local permitting agency before construction. The state 

or local permitting agency determines if the application is complete;

develops a draft permit, if one is necessary; notifies EPA and the public of 

the application; and solicits comments on the draft permit. The permitting 

agency then issues a final permit, if merited, with responses to comments 

it received. The permitting agency is to provide EPA with a copy of every 

permit application, draft permit, and final permit.

EPA administers its NSR oversight and enforcement responsibilities 

through its headquarters Office of Enforcement and Compliance 

Assurance, as well as its 10 regional offices. This office monitors 

compliance, identifies national enforcement concerns and priorities, and 

provides overall direction on enforcement policies; the office also 

occasionally takes enforcement action in conjunction with the Department 

of Justice (DOJ), the agency responsible for handling enforcement cases 

in federal court. In turn, EPA’s regional offices carry out much of EPA’s 

NSR enforcement responsibilities, oversee states’ enforcement programs, 

and implement NSR in certain areas, such as Indian country.9

 

8

Other revisions to NSR regulations were proposed in 2006 and 2007 but were never 

finalized, or, if finalized, EPA has stayed their effective date, is considering whether 

changes to the regulation are necessary, or both. Similarly, a revision finalized in 

December 2008 has been stayed.

Since 

1999, EPA has made enforcing NSR among coal-fired electricity 

generating units a national enforcement priority and has reached several 

settlements with owners of such units, which have resulted in the 

installation of emissions controls, unit retirements, agreements to fund 

environmentally beneficial projects, and tens of millions of dollars in civil 

penalties.

9

“Indian country” includes all land within the limits of an Indian reservation under the 

jurisdiction of the United States government, all dependent Indian communities within the 

borders of the United States, and all Indian allotments, the Indian titles to which have not 

been extinguished.
 

Page 5 GAO-12-590 EPA's Implementation of New Source Review

This report responds in part to your request for information on the 

implementation and enforcement of NSR for fossil fuel electricity 

generating units. Specifically, our objectives were to examine (1) what 

information EPA maintains on NSR permits issued to fossil fuel electricity 

generating units; (2) challenges, if any, that EPA, state, and local 

agencies face in ensuring compliance with requirements to obtain NSR 

permits; and (3) what available data show about compliance with 

requirements to obtain NSR permits.

To respond to our objectives, we gathered information from EPA and from 

selected state and local officials involved in implementing NSR. We 

selected a nonprobability sample of nine states on the basis of (1) the 

number of older electricity generating units in the state; (2) the quantity of 

electricity generated by such units in those states; (3) the volume of sulfur 

dioxide, nitrogen oxides, and carbon dioxide emitted by units in those 

states; and (4) the region in which the generating unit was located. The 

nine states we selected were: Alabama, Georgia, Indiana, Kentucky, 

Missouri, New York, North Carolina, Ohio, and Pennsylvania. We 

gathered information from EPA and these selected states on the status of 

their NSR permitting programs and efforts to collect and maintain relevant 

data. In addition, we spoke with officials from these states, as well as 

officials at the four EPA regional offices that oversee these states and 

EPA’s Office of Air and Radiation. In three of the states, some localities 

are responsible for NSR permitting; we spoke with officials at two of those 

localities. To assess compliance with NSR, we reviewed relevant 

documents from EPA, other government agencies, academic and 

research institutions, environmental organizations, and industry groups. 

We also interviewed knowledgeable enforcement and compliance officials 

from EPA headquarters and the four regional offices, as well as officials in 

selected states and localities, to collect information on EPA’s efforts to 

enforce NSR and track compliance among generating units. In addition, 

we spoke with stakeholders from academic and research institutions, 

environmental organizations, and industry groups on these topics. 

Appendix I provides additional information about our scope and 

methodology.

We conducted this performance audit from April 2011 to June 2012, in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
 

Page 6 GAO-12-590 EPA's Implementation of New Source Review

Subject to EPA’s oversight, state and local permitting agencies generally 

administer NSR and operate under one of two arrangements. Under the 

first arrangement, state and local agencies receive “delegated authority” 

from EPA under which they implement EPA’s NSR regulations. Under the 

second arrangement, states and localities are also responsible for 

administering NSR, but instead of implementing EPA’s NSR regulations, 

state and local agencies develop plans, known as state implementation 

plans, that regulate the construction and modification of stationary 

sources. These plans provide assurances that the states and localities 

will have adequate personnel, funding, and authority under state law to 

carry out the plan, among other provisions. State implementation plans 

also must include NSR regulations that are at least as stringent as EPA’s 

NSR regulations, although states and local agencies are authorized to 

include more stringent or additional requirements.10

Although this report focuses on NSR, the Clean Air Act and its 

implementing regulations subject electricity generating units to additional 

emissions control requirements. For example, the Acid Rain Program, 

created by the Clean Air Act Amendments of 1990, established a cap on 

the amount of sulfur dioxide that may be emitted by electricity generating 

units nationwide and authorizes those generating units to trade emissions 

allowances for sulfur dioxide. These facilities must also continuously 

monitor their emissions and report them to EPA. Furthermore, EPA has 

recently finalized or proposed several other regulations that will affect 

many fossil fuel generating units. These regulations include the (1) 

Mandatory Reporting of Greenhouse Gas rule finalized in 2009, which 

established reporting requirements for greenhouse gas emissions above 

certain thresholds; (2) Cross-State Air Pollution Rule, finalized in 2011, 

which limits sulfur dioxide and nitrogen oxides emissions from a number 

of states that contribute significantly to nonattainment or interference with 

maintenance of certain national ambient air quality standards in 

downwind states; (3) National Emissions Standards for Hazardous Air 

Pollutants from Coal- and Oil-Fired Electric Utility Steam Generating 

Units, also known as the Mercury and Air Toxics Standards, which 

States and localities 

must submit these plans, as well as any revisions to them, to EPA for 

approval. Once EPA approves the plans, they become federally 

enforceable requirements.

 

10Some states, however, have laws preventing agencies from issuing more stringent 

regulations.

Background 
 

Page 7 GAO-12-590 EPA's Implementation of New Source Review

establish emissions limitations on mercury and other pollutants and was 

finalized on February 15, 2012; and (4) Standards of Performance for 

Greenhouse Gas Emissions for New Stationary Sources for Electric Utility 

Generating Units, proposed in April 2012, which establishes new source 

performance standards for emissions of carbon dioxide for certain new 

fossil fuel electricity generating units.11

EPA does not maintain complete information on NSR permits issued to 

fossil fuel electricity generating units. State and local permitting agencies 

track the NSR permits they issue, but EPA does not maintain data on 

these permits in a complete and centralized source of information, which 

limits the agency’s ability to assess the impact of NSR. In addition, EPA 

has the opportunity to review and comment on every draft NSR permit 

issued by state and local permitting agencies, but the agency does not 

compile data on which permitting authorities address EPA’s comments. 

The absence of this information makes it difficult for EPA to measure the 

impact of its comments and may impede its ability to assess how state 

and local permitting agencies may differ from EPA in their interpretation of 

NSR requirements.

