From: "Higgins, Cortney" <Cortney_Higgins@omb.eop.gov> 

To: Melanie King/RTP/USEPA/US@EPA 

Cc: RobertJ Wayland/RTP/USEPA/US@EPA, Paula VanLare/DC/USEPA/US@EPA 

Date: 01/14/2013 10:36 AM 

Subject: Suggested Edits to the Impacts Memo and Preamble regarding Reporting

Hi Melanie, 

We have some questions about the burden estimate in the memo. Can you address the attached comments? In 

particular, can you further explain how EnerNOC estimated 1000 hours per year in reporting? 

Further, on PAGE 35 – can the following change be made: 

CURRENT TEXT: 

Owners and operators of these engines are also required to report the dates, 

times and situations that the engines operate to mitigate local transmission 

and/or distribution limitations annually to the EPA, beginning with operation 

during the 2015 calendar year. 

NEW TEXT TO FOLLOW: 

EPA anticipates that in most cases, the entity that dispatches the engines to operate, such as the curtailment 

service provider or utility, will report the information to EPA on behalf of the facility that owns the engine. Thus, 

the burden of the reporting requirement will likely be on the entities that dispatch the engines. {EPA Text from 

Memo} Our burden estimate (see the PRA section below) assumes the dispatching entity will report the date and 

hours dispatched without contacting individual engine operators. 

And finally, any changes made in the memo (updating burden estimates) will need to be carried forward to the 

preamble in the PRA section. Consider replacing the new sentence that begins “The EPA estimates...” with the more 

detailed paragraph from the memo. 

Please give me a call if you have any questions. 

Regards, 

Cortney 

202.395.7856 

(See attached file: RICE NESHAP Reconsideration Impacts - Final Rule 1-11-13 

DRAFT._InteragencycommentsunderEO13563.docx)
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EC/R Incorporated Providing Environmental Technical Support Since 1989

501 Eastowne Drive, Suite 325  Chapel Hill, North Carolina 27514 

Telephone: (919) 484-0222  Fax: (919) 484-0122 

MEMORANDUM 

DATE: January 11, 2013 

SUBJECT: RICE NESHAP Reconsideration Final Amendments - Cost and Environmental Impacts 

FROM: Tanya Parise, EC/R, Inc. 

 

TO: Melanie King, EPA OAQPS/SPPD/ESG 

The EPA is finalizing amendments to the national emission standards for hazardous air pollutants 

(NESHAP) for stationary reciprocating internal combustion engines (RICE) in 40 CFR part 63, subpart 

ZZZZ. The purpose of this memorandum is to present the estimated impacts associated with the amendments 

being promulgated compared to the 2010 final rules (75 FR 9648 and 75 FR 51570) that addressed existing 

stationary RICE less than or equal to 500 horsepower (HP) located at major sources and existing stationary 

RICE located at area sources. This memorandum will also discuss amendments that will affect other engines 

subject to the RICE NESHAP and the effect on impacts for those engines. 

The amendments include alternative compliance options for certain stationary engines, management 

practices for a subset of existing stationary engines in sparsely populated areas, and alternative monitoring 

and compliance options for the same engines in populated areas. In addition, the EPA is increasing the 

demand response (DR) allowance for stationary emergency RICE. The specific amendments being finalized 

and how these changes will affect emission reduction estimates and the total costs of the rule are discussed in 

the paragraphs that follow. It should be noted that these impacts are identical to those estimated for the 

amendments proposed to the RICE NESHAP in June 2012. 

Non-Emergency Stationary SI RICE >500 HP Located at Area Sources

Engines in Sparsely Populated Areas

 Existing stationary non-emergency 4-stroke lean burn (4SLB) and 4-stroke rich burn (4SRB) spark 

ignition (SI) engines greater than 500 HP at area sources that are in sparsely populated (remote) areas will be 

subject to management practices under the amendments. A remote area is defined as either: (1) an offshore 

area that is beyond the line of ordinary low water along that portion of the coast of the United States that is in 

direct contact with the open seas and beyond the line marking the seaward limit of inland waters; (2) a 

pipeline segment with 10 or fewer buildings intended for human occupancy and no buildings intended for 

human occupancy with four or more stories within 220 yards (200 meters) on either side of the centerline of 

any continuous 1-mile (1.6 kilometers) length of pipeline and that does not lie within 100 yards (91 meters) 

of either a building or a small, well-defined outside area (such as a playground, recreation area, outdoor 

theater, or other place of public assembly) that is occupied by 20 or more persons on at least 5 days a week 

for 10 weeks in any 12-month period; or (3) engines not located on pipelines that have 5 or fewer buildings 

