-----Forwarded by Melanie King/RTP/USEPA/US on 10/19/2010 10:31PM -----

To: LisaP Jackson/DC/USEPA/US@EPA 

From: "Holmstead, Jeff" <Jeff.Holmstead@bgllp.com> 

Date: 10/19/2010 07:16PM 

Cc: Gina McCarthy/DC/USEPA/US@EPA, RobertJ Wayland/RTP/USEPA/US@EPA, Michael 

Horowitz/DC/USEPA/US@EPA, Melanie King/RTP/USEPA/US@EPA, Scott 

Fulton/DC/USEPA/US@EPA, <ossias.rich@epa.gov>, <Mike.Wasson@Exterran.com> 

Subject: SI RICE -- Petition for Reconsideration on One Issue 

(See attached file: Exterran_Petition_for_Reconsideration.pdf) 

I am submitting the attached Petition for Administrative Reconsideration 

on behalf of Exterran Energy Solutions, L.P., and EXLP Operating, LLC. 

As you will see, it addresses only one issue -- a requirement that 

companies install and operate very costly "continuous parametric 

monitoring systems" on engines located at area sources. As discussed 

our Petition, there are better (and much less expensive) compliance 

assurance mechanisms available for these engines. 

The proposed rule did not include the CPMS requirement for area sources, 

and we believe that EPA would not have included this requirement in the 

final rule if the Agency had received public comments on this issue. 
BEFORE THE ADMINISTRATOR 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, DC 

PETITION FOR ADMINISTRATIVE RECONSIDERATION 

OF THE FINAL RULE 

"NATIONAL EMISSION STANDARDS FOR 

HAZARDOUS AIR POLLUTANTS FOR 

RECIPROCATING INTERNAL COMBUSTION 

ENGINES; FINAL RULE" 

75 FED. REG. 51570 (AUGUST 20, 2010) 

 Exterran Energy Solutions, L.P. 

 EXLP Operating, LLC 

 16666 Northchase Drive 

Houston, TX 77060 

Petitioner 

 Jeff Holmstead 

Rebecca J. Rentz 

 Bracewell & Giuliani LLP 

 2000 K Street, NW 

 Suite 500 

 Washington, DC 20006 

 Attorneys for Petitioners 

 October 19, 2010
Exterran Petition for Administrative Reconsideration 

NESHAP SI RICE Rule 

75 Fed. Reg. 51570 (August 20, 2010) 

-2- 

INTRODUCTION

Pursuant to Section 307(d) of the Clean Air Act and Sections 553-557 of the Administrative 

Procedure Act, and for the reasons set forth below, Exterran Energy Solutions, L.P. and EXLP 

Operating, LLC (collectively referred to herein as “Exterran”) petitions the Administrator of the 

United States Environmental Protection Agency ("EPA") to reconsider one aspect of the 

"National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal 

Combustion Engines" 75 Fed. Reg. 51570 (August 20, 2010) (the "RICE Rule"). 

Specifically, Exterran seeks reconsideration of a provision in the final RICE Rule that requires 

continuous parametric monitoring systems ("CPMS") on four stroke lean burn ("4SLB") and four 

stroke rich burn ("4SRB") Spark Ignited ("SI") RICE greater than 500 horsepower ("hp") at area 

sources, as defined by the National Emission Standards for Hazardous Air Pollutants 

("NESHAP") program in the federal Clean Air Act. The CPMS requirement for area sources is 

found in Table 6 to the final RICE Rule, item 10(ii)-(iv). 

PETITION BACKGROUND AND SUMMARY 

Exterran is a global leader in the natural gas contract compression business. Exterran owns and 

operates one of the largest fleets of compressors in North America, which are driven almost 

exclusively by natural gas-fired, spark-ignited (SI) engines. Over 10,000 of Exterran's engines 

are subject to the final RICE Rule. Exterran's fleet is typically deployed at relatively remote 

exploration and production operations and represents an application that is distinct from the 

compressors and engines used at natural gas pipelines, which are typically much larger and part 

of a more significant infrastructure of equipment and personnel. 

