AT&T Services, Inc.

4430 Rosewood Drive Pleasanton, CA 94588 T: 415-454-9282

F: 415-454-9099

www.att.com

May 18, 2011

Melanie King Energy Strategies Group Sector Policies and Programs Division Office of Air Quality Planning and Standards United States Environmental Protection Agency

Mail code D243-01 RTP, NC 27771

Re: New Source Performance Standards, Subp art IIII; Low Sulfur Diesel Fuel Requirements

Dear Ms. King:

On behalf of various associated legal entities, AT&T Services, Inc. (AT&T) hereby requests that the Envi ronmental Protection Agency (EPA) amend the New Source Performance Standards (NSPS) for Stationary Compression Ignition Internal Combustion Engines (CI ICE), 40 C.F.R. Part 60, Subpart I III, to allow faciliti es to deplete their existing inventory of low-sulfur diesel (LSD ) without having to obtain a “waiver” from EPA every six months. This result could be accomplished simply by amending 40 C.F.R. § 60.4207(b) to mandate the “purchase” of ultra low-sulfur diesel (ULSD) instead of the

“use” of such fuel. Such an amendment w ould: (1) ensure the or derly transition from LSD to ULSD without compromising any of th e environmental benefits of the rule; (2) allow facilities to deplete their existing LSD inventories and avoid the economic hardship of having to drain and repurchas e fuel inventories; (3) elim inate the regulatory (and cost) burdens of EPA’s waiver program; and (4) comport with President Obama’s recent Executive Order, Improving Regulation and Regulatory Review , that calls for the innovation of needlessly burdensome requirements.

Background

NSPS Subpart IIII regulates CI ICE emi ssions and, among other things, requires, as of October 1, 2010, that all affected engines use diesel fuel that meets a sulfur content limit of 15 parts per million (ppm) or less (U LSD). 40 C.F.R. § 60.4207(b). Subpart IIII, however, also includes a provision under which facilities can petition the Administrator for permission to continue using “noncomp liant” fuel beyond the specified compliance

date if warranted. Id . § 60.4207(c). These waivers ar e valid for six months, and if additional time is needed, the facility must submit a new petition. Subpart IIII does not limit the number of waivers a facility may seek. Id.To date, AT&T has sought and obtained two waivers. EPA issued the first waiver in September 2010 and the second on March 10, 2011. The current waiver authorizes AT&T to use “non-compliant” fuel until Oc tober 1, 2011. For the reasons discussed below, unless Subpart IIII is amended, AT&T is likely to seek additional waivers every six months for many years to come. This is an inefficient and uncertain process. AT&T’s only other option would be to drain its existing fuel inventory and replace it with ULSD. This option would cost AT&T as much as $10 million, yet result in only trivial, if any, environmental benefit. In fact, mandating the dr aining of tanks could actually result in environmental harm by increa sing the potential for spills and emissions during pumping and transportation.

A better solution is needed and easil y implemented through the amendment

discussed herein.

AT&T’s CI ICE Fleet and Fuel Inventory

AT&T owns and operates approximately 1,300 CI ICE

− the overwhelming majority of which are emergency backup engine s. These engines, which are located at more than 1,200 facilities acr oss the United States, provide critical backup power to

wireless and wireline telecomm unications systems in the event of commercial power loss. Of AT&T’s more than 12,500 storage tanks , approximately 1,200 are dedicated to CI ICE. The current fuel inventory of thes e tanks is approximately 1.8 million gallons. Since at least October, and at many sites ear lier, AT&T has purchased only ULSD for its

CI ICE fleet. The ULSD has been added direct ly to previously existing LSD inventory in

the same tanks.

As AT&T’s CI ICE are only used in emer gency situations, and are rarely run for long periods when they are used, the fuel inventory supplying th ese engines depletes slowly. Indeed, many of our tanks are re-suppl ied with fuel only once per year, and in some cases even less frequently than that . Additionally, AT&T has an emergency preparedness policy of not allowing the fuel levels in its storage tanks to dip below 50 percent of capacity or to exceed 90 percent of capacity. The minimum level ensures that there is always an adequate fuel supply on-hand for each emergency backup engine in the event of a prolonged electrical grid outage , whereas the upper threshold is a safety measure to allow for fuel expansion. Therefor e, the maximum amount of fuel that can be introduced into a tank at any one time during re fueling is 40 percent of tank capacity.