Field Code Changed

Deleted: 4
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2 

intended for human occupancy within a 0.25 mile radius around the engine. Under the amendments, these 

engines are no longer subject to emission standards necessitating the use of aftertreatment, but subject to 

management practices instead; no emission reductions have been estimated from meeting the management 

practices. The capital and annual costs for these engines would decrease substantially from those estimated 

for the 2010 final rule because owners and operators would not have to purchase, operate and maintain a 

catalyst, plus owners and operators would not be required to monitor the catalyst inlet temperature 

continuously or record the pressure drop monthly. 

 

 The only costs attributed to engines subject to management practices are for maintaining records of 

the maintenance conducted on the engine in order to demonstrate that the engine is operated and maintained 

according to the manufacturer’s emission-related operation and maintenance (O&M) requirements or the 

owner or operator’s own maintenance plan. It is expected that the majority of owners and operators are 

already following some type of O&M requirements and little additional burden is expected. Therefore, 

minimal recordkeeping costs were estimated at 1 hour per year for each engine at a technical labor rate of 

$72 per hour. Owners and operators of SI engines that are subject to management practices are not subject to 

any reporting requirements and therefore no reporting costs were estimated for these engines. Existing nonemergency 4-stroke SI engines greater than 500 HP at area sources are predominantly located in sparsely 

populated areas; more specifically, according to industry information, about 90 percent of these engines are 

in Class 1 areas. 

Engines in Populated Areas

Existing stationary non-emergency 4SLB and 4SRB SI engines greater than 500 HP at area sources 

that are not in remote areas are subject to an equipment standard under the amendments that would require 

the use of a catalyst. Under the amendments, existing stationary non-emergency 4SLB SI engines do not 

have to meet numeric emission limits, but have to demonstrate by testing that the catalyst is achieving a 93 

percent carbon monoxide (CO) reduction or that CO emissions at the engine exhaust do not exceed 47 parts 

per million by volume, dry basis (ppmvd). Existing stationary non-emergency 4SRB engines are required to 

demonstrate via testing that the catalyst is reducing CO by 75 percent or more, or alternatively that total 

hydrocarbons (THC) emissions are being reduced by 30 percent or more. Alternatively, 4SRB engines can 

demonstrate compliance with a CO concentration level of 270 ppmvd at 15 percent O2. 

 Given that owners and operators would still have to use add-on controls on their engines and the 

same catalyst performance is expected as previously estimated, and because pollutant reductions estimated 

for the 2010 rule are conservatively based on the average control efficiencies observed during EPA’s testing 

program at Colorado State University (CSU) for 4SLB engines and industry testing for 4SRB engines, the 

same emissions reductions estimated for the 2010 rule are expected under the amendments for existing 

stationary non-emergency 4SLB and 4SRB SI engines greater than 500 HP at area sources in populated 

areas. The control efficiencies are documented in the memorandum “Impacts Associated with NESHAP for 

Existing Stationary SI RICE” available from www.regulations.gov as Document ID Numbers EPA-HQOAR-2008-0708-0542, 

 The changes are expected to lower costs in terms of monitoring and testing expenses. Under the 

amendments, owners and operators no longer have to perform monthly measurements of the pressure drop 

across the catalyst. Owners and operators are still be required to monitor the catalyst inlet temperature or use 

a high temperature shutdown device to protect the catalyst, but they do not have to continuously record the 

catalyst inlet temperature. High temperature shutdown devices are typical on engines and the EPA has 
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3 

assumed that all the engines will already have such a device installed on their units. Therefore, no cost has 

been estimated for this requirement. The costs would be further reduced for 4SRB SI engines because the 

rule will allow less expensive CO and THC testing in place of formaldehyde testing, which is more 

expensive. 

