1 of 22 Enclosure
Ba ckground In July 2005, the EPA issued its proposed New Source Performance Standard (NSPS) rules for stationary compression ignition internal combustion engines. The proposed rule regulate s NO x , PM, CO, and NMHC in applicable engines. The rule r equire s engines to meet the emission standards, in part, through use of low and ultra low
sulfur diesel fuel. During the comment period, the Alaska Department of Environmental Conservation developed recommendations to align the NSPS
transition to ultra lo w sulfur diesel in rural Alaska with the timeline developed for
rural Alaska mobile diesel sources.

EPA’s proposed NSPS rule followed the same fuel sulfur transition timeline as promulgated in the EPA’s diesel nonroad rule. Essentially, EPA required fu el
destined for nonroad use to less than 500 ppm (low) sulfur in summer of 2007. In summer of 2010, EPA lowered the fuel sulfur requirement to less than 15 ppm (ultra low) sulfur . After 2010, there are downstream requirements for re tailers and end

users to ensure proper fueling of 2011 and later model year equipment with ultra low sulfur diesel. The NSPS rule required low sulfur diesel after 2007 and ultra low sulfur diesel after 2010 for new, reconstructed, or modified engines.

To align the NSPS rule with the fuel sulfur timeline already final and in place for Alaska’s mobile sources, ADEC recommended EPA keep the fuel transition timeline
for urban Alaska. ADEC then recommended EPA allow rural Alaska to skip the 2007
low sulfur diesel step and instead allo w a one step transition from uncontrolled to
ultra low sulfur diesel in 2010. On

- highway and nonroad mobile diesel sources
transition to ultra low sulfur diesel in Fall of 2010. Aligning the NSPS requirements with this timeline simplifies the distributio n of ultra low sulfur diesel to rural Alaska making compliance easier and ensuring a supply of ULSD for sources needing the fuel. Phasing fuel in different stages would create an unnecessary logistical and financial hardship for rural Alaska communities fo r a relatively small environmental gain. A one step transition to ultra low sulfur diesel helps eliminates costs and fuel2 of 22 distribution problems associated with a premature switch in infrastructure from a single diesel fuel distribution network, to a multi

- fuel system. A one

- step transition
allows time for cost differentials between ultra low and higher sulfur diesels to
resolve.

ADEC also asked for time to develop a cost analysis and health assessment before moving forward with final rules affecting statio nary diesel fired sources. ADEC asked
EPA for assistance in developing a health study and cost assessment. ADEC requested EPA research health impacts from diesel exposure in rural areas . ADEC also requested EPA perform a cost benefit analysis considering r ural Alaska’s unique market demand and Alaska’s refinery capacity to produce arctic grade ultra low
sulfur diesel fuel. In June of 2006 , we requested EPA add language to the final rule specifying that modifications to the NSPS timeline , justified by these studies, would only impact rural Alaska power utilities.

In July of 2006, the United States Environmental Protection Agency , issued its final New Source Performance Standard rules for stationary compression ignition internal combustion engines. The final rule implemented the recommended timeline of a 2010 transition to ULSD in rural Alaska for new, modified or reconstructed engines. To address concerns specific to the power utilities, EPA stated:

“In addition, the final regulations include language that allows Alaska to submit for EPA approval through rulemaking process, by no later than January 11, 2008, an alternative plan for implementing the requirements of this regulation for public

- sector electrical utilities located
in rural areas of Alaska not acc essible by the Federal Aid Highway System.”

ADEC proceeded to complete a pilot health assessment study already underway at the time. Further, ADEC proceeded to identify funding and formed a work group to look at the cost impacts of rural Alaska ’s transiti on to ULSD. The economic study
and pilot health assessment have been completed.3 of 22 Rural Alaska Power Utilities (SIC 49

- 11) Over 180 communities in rural Alaska depend on diesel fuel for electricity. They are scattered over an area twice the size of Texas, a nd are located in remote areas of the state without road access. More than 93% of these communities have a population less than 1000, with an average population of only 310 residents. Each community has a school, post office, health clinic, airport, and co mmunity building, and a few have public water and sewer. These communities are located in the most severe arctic environments in the United States and rely entirely on locally diesel

- generated electricity to maintain critical public infrastructure. Unlike the Continental U.S., they are not linked by electrical interties, but rely on a local, self sufficient, diesel power plant. This system of power generation is unique in the United States.