The proposed RICE Rule was issued on March 5, 2009. The final RICE Rule includes stringent 

emission standards and operational requirements to ensure that engines are well maintained. At 

issue in this petition is a requirement that will impose substantial costs on regulated companies 

without providing any environmental benefit – a provision requiring that CPMS be installed on 

all 4SLB and 4SRB engines greater than 500 hp, even those located at area sources. EPA has 

estimated that CPMS will only cost $568 per engine, but this figure is more than an order of 

magnitude below the actual cost. As discussed below, the initial cost of purchasing and 

installing CPMS is $7,890 per engine. In addition, the annual operating cost (including laborintensive evaluation and reporting requirements) will be in the range of $6,000 - $8,000. 

There are several compliance assurance alternatives to CPMS that would be more effective than 

CPMS at ensuring that owners and operators immediately identify and remedy catalyst 

operational concerns at remote, usually unmanned, area sources. For example, a quarterly or 

monthly pressure differential check, together with a quarterly or monthly temperature reading 

and the required performance measurements, would provide multiple checks to evaluate 

compliance. Additionally, instead of retroactive or remote CPMS data logger evaluations that in 

many cases will be conducted months after the first reading is recorded, these manual 

temperature and pressure differential checks would allow the engine staff to observe the 

operating conditions in real time and perform any necessary maintenance immediately at the site. 
Exterran Petition for Administrative Reconsideration 

NESHAP SI RICE Rule 

75 Fed. Reg. 51570 (August 20, 2010) 

-3- 

Reconsideration of the CPMS requirement is also warranted because EPA failed to provide 

adequate notice or consider appropriate compliance alternatives at smaller area sources, sites that 

often only have one engine. Neither the RICE Rule compliance requirements in Table 6 of the 

March 2009 proposed rule nor the Regulatory Impact Analysis ("RIA") for the proposed rule 

indicated that CPMS would be required at area sources. EPA should allow an additional 

administrative proceeding to review the technical challenges and cost that would be imposed by 

requiring CPMS at area sources. 

BASES FOR ADMINISTRATIVE RECONSIDERATION

I. THE CPMS COSTS ARE NOT ACCURATELY REPRESENTED IN THE RICE 

RULE DOCKET 

NESHAP defines an area source as any source that emits less than 10 tons per year (tpy) or more 

of any single hazardous air pollutant ("HAP") or less than 25 tpy of any combination of HAPs. 

When considering controls on area sources, the federal Clean Air Act provides EPA with the 

ability to consider costs in order to avoid imposing unreasonable costs on smaller sources. EPA 

considered the costs of controls and relevant HAP emission reductions on area source engines, 

including the engines greater than 500 hp. However, EPA's final cost per ton calculations failed 

to include realistic CPMS costs associated with equipment purchase and operating expenses. 

EPA estimates that CPMS equipment will cost $568 per engine. Impacts Associated with 

NESHAP for Existing Stationary SI RICE, p. 6 (June 29, 2010). This cost estimate is skewed not 

only because it fails to consider the actual purchase and operating cost of a CPMS, but also 

because it averages the cost to purchase CPMS equipment among four engines. Final RICE Rule 

Response to Comments, EPA Docket EPA-HQ-OAR-2008-0708 at p. 245 (August 10, 2010). 

Most area sources in the production and exploration sector will only have one engine at a site, as 

opposed to the larger midstream compressor stations which usually have multiple larger hp 

engines. Therefore, the assumption that four (4) engines will always exist at a site does not 

apply to most area sources.