 Non-emergency engines in populated areas will continue to be subject to the same recordkeeping and 

reporting requirements as required in 2010 rule, such as reading instructions, training personnel, submitting 

an initial notification, and submitting semi-annual compliance reports. It is estimated that a total of 14 hours 

will be needed, including 4 hours for reading the rule, 4 hours for training, and 6 hours for preparing and 

submitting notifications and compliance reports. Existing non-emergency 4-stroke engines greater than 500 

HP at area sources in populated areas account for 10 percent of the total population of 4-stroke engines 

above 500 HP at area sources, according to industry estimates. 

THC Compliance Demonstration Option

 In addition to a reduction in testing costs discussed for existing 4-stroke engines at area sources and 

the estimated cost impacts presented in Table 2, additional savings are expected for owners and operators of 

existing and new stationary 4SRB engines above 500 HP located at major sources. Owners and operators of 

these engines currently have the option of either limiting the concentration of formaldehyde or reducing 

formaldehyde emissions, a requirement that was promulgated as part of the original 2004 RICE NESHAP 

rulemaking. The amendments provide these owners and operators an alternative THC compliance 

demonstration option. It is expected that owners and operators will take advantage of the THC testing option 

as opposed to testing for formaldehyde, but the number of engines that will be tested for THC instead of 

formaldehyde is unknown. Therefore, the specific cost savings associated with this amendment has not been 

calculated, however, it is expected that the testing burden will be substantially reduced. The cost of 

formaldehyde stack testing used to estimate testing costs for the 2004 rule was close to $6,000. Estimates 

available today indicate that CO or THC testing can be performed for around $1,000. Subsequently, it is 

possible that cost savings related to performance testing could be as high as 80 percent. 

Emergency DR

 The EPA is increasing the DR allowance for stationary emergency engines. The amendments would 

increase the DR allowance for emergency engines from 15 hours per year (hrs/yr) to an allowance of 100 

hrs/yr that would include operation for maintenance and testing purposes and DR operation. Engines greater 

than 300 HP that operate for more than 15 hrs/yr for emergency DR must use ultra low sulfur diesel (ULSD) 

and report on an annual basis the dates and times the engines operated for emergency DR purposes. 

 To estimate emissions from emergency engines the EPA has previously estimated that these types of 

engines would on average operate for 50 hrs/yr. The average hours of operation for emergency engines is not 

expected to change based on the amendments and 50 hrs/yr is still believed to be representative of average 

emergency engine operation. Therefore, the emissions previously calculated remain appropriate. In terms of 

any revenue generated from participation in DR programs, the EPA expects owners and operators will 

benefit financially, however, the EPA does not know to what extent. The EPA expects there will be savings 

and/or income generated through participation in emergency DR programs, but the EPA has not accounted 

for any potential revenue in estimating the costs and benefits of the amendments. It is uncertain how many 

engines participate in these programs and how frequently stationary emergency engines would operate if 

they are called upon. According to data from DR programs in ISO-NE and PJM territories backup generation 
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4 

was dispatched for less than 30 hours during the summers of 2008, 2009 and 2010.a Another example of 

emergency engines operating infrequently for DR programs can be found in Table 1 of a 2010 letter from 

EnerNOC to EPAb

 that presents a summary of emergency DR events in New England. According to 

EnerNOC, emergency engines have only been called upon three times in New England, where the duration 

of the events was 3.75, 5.95 and 16.5 hours in 2006, 2005, and 2003, respectively. Other factors, such as the 

annual revenue from DR programs (which varies), are also uncertain making it problematic to estimate the 

economic benefit of such programs. As such, the EPA has not estimated any costs associated with the 

emergency engine amendments. 

 For the final rule, the EPA is requiring that if engines greater than 300 HP exceed or agree to be 

available for more than15 hrs/yr for emergency DR that the owners/operators use ULSD fuel and report 

annually the dates and times the engines operated for emergency DR purposes. The rule requires 

owners/operators to being using ULSD on January 1, 2015. Owners and operators would have to begin 

tracking engine operation for the 2015 calendar year and submit the first annual report early in 2016 that 

would cover 2015. The costs associated with other requirements of the rule discussed in this memorandum 

have been assessed for 2013, the year owners and operators will have to start complying with the rule. 

