----- Forwarded by Melanie King/RTP/USEPA/US on 10/19/2010 02:23 PM |------------> | From: | |------------>
>--------------------------------------------------------------------------- ---------------------------------------------------------------| |"Wemhoff, Bill G." <bill.wemhoff@nreca.coop> |
>--------------------------------------------------------------------------- ---------------------------------------------------------------| |------------> | To: | |------------>
>--------------------------------------------------------------------------- ---------------------------------------------------------------| |RobertJ Wayland/RTP/USEPA/US@EPA, Melanie King/RTP/USEPA/US@EPA |
>--------------------------------------------------------------------------- ---------------------------------------------------------------| |------------> | Date: | |------------>
>--------------------------------------------------------------------------- ---------------------------------------------------------------| |10/19/2010 02:19 PM |
>--------------------------------------------------------------------------- ---------------------------------------------------------------| |------------> | Subject: | |------------>
>--------------------------------------------------------------------------- ---------------------------------------------------------------| |Petition for Reconsideration - SI RICE NESHAP 8-20-10 |
>--------------------------------------------------------------------------- ---------------------------------------------------------------|

Attached for your information is a Petition for Reconsideration of the Spark Ignition Reciprocating Internal Combustion Engine August 20, 2010, final rule that was delivered to Administrator Jackson today.

In the petition, NRECA is requesting that EPA relax the restrictions in the final rule regarding the use of emergency RICE for peak shaving and demand reduction programs. The change we are proposing would not result in any additional run-time above the 100 hours of operation that is already provided for in the rule, but would allow owners/operators to use their units without restriction up to 100 hours-per-year for non-emergency operation in ways that best meet their particular circumstances and needs. Under this arrangement, all hours of operation for maintenance, testing, peak shaving, demandreduction, and all other non-emergency operation would be at the owner/operator discretion – but not to exceed 100 hours-per-year.

I would be happy to respond to any questions you may have regarding the petition.

Bill Wemhoff

Sr. Principal, Environmental Policy

NRECA

ph (703) 907-5824

<<1010petitioncvrf (2).docx>> <<Petition1010.docx>>

Confidentiality Notice: This e-mail message, including any attachments, is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, copy, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. (See attached file: 1010petitioncvrf (2).docx)(See attached file: Petition1010.docx)4301 Wilson Blvd.  Arlington, VA 22203-1860  tel: 703.907.5500  www.nreca.coop October 19, 2010

By Hand Delivery

The Honorable Lisa Jackson Administrator United States Environmental Protection Agency Ariel Rios Building (Mail Code 1101) 1200 Pennsylvania Ave., NW Washington, D.C. 20460

Re: Petition for Reconsideration of Port ions of the Final Rule: National Emission Standards for Hazardous Air Pollutants for R eciprocating Internal Combustion Engines

Dear Administrator Jackson:

Please find enclosed the National Rural Electric Cooperative Association’s (NRECA) Petition for Reconsideration of portions of the Final Na tional Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combusti on Engines promulgated on August 20, 2010, ( 75 Fed. Reg. 51,570 ) pursuant to Clean Air Act § 307(d)(7)(B). The enclosed Petition for Reconsideration addresses restrictions contained in the final rule that prohibit the use of small emergency generating units for peak shaving programs and demand reduction service beginning May 2013 without the addition of expensive emission reduction technology on units that are 500 horsepower and larger.
Please contact me if you have any questions or requi re additional information. I can be reached at (703)907-5824 or bill.wemhoff@nreca.coop

.

Sincerely, (original signed)

Bill Wemhoff Senior Principal, Environmental Policy National Rural Electric Cooperative Association 4301 Wilson Blvd. Arlington, VA 22203

Enclosure
cc: Robert Wayland Melanie King Kevin Bromberg, SBA1 

### BEFORE THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

) National Emission Standards for ) Hazardous Air Pollutants for ) Reciprocating Internal Combus tion ) Docket EPA-HQ-OAR-2008-0708 Engines; Final Rule, 75 Fed. Reg. 51,570 ) (August 20, 2010) ) )



### PETITION FOR RECONSIDERATION

The National Rural Electric Cooperative Association (“NRECA”) hereby requests that the U.S. Environmental Protection Agency (“EPA” or “the Agency”) reconsider portions of the above-captioned final rule pursuant to § 307(d)(7)(B) of the Clean Air Act (“CAA” or “the Act”), 42 U.S.C. § 7607(d)(7)(B). Speci fically, NRECA requests that EPA remove the restrictions it has placed on th e use of small emergency electric generating units for peak shaving and demand reduction operation in the ru le’s requirements for emergency stationary Reciprocating Internal Combusti on Engines (“RICE”) (§63.6640) ( 75 Fed. Reg. 51,591 ). This change would not result in any additional run-time above the 100 hours of operation that is already provided for in the rule, but woul d allow owners/operators to use their units without restriction up to 100 hours-per-year for non-emergency operation in ways that best meet their particular circ umstances and needs.