EPA does not maintain complete information on NSR permits issued for 

construction of new fossil fuel electricity generating units or for major 

modifications to existing units. State and local permitting agencies, which 

issue NSR permits in most parts of the country, track the NSR permits 

they issue. (Figure 1 describes the roles of state and local permitting 

agencies and EPA in issuing NSR permits.) State and local agencies vary 

widely in the types of data they collect on NSR permits and the systems 

they use to compile the data. Some states maintain detailed information 

on NSR permits in electronic form available on publicly accessible 

websites. For instance, in seven of the nine states where we conducted 

interviews, state officials maintain information online that can be used to 

identify the electricity generating units that have received NSR permits, as 

 

11The Cross-State Air Pollution Rule and the National Emissions Standards for Hazardous 

Air Pollutants from Coal- and Oil-Fired Electric Utility Steam Generating Units are currently 

being challenged in court. A federal appeals court has stayed the effective date of the 

Cross-State Air Pollution Rule while it hears the case. GAO is currently undertaking a 

study on the effects of these two rules on reliability. The study is expected to be issued in 

2012.

EPA Does Not 

Maintain Complete 

Information on Issued 

NSR Permits or Track 

the Impact of Its 

Comments

EPA Does Not Maintain 

Complete Data on NSR 

Permits
 

Page 8 GAO-12-590 EPA's Implementation of New Source Review

well as the requirements of the permits.12

Figure 1: New Source Review Permitting Process

These data, however, are 

maintained in different formats across these states and cannot be readily 

compiled into a complete source of information on NSR permitting for the 

electricity generating sector.

In addition to the data collected by state and local permitting agencies, 

EPA maintains several sources of data on NSR permitting for electricity 

generating units, but none of these sources are complete. Of the four 

EPA regional offices we assessed, three offices consolidated NSR 

permitting data for the states and localities under their oversight.13

In 2006, the National Research Council recommended that EPA, in 

conjunction with states and localities, systematically collect data on the 

full range of NSR permits issued nationwide to stationary sources of air 

For 

example, one EPA regional office maintains a spreadsheet to track NSR 

permits issued over time. The spreadsheet contains information on (1) the 

type of source applying for the permit, (2) the project under consideration, 

(3) when a final permit is issued, and (4) what emissions control 

technologies are required. However, the information maintained by the 

EPA regional offices is in different formats and is not compiled into a 

complete, centralized repository of information on NSR permits issued 

nationwide.

 

12Our review was limited to the NSR permits issued to electricity generating units; state 

and local permitting agencies may also maintain information on NSR permits issued to 

other stationary sources.

13Regional offices also maintain information on the NSR permits issued by their office, 

such as to generating units in Indian Country, although officials said that regional offices 

rarely issue such permits.
 

Page 9 GAO-12-590 EPA's Implementation of New Source Review

pollution, including electricity generating units.14 In its report the council 

noted that such information could be useful to stakeholders and decision 

makers for assessing the broader impacts of NSR regulations, or 

potential changes to the regulations, on emissions, public health, and 

energy efficiency. Asked how EPA had responded to this 

recommendation, officials in EPA’s Office of Air and Radiation said it had 

largely been satisfied by an agency database that tracks the emissions 

control technologies that have been required by issued NSR permits.15

However, the database is incomplete; EPA officials said it contains 

information on approximately 50 percent of issued NSR permits and 

therefore cannot be used, as recommended by the council, to identify all 

NSR permits that have been issued nationwide. EPA officials suggested 

that the database was not complete because some state and local 

permitting agencies do not enter their information in a timely manner, and 

others do not report the information at all. In addition, EPA officials noted 

that the Clean Air Act requires only that states enter permit information for 

sources in nonattainment areas.16

EPA also has a centrally maintained database on NSR permits issued 

nationwide for sources of greenhouse gases. EPA officials told us this 

 

14National Research Council, New Source Review for Stationary Sources of Air Pollution

(Washington, D.C.:2006). In its report, the Council found that no centralized source 

existed for information on NSR permits issued nationwide. It estimated—using data 

provided to EPA by state and local permitting authorities that were preliminary, 

unpublished, and not subjected to review—that from 1997 to 1999 there had been several 

NSR permits issued for major modifications to existing sources in the combined electricity, 

gas, and sanitary services sector: 38 for carbon monoxide, 30 for particulate matter, 46 for 

nitrogen oxides, and zero for sulfur dioxide.

15The RACT/BACT/LAER Clearinghouse is a database maintained by EPA’s Office of Air 

and Radiation, which contains information provided by state and local permitting agencies 

on air pollution control technologies, including technologies required in source-specific

permits. The database contains information on over 5,000 air pollution control permit 

determinations submitted by permitting agencies for several U.S. territories and all 50 

states.

16See 42 U.S.C. § 7503(d). According to EPA officials, in many cases, EPA regional 

offices also have planning agreements with states stipulating that the state must enter 

data from all NSR permits into the database. Some regional offices specify a certain time 

frame by which states must enter the data. These officials said that, as a general matter, 

the planning agreements are tied to grant funding received by states, and EPA could 

conceivably withhold funding if a state fails to meet a condition of the agreement. 

However, with declining budgets and resources at state government levels, officials said 

that entering data is not always a priority for states, or they may choose to defer entering 

data until they believe they have a permit that is noteworthy.
 

Page 10 GAO-12-590 EPA's Implementation of New Source Review

database would capture most NSR permitting activity for electricity 

generating units because such units are major sources of greenhouse 

gases, in addition to other pollutants. But this database too is incomplete: 

it has been used only since 2011 and does not contain information on 

whether the NSR permits include requirements for pollutants other than 

greenhouse gases. EPA officials mentioned other means of tracking data 

on NSR permits, but none of these sources can definitively identify the 

units that have received NSR permits nationwide (see app. II for more 

information on sources of data on NSR permits).17

Because EPA does not maintain comprehensive information on the NSR 

permits issued to fossil fuel electricity generating units across the nation, 

the agency does not have complete data on which units have obtained 

permits, limiting its ability to assess the scope and impact of NSR. 

Without such data, EPA cannot fully assess what controls have been 

required or estimate what emissions from generating units may have 

been averted as a result of NSR requirements.

In addition, the absence of information on NSR permits hinders EPA’s 

ability to efficiently target noncompliance. To identify potential targets for 

NSR enforcement actions—units that may have made a physical or 

operational change that resulted in a significant net emissions increase 

without obtaining a permit—EPA officials we interviewed said they have 

relied in part on continuous emissions monitoring data required under 

Title IV of the Clean Air Act. For example, an unusual emissions decrease 

followed by a sharp increase could signal a temporary plant shutdown to 

install new equipment. In instances where noncompliance has been 

suspected, EPA officials we spoke with said they have sometimes 

consulted relevant state and local permitting authorities to ascertain 

whether a suspected unit previously received an NSR permit. In other 

cases, EPA officials told us they have obtained copies of NSR permits by 

requiring unit owners to provide them through information requests, along 

with documentation on previously completed work at a suspected unit—

making a centralized source of information on NSR permits unnecessary. 