However, the costs associated with ULSD fuel and annual reporting would not be incurred in 2013, but will 

start later in 2015/2016, which for NESHAPs is outside the typical time period the EPA presents estimates 

for. 

 With that said, conducting a complete estimate of the total impact of the ULSD requirement 

associated with operating for more than 15 hrs/yr for emergency DR in any year is still not possible because 

the number of engines that would be affected by this requirement is unknown. The EPA does not know the 

number of engines that will be operated for emergency DR and the EPA does not know how many of those 

engines would operate for more than 15 hrs/yr. 

 The EPA believes the ULSD cost would be balanced out by the reduced engine maintenance that is 

expected from using this fuel. Also, the cost difference between ULSD fuel and higher sulfur fuel is small, 

especially considering that the yearly operation for emergency DR would be limited to no more than 100 

hours per year, and subsequently also the fuel consumption. As of July 2012, the pre-tax cost of ULSD to the 

end user was $3.003 per gallon.c

 The cost of other No. 2 diesel fuels ranged from $2.753 to $2.989 per 

gallon, depending on the sulfur content and other fuel characteristics. The difference in fuel costs could 

therefore range from 1.4 to 25 cents per gallon between ULSD and various No. 2 diesel fuels. At the end of 

July 2012, the cost of residual fuel oil was $2.406, which compared to the cost of ULSD is about 60 cents 

per gallon higher. 

 Based on the amount of and heating value of the fuel currently used by these engines, switching to 

ULSD fuel would have a small cost impact because the engines are used so infrequently. Based on the lower 

heating value of U.S. conventional diesel of 128,450 Btu/gald

, a 300 HP engine operating for 100 hrs/yr may 

use approximately 1,560 gal diesel/yr. Therefore, the fuel cost differential of switching from No. 2 diesel 

 

a Memorandum from Stacy Angel, Synapse Energy Economics, Inc. to Doug Hurley, Synapse Energy Economics. 

Sample Revenue for a 1 MW Backup Generation Unit. June 27, 2011.

b Attachment 2 to Letter from Richard H. Counihan, EnerNOC to Melanie King, EPA. February 11, 2011.EPA-HQOAR-2008.0708-0748.2. 

c Refiner Petroleum Product Prices by Sales Type. Sales to End Users. 

http://www.eia.gov/dnav/pet/pet_pri_refoth_dcu_nus_m.htm. July 2012. d

 http://cta.ornl.gov/bedb/appendix_a/Lower_and_Higher_Heating_Values_of_Gas_Liquid_and_Solid_Fuels.pdf. 

Deleted: and reporting 

Deleted: s
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5 

fuel to ULSD may cost between $22 and $391 on an annual basis for each engine, as a rough estimate. Based 

on the lower heating value, switching from residual fuel oil to ULSD may cost $860 per year, depending on 

the residual fuel oil quality, hours of operation, and size of the engine. 

 Regarding the impact of the requirement to report emergency DR operation, the EPA anticipates that 

in most cases, the entity that dispatches the engines to operate, such as the curtailment service provider or 

utility, will report the information to EPA on behalf of the facility that owns the engine. Thus, the burden of 

the reporting requirement will likely be on the entities that dispatch the engines. The number of entities is 

uncertain, but the EPA was able to obtain estimates from the National Rural Electric Cooperative 

Association of the number of cooperatives that have engines participating in demand response. The NRECA 

estimated that approximately 446 local utilities would engage in the reporting requirement. The EPA 

estimates that each utility would spend approximately 16 hours per year reporting the information to the 

EPA. This results in an estimated burden of 7,128 hours at a cost of $610,000 per year, beginning in the year 

2015. The EPA also received information from one curtailment service provider, EnerNOC, who estimated 

the burden of the requirement to be 1,000 hours at a cost of $60,000 in the first year of implementation, 

2015, and 250 hours at a cost of $15,000 in subsequent years. Using an estimated number of 70 curtailment 

service providers nationwide that are operating engines for emergency demand response, the burden for 

curtailment service providers would be 70,000 hours at a cost of $4.2 million in the first year of 

implementation, 2015, and 17,500 hours at a cost of $1 million in subsequent years. Summing the totals for 

the cooperatives and curtailment service providers yields a total of 77,128 labor hours at a cost of $4.8 

million in the first year that reporting is required, 2015, and 24,628 labor hours at a cost of $1.7 million in 

subsequent years.