Rural Alaska power generation is primarily fueled by diesel. Wh ile costs vary by region across the state, rural Alaska communities typically pay some of the highest
fuel costs in the United States. This translates into high power costs. A gallon of
diesel costs over five dollars in some areas. In many communities, t h e cost per kilowatt

- hour of power is over fifty cents before a Power Cost Equalization (PCE) subsidy is provided

.

These power systems in rural Alaska are often operated as non

- profits by city governments or regional cooperatives. Operations are tightly c ontrolled for costs. There is little revenue cushion to shield customers from increased operating costs including those from rising wholesale fuel prices. The transition to ultra low sulfur diesel presents a financial and logistical challenge to rural elec tric generators and has the potential to seriously increase the cost of power. Cost increases will occur through increase s in the cost of fuel , and fuel distribution storage modifications.

Cost Implications
T he cost of implementing federal fuel rules on stationary engines in rural Alaska is
uncertain . T here is consensus that costs will go up, but th e extent of the increase is
uncertain

. Further complicating the picture are global factors raising the price of fuel4 of 22 to unforeseen levels. The daily wellbein g of rural Alaska residents and communities depends on the ability to generate electricity and heat from hundreds of continuously operating diesel engines and burners. The uncertainty in fuels cost s and potential

cost increase s makes it hard for individual s, local and regional organizations to plan budgets for fuel, heat, and power costs. A cost analysis for Alaska is consistent with Section 111(a) of the Clean Air Act whereby the Administrator is obligated to determine the best demonstrated technology “tak ing into account the cost of achieving such [emission] reduction and any non

- air quality health and environmental impact and energy requirements.”

Through 2007, ADEC , with assistance , was able to formulate a scope of work , find
fund ing, and hire a contrac tor to perform a cost assessment

. The contractor, Northern Economics Inc. , was selected in June 2007. Northern Economics
researched and drafted deliverables through the Fall of 2007, presenting a completed study to ADEC in January 2008. The assessment loo ked at how impacts to household costs associated with delivering ULSD to rural communities would vary depending on how the transition occurred and in what part of rural Alaska the transition occurred. Researchers took into account community size, infrastru cture considerations, fuel distribution methods, available fuel types, refinery costs, regulatory requirements, and demand.

The cost study outlines a number of scenarios that may occur in the transition of
rural Alaska to ULSD. Each scenario has a set of challenges and cost implications for different end user groups. With any scenario, the annual fuel costs to rural Alaska
households will rise. The following describes the salient findings of the report.

**•** The project area consists of northern and western A laska not connected to the road or ferry system. The area has 151 communities categorized as hubs, subregional hubs, towns, and villages.5 of 22 **•** Typical fuels consumed in the project area are Jet A for heating fuel and certain aircraft, diesel No. 1 and No. 2 (s ometime with additives for the Arctic), aviation gasoline, and unleaded gasoline. Jet A is the main fuel consumed.

**•** The cost differences between ULSD and Jet A are estimated at

o 1.32 percent in Anchorage

o 3.3 percent in Fairbanks

o 1.4 percent at Anacortes, Wa shington which is representative of the refineries located in northern Puget Sound that supply fuel to Alaska

**•** Cost differences between these fuels are getting smaller as ULSD volumes
increase.

**•** Anchorage cost differences per gallon avera ged 9.1 cents from mid

- 2006 to the
end of 2007. ( These costs are for the fuel only and do not reflect additives for pour point adjustment or lubricity )

.

**•** Three scenarios were used to analyze two main cost centers (storage and distribution, and heat and electrical power).

o Sc enario 1

- the Warranty scenario reflected just enough shipment of ULSD to meet 2007 and newer engine requirements.

o Scenario 2

- the Compliance scenario reflected more consumption of ULSD
to meet EPA

- mandated timelines.

o Scenario 3

- the Full Conversion s cenario, with ULSD shipped for all purposes (heating, engines, and power plants) except aircraft Jet A needs.

**•** Scenario 3 had the lowest modeled costs to rural households at $189 per household per year in costs resulting from the transition to ULSD. Scenari o 2 was $278 per household per year, and scenario 1 was $300 per household per year.

