LEGAL_US_W # 74681400.3 

March 29, 2013 

By Hand Delivery and Email 

The Honorable Bob Perciasepe, Acting Administrator and Deputy Administrator 

U.S. Environmental Protection Agency 

Office of the Administrator 

Ariel Rios Building, Room 3000 

1200 Pennsylvania Avenue NW 

Washington, DC 20460 

 Re: Petition for Administrative Reconsideration of the Final Rule – National 

 Emission Standards for Hazardous Air Pollutants for Reciprocating Internal 

 Combustion Engines 

Dear Mr. Perciasepe: 

Please find enclosed a Petition for Reconsideration of the Final Rule, National Emission 

Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines, 78 Fed. 

Reg. 6674 (Jan. 30, 2013). 

Please acknowledge receipt of this petition by date-stamping the enclosed return copy and 

returning it in the enclosed self-addressed envelope. Thank you. 

Sincerely, 

/s/ Kevin Poloncarz /s/ David W. DeBruin 

Kevin Poloncarz David W. DeBruin 

cc: Melanie King 

 Lorie Schmidt 

Enclosures 

 
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LEGAL_US_W # 74681400.3 

BEFORE THE ADMINISTRATOR 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

 )

In the Matter of the Final Rule: )

 )

National Emission Standards for Hazardous )

EPA Docket No. EPA-HQ-OAR-2008-0708

Air Pollutants for Reciprocating Internal ) 

Combustion Engines ) 

 ) 

PETITION FOR RECONSIDERATION 

Pursuant to Section 307(d)(7)(B) of the Clean Air Act (hereinafter, the “Act” or “CAA”), 42 

U.S.C. § 7607(d)(7)(B), Calpine Corporation (“Calpine”) and PSEG Power LLC (“PSEG”) 

(collectively, the “Petitioners”) hereby petition the Administrator of the United States 

Environmental Protection Agency (“EPA”) to reconsider the National Emission Standards for 

Hazardous Air Pollutants (“NESHAP”) for Reciprocating Internal Combustion Engines 

(“RICE”), 78 Fed. Reg. 6674 (Jan. 30, 2013) (the “Final Rule”). 

I. SUMMARY 

As described in detail below, the Petitioners request that EPA reconsider the following portions 

of the Final Rule: 

 40 CFR § 63.6640(f)(4)(ii): The 50-hour exemption for existing emergency RICE at area 

sources of hazardous air pollutants (“HAPs”) to be operated for local system reliability 

purposes. 

 40 CFR §§ 63.6604(b), (c): The Ultra Low Sulfur Diesel (“ULSD”) fuel use requirement 

for emergency engines larger than 100 horsepower (“HP”) that participate in emergency 

demand response (“DR”) programs or operate for local system reliability purposes, which 

requirement starts in 2015. 

 40 CFR § 63.6650(h): The reporting requirement for emergency engines larger than 100 

HP that participate in emergency DR programs or operate for local system reliability 

purposes, which requirement starts in 2015. 

 40 CFR §§ 63.6640(f)(2)(ii), (iii): The 100-hour emergency DR exemption for 

emergency engines, which is supported, if at all, exclusively by evidence that post-dated 

the close of the public comment period and by EPA’s erroneous conclusion that it would 

result in no increase in operations of emergency RICE and no greater emissions impacts. 

According to CAA section 307(d)(7)(B), EPA must convene a proceeding for reconsideration of 

these provisions of the Final Rule because (1) the grounds for Petitioners’ objections arose after 
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LEGAL_US_W # 74681400.3 

the period for public comment (but within the time specified for judicial review) and (2) the 

Petitioners’ objections are of central relevance to the outcome of the Final Rule. 

II. BACKGROUND 

The 20041

 and 20082 versions of the RICE NESHAP did not regulate existing emergency 

engines less than or equal to 500 HP located at major sources of HAP and existing emergency 

engines located at area sources of HAP.3

 However, in 2010, EPA finalized health-protective 

amendments to the RICE NESHAP which only exempted existing stationary RICE from the 

emissions control requirements of 40 CFR Part 63, Subpart ZZZZ (i.e., the generally applicable 

RICE NESHAP requirements) if they were operated as emergency engines.4

 The exemption for 

emergency engine operations was limited to (1) 50 hours per year for non-emergency operations 

(which did not include peak-shaving or economic DR operations) and (2) 15 hours per year as 

part of an emergency DR program.5

EnerNOC, Inc. (“EnerNOC”) and other DR aggregators petitioned EPA to reconsider the 2010 

final rule amending the RICE NESHAP, specifically requesting that the 15-hour allowance for 

emergency DR participation available to emergency RICE be increased to “a maximum of 60 

hours per year or the minimum hours required by Independent System Operator tariff.”6

 In 

response to EnerNOC’s petition for reconsideration and pursuant to an associated settlement 

agreement, EPA proposed a revision to the RICE NESHAP on June 7, 2012 (the “Proposed 

Rule”).7 

The Proposed Rule would have expanded the number of hours that all unregulated RICE could 

be used in emergency DR programs from 15 to 100 hours per year when there was an Energy 

Emergency Alert Level 2 (“EEA Level 2”) event or a deviation of voltage or frequency of 5 

percent or greater below standard voltage or frequency.8 The Proposed Rule also would have 

created a new exemption for RICE at area sources of HAP to operate for up to 50 hours per year 

in peak shaving programs (i.e., “non-emergency” DR programs) prior to April 16, 2017.9

 

Calpine and PSEG submitted detailed comments on the Proposed Rule. Petitioners’ concerns 

with the Proposed Rule and, now, the Final Rule emanate from their demonstrated commitment 

to advancing EPA’s efforts to reduce emissions from the power sector, as demonstrated most 

recently by their intervention in support of EPA in defending two of the most important rules it 

 

1 See 69 Fed. Reg. 33474 (June 15, 2004). 

2 See 73 Fed. Reg. 3568 (Jan. 18, 2008). 

3

 A major source of HAP emits either (1) 10 tons of any one HAP per year or (2) 25 tons of all HAPs per year. An 

area source of HAP emits HAP below these thresholds. 

4 See 75 Fed. Reg. 9648 (Mar. 3, 2010). 

5

 40 CFR § 63.6640(f) (2010 version of RICE NESHAP). 

6

 EnerNOC et al., Petition for Reconsideration, EPA-HQ-OGC-2011-1030-0003, at 2 (2010). 

