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EPA’s New Source Review Program: Time for Reform?

January 2017

Citation: ELR 10026

Author: Art Fraas, John D. Graham, and Jeff Holmstead

This Article examines the complex CAA program known as new source review (NSR), which affects virtually every major manufacturing facility and power plant in the United States. The NSR program provides important health and environmental benefits but has become a significant impediment to the growth and modernization of the U.S. manufacturing sector. Because of a new, more stringent air quality standard for ozone, the resulting changes in the NSR program may effectively prevent industrial development in some parts of the country. The authors propose administrative reforms that EPA could take to address some of the major concerns about NSR while still maintaining the environmental benefits of the program: (1) replace current deterministic, upper-bound modeling requirements with a probabilistic approach to air quality modeling; (2) expand the pool of emission reduction credits that may be used to offset emissions from new or expanded facilities; and (3) take actions to facilitate NSR permitting when there are changes to national ambient air quality standards. The authors also offer two potential statutory reforms: (1) allow permit applicants to avoid certain NSR requirements by paying emissions fees that state or local environmental agencies would use to pay for or subsidize emissions reductions; or, more fundamentally, (2) replace the NSR program with a comprehensive system of emissions fees for each of the NSR pollutants.

Art Fraas is a Visiting Fellow at Resources for the Future; John D. Graham is Dean of the Indiana University School of Public and Environmental Affairs; and Jeff Holmstead is a Partner in Bracewell LLP.

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