Emissions, Policy & Regulations

NSR Reform: The Time is Nigh

Issue 10 and Volume 121.

By Robynn Andracsek, P.E., Burns & McDonnell and contributing editor

Forces are at work to update the Environmental Protection Agency’s (EPA) archaic and perplexing New Source Review (NSR) Rules. These rules, more so than greenhouse gas or mercury regulation, prevent power plants from making efficiency improvements, which would reduce emissions on a per megawatt basis.

The lack of a basic definition of “routine” in determining if a replacement or upgrade requires a new permit with modern controls leaves utilities fearing change. NSR lookback lawsuits have forced at least 113 power plants to install new control devices, pay fines, or shutdown at a cost of more than $21 billion over the last 17 years.

The main guidance document for NSR remains the draft 1990 New Source Review Workshop Manual, aptly nicknamed the “puzzle book.” Never finalized due to controversy and EPA inertia, this document has been supplemented over the decades with guidance memos and applicability determinations. The result is a confusing Frankenstein-like mess that leaves industry without a clear path to updating and repairing their infrastructure. This guidance document was finally updated Sept. 1, 2017, not by the EPA but by the Air and Waste Management Associate (AWMA), and is available for purchase. Although not EPA-reviewed or approved, it does provide clarity on the NSR rules and incorporates the few 2002 NSR reforms that survived court challenge.

However, outside of AWMA’s repackaging of the 25 years of guidance documents, there remains a push to alter the actual regulations. The current administration has called for a rollback on regulations and the EPA has indicated it plans to overhaul NSR. Additionally, the Department of Energy released a report in August 2017 on the “reliability and resilience of the electric grid.” The report correctly states, “The uncertainty stemming from NSR creates an unnecessary burden that discourages rather than encourages installation of CO2 emission control equipment and investments in efficiency because of the additional expenditures and delays associated with the permitting process.”

  • The following are common and sensible suggestions to reform NSR into a vehicle that encourages innovation and pollution reduction instead of inhibiting modernization:
  • Remove the undefined exemption for “routine maintenance” and replace it with a discrete definition for substantial modifications (such as changing the frame model of a turbine) that trigger installation of Best Available Control Technology (BACT) on existing facilities. Simple and common repairs such as boiler tube replacements or turbine overhauls should not be limited by regulatory uncertainty and should be considered “routine maintenance.”
  • Provide an exemption for pollution control projects that will survive court challenge. The 2002 NSR Reform attempted to regulate projects which decreased emissions of one pollutant at the expense of increasing another pollutant. For example, installing over-fire air on a boiler reduces nitrogen dioxides (NO2) but increases carbon monoxide (CO). NO2 is arguable more important than CO since NO2 contributes to ground level ozone and fine particulate (Pm2.5) formation. However, this reform was struck down by the courts.
  • Regulate emissions on an efficiency basis (pounds per megawatt-hour) to encourage innovation. Retrofitting an existing boiler or turbine can be more cost effective than building a new unit. If the modified unit is more efficient, its operation should be encouraged versus operating an older, less efficient unit.
  • Remove the NSR incentive to pollutant as much as possible the two years before a facility triggers NSR permitting. Currently, a facility’s post project emissions are measured against its actual emissions in the five years preceding the modification on a ton per year basis, not against the potential or even the permitted emissions. A project could decrease emissions on a pound per hour basis but if the boiler subsequently increases its capacity factor, it triggers NSR and control device retrofit. In contrast, New Source Performance Standard regulations require a short-term emission increase before triggering new applicability.

Stable, affordable electricity and clean air are not mutually exclusive. It is time to reform regulations to permit technical advances in power generation.