7 See 77 Fed. Reg. 33812 (June 7, 2012). 

8 Id. at 33838 (Proposed Rule § 63.6640(f)(2)). 

9 Id. (Proposed Rule § 63.6640(f)(4)(i)). 
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LEGAL_US_W # 74681400.3 

has ever issued to reduce the impacts to air quality from the generation of electricity, the CrossState Air Pollution Rule (“CSAPR”) and the Mercury and Air Toxics Standards (“MATS”).10 

The Final Rule represents a significant departure from EPA’s efforts in this respect and would 

jeopardize some of the improvements in air quality to be obtained through implementation of 

CSAPR and MATS. 

Several aspects of the Final Rule and its rationale also represent significant departures from the 

Proposed Rule or, alternatively, are supported solely by evidence that was introduced after the 

close of the public comment period: 

1. Regarding the 50-hour non-emergency DR exemption, EPA further limited the timeframe 

for when RICE at area sources of HAP can participate in peak shaving programs11, while 

also establishing a new exemption whereby area RICE can operate for up to 50 hours per 

year if all of the following conditions are met: (1) The engine is dispatched by the local 

balancing authority or distribution system operator; (2) the dispatch is intended to 

mitigate local transmission and/or distribution limitations; (3) the dispatch follows 

reliability, emergency operation or similar protocols; (4) the power is provided only to 

the facility itself or to support the local transmission and distribution system; and, (5) the 

owner or operator identifies and records, among other things, the entity that dispatches 

the engine. 40 CFR § 63.6640(f)(4)(ii). 

2. Starting on January 1, 2015, emergency engines larger than 100 HP will be required to 

use ULSD if they operate or are contractually obligated to be available for more than 15 

hours per year (up to a maximum of 100 hours per year) for emergency DR, or if they 

operate for local system reliability. 40 CFR §§ 63.6604(b), (c).12 The Proposed Rule did 

not require emergency engines to use ULSD in any circumstances. 

3. Entities with 100 HP or larger engines that operate, or are contractually obligated to be 

available, for more than 15 hours per year (up to a maximum of 100 hours per year) for 

emergency DR purposes, or that operate for local system reliability purposes, must report 

(1) the location of the engines and (2) dates and times the engines operate for emergency 

DR or local system reliability to EPA annually, beginning with the 2015 calendar year. 

40 CFR § 63.6650(h). The Proposed Rule did not require emergency RICE operators to 

report the location or operational statistics of their engines. 

 

10 EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012), reh’g en banc denied (Jan. 24, 2013); 

White Stallion Energy Center v. EPA, No. 12-1100 (D.C. Cir.); White Stallion Energy Center v. EPA, No. 12-1272 

(D.C. Cir.) (held in abeyance Sep. 12, 2012). Petitioners note that their interests in promoting the environmental and 

health protections afforded by the Clean Air Act are more than coincidental to their business strategies and financial 

interests. Rather, Petitioners’ interests in advancing health-protective rules designed to reduce emissions from the 

power sector are integral to their respective missions, goals and business strategies. 

11 40 CFR § 63.6640(f)(4)(i). 

12 These sections explicitly refer to “diesel fuel that meets the requirements in 40 CFR § 80.510(b) for nonroad 

diesel fuel”. For ease of reference, this petition uses the term ULSD to refer to diesel fuel that meets the 

requirements in 40 CFR § 80.510(b) for nonroad diesel fuel. 
4 

LEGAL_US_W # 74681400.3 

4. The Final Rule does not alter the number of hours per year (i.e., 100 hours) that 

emergency engines can participate in emergency DR programs, which is limited to EEA 

Level 2 events and 5% deviations from standard voltage or frequency. 40 CFR §§ 

63.6640(f)(2)(ii), (iii). However, the Petitioners highlight that no record evidence 

adequately supported EPA’s position regarding the system-wide emissions impacts of the 

emergency DR exemption. The only evidence that might now support EPA’s position in 

this regard was introduced after the close of the public comment period for the Proposed 

Rule. 

5. Finally, upon promulgating the Final Rule, EPA articulated its view for the first time that 

the Final Rule would result in no increase in the number of hours emergency RICE could 

be operated for emergency DR because the May 2013 compliance date had not yet 

occurred. 

III. ISSUES FOR RECONSIDERATION 

Under the Act’s administrative reconsideration provision, “[i]f the person raising an objection [to 

a final rule] can demonstrate to [EPA] that it was impracticable to raise such objection within 

such time or if the grounds for such objection arose after the period for public comment (but 

within the time specified for judicial review) and if such objection is of central relevance to the 

outcome of the rule, [EPA] shall convene a proceeding for reconsideration of the rule and 

provide the same procedural rights as would have been afforded had the information been 

available at the time the rule was proposed.” 42 U.S.C. § 7607(d)(7)(B) (emphasis added). 

Accordingly, if Petitioners can demonstrate to EPA’s satisfaction that both the temporal and 

central relevance requirements are fulfilled, then EPA must reconsider the Final Rule. 

Each of the following aspects of the Final Rule provides an independent reason for EPA to grant 

this petition for reconsideration and revise the Final Rule to better protect air quality and public 

health. 

A. The New 50-Hour Non-emergency Use Exemption for RICE At Area Sources Of 

HAP Is Unduly Permissive 

EPA must reconsider the Final Rule with respect to the newly inserted section regarding the 

permissibility of operating RICE at area sources of HAP (i.e., area RICE) when dispatched by 

the local system operator. 

In deciding to limit the availability of the peak shaving exemption to May 3, 2014 in the Final 

Rule (as opposed to the Proposed Rule’s sunset date of April 16, 2017), EPA stated that 

“operation for peak shaving and load management does not fairly come under the definition of 

emergency use... Given that the EPA has promulgated less stringent requirements for emergency 

engines, for reasons specifically related to the emergency use of such engines, the EPA must 

ensure that the uses of these engines fairly comport with emergency use, and that uses of these 

engines do not migrate into general uses, particularly uses to increase non-emergency generating 
5 

LEGAL_US_W # 74681400.3 

capacity.”13 Accordingly, EPA found it appropriate to further limit the time period in which 

emergency RICE could operate in peak shaving programs. 