**•** The analysis suggests the household costs of transitioning to ULSD fuel are highest for the regions of the state with the low est income populations. This disproportionate impact is due to the greater reliance of project area communities on diesel for heating and power generation in comparison to the rest of Alaska.6 of 22 **•** By starting to burn ULSD in 2008 as outlined in scenario 3 , villages benefit from a
“blend

- down” of diesel , w here average sulfur concentrations decline, over three years, to less than the 15 ppm upper limit on sulfur

.

**•** A “blend down” of diesel allows communities to avoid purchasing new tanks, cleaning existing tanks, disposing of cleaning waste s , and temporary dr um use.

T he contractor conclude d a blend down of fuels to comply with the existing 2010
deadline recommendation will be less of a cost impact than delaying the transition to
some later date. This conclusion supports our initial recommendation to keep the
transition to ULSD within the same timeframe as the mobile source rules.

ADEC does not e that k eeping cost impacts of the ULSD transition to a minimum is important for air quality. An increase in cost of diesel means people may shift to
other sources of heat and power. In the absence of a viable and clean alternative energy, the primary fuel options available to Alaskans are wood burning for heat, and possibly coal burning for heat and power. Wood and coal emit far more pollution per unit of energy than d iesel.

Health Implications Pilot Study Over three months in the winter and early spring of 2006, ADEC and University of
Alaska researchers conducted a pilot study in a small Alaskan village to determine if health effects from diesel power generation could be detected. Monitoring found fine particulate levels within applicable federal standards over the three months of monitoring. ADEC instruments likely detect ed the exhaust plume from the power generator.

Due to difficulties in getting an adequate number of study participants, and adequate participation from those who were assessed, no conclusions were drawn concerning diesel power exhaust and possible health impacts. National studies are clear that7 of 22 diesel exhaust impacts health. It is also clear that rur al Alaskans suffer disproportionately from poor lung health. We cannot exclude a contribution of diesel exhaust to these health impacts. Further, mere compliance with federal air quality
standards does not justify removal of a location from compliance with NSPS rules. Though other considerations like cost and logistics are considered, the lack of a
concrete conclusion from the pilot health study effort does not justify removal of
ADEC’s original recommendation of keeping the 2010 timeline for transition to ULSD
in rural Alaska. Discussion of the studies showing the health impacts of diesel exhaust and Alaska’s disproportionate rate of lung ailments follow.

Evidence of Health Effects from Diesel Exhaust Diesel exhaust (DE) is composed of vapors, gases, and f ine particulate

. Diesel
combustion also produces polycyclic aromatic hydrocarbons (Strickland, P and Kang, D, 1999). The health impacts of fine particulate are well documented. The impacts of diesel exhaust on immunological response are discussed below.

D E can act as a nonspecific airway irritant at relatively high levels. At lower levels, DE promotes release of specific proteins in the upper and lower airway involved in immune response to allergens, bacteria, and other foreign material. Low levels of DE

a lso release oxidants in the lower airway . Release of these proteins associated with allergic and inflammatory response can culminate in airway inflammation, mucus,
and an asthmatic contraction of the bronchial muscle s (Pandya, RJ et al., 2002). DE
increas e s inflammatory response to allergens, (Diaz

- Sanchez, D et al., 1994) and allergic reactions to new antigens (Diaz

- Sanchez, D et al., 1999). Exposure of healthy
human volunteers to low dose of diesel exhaust showed increase in antibodies found
in nasal lava ge, and a rise in antibody secreting cells (Diaz

- Sanchez, D et al., 1994).
The se studies imply exposure to diesel exhaust result s in increased respiratory
inflammation. Further studies have found that diesel exhaust can worsen existing allergic response , a n effect detectable at concentrations comparable to exposures along a busy urban street (Diaz

- Sanchez, D et al., 1997 ; Fujieda, S et al., 1998; Diaz

Sanchez, D et al., 1999)

.8 of 22 Evidence for Possible Health Effects in Alaska In Anchorage, children who live close to high traffic areas were found to have a higher
rate of doctor

- diagnosed asthma as compared to children living in low traffic areas (Gordian, Wakefield et al in preparation)

. Anchorage is an attainment area for PM2.5. The study demonstrates that n onattainment status alone does not equate to a lack of health impacts associated with air pollution. Proximity to pollution sources can impact health in area s where overall air quality may be good.

