GAO: Complexity of NSR Permitting Process, Lack of EPA Data, Hinders Compliance

A new report by the Government Accountability Office (GAO) finds that the Environmental Protection Agency (EPA) lacks centralized information on New Source Review (NSR) permits typically issued to fossil fuel-fired power plants by states, though the agency has spearheaded enforcement efforts for noncompliance. The report, which concedes that the NSR permitting process is “complex and controversial,” also suggests that a "substantial number" of existing generating units may not have complied with requirements to obtain NSR permits.

The report submitted to Sen. Sheldon Whitehouse (D-R.I.), chair of the Senate’s Committee on Environment and Public Works’ Subcommittee on Oversight, examines challenges faced by the EPA as well as state and local agencies in ensuring compliance with requirements to obtain NSR permits.

Both fossil fuel-fired power plant units built after Aug. 7, 1977, and existing generating units that seek to undertake a "major modification," physical or operational, that would result in a large net increase in emissions of a regulated pollutant are subject to NSR under the Clean Air Act. The permitting process essentially requires owners of these units to obtain a preconstruction permit—typically, from state or local agencies—that sets emission limits and requires the use of certain pollution control technologies.

The EPA approves and oversees implementation of NSR by the states, and federally enforces requirements in state implementation plans. But the controversial process has often sparked disputes between the EPA and generators over whether certain changes to generating units qualified for exclusion as routine maintenance, repair, and replacement.

As the GAO notes, over the past two decades, the EPA has made NSR enforcement a "national priority," reaching 22 settlements with generators that own 263 coal units in the U.S., and requiring them to install and operate emissions controls costing about $12.8 billion in total as well as pay civil penalties of around $80 million. EPA investigations for NSR compliance—and subsequent enforcement actions—"take a long time to conclude and involve substantial EPA resources,” the organization notes, however. The 22 settlements to date took on average seven years to conclude, the report says, efforts that placed a "large burden on owners and operators of generating units, given the amount of information required on past activities at the unit."

Even so, a "substantial number of generating units have not complied with requirements to obtain NSR permits," the report suggests. The EPA has investigated 831 coal generating units at least once since it began an NSR enforcement initiative in 1999—representing 81% of all coal-fired units that generated power in 2010, and about 24% of all fossil fuel-fired units, and it has alleged noncompliance at 467 units, or in more than half the units investigated.

One reason is that “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 report says. “Addressing NSR’s complexity and improving compliance could reduce the need for long and resource-intensive 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.”

The absence of information on NSR permits "hinders EPA’s ability to efficiently target noncompliance," the report concludes. "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, unless they rely on unit owners or the efforts of state and local permitting agencies to provide this information."

Congress’ investigative arm pointed out that the agency had been advised before, in 2006, by the National Research Council to collect data on a full range of NSR permits issued nationwide because that information could be useful to stakeholders and policy makers for assessing the broader impacts of NSR regulations. According to the report, the EPA said that a centralized information repository was impractical 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."

Sources: POWERnews, GAO