However, a majority of  the officials also expect that the rule will lead to an overall increase in  emissions of harmful air pollutants and hinder efforts to meet air quality  standards, potentially creating or exacerbating risk to public health. A Majority of the State Officials Expect the Rule to Increase Emissions and Hinder Efforts to Meet Health-based Air Quality Standards

A majority of the state officials expect emissions to increase as a result of  the final rule—in contrast to EPA’s conclusion, in the agency’s analysis of  the rule’s environmental effects, that it will reduce emissions from  industrial facilities. EPA program managers  maintain that this provision will decrease emissions. At Least Half of the State Officials Expected the Proposed Revisions Defining NSR Exclusions to Provide Industry Greater Flexibility but Also Increase Emissions and the Administrative Workload for State Agencies

Similar to their opinions on the final rule, a majority (28 of 42) of the state  officials expected EPA’s two NSR revisions—as proposed in December  2002—to provide companies the flexibility to perform maintenance and  replacement activities without obtaining permits and installing pollution  controls. Only 2 officials  thought that this exclusion would decrease emissions, while the others  expected no change (7) or could not judge (12). Overall, 21 of the 44 state officials believed the two exclusions would  enable older facilities, built prior to 1977, to increase emissions. A Majority of the State Officials Expected the Exclusions Would Create a Greater Administrative Workload

A majority of the officials said that implementing the exclusions would  increase their administrative burden (27 of 44) and create uncertainty for  agencies in determining when a facility’s activities can be excluded (28 of  44). In  contrast, stakeholders representing the industry groups asserted that the  proposed and final changes clarified the NSR program, thereby making  permitting easier, and encouraging investment in energy efficient projects  that lower fuel consumption and emissions. Environmental and Public Health Group Stakeholders Expected the Proposed and Final Revisions to Decrease Industry’s Regulatory Burden but Increase Emissions and Air Quality Agencies’ Workload

According to the opinions of the six environmental and public health  group stakeholders we contacted, as well as an association representing  all of the state and local air quality agencies, the proposed and final  revisions would lessen the regulatory burden on companies because, as  discussed earlier, fewer modifications would trigger NSR. The company would also have to  periodically report on their compliance with the permit. Under the air toxics  program, some companies have had to install controls to reduce facility  emissions of hazardous air pollutants. However,  the DOE analysis is not useful as a benchmark for assessing the effects of  EPA’s revisions because, under the NSR program, facilities only have to  install the best available controls when making major modifications. Conclusions

EPA’s assessments of the December 2002 and October 2003 NSR revisions  concluded that the rules would provide industry with greater flexibility to  modify their facilities without having to obtain NSR permits or, in some  cases, install pollution controls, while enhancing the program’s  environmental benefits. Little data currently exist to  resolve these competing viewpoints. Recommendations for Executive Action

To ensure that state and local air quality agencies are adequately equipped  to implement the new NSR rules, as required by EPA, and that the rules do  not have unintended effects on emissions and public health, we  recommend that the EPA Administrator (1) provide state and local air  quality agencies with assistance in implementing the December 2002 rule,  (2) pending the court’s decision on the equipment replacement rule, work  with state and local air quality agencies to identify the data that the agency  would need to monitor the effects of this rule and use the monitoring  results to identify necessary changes, and (3) consider the state and  stakeholder concerns about emissions and workload impacts that we  identified before deciding whether to issue a final rule on the second  proposed exclusion, the annual maintenance allowance exclusion. These figures are similar to the state responses, however, compared with  state officials, fewer local officials expected the exclusions to result in  significant enough emissions changes to exacerbate air quality problems in  areas that do not meet standards or cause new problems in areas that  currently meet the standards. Detailed survey results are available at:  http://www.gao.gov/special.pubs/gao-04-337sp.
Why GAO Did This Study

Environmental Protection Agency (EPA) revisions to the New Source Review (NSR) program to control industrial emissions have drawn attention from state and local agencies that implement the program, as well as industry and environmental and health groups. Under the revisions, companies may not have to install pollution controls when making some facility changes. GAO was asked to obtain the opinions of state air quality officials and other stakeholders on the impact of both the final and proposed revisions EPA issued in December 2002. GAO obtained survey responses from NSR program managers in 44 states and certain localities and contacted six environmental and health groups, and eight industry groups active in the NSR debate. Survey details are available in GAO-04-337SP .

What GAO Found

A majority (29 of 44) of the state officials responding to GAO's survey expected the rule EPA finalized in December 2002 to provide industry with greater flexibility to make some facility changes without having to obtain NSR permits or, in some cases, install pollution controls. However, in their opinion, 27 officials expected the rule to increase emissions of harmful air pollutants, thereby hindering areas' efforts to meet air quality standards and potentially creating or exacerbating public health risks. This concern\ contrasts with EPA's assessment that the rule will decrease emissions and maintain the current level of environmental protection. Furthermore, 30 of the officials expected their agency's workload would increase as they adopt and implement the rule into their own programs. Almost all of the 44 officials would like EPA assistance with implementation. Similarly, 28 of the 42 officials responding expected the two NSR revisions as proposed in December 2002--intended to provide more certainty about when facility changes are considered routine maintenance, repair, and replacement activities and can be excluded from NSR requirements--to decrease the number of permits companies would have to obtain, thereby giving them the flexibility to make some changes without installing controls. However, 21 and 26 officials, respectively, thought that the two exclusions would increase emissions; only relatively few thought the exclusions would decrease emissions as EPA's analysis had predicted. About a third of the officials thought the exclusions would exacerbate air quality problems in areas that do not meet standards, but fewer officials thought the exclusions would cause problems in areas that currently meet standards. Finally, 27 thought that implementing the two exclusions would increase states' administrative burden. The other stakeholder groups GAO contacted agreed that the final rule and two exclusions would decrease the regulatory burden on companies that modify their facilities, but disagreed about the impact on emissions and air quality agencies' workload. The six environmental and public health officials expected that because companies would not have to obtain as many NSR permits or install as many controls when modifying facilities, emissions would rise and state and local agencies' workloads increase as agencies sought alternative ways to meet standards. In contrast, the eight industry officials expected the revisions to encourage companies to invest in energy-efficient projects they had avoided under the prior program, which the officials believed would lower fuel use and emissions. The officials also expected that fewer permits would lead to decreases in agencies' workloads. Determining the revisions' likely impacts is difficult because, as discussed in GAO's August 2003 report on EPA's analytical basis for the final rule (GAO-03-947), little data exist to confirm stakeholders' opinions. In that report, GAO recommended that EPA work with state and local agencies to obtain data to assess the rule's emissions impact and correct any adverse effects.