At the same time, EPA established a new, potentially capacious exemption for the dispatch of 

area RICE as part of a financial arrangement with another entity. The 50-hour non-emergency 

use exemption can now be used when “(A) The engine is dispatched by the local balancing 

authority or local transmission and distribution system operator[;] (B) The dispatch is intended to 

mitigate local transmission and/or distribution limitations so as to avert potential voltage collapse 

or line overloads that could lead to the interruption of power supply in a local area or region[;] 

(C) The dispatch follows reliability, emergency operation or similar protocols that follow 

specific NERC, regional, state, public utility commission or local standards or guidelines[;] (D) 

The power is provided only to the facility itself or to support the local transmission and 

distribution system[; and,] (E) The owner or operator identifies and records the entity that 

dispatches the engine and the specific NERC, regional, state, public utility commission or local 

standards or guidelines that are being followed for dispatching the engine...” 40 CFR § 

63.6640(f)(4)(ii). 

However, the Final Rule does not define what it means for an emergency engine to be 

“dispatched by” the local system operator; what parameters are placed on 

“reliability...protocols”; or, what it means to require that power is provided “to support the local 

transmission and distribution system.” The Final Rule also fails to provide any guidance for how 

either the local transmission and distribution system operator or EPA can determine whether any 

particular dispatch of RICE is or was “intended to mitigate local transmission and/or distribution 

limitations so as to avert potential voltage collapse or line overloads that could lead to the 

interruption of power supply in a local area or region.” Indeed, by introducing intent into the 

determination of whether the section 63.6640(f)(4)(ii) allowance applies and using such an 

attenuated formulation of the conditions that such dispatch is intended to mitigate—local 

transmission or distribution constraints that could result in voltage collapse or overloads, which 

could result in interruption of power in a localized area—EPA appears to have opened up the 

exemption to circumstances where the threat to the electricity grid is so remote as to be 

indiscernible. Given the indefinite nature of these conditions and their attenuated relationship to 

any actual power loss, EPA may, at the very least, find it challenging to enforce against potential 

abuse of the exemption. 

Thus, despite imposing several criteria upon the exemption, these criteria are so indistinct as to 

contradict EPA’s rationale for not finalizing the proposed peak shaving allowance through 2017, 

i.e., to prevent exempt emergency engines from migrating into general uses. Accordingly, the 

new exemption, which has no sunset date, will authorize even greater usage of RICE in nonemergency situations than the Proposed Rule’s limited exemption for peak shaving. The 

Petitioners would have strongly disputed the permissibility of including section 63.6640(f)(4)(ii) 

as part of the non-emergency use exemption for emergency RICE if it were part of the Proposed 

Rule. 

 

13 EPA, Response to Public Comments on Proposed Amendments to National Emission Standards for Hazardous Air 

Pollutants for Existing Stationary Reciprocating Internal Combustion Engines and New Source Performance 

Standards for Stationary Internal Combustion Engines, at 113-14 (Jan. 14, 2013), available at: 

http://www.epa.gov/ttnatw01/rice/20130114ReconsiderationComments.pdf (hereinafter, “RTC”). 
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LEGAL_US_W # 74681400.3 

For these reasons, Petitioners object to section 63.6640(f)(4)(ii) of the Final Rule because it 

provides an expansive exemption for area RICE to operate for non-emergency uses and, unlike 

the peak shaving exemption, does not contain a self-limiting termination date. In light of the 

significant negative health impacts associated with the operation of uncontrolled diesel-fired 

engines14 and EPA’s concession that it does not know how many exempt engines operate, for 

how long, and where they are located15, EPA needs to take a second look at section 

63.6640(f)(4)(ii). 

The preconditions for granting a petition for reconsideration are satisfied in this case. First, the 

grounds for Petitioners’ objection arose after the period for public comment had terminated 

because EPA created section 63.6640(f)(4)(ii) out of whole cloth: there is no previous version of 

this exemption, or direct analogue to it, in the Proposed Rule that the petitioners could have 

commented on during the public comment period on the Proposed Rule.16 

Second, Petitioners’ objection is of central relevance to the outcome of the rule because (1) the 

reworking of the exemption for non-emergency use of area RICE is one of the only aspects of 

the Final Rule in which, apparently, EPA would argue that it has acceded to the demands of 

power producers, public health advocates, and environmental organizations with respect to the 

exemptions provided for emergency RICE17; (2) the subject of emergency RICE consumed a 

substantial portion of the record; and, (3) Petitioners’ objection provides substantial support for 

the argument that the Final Rule should be revised.18 

 

14 See, e.g., Calpine Comments, EPA–HQ–OAR–2008–0708-1134, at 6-14; PSEG Comments, EPA–HQ–OAR–

2008–0708-0961, at 7-10. 

15 RTC at 125 (stating that “[i]n terms of comments about lacking a thorough inventory of engines that are used in 

emergency DR and peak shaving programs, the EPA agrees and acknowledges that there is little known about the 

number of and location of these engines”); RTC at 142 (conceding that “EPA cannot speculate on the impacts when 

the number of engines participating in these programs is unknown and the EPA does not know how often the 

engines will be run”). 

16 The fact that a final rule may vary from a proposal does not automatically void the final rule. See Rybachek v. 

EPA, 904 F.2d 1276, 1288 (9th Cir. 1990) (stating that a new requirement in a final rule does not violate the due 

process rights of a person participating in such a rulemaking if the new requirement “was in character with the 

original proposal and a logical outgrowth of the notice and comments received”). However, while the “logical 

outgrowth” framework annunciated in Rybachek may serve as a useful referent, it is not controlling here because the 

CAA defines a specific, unique standard for determining whether EPA must grant a petition for reconsideration of a 

final rule promulgated pursuant to the Act. For purposes of satisfying the temporal requirement under CAA section 

307(d)(7)(B), Petitioners must merely demonstrate that “it was impracticable to raise [our] objection within [the] 

time [for public comment] or [] the grounds for such objection arose after the period for public comment (but within 

the time specified for judicial review).” In this case, EPA finalized a wholly new exemption for non-emergency 

operations associated with dispatch for local system reliability, which was reflected nowhere within the Proposed 

Rule. Accordingly, because EPA inserted section 63.6640(f)(4)(ii) in the Final Rule with no antecedent in the 

Proposed Rule, the grounds for Petitioners’ objection to this new section materialized after the close of the public 

comment period and it is irrelevant whether or not the new section was a logical outgrowth of the Proposed Rule. 

