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1 MEMORANDUM TO: Jaime Pagán, EPA OAQPS/SPPD/ESG Melanie King, EPA OAQPS/SPPD/ESG FROM: Bradley Nelson, EC/R, Inc. DATE: June 12, 2009 SUBJECT: Summary of the May 29, 2009 Meeti ng in Washington, DC with the Interstate Natural Gas Association of America a nd the U.S. Environmental Protection Agency to discuss the Proposed NESHAP for Existing Stationary RICE
1.0 INTRODUCTION A meeting between members of the Interstate Natural Gas Association of America (INGAA) and the U.S. Environmental Protection Agency was held in Washington DC on May 29, 2009. The purpose of this meeting was to disc uss the proposed nation al emission standards for hazardous air pollutants (NESHAP) for existing stationary reciprocating internal combustion engines (RICE). The proposed NESHAP for ex isting stationary RICE was published in the Federal Register on March 5, 2009 (74 FR 9698).
2.0 ATTENDEES U.S. Environmental Protection Agency Bob Wayland, OAQPS/SPPD/ESG Melanie King, OAQPS/SPPD/ESG (by phone) Michael Horowitz, OAR/OGC (by phone) Larry Sorrels, OAQPS/HEID/ABCG (by phone) Interstate Natural Gas Association of America Jim McCarthy, Innovative Environmental Solutions, Inc. Vincent Brindley, El Paso Corp. Charles Wait, Panhandle Energy. Mary Beth Whitfield, Williams Gas Pipeline Kasey Gabbard, NiSource Dan Regan, INGAA Lisa Beal, INGAA2 EC/R Incorporated Bradley Nelson (by phone)
3.0 SUMMARY OF MEETING INGAA requested this meeting with EPA to di scuss its comments on the proposed rule. INGAA is a trade organization th at represents interstate na tural gas transmission pipeline companies operating in the U.S. INGAA’s member s transport over 95 pe rcent of the nation's natural gas through a network of 200,000 miles of pipelines. This meeting summary will be available in the docket for this rule making (Docket ID No. EPA-HQ-OAR-2008-0708). Lisa Beal welcomed everyone to the meeting and stated that the purpose of the meeting was to discuss some issues and concerns with the proposed rule and to provide suggested revisions to address these issues. Lisa then turned the meeting over to Jim McCarthy who conducted the meeting using the presentation pr ovided in Attachment A of this meeting summary. Emission Standards – MACT Floor The first topic of discussion was the maxi mum achievable contro l technology (MACT) floor emission standards in the proposed rule. INGAA noted that its co mments were focused on spark ignition (SI) engines and the proposed re quirements for these engines. INGAA’s main comments on the MACT floor include:

• lean burn engines being miscategor ized as rich burn engines, • the use of CARB 430 to quantify formaldehyde emissions, • tests conducted at high loads only, and • test points listed as multiple source tests. Taking these points into cons ideration, INGAA stated the MACT floors are based on only zero to three valid tests. INGAA believes that additional test data is needed to develop the MACT floors for the SI engines. EPA stated that it had limited engine test da ta and have requested additional test data from other industry groups by October 2009. EPA is on a strict schedule to finalize the rule because it is under a court ordered deadline. If INGAA intends to provide additional test data, EPA asked that INGAA note in its comments on th e proposed rule what test data will be provided and when EPA can expect to receive the te st data. EPA also stated that it would prefer to receive full test reports, but w ill consider other forms of test data. EPA also asked INGAA if there were test data during startup, shutdown, and malfunction (SSM) operating periods of the engine. INGAA responded that test data may be available; however it will probably not be in the form of test reports. Above-the-Floor3 The second item that was discussed was the a bove-the-floor options in the proposed rule. INGAA stated that the hazardous ai r pollutant (HAP) emission fact ors and control costs are not consistent with the original RICE MACT, and th erefore the cost effec tiveness values are underestimated. In addition, INGAA noted that the cont rol costs in the proposed rule do not take into account the type of engine or use. EPA requested that INGAA provide cost data to support its comments and to provide details on suggested revisions. EPA also st ated that it would meet with INGAA after the comment period to disc uss INGAA’s comments in more detail. Cost Effectiveness Values and Threshold The third item of discussion involved the cost effectiveness threshold that was used to develop the above-the-floor opti ons. INGAA presented what it be lieved was EPA’s rationale for selecting above-the-floor options for natural gas-fired engine s. INGAA concluded that EPA used a cost threshold to determine the sizes of engines that would need to add control technology. EPA responded that th e above-the-floor options are not based solely on technology or cost thresholds, but also on population, emission reductions, and other factors. EPA asked for specific comments on this issue. Startup, Shutdown, and Malfunction The next item that was discussed was the SSM limits in the proposed rule. INGAA believes there are no data that supports thes e limits and asked how compliance will be determined for these limits. INGAA believes that wo rk practices as defined in section 112(h) of the Clean Air Act (CAA) or generally availabl e control technology (GAC T) should be used. EPA asked for information on events, time required to get engine in standard mode, and what pollutants are emitted during these events. Compliance Implications The next item that was discussed was the co mpliance implications of the proposed rule. INGAA stated that two stroke lean burn (2SLB) engines may not have a high enough exhaust temperature to use a catalyst. INGAA also pointed out that air compressors that cycle on and off may also not provide enough heat to make a cat alyst effective in reducing exhaust emissions. EPA responded that this was a common comment and indicated that it is hoping to get additional data to look at other options. Major and Area Source Alternatives INGAA recommended that GACT work practices be used in place of emission limits for rural area source engines and asked if EPA need ed additional information to determine if GACT was applicable. EPA responded that it would revi ew any rationale and data for using GACT in the comments and address the issue as appropria te. INGAA asked if EPA had looked at the unit risk estimate (URE) for engines located in rural areas. EPA responded that a study is in progress that looks at the URE and believes that the URE will be more stringent than the proposed standards. INGAA asked if urban/rural segregat ion of natural gas-fired engines was an option.4 EPA responded that it would look into the issues that were brought forward by the comments and discuss them internally. Subcategories INGAA asked what is needed to substantiate a subcategory in the proposed rule. EPA responded that subcategories are developed by cla ss/type/size and that it would need additional data to develop new or additional subcategor ies. EPA asked for what engines was INGAA proposing to subcategorize. INGAA stated that the recommendations for subcategories would depend on the revised MACT floor. INGAA asked how EPA would classify an engine used as an air compressor. EPA replied that an air compressor would be classified as an intermittent process type. Management Practices INGAA supports the application of manage ment practices rather than using MACT limits. INGAA believes that the operator design ed practices under the New Source Performance Standards (NSPS) would harmonize the operator requi rements. EPA stated it will look to see what management practices are appropriate and indicated that it is aw are of the frequency limitations in the proposed rule. However, the ma nagement practices that are selected must be structured and enfor ceable, EPA stated. Test Methods and Compliance Monitoring INGAA commented about the viability of Method 323 to measure formaldehyde from natural gas-fired engines. INGAA noted that there have been some concerns noted by EPA Region 8 and INGAA that should be documented in th e docket. Without an alternative, fourier transform infrared spectroscopy is the only option from measuri ng formaldehyde from rich burn engines. INGAA also noted that the pressure monitoring provisions in the proposed rule are unclear and that requiring pressure monitoring fo r remote engines will be difficult because there is no electricity in those areas. Reporting and Recordkeeping INGAA stated that the reporti ng and recordkeeping requireme nts in the proposed rule do not minimize the burden on the owner/operators of the engines. INGAA asked that the recordkeeping and reporting requirement provisions that were included in the SI NSPS be used. EPA asked for specifics on what requirements should be revised in the comments submitted by INGAA.5 Rule and Implementation Complexity INGAA noted that this was the fifth significant engine rulema king in the past 5 years and that this particular rulemaking affected many more units includi ng, commercial, residential, and industrial source types. EPA responded that the proposed rule addresses recent court decisions and that EPA is required to set numerical limits for all categories at major sources. INGAA stated that the EPA did not account for operating variability when assess ing the MACT floor. EPA responded that it can only use the top 12 percent to look at variability. If more data was received EPA could look at variab ility options. EPA stated that it did not want to send section 114 letters to obtain data, but wanted to receive information from the industry. Plans/Next Steps EPA asked INGAA to prioritize its list of issues before sending its comments on the proposed rule.6 Attachment A INGAA Presentation7 

# IC Engine NESHAP: Proposed Revisions to Subpart ZZZZ INGAA – EPA Meeting
Washington, DC

May 29, 2009


# Topics (1)

z 

### Basis for the Emission Standards » MACT Floor analysis – Emissions data

– Variability and operating condition impacts 

### » “Above the Floor” analysis – Cost effectiveness data 

### » SSM emission limits – Data and basis for conclusions 

### » Catalyst required for all engines with emission limit 

### » Compliance certification issues

– Standards apply “at all times” including SSM events 

### » Concern: Docket data and analysis do not support

these requirements 

### » Alternatives for some engines or operating conditions:

– Area source – GACT

– Major source – Clean Air Act §112(h)8 

# Topics (2)

z Urban versus rural IC engine requirements 

### » Exemption or GACT work practice alternatives 

### » Implication of formaldehyde URE review

z Subcategories 

### » Basis for defining subcategories

z Management Practices – Basis and frequency

z Test Methods and Compliance Monitoring

z Reporting and Recordkeeping (Part 63, Subpart A) 

### » Reconciliation with other recent IC engine rules

z Integration and EPA intent from recent Court cases

z Addressing data gaps for natural gas-fired ICEs 

### » Timing for data development & EPA analysis 

### » Deferred rule schedule for natural gas-fired engines? 

# Emission Standards: MACT Floor

z INGAA reviewed the Emissions Database data points and INGAA Comments will identi fy significant issues



### » Many formaldehyde tests based on CARB 430 

### » Engines miscategorized or test condition is atypical

– e.g., Rich Burn with exhaust oxygen >>2% 

### » Multiple test points on one engine should not be considered multiple “sources”

– Data may be pertinent for variability, offload emissions, etc. 