Chronic respiratory disease is the most common complaint in Alaska Native children. The prevalence of asthma has been increasing in Alaska Natives. The State of
Alaska , Section of Epidemiology , s tud ied respiratory illness in Nuiqsut and a control village in rural Alaska. Both villages had populations of about 400. Forty

- seven people in each village (11% of population in Nuiqsut, 12% in control village) had a diagnosis of asthma or reactive airway disease. In both villages the most common respiratory diagnosis was asthma and the vast majority of the medical vi sits for respiratory disease were among those diagnosed with asthma. A 1997 survey of 465 Alaska Native children in grades 6

- 9 in the Yukon Kuskokwim Delta (YK) found 24%
had asthma or asthma

- like symptoms, 37% were sputum producers, and only 39%
had no re spiratory symptoms ( Hennessy T et al 1999). Nationwide, asthma rates are
lower in rural areas than in urban areas . With nearly 8% of the US population having asthma, the asthma rate s in Nuiqsut are higher than the general population. Further, t here are in dications that asthma in American Indian and Alaska Native children is often undiagnosed and inadequately treated (Hisnanick, et al 1994; Liu, et al, 2000) which may mean the reported numbers are underestimate d

.

Asthma is not the only respiratory ailment of concern. The Yup’ik Eskimo have some of the highest rates of respiratory morbidity documented for any Native population. For example, hospitalization for respiratory syncytial virus (RSV) is five times higher for Native children in the YK Delta compar ed to the overall US population (156 vs. 31/1000) (Lowther, S.A., et al., 2000; Wright, A.L., et al.1989; Shay, D.K 1999;9 of 22 Karron, R.A., et al., 1999). During one RSV epidemic, one

- fourth of all infants in this region were hospitalized with the infection, at an estimated cost of $1034 per YK Delta child ( compared to $27 per child in the rest of the United States) (Karron, R.A., et al., 1999).

Another common lung condition is called bronchiectasis . Bronchiectasis has nearly disappeared in the industrializ ed world, but remains relatively common among Alaska Natives in the YK Delta (Lewis, T. 1999; Stout, J et al 2001; Fleshman, et al 1968; Singleton, R., et al., 2000). The most common predisposing factor for bronchiectasis is having early and recurrent pne umonia, implicating increased susceptibility to respiratory infections and chronic respiratory symptoms.



### Final R ecommendations In November 2007, the Alaska Energy Authority approached ADEC with concerns regarding the NSPS rule. The Alaska Energy Authorit y (AEA) is a corporation of the
State of Alaska . Their mission is to reduce the cost of energy in Alaska, in part, by assisting in the development of safe, reliable, and efficient energy systems. With rural Alaska suffering from some of the highest fuel co sts in the country, AEA and rural power utilities undertake a number of strategies to keep power and fuel costs to a minimum for village residents. Implementing NSPS ULSD and emission requirements clearly and negatively impact these strategies. The strateg ies include importing a single grade of diesel fuel to simplify storage and use; capturing waste heat off the generators and heating nearby building, displacing fuel oil emissions and cost; and burning waste lubricating oil to captur e the heat energy and a meliorat e soil and
water contamination concern s. Addressing these concerns in turn with ADEC’s desire to maintain and improve air quality, the following recommendations were developed
for EPA to consider in the NSPS for stationary diesel internal combustio n engines..

Allow NSPS owner - operator requirements to apply only to model year 2011 and later engines.10 of 22 By changing the application date for NSPS requirements from model year 2007 engines on October 1, 200 7 to model year 2011 engines on December 31, 2010 , EPA will greatly simplify the NSPS requirements and thus greatly enhance compliance

success with the NSPS rules.

Alaska village power plants are typically operated by a single part time operator with an alternate. Although a plant operator may be one of the few jobs in a rural community, there is a high rate of turnover among plant operators. This frequently leads to inexperienced operator s responsible for the power plant. In addition, there is an inordinate amount of paperwork and training involved for a n operator to properly run a village power plant. Though good mechanics, in many cases, village power plant operators generally do not have the training, expertise or resources to adequately track safety and environmental paperwork requirements, and at th e same time keep the engines and fuel tanks in good operating order. AEA and ADEC believe simplifying operations and keeping village requirements straightforward is the best path toward compliance with the NSPS.