The Petitioner NRECA is the national service organization for more than 900 not-for-profit rural electric utilities that provide electric ener gy to approximately 42 million consumers in 47 states or 12 percent of the nation’s population. Kilowatt -hour sales by rural electric cooperatives account for approximately 11 perc ent of all electric energy sold in the
United States. NRECA member s generate approximately 50 percent of the electric energy they sell and purchase the remaining 50 percent from non-NRECA members. The vast majority of NRECA members are not-f or profit, consumer-owned cooperatives.2 NRECA’s members also include approximate ly 66 generation and transmission (“G&T”) cooperatives, which generate and transmit power to 668 of the 846 distribution cooperatives. The G&Ts are owned by the di stribution cooperatives they serve. Remaining distribution cooperativ es receive power directly from other generation sources
within the electric util ity sector. Both dist ribution and G&T cooperatives were formed to provide reliable electric service to their ow ner-members at the lowe st reasonable cost.

Grounds for the Reconsideration Under CAA § 307(d)(7)(B), the Administ rator must convene a proceeding for reconsideration if a person raising an objection to a promulgate d rule can demonstrate that it was impracticable to raise the objection within the period for public comment, or if the grounds for the objection arose after the period for public comment (but within the time specified for judicial review), and if the objec tion is of central relevance to the outcome of the rule. In that proceeding, the Administrator is to 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). NRECA’s objections meet these criteria and a new rulemaking proceeding
should be convened with re spect to the issues desc ribed in this petition. EPA has promulgated a variety of New S ource Performance Standards (“NSPS”) and
National Emissions Standards for Hazardous Ai r Pollutants (“NESHAPs”) for RICE on a piecemeal basis, including, at a minimum, th e following actions in recent years:

 NESHAPs for engines above 500 horsepower (“HP”) at major sources, 69 Fed. Reg. 33,474 (June 15, 2004) (Subpart ZZZZ of 40 C.F.R. Part 63),

 NSPS for compression ignition Internal Compression Engines (“ICE”), 71 Fed. Reg. 39,154 (July 11, 2006) (Subpart IIII of 40 C.F.R. Part 60),

 NSPS for spark ignition ICE, 73 Fed. Reg. 3,568 (Jan. 18, 2008) (Subpart JJJJ of 40 C.F.R. Part 60),

 NESHAPs for engines below 500 HP at major sources, 73 Fed. Reg. 3,568 (Jan. 18, 2008) (Subpart ZZZZ of 40 C.F.R. Part 63) 1

,

 NESHAPs for compression ignition RI CE, 75 Fed. Reg. 9,648 (Mar. 3, 2010) (Subpart ZZZZ of 40 C.F.R. Part 63), and

1 The rule promulgated on January 18, 2008, included New Source Performance Standards for ICE and NESHAPs for RICE.3  NESHAPs for spark ignition RICE, 75 Fed. Reg. 51,570 (Aug. 20, 2010) (Subpart ZZZZ of 40 C.F.R. Part 63).
EPA’s extended and sporadic rulemaking pr ocess has fostered confusion within the regulated community, particularly in regard to owners and operators of small emergency generating units participating in peak shaving programs. Furthermore, there remain inconsistencies in the rules regarding how certa in RICE are to be regulated. For example, in EPA’s final rule for spark ignition (“SI”) RICE, the Agency finalized a subcategory of nonemergency RICE that operate 24 hours or less per year at area sources. ( 75 Fed. Reg. 51,572, col. 2; and Table 6, No. 9, 75 Fed. Reg. 51,601, August 20, 2010 ). This subcategory is not included in the Agency’s final rule for compression ignition (“CI”) RICE under Part 63, Subpart ZZZZ. EPA, itself, has recognized and attempted to cure some of the inconsistencies with its current pr oposal to revise the de finition of “emergency stationary internal combusti on engine” in its July 2006 NSPS 2