Nevertheless, without a centralized source of information on NSR 

permits, EPA enforcement officials cannot readily identify whether a 

generating unit has obtained an NSR permit, and under what terms, 

 

17For example, EPA maintains a database aimed at tracking its reviews of draft stateissued permits; the database does not, however, contain information on final permits or 

their terms.
 

Page 11 GAO-12-590 EPA's Implementation of New Source Review

unless they rely on unit owners or the efforts of state and local permitting 

agencies to provide this information.

EPA does not track whether state and local permitting agencies 

incorporate the agency’s comments into final NSR permits for fossil fuel 

electricity generating units. State and local permitting agencies have the 

authority to make final permitting decisions, but as part of its oversight 

responsibilities, EPA has the opportunity to review and comment on every 

draft NSR permit submitted by state and local permitting agencies.18

Officials we interviewed in several EPA regional offices said they note the 

responses of state and local permitting agencies to EPA’s comments, but 

all said that they do not regularly report this information to EPA 

headquarters. EPA officials also told us that regional officials notify 

headquarters officials, including members of a working group on the utility 

industry, when significant areas of concern arise on a final NSR permit for 

a generating unit. They noted that this information is neither reported 

systematically nor compiled in a centralized manner, adding that 

quantifying the impact of all of its comments would be subjective and 

time-consuming. However, without compiling any information on whether 

state and local permitting agencies have incorporated its comments into 

final NSR permits, EPA is limited in its ability to assess the impact of 

EPA 

officials said that, when the agency elects to make comments, their 

reviews often focus on whether and how the permitting authorities 

conduct the required analyses—for example, whether an appropriate 

analysis was used to support a proposed emissions control as the best 

available control technology. The agency’s comments are first prepared 

by regional offices and then reviewed by headquarters to ensure 

consistency with comments previously issued by the agency. According 

to EPA officials, EPA’s headquarters office maintains a database to track 

the agency’s work and ensure that it delivers comments during the 30-day 

public comment period. This database includes basic information on the 

draft permits, but EPA does not use it to track the proposed terms of the 

permits, the substance of the agency’s own comments, whether the draft 

permits are finalized, or the extent to which state and local agencies 

incorporated EPA’s comments into final permits.

 

18EPA regulations require state and local permitting agencies to give the public at least 30 

days to comment on draft NSR permits.

EPA Does Not Track 

Incorporation of Its 

Comments into Draft 

Permits
 

Page 12 GAO-12-590 EPA's Implementation of New Source Review

these comments on state and local permitting decisions across the 

nation. For example, EPA cannot assess the extent to which NSR 

emissions control requirements imposed by state and local permitting 

agencies may differ from those suggested by EPA in its comments.19

In addition to a lack of comprehensive permitting data, EPA and state and 

local agencies face other challenges in ensuring that owners of fossil fuel 

electricity generating units comply with requirements to obtain NSR 

permits. Many of the challenges stem from two overarching issues: 

(1) determining whether an NSR permit is required and (2) identifying 

instances where unit owners should have obtained NSR permits but did 

not. As a result, EPA’s enforcement efforts involve long, resourceintensive investigations.

A major challenge to EPA, states, and local agencies in ensuring NSR 

compliance is that it can be difficult for unit owners and regulators to know 

whether an NSR permit is needed, because NSR’s rules governing 

applicability are complex and because NSR applicability is determined on 

a case-by-case basis. EPA and state officials we spoke with said that 

NSR as it applies to new units is fairly straightforward, because newly 

constructed units generally must obtain NSR permits before starting 

operation. In contrast, determining what constitutes a major modification 

of an existing unit, and, thus, what requires an NSR permit, is more 

complex. Under NSR regulations, owners are to apply for an NSR permit 

before making any physical or operational change that would result in a 

significant net increase of emissions. These changes, such as adding 

new equipment, must be evaluated in the specific context of the unit and 

its intended use. State officials and industry representatives we 

interviewed said it can be difficult to determine whether these activities 

trigger NSR because the two steps for determining applicability—first, 

whether the unit is making a physical or operational change and, second, 

whether this change would result in a significant net increase of 

emissions—are not categorically defined and have changed over time.

 

19In states that have adopted their own NSR regulations, these NSR rules may differ from 

EPA’s, although they must be no less stringent than EPA’s regulations.

Regulators Face 

Challenges in 

Ensuring Compliance 

with NSR Permitting 

Requirements 

Determining When NSR 

Applies Can Be Difficult
 

Page 13 GAO-12-590 EPA's Implementation of New Source Review

The first step for determining NSR applicability can be complicated 

because the definition of “physical or operational change” excludes 

activities that are considered routine maintenance, repair, and 

replacement. NSR regulations, first finalized in 1978, contained no 

description or definition of the “routine maintenance” exclusion, instead 

relying on a case-by-case approach that involves weighing several 

factors, including the nature, extent, purpose, frequency, and cost of 

proposed activities. Federal courts, however, have issued inconsistent 

decisions on whether the factors should be analyzed with respect to 

industry practice or a particular unit’s history. In 2003, in part because of 

concerns about the case-by-case approach, EPA finalized a rule that 

categorically excluded certain activities from NSR by defining them as 

“routine maintenance, repair, and replacement” to provide more certainty 

to generating units and permitting agencies. Specifically, the rule 

categorically deemed certain replacement activities to be routine 

maintenance, repair, and replacement if certain conditions were met, 

such as replacement activities’ costs not exceeding a specified threshold. 

In 2006, however, a federal appeals court struck down this rule because it 

was contrary to the plain language of the Clean Air Act.

As a result, a case-by-case approach is still used to determine which 

activities qualify for the exclusion. Several state officials and industry 

representatives we interviewed said that the case-by-case approach 

makes it difficult to know when NSR applies. A number of industry 

representatives also said that uncertainty around NSR applicability can 

deter owners from making improvements to units that would improve 

efficiency. One senior EPA enforcement official we interviewed, however, 

noted that NSR regulations are written broadly to cover many disparate 

industries and said it would not be possible for EPA to develop detailed 

regulations tailored to each industry. One state official we spoke with also 

said that attempts to more precisely specify what activities are considered 

routine maintenance might not be worthwhile, since EPA’s previous 

efforts to do so were struck down in court.

The second step in determining NSR applicability—assessing whether a 

change results in a significant net increase in emissions—presents 

additional complications. Like the routine maintenance exclusion, 

regulations governing what constitutes an increase in emissions have 

been subject to litigation, leading to changes in the process used to 

measure emissions increases over time. For example, in 1992, in 

response to a court decision, EPA finalized a regulation changing how 

future emissions from generating units are to be calculated. Rather than 

calculating future emissions based on a unit’s potential to emit, under the 
 

Page 14 GAO-12-590 EPA's Implementation of New Source Review

revised regulation, future emissions are calculated based, in part, on the

maximum emissions that can be generated while operating the unit as it 

is intended to be operated and as it is normally operated. Some state 

officials and industry representatives we interviewed said that calculating 

emissions increases can be challenging because the regulations are 

complex, and EPA’s interpretation has changed over time. NSR’s 

complexity can be particularly difficult for owners of smaller generating 

units who may lack the legal and technical expertise to properly comply 

with NSR, according to an EPA official and industry representative we 

interviewed. EPA officials acknowledged that the process is not always 

simple, but they also noted that it is much easier for companies to make 

these calculations than for permitting agencies to verify them, since 

permitting agencies are less familiar with—and have less access to—

information about a generating unit, its activities, and its data systems, 

than the companies.

