Power Engineering

How Clean Air Rules Deter Equipment Investment

Provisions of the Clean Air Act may actually discourage utilities from lowering emissions and improving efficiency.

By Steve Blankinship, Associate Editor

The law of unintended consequences describes what happens when a simple system tries to regulate something highly complex. The political system that promulgates regulations often produces unintended consequences. And when it comes to power plant emissions, no better example exists of such dysfunctional regulation than the prevention of significant deterioration portion of the Clean Air Act’s New Source Review provisions (PSD/NSR). Like so many aspects of environmental law, PSD/NSR and a host of court rulings and interpretations have produced confusion and uncertainty on a grand scale. The result has been to delay or halt new coal plants as well as projects to improve existing plants that, if completed, would lower net sulfur dioxide, nitrous oxide, mercury and carbon dioxide emissions.

Power Engineering magazine has covered issues related to the adverse effects of PSD/NSR, most recently in guest columns written by contributing editor Robynn Andracsek, P.E., of Burns & McDonnell. As a member of the Kansas City-based firm’s Environmental Studies and Permitting Group, Andracsek helps clients obtain air and operating permits for power plants and refineries. Before joining Burns & McDonnell more than six years ago, she worked for another industry consulting firm. She holds a degree in mechanical engineering and masters degree in environmental engineering from the University of Kansas.

Andracsek said that putting together an air permit application for a coal-fired plant takes four to eight months. Working with state agencies to get the permit issued adds another 12 to 18 months. Then “add one to three years for all the lawsuits,” she said.

One of the biggest issues facing utilities is what they can do to improve an existing plant without triggering New Source Review provisions of the Clean Air Act. Triggering the provisions means the proposed changes are so extensive that the plant is regarded as new and thus subject to installing best available control technology (BACT) emission equipment. Doing so could easily cost more than the original investment to build the entire plant. Another problem is simply trying to perform what has historically been regarded as routine maintenance. Because of court interpretations, however, many maintenance procedures may also be seen as sufficient to trigger “prevention of significant deterioration” (PSD) provisions under the Clean Air Act.

NSR regulations have been largely unchanged since 1976, said Andracsek. The problem is they have been reinterpreted as to what is considered routine maintenance. What’s more, “routine maintenance” itself has not been clearly defined. As an example, she said that replacing boiler tubes was historically regarded as part of maintenance. “But a court decision made it clear that nothing in the Clean Air Act can be safely regarded as being routine,” she said.

The federal court decision Andracsek was referring to stemmed from the U.S. Environmental Protection Agency’s (EPA’s) decision in 1992 regarding work done at Wisconsin Electric Power Co.’s Port Washington plant. Generally referred to as the WEPCo Rule, it is the only detailed explanation of what is viewed as “routine maintenance.” The regulation itself has not been changed, said Andracsek. “There are no definitive lists of possible modifications or direction as to under what classification each would fall. Every change must be analyzed and all conclusions are open to debate. In short,” she said, “utilities are left to guess their PSD applicability.”

The WEPCo Rule expanded New Source Review by making it applicable to existing facilities that make efficiency or operational improvements, even if the changes are routine and regardless of whether or not those activities actually increase pound-per-hour emissions. Under the EPA’s interpretation of the law, existing facilities that improve their capacity, efficiency or even the safety of their operations now fall under NSR’s modification requirements, which can be costly and time-consuming. The result has been to discourage energy-efficient modifications and even plant safety operations.

Modifying a steam turbine to increase its efficiency may not change emissions, because a steam turbine has no emissions. “If you make a change to a steam turbine that lets you use the boiler more often in order to get more capacity during the year, it actually lowers emissions per the amount of electricity produced,” she said. But that improvement can trigger NSR if the boiler enjoys an increase in annual capacity. Owners and operators must consider the plant whose efficiency they have improved (and whose emissions they have cut) relative to the power produced by a new plant that will be subject to even more stringent emission standards. As a result, owners often are “discouraged from making these performance and emission improvements,” she said.