. Furthermore, as mentioned above, the majority of these small stationary SI and CI engines are not owned by coopera tives, but rather by the consumer-owners they serve. Distribution cooperatives, havi ng no major electric generation facilities of their own, are concerned primarily with distributing electric po wer to their retail consumers. They simply do not have the resources or a practical reas on to keep track of and review the many EPA rulemaking activities under the Clean Air Act to see if one of these rulemakings may have an impact on their operation of delivering el ectrical power. Without an outreach from EPA, which was absent in these rulemakings, th ese small entities could not anticipate that the proposed rule for emergency generators would undermine and destroy their very practical and highly successful peak shaving programs. In addition, because the bulk of the sma ll emergency generating units, which are the subject matter of this petiti on, are not owned by these coopera tives, it was impractical for them to contemplate that the continued use of these resources in an efficient and productive
manner for the benefit of their rural consum er-owners would be wiped out by a Federal Government that professes goals of increased energy efficiency and resource conservation.

2 Proposed Revisions to the NSPS for spark ignition stationary RICE ( 75 Fed. Reg. 32,612, June 8, 2010)4 Also, the maximum 15 hours-per-year limit for emergency demand reduction operation was not included in the March 2009 pr oposal, so there was no basis to foresee that EPA would spontaneously issue its final rule with that restriction. The 15 hours limit appeared in the final rule af ter the comment period, so it wa s impossible to object to it
before EPA indicated that it was consideri ng such a limit. Thus, the grounds for this objection arose after the pe riod for public comments.
NRECA believes the inconsistencies in th e rulemakings, the piecemeal way in which EPA has addressed the regulation of RICE, a nd the significant limitations it placed in the final rule without the opportunity for co mment has made it impractical for small distribution electric cooperatives to raise the objections descri bed herein during the public comment period. NRECA further believes that the objections raised in this
Petition for Reconsideration are of central relevance to the outcome of the rule. Peak shaving and demand reduction programs are a major use of many of these small emergency generators and the continua tion of these programs is a significant
consideration for the owners a nd operators of these units. Th e Administrator, therefore, must convene a proceeding for reconsider ation of the objections raised herein.

Background EPA proposed NESHAPs for stationary RICE on March 5, 2009, ( 74 Fed. Reg. 9,698 ). The Agency promulgated a final rule fo r stationary CI engines on March 3, 2010, ( 75 Fed. Reg. 9,648), and for SI stationary RICE on August 20, 2010, ( 75 Fed. Reg. 51,570 ). Among the engines covered by these rules are small emergency generating units owned and located at residential, commercial, and institutional f acilities across rural
America. A number of distribution rural elec tric cooperatives have made arrangements with some owners of these small generati ng units to use them for peak-shaving and demand reduction purposes and also for system reliability considerations. While these arrangements do not generate income for the co operative, they do help offset the costs of these units by reducing the cooperative’s demand on central station power supplies during periods of very high demand. The resu lting reduced costs or economic benefits
are in turn shared with the owner of the emergency unit – a win-win situation. EPA’s final RICE NESHAP rules exempt re sidential, commercial, and institutional emergency generating units located at area sources from rule re quirements. The final rules,5 however, include a section that defines how emer gency stationary RICE can be used. These provisions prohibit the use of emergency units for peak-shaving programs and allows very limited use for other demand reduction purpos es. Beginning in 2013, existing emergency units larger than a specified size will not be ab le to continue to be used in peak shaving programs without being reclassified as “ non-emergency” units and adding expensive emission reduction technology on a dollar-per-ton basis in order to meet stringent emission limits. The additional costs of the new requirements will potentially make it economically prohibitive for their continued use in these prog rams. The result will be increased costs for distribution cooperatives. Being not-for-profit elect ricity providers, they will be forced to pass these costs along to their consumer-owners.