According to several state officials and industry representatives we 

interviewed, assessing whether a change results in a significant net 

increase in emissions can also be complicated because EPA regulations 

authorize certain emissions increases to be excluded from this 

assessment—specifically, those emissions increases that are attributable 

to growth in demand.20

EPA and state agency officials, who are responsible for verifying owners’ 

calculations when they apply for a permit or seek guidance on NSR 

applicability, said that verifications are further complicated by other NSR 

provisions that exclude certain activities from NSR. For example, a 

Several state officials we interviewed said that 

some owners have had difficulty distinguishing between emissions 

increases due to projected growth in demand and emissions increases 

resulting from the change to the unit, a process made more difficult 

because EPA has not offered clarification or guidance regarding this 

exclusion. One senior EPA enforcement official disagreed with this 

assessment, noting that utilities commonly employ models that help 

project demand as a way to guide their operations and investment 

decisions. According to this official, EPA’s approach is based on methods 

already widely employed throughout the electricity sector.

 

20The portion of the generating unit’s emissions post-project that could have been 

accommodated by the generating unit at a certain time before the proposed change, and 

that are also unrelated to the project, including any increased utilization due to demand 

growth, can be excluded from the calculation of emissions increases.
 

Page 15 GAO-12-590 EPA's Implementation of New Source Review

change that significantly increases a generating unit’s emissions will not 

trigger NSR if it does not cause a net increase in emissions. Specifically, 

an NSR permit is not required if the increase in emissions resulting from a 

change is offset by certain contemporaneous emissions reductions, a 

process called “netting.” EPA has defined “contemporaneous” as within 5 

years before construction on the change commences, although states 

can define the term differently. Thus, an owner could compensate for an 

emissions increase in a given year by subtracting emissions decreases 

that were made in the previous 5 years, although any other emissions 

increases during that 5-year period must also have been included in the 

calculation. Several state agency officials we spoke with said that unit 

owners often pursue this option so they do not have to obtain an NSR 

permit and install costly emissions controls. Several EPA and state 

officials we interviewed also said, however, that it can be difficult to verify

that calculations are valid, in part because they must rely on information 

provided by the unit owners. Some of these officials said it can be difficult 

to determine what types of emissions reductions and increases may be 

aggregated together under the netting option.21

To aid owners and regulators in determining when NSR should apply, 

EPA and state officials identified several sources of available guidance, 

including the following:

One EPA regional office 

official said that, overall, options such as netting complicate and lengthen 

the permitting process because they require unit owners to submit 

additional documentation that the regulator must in turn review.

• Consultations with state and local agencies. Before seeking a permit, 

owners of units can request assistance from state and local permitting 

agencies in determining whether NSR applies. Some state agency 

officials said that unit owners in their state regularly seek guidance, 

particularly on how to qualify for one of NSR’s exclusions. However, 

other EPA and state officials we spoke with said that such requests 

are uncommon; many unit owners may hesitate to contact a 

regulatory agency because regulators may have a different 

interpretation of NSR that could require them to install costly 

emissions controls.

 

21In September 2006, EPA proposed a rule clarifying how emissions decreases from a 

project may be included in the calculation to determine if a significant emissions increase 

will result. EPA did not finalize the rule.
 

Page 16 GAO-12-590 EPA's Implementation of New Source Review

• EPA’s 1990 draft NSR workshop manual. Several state agency 

officials we spoke with said they rely on a draft EPA manual from 

1990 issued as guidance for implementing the federal NSR permitting 

process, although the manual was never finalized and has not been 

updated.

• Regionally maintained databases. Through one of its regional offices, 

EPA maintains an online database containing more than 600 EPAissued policy and guidance documents. Several EPA and state 

officials we interviewed said that the database was helpful in providing 

current information on how to apply NSR, although one state official 

said that these determinations are not always consistent.

• Court decisions. Several EPA and state permitting officials we 

interviewed said they rely primarily on court rulings for guidance on 

interpreting NSR regulations to ensure that their determinations are 

up-to-date.

EPA officials said that the agency’s ability to generate comprehensive, 

nationwide guidance is limited because of the case-by-case nature of 

NSR, ongoing litigation, and the variation in NSR requirements across 

states. For example, some states and localities have adopted NSR 

requirements that are more stringent than the federal regulations. 

Furthermore, some states’ regulations differ because they have not 

revised their state implementation plans to incorporate the 2002 NSR 

reforms or had those revisions approved by EPA.

The second major challenge EPA and state and local agencies face in 

ensuring compliance with NSR is that it is often difficult for regulators to 

identify noncompliance—that is, instances where owners did not obtain 

NSR permits before making major modifications to their generating units. 

According to several EPA officials we interviewed, identifying 

noncompliance can be challenging because unit owners—not regulatory 

agencies—have responsibility for determining whether they need an NSR 

permit. Most owners do not ultimately obtain NSR permits before making 

changes to their units, according to EPA officials we interviewed, because 

the owners determine that the changes fall under one of NSR’s 

exclusions, such as routine maintenance, or because they offset 

emissions increases through netting. These unit owners are generally not 

required to notify EPA or state or local permitting agencies when they use 

these exclusions. Therefore, EPA would not review the owners’ 

determinations unless (1) the owner proactively sought a permit and the 

Identifying NSR 

Noncompliance Requires 

Long Investigations
 

Page 17 GAO-12-590 EPA's Implementation of New Source Review

state or local permitting agency determined that an NSR permit was 

required or (2) EPA initiated an investigation. In instances where a unit 

did not apply for and receive a permit as required, it can take EPA several 

years to identify the noncompliance and take corrective action. Moreover, 

under an EPA rule finalized in 2007, known as the “reasonable possibility 

recordkeeping” rule, a unit owner who determines that a change will not 

trigger NSR is not required to keep records of the change and its resulting 

emissions unless the owner believes there is a reasonable possibility that 

the change could result in a significant emissions increase, and other 

conditions are met.22

According to EPA and state officials we interviewed, state and local 

permitting agencies are generally not well positioned to identify 

noncompliance. State and local permitting agencies routinely inspect 

units, but officials told us these inspections focus on compliance with the 

terms of existing operating permits, not on whether an owner failed to 

obtain a permit. Several EPA and state officials told us that, given the 

complexity of most units, routine compliance inspections are not well 

suited to detect NSR violations, in part because it is difficult to distinguish 

work that might be considered a major modification from other work that 

is routine. According to one EPA official, to identify noncompliance with 

NSR, agency investigators need to identify what changes have already 

occurred; gather information on the nature of these changes; and 

determine whether NSR should have applied at the time the changes 

occurred, considering all possible exclusions and other factors. EPA 

officials we spoke with said that this process requires investigators to 

analyze information on historic emissions and a large volume of records 

on work conducted over the course of a unit’s life. According to these and 

other EPA officials, such extensive review would not be possible during 

routine compliance inspections. Several state and EPA officials we spoke 

with also said that, given the complexity and case-by-case nature of NSR, 

state and local agencies generally do not have the resources—and in 

some cases expertise—to detect noncompliance. As result, several state 

According to one state official we interviewed, this 

rule may complicate efforts to identify noncompliance because EPA and 

state regulators generally have to retroactively determine whether an 

NSR permit should have been obtained for past activities, and without the 

benefit of company records, such a determination is difficult.