Impacts of the Existing Subpart IIII

Given our engines’ use pattern s and our internal fuel po licies (which are in part needed to satisfy our Federal Communication Commission requirements), if Subpart IIII is not amended, AT&T would have little choice but to seek waivers repeatedly over the next 11 or so years since we estimate it will take at least this long for the sulfur content of our fuel inventory to meet a limit of 15 ppm through mixing and be deemed “compliant.” According to our internal calculations, even if we depleted our fuel inventory at our maximum rate of 40 percent per year and re placed it each time with ULSD, it would still take 12 years before the fuel in our tanks woul d achieve a sulfur concentration of 15 ppm. Obviously, it will take even longer if we do not fill to our maximum levels each year.This repeated petition process would be burdensome for EPA and for AT&T. In addition to the financial burden, the petiti on process would not afford us with the regulatory certainty and contro l over our future compliance st atus. Given the timing of the process and the short durati on of waivers, were EPA to deny a future petition, it is unlikely that we could timely come into comp liance with Subpart IIII since it would take many months to drain our tanks.

Even more burdensome than the petiti on process, however, would be the only other option that AT&T has to guarantee comp liance with Subpart IIII: draining and then refilling the more than 1,200 tanks servicing its CI ICE fl eet. Whether AT&T did this prospectively or in response to a waiver de nial by EPA, it would be extremely costly. For example, assuming a price of $4 per gallon, 1 replacing our existing fuel inventory of 1.8 million gallons would cost approximately $7.2 million (although this cost might be partially offset by the recovery of some of the existing fuel value). The cost of draining each tank and removing the fuel is like ly to cost an additional $2.7 million. 2 Thus, replacing our fuel inventory to comply with Subpart IIII would cost AT&T in the range of approximately $6 million to $10 million.

From an environmental protection standpoi nt, forcing AT&T and other similarly situated sources to replace their fuel inventor y would not result in any net benefit. In fact, the opposite may occur. Any non-comp laint fuel drained from our tanks would likely be resold and combusted by other nearby sources. Thus, there would be no benefits to local air quality. Any noncompliant fuel that is not locally used presumably would be disposed of or sold for further re processing. The first of these options would result in increased waste, whereas the s econd would involve furt her energy use – both undesirable consequences. Finally, the proce ss of emptying tanks and transporting fuel could also lead to spills and increase d emissions from fuel transportation.

The above estimates are just AT&T’s. We have every reason to believe that other companies within the telecommunications sector are in similar positions and also need

relief.

AT&T’s Recommended Solution

The problems associated Subpart IIII’s fu el requirement can be addressed easily by changing the fuel restrictions from a “us e” requirement to a “purchase” requirement. EPA could accomplish this by revising the langu age of 40 C.F.R. § 60.4207(b) from “. . .

must use diesel fuel that meets the requirement s of 40 CFR 80.510(b)” to “. . . must purchase diesel fuel that meets the requirement s of 40 CFR 80.510(b).” Alternatively, EPA could make the new purchase requirement applicable only to CI ICE used for

emergency purposes.

Both of these options would provide signi ficant relief to the owner/operators of emergency backup engines, including but not limited to the following:

1 According to the Department of Energy, Energy Information Administration website, the cost of on-highway diesel is now at leas t $4 per gallon in every region of the country: http://www.eia.gov/oog/info/gdu/gasdiesel.asp

2 We estimate the cost to drain tanks to be between $0.30 and $1.5 dollars per gallon. Both EPA and owner/operators of em ergency backup CI engines would be

relieved of the burdens of the waiver petition and approval pr ocess currently in place under Subpart IIII;

 Owner/operators of emergency backup CI e ngines with long-term fuel inventories would have more certainty in their fuel-supply purchasing and compliance strategies;

 Owner/operators of emergency backup CI engines would not be required to needlessly spend millions of dollars replacing their existing fuel inventories;

 Owner/operators of emergency backup CI engines that serve a critical infrastructure role, such as AT&T, woul d be allowed to maintain their current policies regarding fuel levels; and

 The amendment would eliminate an in efficient and unnecessary regulatory requirement, consistent with th e President’s Executive Order 13563.

For the reasons articulated in this lett er, AT&T respectfully urges EPA to amend Subpart IIII accordingly.

* * *

AT&T thanks EPA for its consideration of th is matter. If you have any questions or

would like to discuss this issue further

, please contact me at 415-454-9282or mb8242@att.com.

Sincerely, AT&T Services, Inc

Michele Blazek Director, Environment, Health & Safety

cc: Chet Thompson Crowell & Moring LLC