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1 MEMORANDUM

TO: Melanie King, EPA OAQPS/SPPD/ESG

FROM: Tanya Parise, EC/R, Inc.

SUBJECT: Summary of the March 22, 2010 Mee ting between EPA and API to discuss the NESHAP for Existing St ationary SI RICE

1.0 INTRODUCTION

The American Petroleum Institute (API) requested this meeting with EPA to discuss the national emission standards for hazardous air poll utants (NESHAP) for existing stationary spark ignition (SI) reciprocating intern al combustion engines (RICE), wh ich are to be finalized in August 2010. This meeting summary will be availa ble in the docket for this rulemaking (Docket ID No. EPA-HQ-OAR-2008-0708). Th e proposed NESHAP for existing stationary RICE was published in the Federal Register on March 5, 2009 (74 FR 9698). The final NESHAP for existing stationary compression ignition (CI) RI CE was published in the Federal Register on March 3, 2010 (75 FR 9648).

2.0 ATTENDEES

Bob Wayland, EPA Matt Todd, API Melanie King, EPA Clin t Gill, ConocoPhillips Michael Horowitz, EPA (by phone) Tom Monahan, ExxonMobil Gary McAlister, EPA (by phone) Jim McCarthy, IES (by phone) Tanya Parise, EC/R Inc. Jason Clark, Devon (by phone) Jeff Panek, IES George Deeley, Shell (by phone) Jeff Adams, BP2 3.0 SUMMARY OF MEETING

Introduction

API provided an agenda, which is included as Attachment A to this meeting summary. Material that had been previously submitted to EPA was discussed and referred to during this meeting, and can be located in the rulemaki ng docket as Document ID Numbers EPA-HQ-OAR2008-0708-0279, 0300, and 0354.

Area Source Engines

API inquired about EPA’s position on the tr eatment of existing stationary SI engines located at area sources, both in terms of alternatives to numeric al emission limits and regarding

the definition of urban areas. EPA has been re viewing supporting document ation for the Oil and Natural Gas Production rule (40 CFR part 63, subpart HH), but EPA has not begun discussing these issues yet. At this point , EPA is primarily focusing on emi ssions data. API indicated that it had received EPA’s request fo r more information on the area source issue and that it is working on providing a response. EP A stressed that the issues rela ted to existing stationary SI engines at area sources go along with the emissions data and that it is difficult to move forward without emissions data. (Note: EPA is expecting to receive a significant amount of emissions test data for testing conducted by API a nd others on stationary SI engines).

API emphasized that it is eager to resolve this issue and believe that there is a lack of consistency between regulations. According to API, it would be confusing to affected sources if

EPA used a different definition of urban areas in subpart ZZZZ than what was used in subpart HH. Stationary SI engines affected under the subpart ZZZZ could be located at the same facility as units affected under subpart HH, and being cla ssified as an urban area source under one rule and not the other could lead to significant comp liance complexities. EPA urged API to submit rationale explaining why the urban areas/urban clusters (UA/UC) de finition is most appropriate. API indicated that it would prepare such rati onale and submit to EPA. Based on a rough estimate, API said that with respect to the di stribution of major and area sources that about 90 percent of engines are located at area sources.

Limited Use

API said that there was no limited use s ubcategory in the final NESHAP for existing stationary CI engines. There is a bigger difference within stationa ry SI engines as opposed to CI engines because non-emergency SI engines operate two to three tim es more than emergency SI engines, according to API. This is contrary to stationary CI engines wher e there is not as big a difference in the number of hours of operation between non-emergency and emergency engines, API said. EPA asked API what percentage of the population of existing stationary SI engines would be limited use. According to API, only a small number of stationary SI engines would be limited use because the majority of stationary SI engines are for normal operation. There are some gasoline compressors that would be limite d use, API said. API would estimate that the total percentage of existing stationary SI engines that are for limited use purposes is in the single digits.3 Above-the-Floor