 Finally, as discussed above, the EPA has not estimated the increased revenue from DR participation 

by generators with emergency engines, which would likely offset some of the costs (if not all) associated 

with the ULSD and reporting requirements. Therefore, the EPA believes it is justified in not quantifying 

these costs that begin to be incurred in 2016, which, as discussed, will be difficult to fully estimate. 

Stationary Agricultural RICE

 The EPA is specifying that certified Tier 3 existing stationary compression ignition (CI) engines at 

area sources that were installed before June 12, 2006, are automatically be in compliance with the NESHAP 

and are not be subject to aftertreatment-forcing standards. This means that these engines will not be required 

to install add-on controls and subsequently no emission reduction has been estimated for this group of 

engines. The EPA is no longer accounting for a reduction in emissions from these engines effectively 

lowering the estimate of emissions reductions previously estimated for the 2010 rule. In California, San 

Joaquin Valley has identified 17 Tier 3 CI engines installed between January 1 and June 12, 2006, which is 

the number of engines that EPA has used to estimate the impacts of this amendment. 

 In addition, the EPA is specifying that certified Tier 1 and Tier 2 existing stationary CI engines 

greater than 300 HP at area sources that will be replaced within the next few years due to state/local rules are 

subject to management practices until 2015, after which the numeric emission limits of the NESHAP apply. 

In California there are 49 of these Tier 1 engines and 360 of these Tier 2 engines, which are the number of 

engines the EPA has used to estimate the impacts of this amendment. The EPA has not estimated any 

emissions reductions or control costs under the RICE NESHAP for these 409 stationary Tier 1 and Tier 2 

certified CI engines in the year 2013. 

Deleted: The costs associated with the reporting 

requirements would be minimal since facilities are 

already required to keep records. Because the 

number of engines that would be reporting the 

dates/times of emergency DR operation is not 

known, a total estimate cannot be generated. In terms 

of the effort to submit annual reports, it is expected 

that one hour per year per facility would be sufficient 

to comply with this requirement. As of June 2012, 

the total compensation for management/professional 

staff was $51.23e

. Adjusting this compensation rate 

by applying an overhead rate of 167 percent yields a 

total wage rate of $85.60, which is expected to cover 

the reporting requirement.

Comment [A1]: Shouldn’t this be 7136? (16hrs x 

446 = 7136) 

Comment [A2]: Please add in parentheses the 

wage rate used – I think it was $85.60. If using 7136 

hours, the total cost will be $611,000 (rounded to 3 

significant figures). 

Comment [A3]: This seems high – can you 

provide a little more information about this estimate. 

If I understand this currently, EnerNOC estimates it 

will take 125 days (8 hrs each) to report to EPA? 

That seems high. Assuming a single worker 

reporting, that works out to 10 work days a month 

that they are reporting to EPA. 

Comment [A4]: Again, please provide the labor 

rate used in parentheses. 
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6 

Remote Stationary RICE in Alaska

The EPA is also broadening the definition of remote area sources of Alaska in the RICE NESHAP. 

Currently, remote areas are those that are not on the Federal Aid Highway System (FAHS). This change 

permits existing stationary CI engines at other remote area sources in Alaska to meet management practices 

as opposed to emission standards likely necessitating aftertreatment. However, the EPA is unable to quantify 

the number of engines in remote areas of Alaska that would be able to qualify for this provision. Therefore, it 

was not possible to assess the environmental and economic impacts associated with this amendment. The 

EPA does not know how many facilities would be considered remote and does not have any information on 

how many engines are affected. 

While the EPA does not have sufficient information to quantify the total impact of this change, the 

EPA can provide an example of the impact for an individual facility. For instance, the Bailey Power Plant 

operated by the Ketchikan Public Utilities has four (4) stationary diesel engines. Two (2) rated at 4,500 

kilowatt (KW), one (1) rated at 6,450 KW and one (1) rated at 10,500 KW. If these four engines would be 

subject to management practices instead of aftertreatment, the lost HAP reductions is estimated to be 1.3 tpy 

total from the four engines. The lost CO, PM, and VOC emissions are estimated at 1 tpy, 3.7 tpy, and 35 tpy, 

respectively, in total from these four engines. Under the amendments, the facility would avoid total capital 

costs associated with required aftertreatment of over $960,000. The facility would avoid annual expenditures 

related to aftertreatment operating and maintenance costs of more than $176,000 per year, if management 

practices only are required for these engines. 