17 RTC at 109 (stating that “EPA has considered all of the comments, and agrees with the commenters who indicated 

that it would not be appropriate to include a limited temporary provision for peak shaving.”). 

18 See EPA, Response to Clean Air Taskforce, World Wildlife Fund, National Wildlife Federation, and Friends of 

the Earth’s Petitions for Reconsideration of The Renewable Fuel Standards (RFS2), at 2, available at: 

http://www.epa.gov/otaq/fuels/renewablefuels/rfs-response-to-petitions-02-17-11.pdf. 
7 

LEGAL_US_W # 74681400.3 

Therefore, EPA must reconsider section 63.6640(f)(4)(ii). 

B. The New Requirement That Emergency RICE Relied Upon For DR Or Local 

System Reliability Must Use ULSD Is Not Supported By An Adequate MACT Or 

GACT Analysis 

EPA must also reconsider the Final Rule with regards to the newly inserted sections pertaining to 

the requirement that emergency engines relied upon for DR or local system reliability use ULSD. 

While Petitioners acknowledge the health-protective benefits of this requirement, its belated 

addition to the suite of work practice standards generally imposed upon the broader category of 

emergency RICE reflects EPA’s failure to appropriately establish the maximum achievable 

control technology (“MACT”) or the generally available control technology (“GACT”) for this 

distinct subcategory in the first place. 

Starting on January 1, 2015, existing emergency engines larger than 100 HP will be required to 

use ULSD if they operate or are contractually obligated to be available for more than 15 hours 

per year “for the purposes specified in § 63.6640(f)(2)(ii) and (iii) [i.e., emergency DR] or...§ 

63.6640(f)(4)(ii) [i.e., local system reliability operations].” 40 CFR § 63.6604(b).19

EPA contends that it “has appropriately set MACT...for these engines based on the requirements 

of the CAA...The EPA is not exempting any sources in the source category from regulation and 

has established work or management practice standards for emergency engines, and in addition, 

is requiring the use of ULSD for engines contracting to be available for emergency DR beyond 

the preexisting 15 hrs/yr.”20 EPA seems to be arguing that, in so doing, it has chosen to apply a 

work practice standard pursuant to CAA section 112(h)21 instead of a MACT emission standard 

pursuant to sections 112(d)(2) and (3). 

For existing major sources of HAP, emissions standards cannot “be less stringent, and may be 

more stringent than... the average emission limitation achieved by the best performing 12 

percent of the existing sources (for which [EPA] has emissions information)...”22 EPA can only 

apply work practice standards, in lieu of an emission limit, to major sources of HAP if it is not 

feasible to prescribe an emissions limit (i.e., the application of measurement methodology to a 

particular class of sources is not practicable due to technological and economic limitations).23 

 

19 See also 40 CFR §§ 63.6604(c) (applying the same requirement with respect to new emergency engines larger 

than 500 HP). 

20 RTC at 89. 

21 “For purposes of this section, if it is not feasible in the judgment of the Administrator to prescribe or enforce an 

emission standard for control of a hazardous air pollutant or pollutants, the Administrator may, in lieu thereof, 

promulgate a design, equipment, work practice, or operational standard, or combination thereof, which in the 

Administrator’s judgment is consistent with the provisions of subsection (d) or (f) of this section...” 42 U.S.C. § 

7607(h)(1). In turn, “...the phrase ‘not feasible to prescribe or enforce an emission standard’ means any situation in 

which the Administrator determines that...the application of measurement methodology to a particular class of 

sources is not practicable due to technological and economic limitations.” Id. § 7607(h)(2)(B).

22 42 U.S.C. § 7607(d)(3)(A). 

23 Id. § 7607(h). 
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LEGAL_US_W # 74681400.3 

Petitioners acknowledge and appreciate the health-protective benefits of requiring emergency 

RICE participating in DR to use ULSD. Petitioners object, however, to EPA’s addition of this 

requirement in the Final Rule because this decision was not supported by an appropriate MACT 

or GACT analysis. First, the only analysis that EPA could have relied upon to decide that work 

practice standards were appropriate in lieu of emissions standards was based on emergency 

engines that operated in true emergency situations (i.e., loss of power).24 EPA must demonstrate 

that application of work practice standards to this new subset of emergency engines that 

participate in DR programs, which is in addition to operation during true emergency situations, is 

appropriate and justified. Moreover, dusting off an analysis conducted for the broader source 

category of emergency RICE and then adding another work practice standard, as EPA has done 

here, does not satisfy EPA’s obligations to establish MACT and GACT for emergency RICE 

used for DR or local system reliability purposes. 

Finally, it was not until publication of the Final Rule that EPA clarified that it was, in fact, 

establishing MACT and GACT for a distinct subcategory—emergency RICE contracted for 

availability in DR programs for more than 15 hours per year or used for local system reliability 

purposes—and was requiring use of ULSD and other work practices to satisfy MACT and 

GACT for this subcategory. Previously, as evidenced by Petitioners’ comments,25 EPA had 

appeared to carve-out a broad exemption from otherwise applicable MACT or GACT 

requirements for “emergency” RICE participating in “emergency” DR programs.26 

Pursuant to CAA section 307(d)(7)(B), EPA must reconsider 40 CFR §§ 63.6604(b)-(c) because 

(1) it was impracticable to raise Petitioners’ objections to the ULSD requirements as sufficient to 

meet MACT or GACT within the public comment period, as these requirements were inserted 

into the Final Rule after the close of the public comment period27 and (2) the objections to such 

 

24 RTC at 85; see also “MACT Floor Determination for Existing Stationary Non-Emergency CI RICE Less Than 

100 HP and Existing Stationary Emergency CI RICE Located at Major Sources and GACT for Existing Stationary 

CI RICE Located at Area Sources”, EPA-HQ-OAR-2008-0708-0327, at 4 (Feb. 15, 2010) (“For existing stationary 

CI emergency engines located at major sources, EPA determined it is not feasible to prescribe or enforce an 

emission standard because the application of measurement methodology to this class of engine is impracticable due 

to the technological and economic limitations.”). 

25 See PSEG Comments at 12-13 (arguing that “EPA cannot simply deviate from this statutory standard [Section 

112] by electing to exempt certain categories or subcategories from regulation”). Petitioners do not seek 

reconsideration of the arguments raised in their respective comments, but rather object to EPA’s promulgation after 

the close of the public comment period of a new work practice standard for emergency RICE participating in DR 

programs or used for local system reliability purposes, without performing a comprehensive MACT or GACT 

analysis. 