 

22This 2007 final rule was a clarification of a 2002 NSR reform regulation that the D.C. 

Circuit Court remanded to EPA in 2005. EPA is currently considering whether changes to 

the regulation are necessary and a litigating a case about the rule.
 

Page 18 GAO-12-590 EPA's Implementation of New Source Review

officials we spoke with said they rely on EPA to identify instances of 

noncompliance with NSR.

EPA has therefore taken a lead role in enforcing NSR, beginning in the 

mid-1990s and continuing to the present. In 1996, EPA began targeting 

older, coal-fired generating units for compliance assessments and, on the 

basis of its investigations, alleged that several of the largest coal-fired 

electricity generating units in the country had violated NSR provisions by 

making major modifications without obtaining an NSR permit. In 1999 and 

early 2000, after receiving a number of cases from EPA, DOJ filed seven 

enforcement actions in U.S. federal courts in what is known as EPA’s 

Coal-Fired Power Plant Enforcement Initiative. For their part, owners of 

units targeted by the NSR enforcement initiative contended that, among 

other things, their projects should have qualified for the routine 

maintenance exclusion. Nonetheless, almost all of these cases ultimately 

resulted in settlements mandating the installation of emissions controls 

and civil penalties. Since then, EPA and DOJ have continued this 

enforcement initiative and secured additional settlements for alleged 

noncompliance with NSR. According to EPA, steps to develop an NSR 

enforcement case include:

1. Section 114 requests. Under Section 114 of the Clean Air Act, EPA 

may obtain information from owners of generating units to determine 

whether violations have occurred. Such information includes detailed 

cost information on capital construction projects suspected to be NSR 

violations. According to EPA officials, collecting and reviewing such 

information can take several months to over a year.

2. Settlement negotiations. After reviewing generating units’ records, 

EPA determines whether NSR violations have occurred. If EPA 

determines that the unit is not in compliance, it will notify owners of 

generating units and encourage the owner to install emissions 

controls. EPA initially tries to resolve noncompliance through a 

settlement.

3. Referral. If settlement negotiations are unsuccessful, EPA will 

determine whether enough evidence exists to refer the case to DOJ 

for potential litigation. DOJ then reviews the accumulated evidence 

and determines whether there is merit to file suit against the company. 

Before filing the case in court, DOJ generally discusses the matter 

with the owner in a further attempt to settle.
 

Page 19 GAO-12-590 EPA's Implementation of New Source Review

According to EPA and DOJ officials, EPA’s investigations for NSR 

compliance, and subsequent enforcement actions, take a long time to 

conclude and involve substantial EPA resources. In instances where 

EPA’s investigations have uncovered suspected violations, it can take 

years to litigate a case or bring it to conclusion through a settlement. 

Specifically, the 22 settlements resulting from EPA’s enforcement 

initiative took, on average, 7 years to conclude. According to several 

industry representatives we interviewed, these efforts have also placed a 

large burden on owners and operators of generating units, given the 

amount of information required on past activities at the unit.

Available data, while not complete, suggest that a substantial number of 

generating units have not complied with requirements to obtain NSR 

permits. Complete data on NSR compliance do not exist for two primary 

reasons. First, EPA has not yet investigated all electricity generating units 

for compliance with requirements to obtain NSR permits. Second, NSR 

compliance is determined at a point in time, and EPA’s interpretation of 

compliance has, in some cases, differed from that of federal courts. 

Nonetheless, EPA has investigated a majority of coal-fired generating 

units, and data from these investigations suggest that a substantial 

number of generating units have not complied.

From our review of relevant documentation and EPA-provided data, we 

identified two primary reasons why complete data on NSR compliance 

are not available. First, EPA has not yet investigated all generating units 

for NSR compliance, and second, available data do not provide a 

complete picture of compliance.

EPA has investigated most—but not all—coal-fired generating units for 

compliance with NSR at least once. According to our review of EPAprovided documents and data, EPA has investigated 831 generating units 

at least once since it began its Coal-Fired Power Plant Enforcement 

Initiative. These 831 units represent about 81 percent of all coal-fired 

units that generated electricity in 2010 and about 24 percent of all fossil 

fuel-fired units (those using coal, natural gas, or oil) that produced 

Available Data on 

NSR Compliance Are 

Not Complete but 

Suggest Substantial 

Noncompliance 

Complete Data on Unit 

Compliance with NSR Are 

Not Available
 

Page 20 GAO-12-590 EPA's Implementation of New Source Review

electricity in 2010.23

Data on units investigated by EPA are not conclusive because 

compliance is determined at a point in time; therefore, subsequent 

changes to the unit could affect its future compliance with NSR. NSR is 

required each time an existing generating unit undertakes a major 

modification. Thus, an owner of electricity generating unit that has 

obtained an NSR permit in the past—or was subject to an EPA 

investigation—is not exempt from the requirement to obtain an NSR 

permit for any future major modifications.

Most natural gas units—as well as some smaller 

coal-fired units—have not been investigated by EPA. According to EPA 

officials we interviewed, the agency has focused most of its NSR 

compliance efforts on large, coal-fired units because they produce 

dramatically higher levels of harmful air emissions.

24 Moreover, allegations of 

noncompliance stemming from EPA’s investigations do not necessarily 

mean that a violation has occurred, because in some cases federal courts 

have ultimately disagreed with EPA about the need for an NSR permit. 

Given these issues, it is difficult to provide a comprehensive assessment 

of NSR compliance at any given time.

These limitations notwithstanding, data on generating units investigated 

by EPA shed some light on overall compliance with NSR among 

electricity generating units. Among the 831 generating units it has 

investigated through its Coal-Fired Power Plant Enforcement Initiative, 

EPA has alleged NSR noncompliance at a substantial number. 

Specifically, EPA has alleged noncompliance—documented through 

notices of violation, complaints filed in court, or settlements—at 467 

generating units, around 56 percent of the units it has investigated.25

 

23Analysis is based on a universe of 3,443 electricity generating units in the U.S. that (1) 

listed a fossil fuel as a primary fuel, (2) had a net summer capacity greater than 25 

megawatts, and (3) produced electricity in 2010.

These 467 units investigated by EPA represent approximately 45 percent 

24Although units must undergo NSR review for major modifications, some of the 

settlement agreements EPA has reached with electricity generating units include a 

provision precluding EPA, in certain circumstances, from suing the owner for making a 

major modification and not undergoing NSR. 

25In the settlements, companies generally denied the alleged violations and maintained 

their compliance with the Clean Air Act but agreed to settle to avoid the costs and 

uncertainties of litigation and improve the environment.