A summary of the emission reductions associated with the amendments and those estimated for the 

2010 final rule are presented in Table 1. 

Table 1. Summary of Pollutant Reductions for Existing Stationary RICEf

Pollutant 

Emission Reductions (tpy) in the year 2013 

Previous Estimate 

(2010 Final Rule) 

RICE Reconsideration 

(2012 Amendments)

CI SI CI SI 

HAP 1,014 6,008 1,005 1,778 

CO 14,342 109,321 14,238 22,211 

PM 2,844 N/A 2,818 N/A 

NOx N/A 96,479 N/A 9,648 

VOC 27,395 30,907 27,142 9,147 

Tables 2 and 3 present the pollutant reductions by HP and by area/major sources for the SI and CI portion of 

the rule, respectively. 

 

f The estimates presented in Tables 1 through 6 are for existing stationary RICE less than or equal to 500 HP located at 

major sources and existing stationary RICE located at area sources. 
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7 

Table 2. Pollutant Reductions for Existing Stationary SI RICE – by HPb

Size Range (HP) Emission Reductions (tpy) in the year 2013 

HAP CO NOx VOC 

Major Sources 

25-50 0 0 0 0 

50-100 0 0 0 0 

100-175 744 7,124 0 3,826 

175-300 277 2,653 0 1,424 

300-500 288 2,755 0 1,480 

500-600 N/A N/A N/A N/A 

600-750 N/A N/A N/A N/A 

>750 N/A N/A N/A N/A 

Total Major 1,308 12,532 0 6,730 

Area Sources 

25-50 0 0 0 0 

50-100 0 0 0 0 

100-175 0 0 0 0 

175-300 0 0 0 0 

300-500 0 0 0 0 

500-600 101 2,070 2,063 517 

600-750 22 453 452 113 

>750 347 7,156 7,133 1,787 

Total Area 470 9,679 9,648 2,418 

Total 1,778 22,211 9,648 9,147 

 
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8 

Table 3. Pollutant Reductions for Existing Stationary CI RICE – by HPb

Size Range (HP) Emission Reductions (tpy) in the year 2013 

HAP CO PM VOC 

Major Sources 

50-100 0 0 0 0 

100-175 44 2,072 123 1,183 

175-300 57 1,571 161 1,549 

300-500 145 2,362 407 3,923 

500-600 18 209 50 478 

600-750 11 107 31 300 

>750 36 236 102 982 

Total Major 312 6,558 874 8,416 

Area Sources 

50-100 0 0 0 0 

100-175 0 0 0 0 

175-300 0 0 0 0 

300-600 363 5,244 1,017 9,798 

600-750 91 879 256 2,463 

>750 239 1,557 671 6,466 

Total Area 693 7,680 1,944 18,727 

Total 1,005 14,238 2,818 27,142 

 A summary of the costs associated with the amendments and those estimated for the 2010 final rule 

are presented in Table 4. All costs were converted to 2010 dollars for purposes of presenting costs associated 

with the rule in present day terms. However, because the costs estimated for the 2010 rule were in 2008 and 

2009 dollars for the CI and SI engine portion of the rule, respectively, the costs for the amendments in Table 

2 are also shown in those years in order to be able to compare on a consistent basis. Tables 5 and 6 present 

the cost impacts by NAICS code for the SI and CI portion of the rule, respectively. 

