Electric utilities, engineers, contractors and environmentalists are awaiting word from the Environmental Protection Agency, maybe in a matter of weeks, on how it proposes to change the Clean Air Act. Many observers will zero in on what EPA will seek to require when powerplants undergo overhauls or upgrades. How EPA has been interpreting those "new source review" requirements has become a Clean Air flashpoint.

EPA had been expected to release its new source review plan in mid-August, but on Aug. 14, Administrator Christie Whitman said the agency would would hold off until the fall. She says EPA will release new source recommendations with a broader Clean Air legislative package.

WHITMAN (Photo courtesy of Environmental Protection Agency)

Under new source review, utilities must install the best available pollution-control technology when a major powerplant modification increases air pollution.The question is how large a modification should trigger the technology requirement. "I am not prepared to come to any conclusions about one isolated issue before we finish work on our entire [Clean Air] proposal," Whitman said.

"We aren't sure what the Bush administration intends," says Kim Mastalio, president of Black & Veatch's energy services division. "I know the industry would like to see some approach to [new source review] different from the command-and-control practices that have been prevailing before."

Dan Riedinger, an Edison Electric Institute spokesman, says that for 25 years, EPA used a "common-sense" approach. But then the Clinton administration took a harder line. In 1999, the Justice Dept. sued seven utility companies and the Tennessee Valley Authority, alleging new source review violations. One utility, TECO Energy Inc., Tampa, settled. Two others agreed in principle to settle, but the deals aren't final.

"The administration is most likely looking at a different approach," using a "cap-and-trade" concept, Mastalio says. Utilities might be allowed to meet emissions goals for a region, with outputs from "cleaner" plants offsetting "dirtier" ones. Whitman says the overall package will be "an ambitious proposal that will reduce air pollution from powerplants significantly more than the existing system." Though the plan isn't out yet, Mastalio believes it "will mean more pollution control equipment, but it will be more of a regional than a point-source basis."

In another major part of its Clean Air package, EPA says it is working on final details of a previously announced legislative proposal to curb emissions of three pollutants–nitrogen oxides, sulfur dioxide and mercury–using a "market-based approach."

"In general, we would be in favor of a '3P' approach, but a lot depends on the details," says Pat Hemlepp, a spokesman for American Electric Power Co., Columbus, Ohio. Those details include the limits on each pollutant, deadlines for compliance and assurance that the agency won't change its requirements down the road.

EPA's plan won't be the last word. Senate Environment and Public Works Committee Chairman James Jeffords (Ind-Vt.), wants new limits on carbon dioxide as well as the other three pollutants. President Bush is opposed. "That will be the toughest issue in the debate...whether and in what way to address CO2 ," Riedinger says.

With Jeffords and his environmental allies on one side and Bush and industry supporters on the other, the issue isn't likely to be settled this year.