26 See RTC at 48 (“contrary to some commenters’ terminology, emergency engines are not exempt from national 

standards. Those in the source category are not required to put on aftertreatment, but are subject to generally 

available control technology (GACT) or other standards.”). 

27 See note 16 supra. Even if the ULSD provision were a “logical outgrowth” of comments received on the 

Proposed Rule (see, e.g., RTC at 65), that conclusion is simply not germane to whether Petitioners have 

demonstrated, per section 307(d)(7)(B), that the grounds for Petitioners’ objection arose after the period for public 

comment. EPA inserted sections 63.6604(b)-(c) in the Final Rule with no antecedent in the Proposed Rule and 

therefore the temporal requirement for seeking reconsideration is satisfied. 
9 

LEGAL_US_W # 74681400.3 

requirements are of central relevance to the outcome of the Final Rule because Petitioners’ 

objections provide substantial support for the argument that the Final Rule should be revised.28 

C. The New Reporting Requirement For Emergency RICE Is Insufficient To Curb 

Potential Abuse Of The Section 63.6640(f) Exemptions 

EPA must reconsider the Final Rule due to the newly inserted sections regarding reporting 

obligations for emergency RICE relied upon for DR or local system reliability purposes. While 

Petitioners acknowledge this as a step in the right direction, the new requirement is unlikely 

either to provide useful information in a meaningful timeframe or to prevent abuse of the 

exemptions provided for emergency DR and local system reliability operations. 

Section 63.6650(h) requires that, starting with the 2015 calendar year, entities with engines 

larger than 100 HP that operate, or are contractually obligated to be available, for more than 15 

hours per year “for the purposes specified in § 63.6640(f)(2)(ii) and (iii) [i.e., emergency DR] 

or...§ 63.6640(f)(4)(ii) [i.e., local system reliability operations]” submit an annual report that 

contains, inter alia, the location of the emergency engine; the “[h]ours operated for the purposes 

specified in § 63.6640(f)(2)(ii) and (iii), including the date, start time, and end time for engine 

operation for the purposes specified in § 63.6640(f)(2)(ii) and (iii)”; and, the “[h]ours spent for 

operation for the purpose specified in § 63.6640(f)(4)(ii), including the date, start time, and end 

time for engine operation for the purposes specified in § 63.6640(f)(4)(ii).”29 40 CFR § 

63.6650(h). EPA stated that it formulated the new reporting requirement because it 

“acknowledged that it has limited information about the whereabouts of engines used for 

emergency DR purposes and how many engines are used for this purpose.”30 

Petitioners object to section 63.6650(h) because it inadequately ensures accurate and 

comprehensive reporting of the operation of emergency RICE for DR or local system reliability. 

Section 63.6650(h) only requires emergency engine operators to report the operational statistics 

of their engines with respect to use “for the purposes specified in” sections 63.6640(f)(2)(ii), 

(f)(2)(iii), (f)(4)(ii). The Final Rule does not require reporting of engine operations pursuant to 

63.6640(f)(2)(i) for maintenance and readiness testing.31 The risk is that an emergency engine 

operator could operate for DR or local system reliability and later fail to report such operations 

accurately, relying instead upon the maintenance and testing time allotment in section 

63.6640(f)(2)(i) to mask the full extent of such DR and local system reliability operations. 

Indeed, EPA itself concluded that operation for maintenance and testing often coincided with 

 

28 See note 18 supra. 

29 “The report must also identify the entity that dispatched the engine [pursuant to section 63.6640(f)(4)(ii)] and the 

situation that necessitated the dispatch of the engine.” 40 CFR § 63.6650(h)(1)(vii). 

30 RTC at 159. 

31 See 40 CFR § 63.6640(f)(2)(i) (“Emergency stationary RICE may be operated for maintenance checks and 

readiness testing, provided that the tests are recommended by federal, state or local government, the manufacturer, 

the vendor, the regional transmission organization or equivalent balancing authority and transmission operator, or 

the insurance company associated with the engine. The owner or operator may petition the Administrator for 

approval of additional hours to be used for maintenance checks and readiness testing, but a petition is not required if 

the owner or operator maintains records indicating that federal, state, or local standards require maintenance and 

testing of emergency RICE beyond 100 hours per calendar year.”). 
10 

LEGAL_US_W # 74681400.3 

operation for emergency DR.32 This may even be truer with respect to the non-emergency 

operations now authorized for local reliability purposes, given that such operations can 

presumably be scheduled based on projected grid conditions, in lieu of purchasing power from 

other sources. 

Accordingly, the Final Rule’s new reporting requirement is insufficient to prevent abuse of the 

exemptions provided to emergency RICE and does not assure that EPA or the states will receive 

an accurate summary of emergency engines’ operations pursuant to such exemptions. This 

deficiency could possibly be resolved by amending the Final Rule to make clear that all 

operations for purposes of emergency DR, peak shaving, and local system reliability which 

coincide with testing and maintenance activities will be reported and counted against the 

limitations on DR, peak shaving, and local system reliability operations. 

However, even if EPA amends the reporting requirement to clarify its scope, the reporting 

requirement is an inadequate response to the problem that Petitioners and many other 

commenters raised; i.e., EPA’s failure to know where and how frequently emergency RICE are 

operated as part of DR programs precludes EPA from assessing the Final Rule’s impacts on air 

quality and public health.33 EPA contends that information obtained through implementation of 

this reporting requirement will allow EPA, along with state and local agencies, to assess the 

health impacts associated with such operations and will assist states in the development of State 

Implementation Plans (“SIPs”),34 which EPA suggests are better suited to addressing the 

emissions impacts from area RICE.35 However, this information will not be available for several 

years; before then, cities and states will be burdened by the increased emissions of both HAPs 

and criteria pollutants resulting from operation of uncontrolled emergency RICE for DR and 

local reliability purposes, which can only frustrate their attainment of the NAAQS and will 

undoubtedly worsen the impacts of HAPs upon urban populations.36 Thus, any opportunity for 

states or local agencies to utilize such information to avoid these impacts is illusory. 