Using EPA's cost estimate, for area source sites with one engine the cost to purchase the 

necessary equipment for per engine increases from $568 to $1,067. However, even this estimate 

is well below the CPMS purchase and installation cost of $6,000 - $8,000 generated from recent 

discussions with CPMS vendors. (Table 1, below, lists the costs included in this estimate versus 

EPA's current cost estimates.) In addition underestimating purchase and installation costs, the 

EPA cost estimate fails to include the full expected annual operating expenses estimated 

of $5,900 - $7,900.1

 (Table 2, below, lists the costs included in the annual operational expenses.) 

 

1

 EPA assumes that 36 hours per year is required to operate, maintain and record information 

from the CPMS. Impacts Associated with NESHAP for Existing Stationary SI RICE, p. 6 (June 29, 2010). 

Our research to date has not found the source of these annual operating estimates. Although still low for 

maintaining and reviewing data for any CPMS, EPA's estimates seem more appropriate for major sources 

with multiple engines and fall far short of the required manpower and time necessary to perform 

comparable operations for often remote, area sources with fewer engines per site. 
Exterran Petition for Administrative Reconsideration 

NESHAP SI RICE Rule 

75 Fed. Reg. 51570 (August 20, 2010) 

-4- 

The operational costs are necessary to review and process the raw data generated by the CPMS 

and to evaluate operating events as required by the final RICE Rule. 

The cost to evaluate temperature excursions compiled on a four-hour rolling average basis is a 

large annual operating expense that does not appear to be accurately included in EPA's cost 

estimate. Temperature excursions can occur based upon non-catalyst related events, such as 

ambient temperature, reduced engine loading or changes in fuel gas heating value. Likewise, 

production related events caused by changes in operating conditions, i.e., low suction pressure, 

high discharge pressure shutdowns or high liquid level shutdowns, will all produce excursions in 

the catalyst temperature. Mechanical shutdowns for safety and asset protection, such as 

excessive engine vibration and low engine oil pressure, will also trigger engine shutdown and 

result in temperature changes to the catalyst. Under the final RICE Rule, these operationallyrelated temperature events must then be retroactively matched to the temperature excursion on 

the data logger. Any such retroactive data review requires significant labor resources or 

contractor costs with no environmental benefit. Exterran believes that an alternative manual 

monthly or quarterly temperature check, as discussed below in Section II, would provide an 

equivalent compliance measurement with the added advantage of an immediate maintenance 

response at the site. Noteworthy, too, is the fact that the above-described pre-catalyst 

temperature excursions do not necessarily relate to or negatively impact catalyst performance 

and may not result in increased HAP emissions. 

Table 1

Capital Expense 

Description Cost/Rate Qty/Hours Parts/Labor

Total 

Cost 

EPA 

estimate 

Data Logger(s) $ 2,000 1 Parts $ 2,000 $ 614 

CPMS Site plan 

development (contractor) $ 125 40 Labor $ 5,000 

 Not 

estimated 

DP sensors $ 250 1 Parts $ 250 $ 225 

Data Logger installation $ 80 8 Labor $ 640 

 Not 

estimated 

Thermocouple charge $ - 0 Parts $ - $ 40 

Other (software, etc) $ - 0 $ - $ 188 

Total $ 7,890 $ 1,067 

Exterran recognizes that the labor costs for CPMS installation and operating expenses, in 

particular justifying the temperature excursions, are uncertain and may vary over time as new 

technological and less-labor intensive methods of evaluating data appear on the marketplace. 

However, any such technological solution is expected to bear a substantial cost itself and may 

not be viable for all companies. Future technological solutions notwithstanding, at this time the 

hours required to evaluate and compare temperature excursions to operation data is unknown and 

is represented in Table 2 as a range, with the lowest point in the range represented in the total 