EPA Has Found 

Noncompliance at a 

Majority of Units It Has 

Investigated
 

Page 21 GAO-12-590 EPA's Implementation of New Source Review

of coal-fired units that produced electricity in 2010, and about 14 percent 

of all fossil fuel-fired units that produced electricity in 2010.26

According to EPA, the Coal-Fired Power Plant Enforcement Initiative is 

perhaps the most comprehensive and coordinated enforcement effort 

under the Clean Air Act to date. The initiative has led to 22 settlements 

covering a total of 263 units, or approximately 32 percent of the units EPA 

has investigated. According to our analysis of EPA data, the settlements 

will require affected unit owners to install and operate emissions controls 

costing an estimated $12.8 billion in total and levy civil penalties totaling 

around $80 million. Some companies are also required to fund 

environmentally beneficial projects, such as restoring watersheds and 

forests in national parks. These settlements are projected to reduce sulfur 

dioxide emissions by more than 1.8 million tons annually and nitrogen 

oxides emissions by about 596,000 tons annually.27 In some cases, EPA 

reached companywide settlements in which companies agreed to put 

emissions controls on units constituting most of their production capacity. 

Two of the largest settlements—with American Electric Power and the 

Tennessee Valley Authority—represent 105 units, around 40 percent of 

the total, and about $8.6 billion in control costs, or around two-thirds of 

the total. A senior Department of Justice official we interviewed said that, 

in addition to the 22 concluded settlements, 7 additional NSR cases are in 

various stages of litigation. See appendix III for more details on EPA’s 

concluded NSR settlements.

Ensuring compliance with NSR presents significant challenges for EPA, 

and state and local permitting agencies. Unit owners—not regulators—

are responsible for determining when an NSR permit is needed, and, 

because of NSR’s complex requirements, these determinations are not 

always straightforward. The complexity and case-by-case nature of NSR 

requirements also mean that NSR violations are difficult to detect, once 

they occur. State and local agencies generally do not have the resources 

to identify NSR violations and therefore rely on EPA to enforce NSR. 

Although available data on NSR compliance are not conclusive, the 

 

26Analysis is based on a universe of 3,443 electricity generating units that (1) listed a fossil 

fuel as a primary fuel, (2) had a net summer capacity greater than 25 megawatts, and (3) 

produced electricity in 2010.

27These reductions are to be phased in over an agreed-upon time frame, often 10 years.

Conclusions 
 

Page 22 GAO-12-590 EPA's Implementation of New Source Review

substantial number of generating units EPA investigations have allegedly

found to be noncompliant suggests that many generating units have not 

obtained NSR permits as required. Addressing NSR’s complexity and 

improving compliance could reduce the need for long and resourceintensive enforcement actions and more effectively protect air quality by 

averting emissions before they occur. Yet EPA’s ability to simplify NSR or 

develop comprehensive, nationwide guidance is limited for several 

reasons, including the case-by-case nature of NSR applicability, ongoing 

litigation, and the variation in NSR requirements across states.

Nonetheless, EPA has an opportunity to improve its efforts by collecting 

more comprehensive NSR permitting data. Several EPA regional offices 

maintain some information on the NSR permits issued by the state and 

local permitting agencies in their regions, but this information is in 

different formats and not compiled by EPA into a complete and

centralized source of information on NSR permits issued nationwide, as 

recommended by the National Research Council in 2006. More complete 

information on NSR permitting would help EPA and external parties 

gauge the extent to which fossil fuel generating units have obtained NSR 

permits and help inform enforcement efforts that have already found 

widespread alleged noncompliance.

In cases where unit owners apply for permits before making physical or 

operational changes that would result in a significant net increase of 

emissions, EPA plays an important role because it has an opportunity to 

comment on every draft NSR permit under consideration by state and 

local permitting agencies and to influence decisions about the appropriate 

level of pollution control, among others. A key benefit of EPA’s 

involvement in the permitting process is that the agency can review and 

comment on permits issued in different geographic areas and assess 

various aspects of draft permits, including the level of emissions control 

required. Because emissions controls can cost owners and operators of 

generating units hundreds of millions of dollars, EPA’s review of the 

required level of emissions control is critically important. Although EPA 

and headquarters staff devote resources to commenting on draft permits, 

EPA does not track whether state and local permitting agencies 

incorporate the agency’s comments. Without such information, EPA 

cannot fully assess the extent to which state and local agencies 

incorporate its comments in NSR permits or the extent to which emissions 

control requirements imposed by state and local permitting agencies 

reflect suggestions made by EPA in its comments.
 

Page 23 GAO-12-590 EPA's Implementation of New Source Review

To help improve EPA’s implementation of NSR, we recommend that the 

EPA Administrator direct the entities responsible for implementing and 

enforcing NSR—specifically, the Office of Enforcement and Compliance 

Assurance, Office of Air Quality Planning and Standards, and EPA 

regions—to take the following two actions: 

• Working with EPA regions and state and local permitting agencies, 

consider ways to develop a centralized source of information on NSR 

permits issued to fossil fuel electricity generating units, and

• Using appropriate methods, such as sampling or periodic 

assessments, develop a process for evaluating the effects of its 

comments on draft NSR permits.

We provided a draft of this report to the Department of Energy, the 

Department of Justice, and Environmental Protection Agency (EPA). The 

Department of Energy said they had no comments on the report’s findings 

and recommendations. The Department of Justice provided technical 

comments, which we incorporated as appropriate. EPA provided written 

comments, a copy of which can be found in appendix IV. In its written 

comments, EPA agreed with the importance of having good systems for 

tracking and compiling information to efficiently and effectively administer 

its programs, while enhancing accountability and transparency, but 

disagreed with the need for the actions called for in our 

recommendations.

Regarding our first recommendation that EPA work with state and local 

permitting authorities to consider ways to develop a centralized source of 

information on permits issued to electric generating units, EPA said that it 

believes it has a number of permit tracking mechanisms in place, and 

raised four concerns about our recommendation. First, EPA said that it 

has maintained a centralized permit information database for many 

years—the RACT/BACT/LAER Clearinghouse, which is capable of 

capturing and sharing information on NSR permits that have been issued. 

However, EPA acknowledged that this database is incomplete—including 

about half of issued NSR permits—primarily because, in some areas, 

state and local agencies are not required to enter information about the 

permits they issue. Nonetheless, EPA said it is taking steps to improve 

participation. We continue to believe that comprehensive permitting data 

would enable EPA, Congress, and other interested parties to better 

understand the scope and impact of NSR. 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 24 GAO-12-590 EPA's Implementation of New Source Review

Second, EPA said that its regional offices track NSR permitting by the 

states in their jurisdiction and that the agency believes it is most 

appropriate for the regional offices, rather than headquarters, to be 

responsible for this information. However, our work found that the tracking 

of NSR permits by EPA’s regional office varied in completeness. For 

example, of the four regions we included in our sample, one region had a 

robust system for tracking issued NSR permits, and one had no system at 

all. EPA also said that its regional offices provide oversight of state and 

local agencies and that an EPA-wide compilation of permit data would be 

redundant, add costs, and provide little benefit to its oversight function. 