EPA must reconsider section 63.6650(h). It was impracticable for Petitioners to raise their 

objection to the reporting requirement within the public comment period because the requirement 

was not included in the Proposed Rule.37 Further, the Petitioners’ objection to this requirement 

is of central relevance to the outcome of the Final Rule because it demonstrates that the Final 

 

32 See RTC at 31. 

33 See note 15 supra; RTC at 159 (“The EPA has acknowledged that it has limited information about the 

whereabouts of engines used for emergency DR purposes and how many engines are used for this purpose.”). 

34 See id. at 136. 

35 Id. at 183. 

36 See, e.g., Calpine Comments, EPA–HQ–OAR–2008–0708-1134, at 9, note 27, 11-13. 

37 See note 16 supra. Even if the reporting requirement were a “logical outgrowth” of comments received on the 

Proposed Rule (see, e.g., RTC at 263-64), that conclusion is not germane to whether Petitioners have adequately 

demonstrated that the grounds for their instant objection arose after the period for public comment, as required by 

section 307(d)(7)(B). Section 63.6650(h) was not included in the Proposed Rule and therefore the grounds for 

reconsideration are satisfied. 
11 

LEGAL_US_W # 74681400.3 

Rule should be revised.38 Accordingly, Petitioners have satisfied the requirements of section 

307(d)(7)(B) of the Act and EPA should grant this petition. 

D. EPA Lacks Record Evidence To Support Its Position Regarding The System-wide 

Emissions Impacts Of The Final Rule 

EPA must reconsider the Final Rule because EPA fails to adequately justify its view on the 

system-wide emissions impacts of the Final Rule. The evidence, if any, that EPA apparently 

relies on for its position post-dated the close of the public comment period. 

The impacts on power sector emissions as a whole resulting from the proposed exemption for 

emergency DR operations in sections 63.6640(f)(2)(ii)-(iii) was one of the most significant 

points of contention on the Proposed Rule. For instance, the PJM Independent Market Monitor 

argued that “RICE generators are not competitive with coal when economically dispatched and 

therefore RICE generators will not displace coal-fired generating units in energy markets. RICE 

generators may displace other resources... includ[ing] natural gas-fired combustion turbines and 

conservation-based DR.... Affording such uses a special benefit through an exception to 

pollution rules would simply mean an increase in pollution compared to the alternative, with no 

positive benefits on markets.”39 

Additionally, Calpine included with its comments a detailed report produced by the Analysis 

Group, which finds that “the successful participation of RICE-backed DR in regional capacity 

markets increases generation from coal and other fossil-fuel resources, and increases emissions 

of carbon dioxide (CO2), nitrogen oxides (NOx), sulfur dioxide (SO2), and mercury (Hg), 

relative to the same capacity needs being met by alternative market resources [i.e., combined 

cycle natural gas plants and wind energy, which are the most likely resources to clear capacity 

market auctions in the event that unregulated DR RICE is unavailable for bidding into capacity 

markets].”40

EPA failed to change the text of sections 63.6640(f)(2)(ii)-(iii) despite the reasoned analysis of 

power producers, public health advocates, and environmental organization commenters that such 

an expansive exemption for emergency RICE participating in emergency DR would be 

detrimental to air quality. In justifying its failure to adjust the emergency DR exemption in light 

of strong evidence that such an exemption would lead to more, not less, air pollution, EPA 

responded that “there is no guarantee that this would be the case [i.e., that DR RICE would most 

likely be replaced with electricity from cleaner generating resources], and as noted by other 

commenters, the generation could in fact come from coal fired spinning reserves.” See RTC at 

47. 

 

38 See note 18 supra. 

39 PJM Independent Market Monitor Comments, EPA-HQ-OAR-2008-0708-1124, at 5. 

40 See Calpine Comments, EPA–HQ–OAR–2008–0708-1134, at 14-15; see also appended report Analysis Group, 

“Reliability and Emission Impacts of Stationary Engine-Backed Demand Response in Regional Power Markets”, at 

3 (Aug. 2012). Petitioners are not seeking reconsideration of the arguments presented by their respective comments, 

but seek reconsideration with respect to EPA’s reliance upon evidence submitted after the close of the public 

comment period as the basis for its decision. 
12 

LEGAL_US_W # 74681400.3 

However, to support the response quoted above, EPA cites a report (NERA Economic 

Consulting, “Evaluation of the Calpine Report on the Reliability and Emission Impacts of RICEBased DR in PJM” (Oct. 10, 2012)) that was not produced until after the close of the public 

comment period and not posted on the Regulations.gov portal until January 15, 2013, one day 

after the Final Rule was released in its pre-publication version. 

Petitioners object to EPA’s reliance on the NERA report for its position regarding the systemwide emissions impacts of the Final Rule because it is analytically weak. The NERA report 

assumes that coal-fired spinning reserves would be the marginal resource to replace uncontrolled 

emergency RICE in capacity markets. However, given historically low natural gas prices41 and 

stricter regulation of coal-fired power plants42, cleaner generating resources43 would more likely 

be the successful bidders in capacity market auctions in the event that DR RICE was unavailable 

(or had to place higher bids to internalize the costs of emissions controls), not coal-fired spinning 

reserves.

44

Petitioners urge EPA to reconsider sections 63.6640(f)(2)(ii), (iii) and the evidence underlying 

these provisions. The NERA report was released after the close of the public comment period on 

the Proposed Rule and, therefore, it was impracticable for Petitioners to raise their objection to 

EPA’s reliance on this evidence. Further, the Petitioners’ objection to this report is of central 

relevance to the outcome of the Final Rule because EPA lacks substantial record evidence45 to 

 

41 See U.S. Energy Information Administration – Natural Gas Prices, 

http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm. 

42 See, e.g., National Emission Standards for Hazardous Air Pollutants From Coal and Oil-Fired Electric Utility 

Steam Generating Units, 77 Fed. Reg. 9304 (Feb. 16, 2012). 

43 For instance, combined-cycle natural gas plants and wind resources comprise the energy sources in the 

interconnection queue in the PJM market. See Analysis Group, “Reliability and Emission Impacts of Stationary 

Engine-Backed Demand Response in Regional Power Markets”, at 15-16. 