costs. 
Exterran Petition for Administrative Reconsideration 

NESHAP SI RICE Rule 

75 Fed. Reg. 51570 (August 20, 2010) 

-5- 

Table 2

Operating 

Expense 

Description 

Cost 

per 

Hour Hrs 

Total 

cost per 

hour 

Events 

per year 

Total 

hours 

per 

year 

Total Annual 

Operational Costs

Calibrate the Tcouple read device 

and other general 

CPMS maintenance 

requirements* $ 80 

1 

 $ 80 

4 4 

 $ 320 

Pull data from 

logger $ 80 5 $ 320 9** 45 $ 3,600 

Justify temperature 

excursions 

(contractor) $ 125 

8-

16 $ 1,000 – 

$ 2,000 

2 16 - 

37 $ 2,000 – 

 $ 4,000 

Total 

65 - 86 $ 5,920 – 

$7,920 

* Additional annual and operating requirements may not be accurately 

represented on this preliminary chart and is subject to additional discussion upon 

further review by Exterran. 

** This excludes three months every year because of currently existing 

preventive maintenance requirements. 

Without providing any additional HAP reductions, the CPMS purchase and installation costs 

together with the labor intensive evaluation and reporting requirements increases EPA's expected 

cost per engine from $568 to $7,890 for purchase and installation only – plus an additional 

$6,000 - $8,000 for annual operating costs. 

As allowed by the Clean Air Act, the high CPMS costs merit another review of the compliance 

costs imposed on 4SRB and 4SLB greater than 500 hp at area sources. This cost is especially 

burdensome considering the lack of any additional environmental benefit associated with the 

CPMS operation and the available alternatives to determining proper catalyst operation both 

already in the rule or readily available for consideration by EPA. 

II. ALTERNATIVES TO CPMS AT AREA SOURCES WERE NOT ADEQUATELY 

REVIEWED BY EPA 

Given the multiple alternative means of compliance assurance, we question whether EPA 

considered all the viable alternatives to the additional cost, potential unreliability and technical 

challenges associated with installing and relying upon CPMS at area sources. 

CPMS does not measure the emission reductions but rather continuously records the catalyst 

inlet temperature, ostensibly as an indicator of catalyst performance. However, as described 
Exterran Petition for Administrative Reconsideration 

NESHAP SI RICE Rule 

75 Fed. Reg. 51570 (August 20, 2010) 

-6- 

above in Section I and as further detailed below, temperature is not necessarily the most reliable 

indicator of proper or improper catalyst performance and should be viewed together with other 

measurements, such as the differential pressure and performance tests, to more effectively 

evaluate compliance. Under the final RICE Rule, the CPMS temperature data must be measured 

every 15 minutes and then averaged on a four (4) hour rolling basis. The four (4) hour averages 

must be collected, evaluated and reported to the rule administrator every six (6) months. 

Of course, the most direct evidence of compliance is the performance test currently required by 

the RICE Rule every 8,760 hours of operation. Beyond performance testing, the monthly 

measurement of differential pressure across a catalyst is the best indicator for catalyst 

performance. The differential pressure is better than temperature monitoring because it indicates 

whether a catalyst is plugged (as indicated by high pressure differential) or has been blown out or 

damaged by an engine backfire (as indicated by low pressure differential). 

In lieu of the CPMS data collection and associated retroactive data review, we suggest that 

quarterly or monthly temperature checks, together with the required pressure readings 

and performance tests, would be more appropriate for the rural, unmanned sites that are area 

sources because it would provide for on-the-spot checks and immediate maintenance actions, as 

opposed to after the fact, data analysis conducted for each semi-annual report submittal. 

Additionally, performance testing has documented instances where the engine exhaust 

temperature is within the allowed range for effective catalyst performance but the emission 

levels still exceed the allowed limitations. On the other hand, temperature excursions can occur 

based upon non-catalyst related events, such as ambient temperature, or a change in fuel gas 

quality without a detrimental impact to emissions. 

As described above, there are several alternatives to the CPMS monitoring requirement which 

would achieve EPA’s goal of ensuring proper catalyst performance and effective emission 

reductions. EPA should reopen an administrative review for a full review of the alternatives 

instead of imposing costly CPMS measurements that do not add any additional benefit. 

