The New Permit for Old Power Plants

The U.S. Environmental Protection Agency (EPA) has a long history of regulation through litigation. More than 13 years have passed since the EPA launched the opening salvo in its coal-fired power plant enforcement initiative. While regulations such as the Clean Air Interstate Rule (CAIR), Clean Air Mercury Rule (CAMR), and Cross-State Air Pollution Rule (CSAPR) have come and gone, its New Source Review (NSR) legal settlements hold steady.

During the Clinton administration, the EPA felt the dozens of power plants that were still “grandfathered” into the Prevention of Significant Deterioration (PSD) program thwarted its authority. The EPA had assumed that within 15 to 25 years all uncontrolled coal-fired boilers would have to be replaced with cleaner, controlled units. However, when utilities decided to maintain, not replace, existing assets, the agency turned to lawsuits to reinterpret “routine maintenance.” The list of alleged violations reads like a maintenance department’s to-do list: repair/replace air fans, boiler tubing, superheaters, economizers, and feedwater heaters, and so on.

The EPA begins by sending out an innocuous-looking three- to four-page letter, requesting information about the operation of a specific coal-fired boiler. These requests are made under Section 114 of the Clean Air Act, which essentially gives the agency permission to request “information as the Administrator may reasonably require” to develop regulations or determine compliance. An example line item might be to provide actual and potential emissions for each year that the boiler operated, or to provide a list of every appropriations request made since the plant first began operation. The resulting response may run tens of thousands of pages. Even if the investigation begins with one or two plants, the final settlement often encompasses a utility’s entire fleet.

Within the capital expense and maintenance records of any facility, at least a few requests exist for boiler tube repairs or fan replacements that, in retrospect, no longer meet the EPA’s redefined exemption for routine maintenance. After several years and countless lawyer billable hours, the utility and EPA reach a consent agreement to retrofit, repower, refuel, or retire a coal-fired asset: a de facto construction permit for the boiler. As shown below, EPA has had unparalleled success with this program, details of which can be found online:

  • Number of settlements: 27
  • Number of plants: 91
  • Number of boilers: 262
  • Range of penalty per settlement: $100,000 to $3,500,000
  • Range of supplemental environmental project mitigation cost per settlement: $400,000 to $31,800,000
  • Average total settlement cost per plant: $168,000,000
  • Average total settlement cost per boiler: $72,800,000
  • SO2 reductions (claimed by EPA): 1,957,258 tons
  • NOx reductions (claimed by EPA): 623,077 tons

There are several common elements to the power plant settlements:

  • Injunctive release consisting of retrofit of control devices, change in fuel to natural gas, unit retirement.
  • A civil penalty.
  • Supplemental environmental projects, such as solar energy or diesel-fueled school buses.
  • A cap on facility or fleetwide emissions.
  • Retirement of Acid Rain allowances.
  • And, sometimes, a requirement to change the dispatch order so that the lowest emitting units are utilized first.

Although the vast majority of the settlements are with coal-fired assets, natural gas–fired boilers are not immune. One of the EPA’s 27 success stories was with Nevada Power Co.’s Clark Generation Station, a natural gas–fired power plant located in Las Vegas.

Given the problems that the EPA has had with regulatory programs specifically designed to reduce emissions from coal-fired boilers (including CAIR, CAMR, and CSAPR), it is no wonder that this enforcement initiative continues. It is reasonable to expect that any coal-fired boiler without add-on NOx and SO2 control will eventually end up with this type of “permit.” The EPA clearly believes more strongly in the stick than in the carrot.

Robynn Andracsek, PE is an associate environmental engineer with Burns & McDonnell. She specializes in air quality permitting and assists industrial and utility clients acquire operating and construction air permits for their projects.

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