### » Size-specific emissions should be reviewed 

### » For the three natural gas-fired engine subcategories, INGAA review concludes 0 to 3 tests available for the MACT Floor 

### » Conclusion: Additional data is needed

z Consideration of emissions variability, operational effects (e.g., load, application, etc.) is not evident in the docket9 

# Above the Floor

z Cost analysis apparently based on single vendor quote from ~5 years ago



### » Communications do not discuss specifications – e.g., vendor guarantee and operational limitations 

### » Costs and HAP emission factors are NOT consistent with 2002 docket memos from the original RICE MACT

– Higher costs; Above the Floor standard was not warranted 

### » Costs are NOT consistent with operator experience 

### » INGAA comment: Cost effectiveness values ($ per ton) are significantly under-estimated
z Data gap – Collect additiona l data on control costs and peripheral costs (e.g., testing, recordkeeping)



### » 90% control assumption is not supported
z INGAA conclusion: Actual co st per ton is much higher and above the floor controls are not justified 

# Above the Floor Cost Effectiveness Values and Threshold

z Controls were proposed for some subcategories 

### » These decisions appear to define the cost threshold for above the floor controls for natural gas-fired engines 

### » Table from docket document number OAR-2008-0708-0117

z For natural gas-fired engine subcategories in shaded cells, above the floor controls were not required

z INGAA concludes that this indicates the cost threshold 

### » $3,660 – $5,040 per ton for Lean Burn ($~3,600 at 250 hp) 

### » $13,000 – $33,000 per ton for Rich Burn ($~20,000 at 50 hp) Size Range (HP) Engine <50 50 – 100 100 – 175 175 – 300 300 – 500 500 – 600 600 – 750 >750 2SLB (Ox Cat) $19,887 $7,798 $5,039 $3,658 $2,887 $2,578 $2,425 $2,207 4SLB (Ox Cat) $19,887 $7,798 $5,039 $3,658 $2,887 $2,578 $2,425 $2,207 4SRB (NSCR) $33,373 $13,162 $8,549 $6,241 $4,952 $4,435 $4,180 $3,81510 

# Startup, Shutdown & Malfunction

z SSM limits added in response to December Court decision

z Communication with EMA appe ars to be only support documentation
z Data is not available to support SSM Emission Limits 

### » Limits based on the MACT floor (“best performing’) are not consistent with understanding of engine emissions combustion chemistry

– HC and CO emissions higher at reduced load, cold start, etc.
z Basis for compliance is undefi ned – e.g., “instantaneous” measurement



### » Complicates Responsible Official compliance certification
z With many existing engine types, developing data to establish emission limits appears impractical / impossible

z INGAA recommends Work Practices (§112(h) or GACT) 

# Emission Standards: Compliance Implications

z INGAA supports high load performance test (if emission limit) » Compliance determination at other operating conditions is not clear,

but rule indicates standards apply “at all times” » Docket does not include support d ata and it is understood that

emissions vary (e.g., CO, HC increase at low load) » INGAA recommends limiting the stan dard applicability to this test

condition (and data used to develop the standard)

– Work practice for other operating conditions?

z Catalysts will be required for all engines with emission limit based on uncontrolled MACT Floor

» “Best performing” basis and meet “at all times”

– Cost-benefit analysis does not consider $$ or market limitations » Engine replacement required in some cases?

– Engine type or application – too cool for catalyst to work

z Unknowns regarding emissions performance (e.g., SSM, reduced load, etc.) prevent “compliance certification”11 

# Area Source Alternatives

z Most area source engines must meet emission limits 

### » Thus, catalytic control nearly universally required

z Docket support documentation for this decision is not evident

z INGAA recommends GACT work practices for rural area source engines



### » At a minimum, work practices should be employed for smaller engines (e.g., <500 hp) and more remote locations

z Basis for justifying GACT versus MACT should be more clearly defined



### » Are there data gaps that need to be addressed?

z Are additional subcategories needed? 