III. EPA FAILED TO PROVIDE ADEQUATE NOTICE OF AND OPPORTUNITY 

TO COMMENT ON CPMS REQUIREMENTS AT AREA SOURCES 

Given the costs associated with CPMS at area sources, EPA failed to provide adequate notice or 

consider appropriate compliance alternatives at area sources, sites which usually have only one 

engine. The RICE Rule compliance requirements in Table 6 of the March 2009 proposed rule 

did not include CPMS requirements for SI RICE greater than 500 hp at area sources. Likewise, 

the Regulatory Impact Analysis ("RIA") for the proposed rule also failed to apply CPMS to area 

sources. Instead, the RIA stated that CPMS would be required for "large engine facilities." 

"Large engine facilities" was undefined in the RIA and without further definition in the RIA 

there was no clear indication that CPMS would apply to area sources. See Regulatory Impact 

Analysis (RIA) for Existing Stationary Reciprocating Internal Combustion Engines (RICE) 

NESHAP, February 2009, Section 4.8.5, p. 4-35. 
Exterran Petition for Administrative Reconsideration 

NESHAP SI RICE Rule 

75 Fed. Reg. 51570 (August 20, 2010) 

-7- 

Because neither the compliance requirements in Table 6 of the proposed RICE Rule nor the 

February 2009 RIA explicitly referenced CPMS for area sources, it did not appear that EPA was 

proposing to require CPMS for area sources. The distinction between area sources and major 

sources is significant because major sources are larger sites that typically already have 

infrastructure in place to more cost effectively implement a CPMS system (i.e., manned facilities 

with telemetry/monitoring already in place). It is only in the final RICE Rule that EPA applied 

CPMS requirements to area sources. Therefore, the objections raised in this petition "arose after 

the period for public comment." 42 U.S.C. § 7607(d). 

Because affected parties such as Exterran did not know that EPA was proposing to require 

CPMS at area sources, EPA has not had the opportunity to review comments and data that would 

shed light on whether this requirement is justified. The CPMS requirement does not achieve any 

emission reductions that might warrant the cost imposed is without an accurate record evaluating 

or justifying its actual cost. EPA has failed to meet its legal obligation to justify its regulatory 

decisions with data, analysis and demonstrably rational decision-making. Motor Vehicle 

Manufacturers Ass'n v. State Farm Mutual Insurance Co., 463 U.S. 29, 43 (1983). To remedy 

this oversight, EPA should allow an additional administrative proceeding to review the costs of 

and alternatives to CPMS at area sources. 

IV. CONCLUSION 

EPA promulgated several requirements in the final RICE Rule that will reduce emissions and 

improve engine performance through emission standards, work practice standards, and 

compliance and reporting requirements. However, EPA failed to provide adequate notice that 

CPMS would be required to demonstrate compliance for 4SLB and 4SRB SI RICE greater than 

500 hp at area sources. Additionally, EPA failed to adequately respond to the cost concerns 

submitted during the comment period for CPMS application to major sources, which differ in 

many regards to the application of the same at area sources. Subsequent research indicates that 

EPA's estimate of $568 per engine is grossly underestimated for area sources. Exterran 

estimates that the full installation and labor costs applied on a single engine basis (versus 

averaged across four engines) increases the CPMS cost per engine to $7,890 for purchase and 

installation only, plus an additional $6,000 - $8,000 for CPMS annual operating costs. 

EPA is faced here with a procedural violation that can easily be cured by reopening an 

administrative procedure to receive additional comments on the cost of alternatives and relative 

reliability to CPMS at area sources. In an administrative proceeding on the record, EPA should 

address the significant CPMS purchase and installation costs and operating expenses, including 

those described in this Petition. For all of the foregoing reasons, EPA should grant 

reconsideration of the relevant provisions of the RICE Rule to address the procedural and 

substantive failings of the CPMS requirement in an orderly fashion consistent with its 

obligations under the Clean Air Act, the Administrative Procedure Act, and other applicable 

laws.