Under current NSR interpretations, if a power plant has lost capacity over 30 years and if the owners rehabilitate the equipment to regain that lost capacity, they almost certainly have tripped PSD. Andrascek said that red-flags for triggering PSD in the context of maintenance include statements such as “to regain lost capacity” or “to increase efficiency.”

“Boom,” she said. “That’s all you have to say.”

Under the current Bush administration, EPA tried to clarify what constitutes routine maintenance. Power plant operators today must state the nature, purpose, frequency, extent and cost of changes to a plant. “All those points are now subject to five criteria to determine if something is routine or not,” Andracsek said. And in many situations, something like re-tubing a boiler is determined not to be routine, depending on the extent of the work “because it was not something you did every day, like changing a light bulb.”

Proving You Didn’t Speed

The attempt to reform and clarify NSR hasn’t done much either to help clean the air or reduce confusion. The Bush reforms added a “reasonable probability” provision to the process, said Andracsek. “It means that if you are making a change that you don’t think will trigger PSD and you calculate the increase in emissions to be less than the significant emission rate threshold—but greater than 50 percent of the threshold—you are required to document what you did to show you didn’t trip PSD.”

Oyez! Oyez! Oyez!: A court decision made it clear that nothing in the Clean Air Act can be safely regarded as routine.
Click here to enlarge image

Plant owners must provide documentation if they think a “reasonable possibility” exists they will trip PSD. “It’s like keeping a record to show you weren’t speeding,” Andracsek said. “It’s not enough to simply not speed or not get a speeding ticket. You have to prove you never sped.”

New Jersey recently filed a lawsuit on this very point. The state wants documentation kept for all changes, even those that are less than 50 percent of the PSD threshold. “The analogy here is that whenever your car is moving, you must prove you are below the speed limit,” Andracsek said.

Although the requirement is part of the Bush administration’s attempt at NSR reform, it may result in more paperwork with little improved chance of performing work without tripping NSR. “Of five different elements that came about as the result of NSR reform, three have been knocked out by the courts,” she said. One that remains (and that Andracsek said is prudent) is the requirement to “keep track of what’s going on to cover yourself.”

“The goal of some environmental groups seems to be to shut down all coal plants rather than get them to operate more efficiently, meaning more power for the same or fewer emissions,” she said. “You can’t just say ‘I want CO2 regulation.’ You have to fix the flaws in the regulatory system to encourage efficiency. The environmental groups are not working with the power producers. They want these plants to shut down. But they don’t go to the next step and ask what happens if they do shut down.”

She cited the recent U.S. Circuit Court of Appeals ruling on the Clean Air Mercury Rule (CAMR) as another example (see Clearing the Air, page 6). Until that ruling, many projects were already implementing plans to reduce mercury from coal plant emissions by two-third or more. Some of those plans now could be stalled as a result of the ruling. The three-judge panel ruled the EPA’s 2005 mercury rule violated the Clean Air Act by exempting coal-burning power plants from the Act’s strictest requirements for mercury emissions. The judges also struck down the EPA’s cap and trade program for reducing mercury emissions.

Busted: Prove you don’t emit or plan on a date with New Source Review.
Click here to enlarge image

Environmentalists argued that CAMR wasn’t strict enough. But companies had already begun complying with CAMR by installing controls and monitors. At least under CAMR they knew what the rules were, Andracsek said. “Now there’s no guidance. There are energy producers saying the state doesn’t want to issue a permit now because they don’t know what to do. Once again, it’s the uncertainty,” she said.

Several project developers have also said they might not go forward because of the potential requirement of maximum achievable control technology (MACT) for mercury.

What’s their goal?, Andracsek asked. Is it to have a stable power supply while minimizing emissions? Or is it to have no emissions?

“It’s one thing to give someone a bunch of hoops and tell them to jump through them,” she said. “It’s another thing to not tell them what the hoops are and still tell them to jump through them.”

Sponsored by FLSmidth

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