Regulatory Developments, Special Topics in Environmental Management

Hourly/Annual Emissions Tests and NSR Permits

The EPA’s proposed Affordable Clean Energy (ACE) rule (August 31, 2018, Federal Register (FR)) to regulate greenhouse gas (GHG) emissions from existing power plants includes a new approach to the Agency’s New Source Review (NSR) program.

Under the NSR, a major source of air pollution that seeks to modify its facility in ways that generate significant increases in air pollution must obtain an NSR permit, which may require that the modification be accompanied by installation of modern air pollution controls. Generally, there are two tests that determine if increases in air pollution will occur following the modifications. The first determines if emissions are increasing annually. The second determines if emissions are increasing hourly. Current NSR regulations require the annual test. Under the proposed ACE rule, the EPA would switch to an hourly test to determine NSR applicability.

5-year Baseline

The hourly test is favored by industry because it allows units to emit pollution commensurate with a facility’s past emissions rate. The proposed provision includes three alternatives for conducting the hourly test; each is based on comparing projected postmodification emissions to the prechange maximum actual hourly emissions rate achieved over the previous 5 years. Here is the EPA’s proposed language for one of the alternatives:

Emissions increase test. For each regulated NSR pollutant, compare the maximum achievable hourly emissions rate before the physical or operational change to the maximum achievable hourly emissions rate after the change. Determine these maximum achievable hourly emissions rates according to section 60.14(b) of this chapter. No physical change, or change in the method of operation, at an existing EGU [electric generating unit] shall be treated as a modification for the purposes of this section provided that such change does not increase the maximum hourly emissions of any regulated NSR pollutant above the maximum hourly emissions achievable at that unit during the 5 years prior to the change.”

Hourly emissions increases would be determined using emissions factors, material balances, continuous monitor data, or manual emissions tests.

More Hours, More Controls

In the proposal, the EPA argues that by switching from an annual to an hourly emissions test, operators will be able to make heat-rate improvements (HRI) to their units, thereby enhancing efficiency without necessitating the NSR. The proposal would establish HRIs as the best system of emissions reduction for reducing GHG emissions. Hence, by lowering the barrier to HRIs posed by NSR permitting, the proposal would achieve the desired GHG reductions.

The Agency’s thinking here essentially repeats analyses made in Agency proposals in 2005 and 2007, which also sought the switch to an hourly emissions test. The Agency noted that by not imposing an annual emissions test, units could be operated longer with a commensurate environmental benefit.

“The analysis [for the 2007 proposal] maintained that the hourly emissions test would allow units to operate more hours each year, and the more hours a unit operates, the more it will control emissions to remain under the emission caps,” the EPA stated.

Supreme Court Weighs In

The hourly versus annual emissions test was litigated in 2005 when the U.S. Court of Appeals for the 4th Circuit ruled that the NSR and the EPA’s program for new major sources, called New Source Performance Standards (NSPS), must have the same emissions test to determine applicability. The NSPS has an hourly emissions test. The 4th Circuit’s opinion was overturned by the U.S. Supreme Court, which held that there is no requirement that the same term in different provisions of the same statute be interpreted identically. Despite that pronouncement, the EPA says the Supreme Court never prohibited the use of an hourly test for the NSR. Furthermore, states the Agency, the Clean Air Act (CAA) itself is silent about which type of test is required for the NSR, and hence, requiring an hourly test would be within the Agency’s discretion under the Chevron Deference.

Efficiency Benefits Overstated

Opponents of the hourly test contend that it is a backdoor solution to prolonging the life of coal-fired power plants that predate the CAA, and any resulting environmental harm is not overcome by improvements in efficiency. At a House hearing in May covering legislation that would also eliminate the annual NSR test, Paul Baldauf, assistant commissioner of the New Jersey Department of Environmental Protection, addressed these issues.

“NSR amendments, as proposed, could result in the extension of the life of older power plants, with modifications that result in small improvements to energy efficiency, while causing significant increases in annual emissions of air contaminants, including carbon dioxide, sulfur dioxide, nitrogen oxides, particulates, mercury, and other hazardous air pollutants,” testified Baldauf. “That would be inconsistent with the CAA, which requires that sources install best available control technology, lowest achievable emission rate, and maximum achievable control technology when modifying equipment facilities, including energy efficiency modifications that would increase emissions of applicable air contaminants.”

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.