Argument
NRECA believes the restrictions on the use of small stationary compression ignition and spark ignition RICE emergency generating units for peak shaving and demand reduction purposes should be eliminated entirely. Alternativ ely, the restrictions should be minimized so as to not diminish the value of these programs.
EPA’s RICE NESHAP rules allow emer gency units to operate up to 100 hoursper-year or more 3 for testing, maintenance, etc ., including 50 hours-per-year for nonemergency situations – but specifically not for peak-shaving purposes. Peak shaving programs involve minimal hours of operati on, thereby potentially not adding to the allowed 100 annual hours of opera tion contained in the rules. Continuing the use of peak shaving programs, therefore, would not cause additional public health risks or environmental harm beyond those already contempl ated in the final rule. Elimination of peak-shaving programs, however, would requ ire the procurement of additional central station capacity and potentially the addition of transmission and distribution line capacity
to service the demand increase.
EPA’s final RICE NESHAP rules also limit the use of small stationary emergency generating units to 15 hours-pe r-year as a way to prevent system-wide electrical failures,

3 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 ma intenance and testing of emergency RICE beyond 100 hours-per-year. ( §63.6640ሻ ( 75 Fed. Reg. 51,591 / Col. 2).6 including blackouts. Collapse of the grid system could potentia lly cause significant environmental impacts, well in excess of the ef fects of emissions from these units if used to prevent such disasters. While peak-shaving programs do not generate income for the distribution cooperative, they do produce economic benef its by reducing the level of demand on their electric power suppliers, resulting in reduced demand costs. These reduced costs, in turn,
are shared with the owners of these small em ergency generating units that participate in peak shaving programs: a win-win arrangement that helps hold down power costs for the owners of these units, as well as for the cooperatives other consumer-owners. Reduced cost of electrical energy is a very important consideration during this time of national economic strain and is of partic ular importance to rural electr ic cooperatives as they serve some of the most economically depressed areas in the nation.
NRECA is aware of at least one dist ribution cooperative that purchased emergency generators and located them at ar ea hospitals and hurricane shelters. These generators provide the necessary full backup service reliabilit y that is needed at these facilities. Without these cooperative-s upplied emergency units , the hospitals and emergency shelters would need to buy their own units at a cost of millions of dollars. To help offset the costs of these units, th e cooperative uses them in peak shaving and demand reduction programs. Without the benefits of these programs, however, the cooperative advises that it may be forced to discontinue this se rvice. In that event, these facilities will be forced to purchase their own units with the costs borne by th e residents of the cooperative
service area – an area of the country already severe ly economically depressed.
Another restriction contained in the final RICE NESHAP rules is in regard to the limitation of 15 hours-per-year for demand reduction purposes. The final rule restrictions may prevent emergency engines from continued participation in emergency demand reduction programs since the engines may no longer be able to meet Independent System Operator (“ISO”) tariff requirements that specify minimum hours of availability to participate. The result again would be higher costs, the need for replacement capacity, and a potentially less reliable electric grid system that depends upon central station versus distributed generation.7 Conclusion NRECA supports EPA’s efforts to protect public health and the environment from harm caused by the presence of toxic air pollutants. NRECA is very concerned, however, that the Agency has included unnecessary restrictions in this NESHAP rule that will cause economic harm across rural America without providing an y meaningful environmental benefit. In light of the minimal environmental e ffects but significant benefit from having these small stationary emergency units avai lable, NRECA requests that EPA reconsider the provisions of the final RICE NESHAP rules that restrict the operation of these emergency units for peak-shaving and demand reduction programs.
NRECA believes the restrictions on the use of small stationary compression ignition and spark ignition RICE emergency generating units for peak-shaving and demand reduction purposes should be eliminated entirely. Alternativ ely, the restrictions should be minimized so as to not diminish the value of these programs. NRECA suggests that one way that EPA coul d address this issue for SI RICE is to revise §63.6640 in its August 20, 2010, final rule by simply removing the restrictions on peak shaving and demand reduction service, and the 50 hour limitation on non-emergency service. This change would not result in any additional run-time above the 100 hours of operation that is already provide d for in the rule. In other words, the change would allow owners/operators of small stationary emergenc y generating units to use their units without restriction up to 100 hours-per-year for non-emergency operation in ways that best meet their particular circumstances and needs. A ll hours of operation for maintenance, testing, peak shaving, demand reduction, and all other non-emergency operation would be at the owner/operators discretion - but not to exceed 100 hours-per-y ear. Owners/operators with special circumstances that require additional operating hours could petition the Agency for additional hours of non-emergency operation on a case-by-case basis. Upon adequate justification, the additional hours would not be unreasonabl y denied by the Agency. Revising the final SI RICE NESHAP rules in this manner woul d not, and must not, detract in any way from the unlimited hours of operation needed for true emergency service. NRECA also believes it is necessary a nd urges EPA to amend the March 2010 CI RICE NESHAP final rule and the July 2006 NSPS rule with conforming changes so all applicable rules are clear and consistent.