44 The likelihood that cleaner generating sources, rather than coal-fired spinning reserves, would be deployed in the 

absence of increased participation of emergency RICE in PJM’s DR program is only affirmed by the PJM 

Independent Market Monitor’s recent State of the Market Report. See Joseph Bowring, Monitoring Analytics, 

Presentation regarding 2012 State of the Market Report for PJM, at 28, 29, 43, 44 and 54 (Mar. 25, 2013), available 

at: http://www.monitoringanalytics.com/reports/Presentations/2013/IMM_MC_2012_SOM_PJM_20130325.pdf

(illustrating a marked decrease in generation by coal-fired resources and a marked increase in generation by gasfired resources between 2011 and 2012 and significant projected retirements of additional coal resources in 2013 

and also showing, for 2012, net revenues for new entry combined cycle gas-fired generation plants as already 

exceeding levelized fixed costs in some portions of PJM while new entry coal plant net revenues comprise less than 

25% of levelized fixed costs throughout the entire PJM footprint). 

45 The only apparent support in the record for EPA’s position regarding the system-wide emissions impacts of the 

RICE NESHAP is when EPA states that, “[a]nother commenter (1142) in its comments on the proposed rule 

referred to the EPA’s Synapse study, which indicated that there would be a net benefit in air quality in having quick 

start resources such as emergency generators for emergency DR available, reducing reliance on spinning reserves.” 

RTC at 80; see also id. at 124. The “Synapse study” is produced by Synapse Energy Economics, Inc., and it is 

entitled “Modeling Demand Response and Air Emissions in New England”. The Synapse study was published in 

2003 and, therefore, is poor evidence for which marginal resources will be bid into capacity markets and dispatched 

in 2013 and future years, given the rapidly evolving economic and regulatory terrain that affects the power sector. 

See, e.g., notes 41-42 and accompanying text. Indeed, as EPA itself stated in responding to another commenter who 

relied on the very same Synapse study for a different proposition, “the report the commenter refers to very clearly 

indicates that the findings of the study are specific to New England and should not be extrapolated to other areas. 

Also, the study conducted was for that particular point in time and not for current conditions.” RTC at 140. 
13 

LEGAL_US_W # 74681400.3 

support the exemption for emergency RICE to participate in DR programs.46 Accordingly, EPA 

should reconsider the Final Rule. 

E. EPA’s Position That Operation Of Emergency RICE Will Not Increase As A 

Result Of The Final Rule Is Unsupportable 

Upon promulgating the Final Rule, EPA dismissed arguments that the Final Rule would result in 

increased reliance upon emergency RICE in DR programs and, as a consequence, increased 

emissions. EPA contended that because the 2013 compliance date had not yet occurred, there 

were no existing limitations on operation of emergency RICE in DR programs.47 Thus, in EPA’s 

view, promulgation of the Final Rule would not allow any increase, relative to a baseline of no 

limitations on the operation of emergency RICE in DR programs. This position, articulated for 

the first time upon publication of the Final Rule, is wholly unsupportable and misses the point: 

The appropriate baseline for comparison was not and should not have been historic operations in 

2012 and prior years, but operation in 2013 and beyond in accordance with the limitations that 

would soon come into and remain in effect, had EPA not finalized its proposal and thereby 

authorized an increase in operation of emergency RICE in DR programs from 15 to 100 hours 

per year.48 

Had EPA previously articulated its view that the 15-hour limitation scheduled to come into effect 

was of no consequence, Petitioners would have objected and made clear that the appropriate 

baseline for EPA’s consideration of the impacts of its instant decision was not historic 

operations, but operations as they would occur pursuant to the 2010 RICE NESHAP 

amendments. 

Under the 2010 amendments to the RICE NESHAP, affected emergency RICE were required to 

comply with the 15-hour limitation on operation for emergency DR by May 3, 2013. 

Accordingly, DR aggregators and RICE operators bidding into the PJM’s Base Residual Auction 

in May 2010 (for the delivery year running from June 1, 2013 to May 31, 2014), May 2011 (for 

the delivery year running June 1, 2014- May 31, 2015) and May 2012 (for the delivery year 

running from June 1, 2015 through May 31, 2016), should have bid their resources into the 

auction upon the assumption that they would only be authorized to operate for up to 15 hours per 

year for DR purposes (unless they were gambling on the outcome of the EnerNOC litigation and 

ensuing rulemaking). While EPA might suggest it is agnostic to the effect its rules have on 

 

46 See note 18 supra. 

47 See RTC at 126 (“Prior to the 2013 compliance date, there were no limits on operation for existing emergency 

engines. The existing RICE NESHAP promulgated in 2010, as amended by these final amendments, will for the 

first time establish requirements for such engines, limiting their hours of operation in certain situations such as 

emergency DR. Commenters do not provide significant evidence that the hours of use for engines used for 

emergency DR will expand by large multiples at the same time that EPA is beginning to regulate such hours of 

use.”). 

48 While the 2013 compliance date had not yet occurred, neither EPA’s reconsideration of the 2010 amendments, nor 

its Consent Decree agreeing to propose revisions thereto, stayed the effect of the 15-hour limitation on participation 

in emergency DR for emergency RICE. 
14 

LEGAL_US_W # 74681400.3 

energy and capacity markets such as the PJM’s Base Residual Auction,49 under the Final Rule, 

many more resources can be bid into such markets and, as a consequence, will likely be 

dispatched to meet demand. As the PJM Market Monitor made clear in its comments and public 

testimony, the more a system operator relies upon these resources to assure adequate capacity, 

the more likely they are to be dispatched to meet actual demand.50 In addition, very recently, 

PJM also published projections for the dispatch of all DR resources, which forecast that such 

dispatch will be several times greater than historical dispatch.51 Accordingly, EPA’s conclusion 

that the Final Rule will result in no increase in dispatch of emergency RICE for emergency DR 

and no increase in emissions above what was previously estimated is without merit. 

Additionally, in supporting its contention that the Final Rule would not result in a demonstrable 

increase in participation of emergency RICE in DR programs, EPA relied upon evidence 

submitted by EnerNOC in December 2012, after the close of the public comment period, which 

suggested that, currently, backup generators comprise 23 percent (%) of all DR resources within 

PJM.52 Notwithstanding that this evidence itself indicated that the percentage of backup 

generators had increased to 23% from the 14% previously reported by PJM in May 2012 (an 

increase which could very well reflect a more than 60% rise in capacity attributable to backup 

generators within PJM’s DR program), EPA relied upon this one statistic to conclude that “there 

is no evidence that a large percentage of emergency engines even participate in such 

programs.”53 Contrarily, Petitioners and several other commenters submitted extensive evidence 

that diesel backup generators comprised a substantial portion of all DR resources in both PJM 

and other regions and that the dispatch of these engines for such purposes was only likely to 

increase in the future.54 Further, the PJM data submitted by EnerNOC in support of its claim that 

only 23% of all DR is comprised of backup generation was based on only a 71% response rate to 

 

49 See, e.g., RTC at 60 (stating that “[d]ecisions about what units to allow to be bid into the capacity market and 

relied on for reliability are not under the EPA’s purview and should be left to the entities that are responsible for 

maintaining the reliability of the electric grid”). 