API inquired about the status of the above-the-floor analysis . EPA indicated that it is currently in the process of a ssembling cost information and reviewing what information is available and would be appropriate to use for the final rule. EPA has reviewed cost data submitted during the proposal and the additional cost analysis that API and other groups submitted more recently. API indicated a concer n with some of the vendor costs that EPA has available and said that some of the costs appeared to be low. API urged EPA to ask questions if there are any disparities w ith any of the cost data that EPA is looking at. In terms of analyzing emissions data, there are different ways of l ooking at the emissions in order to incorporate variability, EPA said. No decisions have been ma de at this point and EPA will be continuing to

review information. API asked if co-benefits of the rule will be considered, specifically those related to potential reductions of nitrogen oxides emissions. EPA sa id that it will be looking at the potential reductions and bene fits associated with non-HAP pollutants for the final rule.

Management Practices

In terms of appropriate management practi ces for existing stationa ry SI engines, API

indicated that it concurs with the recomm endations submitted by Exterran (EPA-HQ-OAR-2008- 0708-0354). API encouraged EPA to coordinate the maintenance frequencies of all engines subject to maintenance practices, i.e., the time schedules for maintenance of CI and SI engines should be the same. Again, API stressed that EPA should contact API is ther e is information that EPA is reviewing that is inconsistent. API woul d like the opportunity to clear any discrepancies EPA might identify and would also like EP A feedback on the recommended management practices.

API asked if there would be an opportunity wi th the final rule for existing stationary SI engines to make changes to the rule for existi ng CI engines. EPA sa id that any significant changes to the final rule for existing stationary CI engines would require notice and comment.

Startup, Shutdown, Malfunction

There is concern among affected sources with respect to the final re quirements related to periods of malfunction in the prom ulgated rule for existing stationa ry CI engines. API indicated that there are problems with certifying compliance during these periods and expressed that it does not agree with final requirements for periods of malfunction. Accord ing to API, there is concern that engines would automatically be in violation without a chance to address the malfunction issue. One example mentioned was on the monthly pressure drop requirement. API was concerned that if the pressure drop that is recorded monthly is outside the acceptable range, the engine would be considered to have been out of compliance for 30 days . EPA noted that it is likely that the approach promulgated for existing CI engines will be followed for the final rule for existing stationary SI engines.

MACT Floor/Variability4 API asked if there had been any development on how variability would be taken into account in establishing the maximum achievabl e control technology (MACT) floors. EPA

indicated that it needs to receiv e all emissions data first before a MACT floor analysis can take place. EPA will only look at emissions variability from the 12 percent best performing engines.

Test Methods

API said that it has conducted comparison testing of Method 323 and EPA Method 320 for a variety of engines, including lean burn a nd rich burn SI engines at different locations. Preliminary reports of industry’s side-by-si de testing with Method 323 and EPA Method 320 indicate that the results are favorable, API said, bu t that it will be several weeks before the final report will be available. EPA would consider including Method 323 if the final results are consistent with preliminary reports.

Wrap-Up

API plans to submit various materials to EPA in the next several weeks, including information on area sources and the report of Method 323 and EPA Method 320 side-by-side testing, in addition to emissions test data. EP A reiterated the importance and urgency of API submitting the emissions test data as soon as possible. API committed to submitting the rich burn emissions test data by April 2, 2010, and the lean burn emissions test data, which will

include 2-stroke and 4-stroke lean burn data around April 8-9, 2010.5 Attachment A

API Agenda for March 22, 2010 Meeting

## Proposed Meeting Agenda

EPA

– API Meeting on IC Engine NESHAP Rule Revisions

EPA Offices

- RTP, NC

Date: March 22, 2010

Location: EPA Research Triangle Park

Time: 1 :00 p.m. to 3 :00 p.m. EDT Call

- in Number: 919

- 541

- 4486

I. Introductions

II. Treatment o f Area source engines

– Alternative ( s ) to emission limits for SI engines

III. “Above the Floor” analysis

– API/INGAA Cost Effectiveness Report

IV. Management Practices

V. SSM compliance requirements

VI. MACT Floor Determination / Variability Analysis

VII. Method 323 versus Meth od 320 Test Status

VIII. Review of information needs, schedule, and next steps / action items

IX. Follow

- on meeting or conference call