EPA Does Not Maintain Complete Information on Issued NSR Permits or Track the Impact of Its Comments

EPA does not maintain complete information on NSR permits issued to  fossil fuel electricity generating units. 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. State and local permitting agencies, which  issue NSR permits in most parts of the country, track the NSR permits  they issue. Regulators Face Challenges in Ensuring Compliance with NSR Permitting Requirements

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. Determining When NSR Applies Can Be Difficult

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. Identifying NSR Noncompliance Requires Long Investigations

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. 2. 3. Available Data on NSR Compliance Are Not Complete but Suggest Substantial Noncompliance

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. EPA has investigated most—but not all—coal-fired generating units for  compliance with NSR at least once. 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. EPA Has Found Noncompliance at a Majority of Units It Has Investigated

Although 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. 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. 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. 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. 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. Recommendations for Executive Action

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. 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.
Why GAO Did This Study

Electricity generating units that burn fossil fuels supply most of the nations 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 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 EPAs 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 noncomplianceinstances where unit owners made a major modification without first obtaining an NSR permitpartly 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.

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.