Table 4. Summary of Cost Impacts for Existing Stationary RICEb 

Engine Previous Estimate 

(2010 Final Rule) 

RICE Reconsideration 

(2012 Amendments) 

Total Annual Cost 

SI $253 million 

($2009) 

$251 million 

($2010) 

$115 million 

($2009) 

$115 million 

($2010) 

CI $373 million 

($2008) 

$375 million 

($2010) 

$372 million 

($2008) 

$373 million 

($2010) 

Total Capital Cost 

SI $383 million 

($2009) 

$380 million 

($2010) 

$103 million 

($2009) 

$103 million 

($2010) 

CI $744 million 

($2008) 

$748 million 

($2010) 

$737 million 

($2008) 

$740 million 

($2010) 
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9 

 Please refer to the memoranda entitled “Impacts Associated with NESHAP for Existing Stationary CI 

RICE” and “Impacts Associated with NESHAP for Existing Stationary SI RICE” available from 

www.regulations.gov as Document ID Numbers EPA-HQ-OAR-2008-0708-0329 and EPA-HQ-OAR-2008-

0708-0542 for additional assumptions and further information on the 2010 rule estimates. 

The EPA used cost indicies in order to convert between 2008, 2009, and 2010 dollars. Specifically, 

the Marshall & Swift (M&S) Equipment Cost Index for the different years were applied to total cost 

estimates to convert the costs to a specific year. To convert the 2009 costs associated with the existing SI 

engine portion of the rule to 2010 dollars, the EPA divided the total cost by the M&S Annual Index for 2009 

(1,468.6) and multiplied the resulting cost by the M&S Equipment Cost Index for 2010 (1,457.4). Similarly, 

to convert from 2008 dollars, which was the year the costs were previously presented for the existing CI 

engine portion of the rule, the EPA divided the total cost by the M&S Annual Index for 2008 (1,449.3) and 

multiplied the resulting cost by the M&S Annual Index for 2010 (1,457.4). 
10 

Table 5. Summary of Cost Impacts for Existing Stationary SI RICE – by NAICS (2009 Dollars) 

NAICS Major Source Area Source Total (Major + Area) 

Capital Cost Annual Cost Capital Cost Annual Cost Capital Cost Annual Cost 

Electric Power Generation (2211) $52,905,258 $63,062,494 $11,698,144 $12,138,277 $64,603,403 $75,200,772 

Natural Gas Transmission (48621) $1,484,494 $1,462,530 $13,718,381 $6,142,839 $15,202,876 $7,605,369 

Crude Petroleum & NG Production (211111) $4,561,236 $6,138,383 $71,439 $951,462 $4,632,675 $7,089,844 

Natural Gas Liquid Producers (211112) $4,561,236 $6,138,383 $71,439 $951,462 $4,632,675 $7,089,844 

National Security (92811) $5,878,362 $7,006,944 $1,299,794 $1,348,697 $7,178,156 $8,355,641 

Hydro Power Units (335312) $0 $25,248 $0 $37,872 $0 $63,120 

Irrigation Sets (335312) $3,025,050 $3,230,856 $3,285,890 $4,999,041 $6,310,940 $8,229,896 

Welders (333992) $247,440 $679,896 $0 $570,130 $247,440 $1,250,027 

Total $72,663,076 $87,744,734 $30,145,088 $27,139,780 $102,808,163 $114,884,514 

Table 6. Summary of Cost Impacts for Existing Stationary CI RICE – by NAICS (2008 Dollars) 

NAICS Major Source Area Source Total (Major + Area) 

Capital Cost Annual Cost Capital Cost Annual Cost Capital Cost Annual Cost 

Electric Power Generation (2211) $161,766,376 $90,982,105 $464,947,798 $202,463,116 $626,714,174 $293,445,222 

Hospitals (622110) $20,220,797 $11,372,763 $0 $0 $20,220,797 $11,372,763 

Crude Petroleum & NG Production (211111) $2,374,401 $3,807,478 $1,590,115 $2,597,836 $3,964,516 $6,405,314 

Natural Gas Liquid Producers (211112) $2,374,401 $3,807,478 $1,590,115 $2,597,836 $3,964,516 $6,405,314 

National Security (92811) $20,220,797 $11,372,763 $51,660,866 $22,495,902 $71,881,663 $33,868,665 

Hydro Power Units (335312) $0 $16,637 $0 $22,959 $0 $39,597 

Irrigation Sets (335312) $10,294,073 $11,791,567 $34,145 $5,208,084 $10,328,218 $16,999,651 

Welders (333992) $108,260 $1,481,447 $0 $1,881,380 $108,260 $3,362,827 

Total $217,359,106 $134,632,238 $519,823,039 $237,267,114 $737,182,145 $371,899,352 
11 