We continue to believe that a centralized source of complete information 

on NSR permits would enhance EPA’s oversight of state and local 

permitting agencies and help ensure consistency across regions. EPA 

headquarters could build on the ongoing efforts of some regional offices 

and develop more complete data using a simple, low-cost system. For 

example, we found that two regional offices use a spreadsheet to compile 

and maintain basic data on permits issued by state and local agencies. 

Additionally, we believe that any costs incurred in developing more 

comprehensive data should be considered relative to the benefits that 

could accrue from having better information on the universe of permitted 

facilities including, as noted by the National Research Council, the ability 

to assess the impact of policy changes. 

Third, EPA said that a centralized database of all NSR permits would not 

help most members of the public because most members of the public 

are interested in permits issued to specific facilities rather than the entire 

universe of all permits issued. Our report focused on the importance of 

more complete data to enhance programwide oversight of NSR permitting 

and targeting of enforcement efforts. More complete data could potentially 

assist the public and other interested parties in understanding the extent 

of NSR permitting for individual facilities, but this was not the basis of our 

findings and recommendations. We continue to believe that a centralized 

source of permitting data is important for EPA’s oversight of state and 

local permitting agencies and to enhance its enforcement efforts.

Fourth, EPA questioned the value of more comprehensive information in 

targeting noncompliance with requirements to obtain permits. Specifically, 

EPA said that identifying noncompliance involves targeting facilities that 

should have obtained permits but did not and that information on facilities 

that have obtained permits would not assist in these efforts. Moreover, 

EPA said that getting data on noncompliant sources is time- and 

resource-intensive. We continue to believe that compiling complete 

information on facilities that have obtained permits could help identify 
 

Page 25 GAO-12-590 EPA's Implementation of New Source Review

facilities that have not obtained permits and enhance targeting of these 

facilities for potential noncompliance. We also believe that understanding 

which facilities have obtained permits as required could decrease these 

time and resource demands because the agency would have a better 

starting point for identifying noncompliance. 

Regarding our second recommendation that EPA develop a process for 

evaluating the effect of its comments on issued permits, the agency said 

that its regional offices already do so and described the interactions 

between these offices and state and local agencies during the permitting 

process. EPA also said that its regional offices already conduct oversight 

of state and local permitting agencies, including whether these agencies 

adequately address EPA’s comments on draft permits. We acknowledge 

these efforts in the report and believe that, as part of its overall oversight 

of nationwide permitting efforts, EPA headquarters could benefit from a 

broader and more comprehensive assessment of the extent to which its 

comments on draft permits were adequately considered and incorporated. 

Because the terms of issued permits can result in the installation of 

pollution controls that cost hundreds of millions of dollars, it is important to 

conduct higher level review of issued permits to identify variability in the 

terms of issued permits across geographic areas. We therefore continue 

to believe that implementing this recommendation would enhance 

oversight of NSR permitting nationwide and that EPA has an opportunity 

to build on the information already collected through the oversight 

activities of its regional offices.

EPA also provided technical comments that we incorporated as 

appropriate.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the appropriate 

congressional committees, the Administrator of EPA, and other interested 

parties. In addition, the report will be available at no charge on the GAO 

website at http://www.gao.gov. 
 

Page 26 GAO-12-590 EPA's Implementation of New Source Review

If you or your staff have any questions about this report, please contact 

David Trimble at (202) 512-3841 or trimbled@gao.gov or Frank Rusco at 

(202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made key contributors to this report are 

listed in appendix V.

Sincerely yours,

David C. Trimble

Director, Natural Resources and Environment

Frank Rusco

Director, Natural Resources and Environment
Appendix I: Scope and Methodology

Page 27 GAO-12-590 EPA's Implementation of New Source Review

To assess what information the Environmental Protection Agency (EPA) 

maintains on New Source Review (NSR) permits issued for fossil fuel 

electricity generating units, we gathered information from EPA and 

selected states on the status of their NSR permitting programs and efforts 

to collect and maintain permitting data. We selected a nonprobability 

sample of nine states on the basis of (1) the number of older electricity 

generating units in the state; (2) the quantity of electricity generated by 

such units in those states; (3) the volume of sulfur dioxide, nitrogen 

oxides, and carbon dioxide emitted by units in those states; and (4) the 

region in which the generating unit was located.1

To examine what challenges, if any, EPA, state, and local agencies face 

in ensuring compliance by electricity generating units with requirements to 

obtain NSR permits, we reviewed relevant provisions of the Clean Air Act 

and NSR regulations; guidance and other information on implementing 

NSR maintained by EPA; and literature on NSR from government 

agencies, academic and research institutions, environmental 

organizations, and industry groups. We also interviewed knowledgeable 

officials and stakeholders from these agencies and institutions, as well as 

officials from the selected states and localities.

We obtained these data 

from the Ventyx Velocity Suite EV Market-Ops database, a proprietary 

database containing consolidated energy and emissions data from EPA, 

the Energy Information Administration (EIA), and other sources. To 

assess the reliability of the Ventyx data, we reviewed documentation 

provided by Ventyx and tested key variables to verify their accuracy and 

determined the Ventyx data to be sufficiently reliable for our purposes. 

The nine states we selected were Alabama, Georgia, Indiana, Kentucky, 

Missouri, New York, North Carolina, Ohio, and Pennsylvania. To assess 

how permitting information is collected and used, we reviewed relevant 

documentation from these nine states and from EPA. We also interviewed 

permitting officials from these nine states, the four EPA regional offices 

that oversee these states, EPA’s Office of Air and Radiation, its Office of 

Inspector General, and its Office of Enforcement and Compliance 

Assurance. In three of the states, some localities are responsible for NSR 

permitting; we also spoke with officials at two of those localities, which we 

selected on the basis of the number of older units in their jurisdictions.

 

1

Because we used a nonprobability sample, the results we obtained from electricity 

generating units in these states are not generalizeable to such units in all states; 

nonetheless, these results did help us understand how NSR is implemented and enforced 

in different states.

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 28 GAO-12-590 EPA's Implementation of New Source Review

To review what available data show about compliance with requirements 

to obtain NSR permits, we reviewed information published by EPA on the 

estimated rate of noncompliance by industrial sectors. We also reviewed 

information on EPA’s enforcement activities maintained by enforcement 

officials in EPA’s Office of Enforcement and Compliance Assurance, 

including (1) data on notices of violation sent to owners of generating 

units alleging noncompliance with NSR; (2) lawsuits filed in court for 

alleged NSR violations; and (3) information on the settlements concluded 

by EPA and the Department of Justice with owners of generating units, 

which ended or prevented lawsuits alleging noncompliance. To assess 

the reliability of the EPA-provided data, we interviewed knowledgeable 

agency officials and tested key variables to verify their accuracy. We 

determined these data to be sufficiently reliable for the purposes of our 

analysis. We also interviewed knowledgeable enforcement and 

compliance officials from EPA’s headquarters Office of Enforcement and 

Compliance Assurance and four regional offices.