There are many power plants in rural Alas ka where both pre

- model year 2007 and model year 2007 and later engines are installed. These power plants receive a single grade of diesel fuel from a bulk fuel storage facility that stores a year’s supply of fuel. The NSPS require all model year 2007 and later engines, as well as pre

- model year 2007 engines that have been modified or reconstructed, to use ULSD fuel starting no
later than December 1, 2010. Coordinating the 2010 ULSD requirement with 2011 model year engines, rather than retroactively applyi ng to 2007

- 2010 model year engines, greatly simplifies the NSPS compliance requirements. Otherwise, operators across Alaska must identify 2007 and later year engines , ensure ULSD orders are made by Spring 2010 , and ensure proper storage is available for th e transition of these engines to ULSD in Fall/Winter 2010. This forces the purchase, transport, and storage of a large volume of ULSD at once rather than a smoother transition of a little
toward a lot. Consider that exhaust after

- treatments required to mee t the low Tier 4
NOx and PM emissions standards will not be required until model year 2011 engines.11 of 22 There is no technological requirement pre

- model year 2011 diesel engines to operate
on ULSD. A 2010 fuel requirement for 2011 model year engines provides a clear demarcation between regulated and unregulated engines, it agrees with mobile fuel sulfur requirements, and ensur es better compliance and an easier (thus more assured) transition to ULSD

.

Planning, construction and operation of a rural Alaska power plant is complex

. The Alaska Energy Authority, in partnership with the f ederal Denali Commission, develops new power plant projects throughout rural Alaska. The timeframe from project identification, concept design, final design, environmental permitting, construction funding, and procurement typically exceeds three years. There are several projects that have been designed and funded based on pre

- 2007 model year engines. Other projects have already procured pre

- 2007 model year diesel generators,
but will no t be installed prior to the December 31, 2008 deadline. A 2010 transition to the NSPS requirements will allow these pre

- 2007 engines, procured before the NSPS rule was proposed, to be installed without penalty to AEA from the stockpiling prohibitions in th e NSPS

.

Maintain a December 1 2010 deadline for transition of regulated engines to
ULSD.

As outlined in the cost assessment, fuel costs in rural Alaska are some of the highest
in the nation

– and are hitting communities which already have poor economies

. Diesel costs in rural Alaska are dependent on rack prices and the arduous process of delivering fuel to these remote communities. Importing ultra low sulfur diesel will raise diesel prices by some amount. However, that amount is a small percentage
relati ve to the increase in fuel costs due to Outside market influences. Allowing an exemption to burn higher sulfur diesel in 2011 and later engines in no way guarantees lower fuel costs, it only assures higher levels of particulate matter and
SOx emissions for rural Alaskans. Given the poor inhalation health existing in rural Alaska in general, we cannot walk away from this opportunity to improve air quality.12 of 22 However, ensuring a transition to this fuel requires keeping the NSPS requirements as straightforward a nd simple as possible.

Authorize continued use of single circuit jacketwater m arine diesel engines for prime power applications.

Due to the high cost of fuel in rural Alaska, the use of combined heat and power (CHP) diesel electric cogeneration plants i s vital to the economy of rural villages. Numerous diesel power plant heat recovery systems throughout the state provide essential heat to community facilities and schools. Wherever possible, fuel efficient
marine

- jacketed diesel engines are used in prime power applications to provide increased recovered jacketwater heat and improve overall thermal efficiency. In fact, the thermal efficiency of a marine jacketed CHP plant is as high as 65%, compared to only 35% for a power plant without heat recovery. The h eat rejected from a marine

jacketed diesel is about double that of a Tier 3 separately cooled aftercooler (SCAC) diesel engine. To replace an existing jacketwater cooled engine with a SCAC diesel engine effectively eliminates any recoverable heat for deliv ery. Recently, where SCAC engines have been installed in small rural communities, there has been a total loss of available space heat for community buildings, as well as insufficient heat to heat the power plant. If this situation were to repeat across Ala ska there will be an increase in resources spent by schools and community facilities in heating oil, and increased emissions from burning the extra heating oil.

