Emissions

“Project Accounting” is the new “Routine Maintenance”

A proposed New Source Review (NSR) rule change for coal-fired plants aims to clarify project definitions and emissions accounting, yet faces widespread criticism for its complexity and perceived flaws.
“Project Accounting” is the new “Routine Maintenance”
(Source: Flickr.)

By Robynn Andracsek, PE, Providence Engineering and Environmental Group LLC and contributing editor

For 20 years, the U.S. Environmental Protection Agency (EPA) regulated coal-fired power plants through litigation using a revised interpretation of the routine maintenance exemption in the New Source Review (NSR) regulations. This national compliance initiative ended in 2019 after affecting 113 plants at a cost of $21 billion (as shown in the below figure). However, a new proposed NSR rule change could have a similar significant effect on the power industry.

The big problem with the routine maintenance exemption was the lack of a definition for “routine” and the subsequent after-the-fact evaluations of projects by EPA. At plants grandfathered under NSR [(e.g., operating without best available control technology (BACT)], industry made repairs and undertook projects that it considered to be routine (boiler retubing, turbine overhauls, etc.) without first seeking an NSR permit. In the 1990s, when EPA realized these older plants had never undergone NSR permitting, EPA reevaluated “routine” and decided that these repairs retroactively needed NSR limits and controls. “Routine maintenance” was a powerful tool in shutting down many coal-fired boilers.

Source: Author using EPA Data.
https://www.epa.gov/enforcement/coal-fired-power-plant-enforcement

On February 22, 2024, EPA proposed several revisions to its NSR preconstruction permitting regulations.[1] In another of EPA’s unfortunate acronyms,[2] these rules are referred to Project Emissions Accounting (PEA, 2020) Rule and the Project Emissions Accounting Rule Reconsideration (PEAR, 2024). The two rules were meant to clarify issues resulting from the mostly failed 2002 NSR Reform Initiative and the rule interpretations in intervening years.

PEA and PEAR attempt to formally define a project, to wit, what activities are included when calculating and comparing emission increases to the NSR permitting thresholds. For example:

  • How many years separation are required before two activities are considered a single project?
  • Does a project include just the new emissions or also the associated emission unit decreases?
  • What makes an emission decrease enforceable when replacing an old unit?

Industry seeks clarity and certainty when interpreting environmental regulations. Failure to obtain the correct permit is costly (see Figure above). The group of activities that constitute a project is virtually always site-specific. Substantial comments (due July 2, 2024) were received on the draft regulation.

For example, EPA proposed the following revisions to the definition of project (revised text is in bold):

Project means a discrete physical change in, or change in the method of operation of, an existing major stationary source, or a discrete group of such changes (occurring contemporaneously at the same major stationary source) that are substantially related to each other. Such changes are substantially related if they are dependent on each other to be economically or technically viable. In an extreme ozone nonattainment area, a “project” means each discrete operation, emissions unit, or other pollutant-emitting activity.

Comments from industry groups, regulators and tribal organizations varied widely. The proposal was a much-needed improvement, it included a presumption that industry was trying to circumvent the regulations, and it imposed unjustified recordkeeping and reporting. The proposal manages to please no one completely and annoy everyone in differing ways. Commenters argue that “discrete” is poorly defined, the test for “economically viable” is not provided, and removing the previous guidance that two projects divided by more than three years are separate is ill-advised.

Additionally, commenters argue permitting each reduction could be onerous, EPA failed to identify any instance in which a failure to properly define a “project” altered the applicability determination and/or led to circumvention of NSR preconstruction permitting requirements, and reporting requirements are vague enough to be applicable to new office equipment.

NSR is a poorly written regulation, influenced by lobbyists and corrupted by 50 years of litigation. Like the 2002 NSR Reform attempt, this proposal, and in fact the entire NSR program, is subject to political winds and capricious legislative whims. When combined with the recent Supreme Court assassination of the Chevron Deference (when in doubt, defer to the experts at the regulatory agencies), power plants stagger under increased regulatory uncertainty. Redefining projects has the potential to impact the power industry as significantly as the reinterpretation of “routine”.

What should you do?

  • Acknowledge that PEA/PEAR is a big deal, and it will affect your operations.
  • Consult an attorney before each outage and project.
  • Conduct NSR netting calculations to set baseline emissions before each outage and project.
  • Document project emissions, including reductions, in-house and potentially with your regulator.
  • Consult with your regulator to understand what permits are required before and which emissions reports are required after each post outage/project.
  • Follow this rule in industry groups to understand how it evolves.

References

1 89 Fed. Reg. 36,870 (May 3, 2024) Docket ID EPA-HQ-OAR-2022-0381

2 See CSAPR pronounced Casper

About the Author: Robynn Andracsek, PE, is a Senior Air Quality Engineer at Providence Engineering and Environmental Group LLC with 26 years of experience in air permitting for utilities and district energy facilities.  Providence is an employee-owned, multidisciplinary engineering and environmental consulting firm. Our work has taken us across the United States and beyond in support of our governmental and industrial clients’ goals and challenges all the while holding an unwavering dedication to our founding principles – to take care of our clients, make a little money, and have fun while doing it. Her email address is [email protected].