We conducted this performance audit from April 2011 to June 2012, in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comparison of Available 

Databases of NSR Permits for Electricity 

Generating Units

Page 29 GAO-12-590 EPA's Implementation of New Source Review

Table 1: Comparison of Available NSR Permit Databases

Database Main purpose Limitations

EPA control technology clearinghouse To enable state permitting agencies, EPA 

regional offices, and regulated sources to 

assess EPA’s determinations on past NSR 

applications with respect to required 

emissions control technologies

By EPA’s estimates, captures about 

50 percent of permits

State databases or permit records To assist states in keeping records of their 

own permitting activity

Do not consolidate permits for regionwide 

or nationwide assessment; state systems to 

track permits vary widely

Regional databases To inform regulated sources and the public on 

the status of permitting activity

Data limited to regional jurisdiction; 

completeness of data varies by region

Office of Air Quality Planning and 

Standards greenhouse gas permitting 

database

To assist EPA’s headquarters permitting 

division in tracking NSR permits related to 

greenhouse gases following 2010 

greenhouse gas rule

Tracks permits issued since 2011, after 

greenhouse gas rule took effect; may 

exclude NSR permits for some activities, 

such as coal handling, that affect

particulate matter but not greenhouse 

gases

Office of Air Quality Planning and 

Standards comment letter database

To help EPA ensure consistency in its 

comments on draft permits and to meet 

comment deadlines

Does not track whether draft permits are 

finalized, or their terms

Region 7 coal-fired utility database To track permits issued to coal-fired 

generating units from 2000 to 2010 

Database only covers newly constructed 

coal-fired units for a limited time period

Region 4 combustion turbine database To track permits issued to combustion turbine 

units from the early 1990s onward

Database only covers combustion turbine 

units, most commonly natural-gas-fired 

units, and is no longer being updated

Source: GAO analysis.

Appendix II: Comparison of Available 

Databases of NSR Permits for Electricity 

Generating Units
Appendix III: Concluded NSR Settlements

Page 30 GAO-12-590 EPA's Implementation of New Source Review

Table 2: Concluded NSR Settlements Involving Electricity Generating Units

Dollar in millions

Emissions reductions 

(tons per year)

Company

Date 

settlement 

lodged

Number 

of units 

involved

Civil 

penalties 

Estimated 

control costs 

Environmentally 

beneficial

projects

Sulfur 

dioxide

Nitrogen 

oxides

Tampa Electric Company 2/19/2000 10 $3.5 $1,000 $10.5a 70,000 53,000

Public Service Enterprise Group 1/24/2002 

and 

11/30/2006

4 7.4 337 9.25 36,194 18,807

Alcoa, Inc. 3/27/2003 3 1.5 330 2.5 52,900 15,480

Virginia Electric and Power 

Company

4/17/2003 20 5.3 1,200 13.9 176,500 60,400

Wisconsin Electric Power 

Company

4/29/2003 23 3.2 600 22.5b 72,300 32,600

Southern Indiana Gas and 

Electric Company

6/6/2003 3 0.6 30 2.5 6,400 4,200

South Carolina Public Service 

Authority

3/16/2004 12 2 400 4.5 37,500 29,500

Illinois Power Company and 

Dynegy Midwest Generation

3/7/2005 10 9 500 15 39,500c 14,800d

Ohio Edison 3/18/2005 

and 

8/11/2009

29 8.5 1,100 25 171,500 31,050

Alabama Power 4/25/2006 2 0.1 200 4.9 22,790 4,940

Minnkota Power Cooperative 4/26/2006 3 0.85 100 5 23,561 9,458

Nevada Power 6/13/2007 4 0.3 60 0.4 N/A 2,300

Eastern Kentucky Power 

Cooperative

7/2/2007 6 0.75 600 47 54,000 8,000

American Electric Power 10/9/2007 46 15 4,600 60 654,000 159,000

Salt River Project 8/12/2008 2 0.95 400 4 14,303 6,789

Kentucky Utilities 2/3/2009 1 1.4 135 3 28,500 3,000

Duke Energy 12/22/2009 4 1.75 85 6.25 35,000 N/A

Westar Energy 1/25/2010 3 3 500 6 60,000 18,600

American Municipal Power 5/18/2010 4 0.85 0 15 30,600 3,160

Hoosier Energy 7/23/2010 4 0.95 275e 5 19,827 1,845

Northern Indiana Public Service 

Company

1/13/2011 11 3.5 600 9.5 46,000 18,000

Tennessee Valley Authority 4/14/2011 59 10 4,000f 350 225,757 115,977

Total 263 $80 $12,777 $589 1,837,632 596,106

Source: GAO analysis of EPA data.

Appendix III: Concluded NSR Settlements 
Appendix III: Concluded NSR Settlements

Page 31 GAO-12-590 EPA's Implementation of New Source Review

a

EPA estimated the costs of environmentally beneficial projects at $10 to $11 million.

b

EPA estimated the costs of environmentally beneficial projects at $20 to $25 million.

c

EPA estimated reductions in sulfur dioxide emissions of 39,500 tons per year compared with 2003 

emissions and 283,000 tons per year compared with 1999 emissions.

d

EPA estimated reductions in nitrogen oxides emissions of 14,800 tons per year compared with 2003 

emissions and 58,200 tons per year compared with 1999 emissions.

e

EPA estimated control costs at $250 to $300 million.

f

EPA estimated control costs at $3 to $5 billion.
Appendix IV: Comments from the 

Environmental Protection Agency

Page 32 GAO-12-590 EPA's Implementation of New Source Review

Appendix IV: Comments from the 

Environmental Protection Agency
Appendix IV: Comments from the 

Environmental Protection Agency

Page 33 GAO-12-590 EPA's Implementation of New Source Review
Appendix IV: Comments from the 

Environmental Protection Agency

Page 34 GAO-12-590 EPA's Implementation of New Source Review
Appendix IV: Comments from the 

Environmental Protection Agency

Page 35 GAO-12-590 EPA's Implementation of New Source Review
Appendix IV: Comments from the 

Environmental Protection Agency

Page 36 GAO-12-590 EPA's Implementation of New Source Review
Appendix IV: Comments from the 

Environmental Protection Agency

Page 37 GAO-12-590 EPA's Implementation of New Source Review
Appendix IV: Comments from the 

Environmental Protection Agency

Page 38 GAO-12-590 EPA's Implementation of New Source Review
Appendix V: GAO Contacts and Staff 

Acknowledgments

Page 39 GAO-12-590 EPA's Implementation of New Source Review

David C. Trimble, (202) 512-3841 or trimbled@gao.gov

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

In addition to the individuals named above, Michael Hix (Assistant 

Director), Ellen W. Chu, Philip Farah, Cindy Gilbert, Jessica Lemke, Jon 

Ludwigson, Nancy Meyer, Mick Ray, and Jeanette Soares made key 

contributions to this report.

Appendix V: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts

Staff 

Acknowledgments 

(361278)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (www.gao.gov). Each weekday afternoon, 

GAO posts on its website newly released reports, testimony, and 

correspondence. To have GAO e-mail you a list of newly posted products, 

go to www.gao.gov and select “E-mail Updates.” 

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov. 

Contact:

Website: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations 

Public Affairs

Please Print on Recycled Paper.