# Major Source Alternatives

z Defining emission limits for SSM events and all operating conditions is a monumental t ask for the array of engines

» Emissions data is not available » Designing and executing an emissions measurement / data collection effort to address technical questions is infeasible » Serious implementation / enforcement issues also arise

z INGAA recommends Clean Air Act §112(h) options for design / work / management practices

» Measurement technical and econom ic feasibility is at issue » High load emission limits still appl y for nearly all engines; work practices address other operating conditions » Select applications (e.g., air compressors, emergency engines) may warrant work practices at all time (i.e., actual operations not conducive to enforceable emissions limit)
z INGAA does not believe there is a viable alternative to §112(h)12 

# Area Source Engines

Urban versus Rural

z EPA should analyze urban risk associated wi th rural ICEs

z If not exempt, rural units should comply via GACT 

### » Subpart HH approach can be used to differentiate units

z EPA should consider implicati ons of formaldehyde Unit Risk Estimate (URE) review and current “best science”



### » National Air Toxics Assessment reporting indicates that alternative URE is the “current best” science 

### » Less stringent URE has urban risk and cost-benefit implications 

### » Unfortunately, related IRIS review has been repeatedly delayed – potentially important implications for regulation of area source natural gas-fired engines

– e.g., is delisting warranted? 

# Subcategories

z What is needed to substantiate a Subcategory?

z Fewer subcategories would simplify the rule 

### » e.g., if above the floor standard is not reasonable, then single subcategory by engine type may be warranted rather than multiple subcategories by type and size

z Additional subcategories may be warranted to address unique attributes. For example:



### » Type: 2SLB with lower exhaust temperature 

### » Application: Cyclic load / short duration operations such as air compressors

– Major source units: Work practice may be only viable approach 

### » Location: Rural engines (especially smaller engines, remote engines) with access issues and unique cost/benefit considerations13 

# Management Practices

z INGAA supports broader app lication of management practices versus MACT

z For natural gas-fired engin es, operator defined O&M similar to new units unde r NSPS would harmonize requirements

z For proposed procedures, frequency must be addressed 

### » e.g., oil change as frequently as every 8 days 

### » Any defined timing should be clearly indicated as operating hours (not calendar based) 

### » EPA should consider performance metric based decisions for maintenance frequency consistent with current practices 

# Test Methods and Compliance Monitoring

z Formaldehyde tests: Method 323 viability should be more closely examined



### » INGAA has identified an apparent testing error (human error – not Method problem) in test cited in the docket 

### » Additional Region 8 concerns are implied but not documented in the docket

– INGAA has inquired with EPA EMC staff on additional Reports

– Any additional M323 concerns should be clearly discussed 

### » Without an alternative, FTIR testing only has problems

– Remote access / dual trains required / market access

– There may an emissions measurement feasibility issue

z Parameter monitoring: EPA intent on parameter monitoring requirements is not clear (rule and preamble inconsistencies)14 

# Reporting and Recordkeeping

z For last NESHAP revision, EPA proposed many Part 63 General Provision requir ements but streamlined reporting and recordkeeping (R&R) in the January 2008 Final Rule

z Proposed Rule requires nearly all Part 63 R&R 

### » Preamble states EPA intent to minimize burden, but the rule does very little to minimize R&R requirements

z INGAA recommends limiting R&R to those activities that provide a reasonable cost-benefit



### » Identify in the rule those requirements that apply rather than general reference to Part 63 General Provisions 

### » Harmonize with requirements in January 2008 rule


# Rule and Implementation Complexity

z This is the 5 th significant ICE rulemaking in 5 years 

### » Breadth of this rule is staggering – number of affected units; source types; commercial / residential / industrial 

### » The January 2008 rule has caused significant implementation problems with states

– Challenges are trivial in comparison to the Proposed Rule 

### » Issue: Can some requirements be harmonized?

z Proposed Rule attempts to address Court decisions 

### » This is the first rule impacted in many cases 

### » Based on docket, INGAA could not discern EPA’s intent or rationalization for integrating Court decisions into rule 

### » INGAA recommends separate EPA effort to develop policy and guidance memos on Court case integration

– EPA decisions and process for implementing into NESHAPs15 

# Schedule: Addressing Data Gaps

z INGAA offers assistance in addressing data gaps 

### » Significant issues may warrant additional discussion on data needs, plans, and timing

– Emissions data – Addressing data needs for emission limits

is challenging even if all loads and SSM are not addressed

– Costs

– Management practices / Justification of GACT or §112(h)

z For natural gas-fired engi nes, EPA should consider seeking an Extension from the Sierra Club



### » Separate schedule for gas and diesel rules 

### » Commitment to reasonable schedule and data gathering

z Schedule / deadlines for “additi onal data” to be provided

z Additional meeting(s) or calls? 

# Plans / Next Steps

z INGAA will submit comments on June 3

z Current EPA schedule for rulemaking

z How can INGAA assist in addressing data gaps? 

### » Data needs 

### » Timing 

### » Coordination?