Stationary Diesel RICE on OCS Vessels and Rigs

In the original assessment of affected sources that would be covered by the amendments, the 

EPA did not consider that there could be circumstances during which stationary CI RICE on Outer 

Continental Shelf (OCS) vessels could be considered stationary and consequently subject to the RICE 

NESHAP. Therefore, impacts from these units were not assessed in the proposed rule impacts analysis 

dated May 10, 2012 (EPA-HQ-OAR-2008-0708-0857). The engines in question would be larger than 

500 HP and would be considered area sources when they become stationary sources during drilling in 

the OCS. Consequently, under the proposed rule, these engines would have been subject to emission 

standards outlined in Table 2d of the proposal. Meeting the emission standards under the proposal would 

likely have required the use of add-on controls, namely oxidation catalyst, in this case. 

Comments received on the June 7, 2012, proposed rule argued that there are feasibility issues 

with complying with the RICE NESHAP for stationary diesel engines on offshore vessels and 

platforms/rigs. Specifically, according to commenters, OCS facilities face strict weight and space 

constraints for instance, which limit control and testing options. To comply with the requirements of the 

RICE NESHAP would not be cost effective, according to commenters. Instead, commenters with 

sources on the OCS affected by the RICE NESHAP requested that stationary engines in these locations 

be permitted to comply with the rule by following maintenance practices, similar to those required for 

smaller (less than 300 HP) existing stationary diesel engines. 

Based on information obtained from EPA Regional Offices, the EPA has identified that in 2013 

there are expected to be up to 5 vessels or drilling rigs operating on the OCS that would be subject to the 

RICE NESHAP as existing sources. Specifically, based on available information obtained from EPA 

Regions 4 and 10, there would be one drillship in the Chukchi Sea on the Alaska OCS and four drilling 

rigs or drillships on the OCS of the Gulf of Mexico. The EPA estimated baseline HAP emissions from 

these units according to information available in their permits. To be conservative and to estimate the 

worst-case scenario, HAP emissions were estimated based the maximum allowable amount of operation 

per drilling season. A summary of the estimated HAP emissions for 2013 are presented in Table 7. 

Table 7. Total Baseline HAP Emissions from Stationary Engines on OCS Vessels 

Based on Projected Activity for 2013 

Vessel/Rigg tons/yr lb/yr

Deepwater Nautilus 2.13E-01 426 

Discoverer Spirit 4.76E-03 10 

Discoverer 1.13E-01 226 

Pathfinder 6.85E-01 1,369 

DD1 7.34E-01 1,469 

 

Total: 1.75h 3,500 

As indicated in Table 7, baseline emissions from stationary engines on OCS sources are low and 

represent a small amount of total emissions (less than 0.06 percent) from all stationary diesel engines in 

the U.S. It is unlikely that in the event that the final rule did not allow these engines to comply with the 

rule by following maintenance practices that these units would be equipped with oxidation catalyst. 

 

g These are known vessels/rigs that are currently permitted, but similar rigs may be used from year to year. 

h

 Note that the HAP emissions are conservative estimates and may be higher than actual emissions from these sources. 
DRAFT – DELIBERATIVE – DO NOT CITE OR QUOTE 

12 

More than likely, owners and operators of these engines would have sought a technical infeasibility 

exemption under 40 CFR 55.7, and if granted, these engines would not have been required to use 

oxidation catalyst or any other HAP-reducing control technology. The exemption would have required 

the engines to employ a substitute requirement in place of the original RICE NESHAP requirements, 

which may have involved measures to offset the emissions from these engines. However, the amount of 

HAP emissions that would have been offset is unknown and the EPA is not able to estimate the 

magnitude of those emissions in the absence of requiring maintenance practice for these engines. Also, 

according to Region 4, because the only criteria pollutants the RICE NESHAP requires are CO and 

formaldehyde as VOC, it is possible that under the exemption only offsets for these pollutants would be 

required. Also, the EPA has the discretion to set the offset ratio to ensure onshore standards and 

increments are met. Therefore, it is not possibly to quantify the potential offsets that would be required, 

if the engines were to seek a technical infeasibility exemption under 40 CFR part 55.