Proposed NSR rules spell relief for maintenance projects

Bill Roth-Evans, Trinity Consultants

Since the mid 1970s, the Environmental Protection Agency (EPA) has required permitting for construction and modification projects that would result in significant increases in air pollutant emissions under the New Source Review (NSR) permitting program. These large permits can take well over a year to be issued from the time of application. There are a variety of exemptions from NSR permitting, many of which are unclear. One of the key exemptions is for a project that would be considered “routine maintenance, repair, and replacement” (RMRR).

Unfortunately the existing NSR rules do not provide much clarity on what can be considered RMRR. For example, what does “routine” really mean? Generally, EPA has stated that an activity must occur at least once a year for it to be considered routine. In the power industry, however, normal parts replacement may only occur once every five to ten years.

Possibly a consequence of such confusion, the power industry has been the target of EPA enforcement for NSR violations due to the incorrect application of the RMRR exemption for activities such as replacing economizers, reheater riser tubes, turbine rotors, and front ash hopper tubes.

On Dec. 31, 2003, EPA proposed new NSR rules intended to clarify the RMRR exemption. This long awaited proposal, once finalized, will enable facilities to more accurately apply the exemption based on a rule rather than a large number of memos and letters from EPA.

The proposed RMRR rule includes several key aspects. First, the proposal establishes a cost-based approach for determining whether activities fell under RMRR. A plant would calculate an annual facility-wide allowance for maintenance activities. The allowance will be calculated by multiplying the cost of replacing an entire air pollutant emission source (e.g., a boiler) by an industry-specific RMRR percentage. The percentage may be based on the Internal Revenue Service “Annual Asset Guideline Repair Allowance Percentages.” As long as physical changes to the existing equipment (within some restrictions) could all be accomplished without spending more than the allow-ance, it would be assumed that the project was an RMRR activity and, therefore, exempt from NSR permitting.

The second significant part of the proposed rule is the addition of language outlining the exemption for projects involving the replacement of equipment with new equipment that is functionally equivalent. The new equipment (e.g., boiler tubes) must serve the same function and must not alter the basic design parameters of a unit. Any physical changes to a facility that do not fall under the maintenance allowance or equipment replacement approaches could still be evaluated on a case-by-case basis similar to the current methods. In addition, if the costs associated exceeded a pre-determined reconstruction cost threshold percentage (e.g., 50 percent of the cost of a new unit), then the exemption would not apply.

Once it is finalized by EPA, the RMRR rule should provide additional clarity to the power generation industry, despite the size of the proposed rule and its supporting documentation. Having a specific outline of the RMRR exemption will help facilities plan maintenance timelines better, and help avoid the risk of NSR enforcement activity. For example, pushing a maintenance activity back until the following calendar year may enable a facility to keep below the RMRR annual cost thresholds.

EPA has received all initial comments on the proposed RMRR rule, with the comment period ending May 2, 2003. In addition, several public hearings have been held across the country to solicit comments on the proposed rules. There are a great number of obstacles to the proposed RMRR rule, however, that make it difficult to anticipate the timeline for its finalization.

One concern is the lawsuit filed by nine Northeastern states on Dec. 31, 2002, intended to block the implementation of the NSR reforms (New York v. EPA, D.C. Cir., No. 02-1387).

Other concerns include comments raised by several regulatory agencies. Thus, it is likely that the RMRR rule will not be finalized until 2004, if not later. Still, the potential of this rule change to provide consistency from state to state and facility to facility for the application of the RMRR exemption makes it worth the wait.

Roth-Evans is the manager of St. Louis Operations for Trinity Consultants. He has a Masters Degree in Environmental Engineering from the University of Illinois with a focus on air quality. In his nine years with Trinity, Roth-Evans has worked with a variety of industries across the country including electric power generation.

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