50 See EPA, Public Hearing on Proposed Rule: National Emission Standards for Hazardous Air Pollutants for 

Reciprocating Internal Combustion Engines; New Source Performance Standards for Stationary Internal 

Combustion Engines, Docket ID No. EPA–HQ–OAR–2008–0708-0944, at 115 (July 10, 2012) (testimony of Joseph 

Bowring, President, Monitoring Analytics). Dr. Bowring, the PJM Market Monitor, also states that “[a]s the amount 

of demand side, which is involved in the market goes up, ...the probability of actually requiring it to interrupt also 

goes up.” Id. 

51 See PJM, “Expected Demand Resource Calls in 2013/14, 2014/15, 2015/16” (Mar. 26, 2013), available at: 

http://www.pjm.com/~/media/documents/reports/20130326-pjm-future-expectations-for-emergency-demandresponse-events.ashx. 

52 RTC at 126 (noting “updates to data submitted by EnerNOC” received by EPA on December 21, 2012). 

53 Id. 

54 PJM Independent Market Monitor Comments, EPA-HQ-OAR-2008-0708-1124, at 7 (stating that “[a]llowing an 

exemption in the NESHAP RICE rule for RICE generators located behind the meter impedes or delays its 

replacement by cleaner alternatives. Such a preference would have the unintended consequence of providing 

incentives to displace clean conservation-based DR with uncontrolled diesel generation.”). 
15 

LEGAL_US_W # 74681400.3 

PJM reported as of December 18, 2012, thus leaving almost 30% of all PJM Demand Response 

resources still unaccounted for at that time.55 

In sum, EPA relied upon evidence submitted and a rationale it developed after the close of the 

public comment period to support its contention that the Final Rule would not result in increased 

participation of diesel RICE in DR programs and, as a consequence, an increase in emissions 

above what was previously estimated. Additionally, EPA’s contentions in this respect are of 

central relevance to the outcome of the Final Rule. For these reasons, EPA must convene a 

reconsideration proceeding to reconsider how the Final Rule’s increased allowance for operation 

of emergency RICE in emergency DR programs will result in increased operation of emergency 

RICE for such purposes (relative to the 2010 RICE NESHAP and its more limited allowance of 

only 15 hours per year for participation in DR programs) and, as a consequence, more significant 

emissions impacts than EPA assumed upon promulgating either the 2010 amendments or the 

2013 Final Rule. 

IV. RELIEF REQUESTED 

Pursuant to 42 U.S.C. § 7607(d)(7)(B), the Petitioners hereby request that EPA reconsider the 

portions of the Final Rule and its supporting rationale described above and make the following 

revisions to the RICE NESHAP: 

 40 CFR § 63.6640(f)(4)(ii): The 50-hour exemption relating to local system reliability 

operations for existing emergency RICE should be further circumscribed, so as to prevent 

such operations from migrating into non-emergency operation. 

 40 CFR §§ 63.6604(b), (c): The ULSD fuel use requirement for emergency engines 

participating in emergency DR programs or operated for local reliability purposes should 

be supported by a thorough MACT or GACT analysis. 

 40 CFR § 63.6650(h): The reporting requirement for emergency engines participating in 

emergency DR programs or operated for local reliability purposes should be clarified and 

strengthened to prevent operations for DR and local system reliability from being masked 

as maintenance and testing. 

 40 CFR §§ 63.6640(f)(2)(ii), (iii): EPA should reopen the record so that stakeholders can 

comment on EPA’s reliance on the NERA report in dismissing the system-wide 

emissions impacts that will result from expansion of the emergency DR exemption for 

emergency engines. EPA should also reopen the record so that stakeholders can 

comment on its conclusion that, because the May 2013 compliance date had not yet 

arrived under the 2010 RICE NESHAP, the increase in the number of hours that 

emergency RICE are allowed to operate in DR programs under the Final Rule—from 15 

to 100 hours per year—has no emissions impact. If the 100-hour allowance for 

 

55 See PJM, “Enhance DR Information,” Presentation to PJM Demand Response Subcommittee, at 1, 3 (Dec. 18, 

2012), available at: http://www.pjm.com/~/media/committees-groups/subcommittees/drs/20121218/20121218-item05-enhanced-dr-information.ashx (showing “[a]bout 71% response rate” “as of date of October 19, 2012” and 

reporting “Before and After updates” for category of “BackUp Gen” of “14% vs. 23%”). 
16 

LEGAL_US_W # 74681400.3 

participation in DR cannot be supported in the wake of conducting a reconsideration of 

the evidence concerning the resulting direct and system-wide emissions impacts, then the 

allowance should be reduced or rescinded. 

Dated: March 29, 2013 Respectfully Submitted, 

Diana Woodman 

Yvonne A. McIntyre 

Derek Furstenwerth 

John Flumerfelt 

Calpine Corporation 

/s/ Kevin Poloncarz 

Kevin Poloncarz 

Ben B. Carrier 

Paul Hastings LLP 

55 Second Street, 24th Floor 

San Francisco, CA 94105 

415.856-7029 (phone) 

415.856.7129 (fax) 

kevinpoloncarz@paulhastings.com 

Attorneys for Calpine Corporation 

Geraldine A. Smith 

Leilani M. Holgado 

Kimberly Scarborough 

Kenneth Carretta 

Shannon Bañaga 

PSEG Power LLC 

/s/ David W. DeBruin 

David W. DeBruin 

Robert L. Graham 

Matthew E. Price 

Bharat Ramamurti 

Jenner & Block LLP 

1099 New York Avenue, NW 

Suite 900 

Washington, DC 20001-4412 

202.639.6015 (phone) 

202.639.6066 (fax) 

ddebruin@jenner.com 

Attorneys for Calpine Corporation and 

PSEG Power LLC