I have loads of 133A so the cable sized #1/0 awg but due to voltage drop it is now up size to #500kcmil. So 500kcmil is provided.
Engineer is now telling me based on NEC 2017 section 240.4 less than 800A the breaker size should be 400A Not 150A.
I dont see anything in NEC 2017 that says breaker has to be 150A? I feel something is wrong but cant enforce 150A breaker
You do not necessarily *need* to increase the OCPD, due to voltage drop governing a change in size of the conductor. If anything, there may be reasons specific to the load that limit you to a maximum OCPD, which would prevent you from doing this. Or at least, insert a second OCPD close to the load in order to comply with the needs of the load. Some loads specify a maximum OCPD rating. You should check with the manufacturer or the documentation of a particular load, to see if you are allowed to increase the OCPD trip rating to far higher than the NEC's default size.
That being said, there are reasons you might want to increase the OCPD, such as having more capacity in the equipment to terminate your wires. I can't directly terminate a 500 kcmil wire in a standard 150A breaker. Not without a splice reducer to locally step it down to a size such as #1/0. And there is a good chance I would also need a junction box, to get more physical space to maneuver this giant wire and accomplish the splice/reduction. However, I can terminate 500 kcmil wire directly in a 400A frame size breaker, that has an adjustable trip setting or replaceable trip plug, to make its trip rating 150A. Or a 400A fused disconnect, with fuse reducers that enable me to insert 150A fuses.
Another abstract reason why one might want to increase the OCPD rating when curtailing voltage drop, is that it gets you around upsizing the EGC as required in 250.122(B). In your example, if I use a 150A trip rating, and I'm upsizing phase conductors from #1/0Cu to 500 kcmil Cu, then that is an upsize ratio of 4.716. The default #6 Cu ground wire, ends up getting upsized from 26.3 kcmil to 124 kcmil, which rounds up to #2/0 Cu. However, if I were permitted to use a 400A OCPD, then 500 kcmil Cu would qualify as "the minimum size with sufficient ampacity for the intended installation", and therefore require no upsizing at all of the #3Cu EGC.