AEA conducted a study in 2005 to assess the number and condition of heat recovery system thro ughout rural Alaska. Of 174 responding utilities, 107 had functioning heat recovery systems that were providing beneficial recovered heat to community facilities. Although the study did not evaluate the quantity of fuel savings realized by
these CHP facili ties, it is conservatively estimated that over 1

- million gallons of heating fuel is offset each year by heat recovery from diesel generators. Conservatively then, this prevents over a ton of particulate matter and 10 tons of NOx from entering the atmosphe re, using EPA’s AP

- 42 emission factors.13 of 22 Marine engines will have to meet Tier III standards some five years later than stationary source engines, and marine engines less than 800 HP (560 kWe) will not be required to meet Tier IV standards. For example, in 2013, the PM standard for stationary engines greater than 175 hp and below 750 hp is 0.02 grams per kilowatt

hour. For marine engines, the 2012 standard will be 0.12 to 0.24 grams per kilowatt

hour. See Tables 1 and 2. The difference in NOx is 0.40 to up to 11.0 between stationary and marine engines. In rural Alaska, the pollutant of primary concern is fine particulate matter because of health concerns and a collection of other local fine particulate sources such as woodstoves and open burning of refuse. O ther parts of Alaska are approaching or exceeding the fine particulate standard. NOx on the other hand, is not considered a health concern; neither as a precursor to ozone or PM2.5, nor as a criteria pollutant.

ADEC recommends EPA allow the use of singl e circuit jacketwater m arine diesel engines for prime power applications

. A llowing use of marine engines in land based applications means operating engines that emit more NOx and PM than land based stationary source engines. Recognizing the importance of a ir quality protection, ADEC will seek opportunities to retrofit emissions controls, either an oxidative catalyst, a particulate trap, or both, onto a 2011 or later model year m arine diesel engines to tak e advantage of the 2010 transition to ULSD

.14 of 22 Table 1 : Emission Standards Summary: G/KW

- hr (G/HP

- hr) for Engine Size 75 ≤HP<175

Date Pollutant Stationary Marine (L/cylinder)*+

<0.9 0.9

- <1.2 1.2 < 2.5 2.5

- <3.5 3.5

- <7.5 2007 PM 0.30 (0.22)

NOx 4.0 (3.0)

2008

- 2011 PM 0.30 (0.22)

NOx 4.0 (3.0)

2012 PM 0.02 (0.01) 0.15 (0.11) [0.14 (0.10)]
NOx 0.40 (0.30) [5.4 (4.0)]
2013 PM 0.02 (0.01) 0.14 (0.10) [0.12 (0.09)] 0.12 (0.09) [0.11 (0.08)]
NOx 0.40 (0.30) 7.0 (5.2) [5.4 (4.0)] 5.8 (4.3) [5.6 (4.2)]
2014 + PM 0.02 (0 .01) 0.12 (0.09) [0.11 (0.08)] 0.11 (0.8) [0.11 (0.08)]
NOx 0.40 (0.30) 5.8 (4.3) [5.6 (4.2)] 5.8 (4.3) [5.8 (4.3)] *Italicized marine numbers are Tier 3 Standards for Marine Diesel C1 Commercial Standard Power Density
+Standard font marine number s are Tier 3 Standards for Marine Diesel C1 Recreational and Commercial High Power Density15 of 22 Table 2: Emission Standards Summary: G/KW

- hr (G/HP

- hr) for Engine Size 175 ≤HP<750

Date Pollutant Stationary C1 Marine (L/cylinder) *+

<0.9 0.9

- <1.2 1.2

- <2.5 2.5

- <3.5 3.5

- <7.5 2007 PM 0.20 (0.15)

NOx 4.0 (3.0)

2008

- 2010 PM 0.20 (0.15)

NOx 4.0 (3.0)

2011 PM 0.02 (0.01)
NOx 0.40 (0.30)
2012 PM 0.02 (0.01) 0.15 (0.11) [0.14 (0.10)]
NOx 0.40 (0.30) [5.4 (4.0)]
201 3 PM 0.02 (0.01) 0.14 (0.10) [0.12 (0.09)] 0.12 (0.09) [0.11 (0.08)]
NOx 0.40 (0.30) 7.0 (5.2) [5.4 (4.0)] 5.8 (4.3) [5.6 (4.2)]
2014 + PM 0.02 (0.01) 0.12 (0.09) [0.11 (0.08)] 0.11 (0.8) [0.11 (0.08)]
NOx 0.40 (0.30) 5.8 (4.3) [5.6 (4.2)] 5.8 (4.3) [5.8 (4.3)]

* Italicized marine numbers are Tier 3 Standards for Marine Diesel C1 Commercial Standard Power Density +Standard font marine numbers are Tier 3 Standards for Marine Diesel C1 Recreational and Commercial High Power Density16 of 22 There is an environmental benefit to leaving the marine NOx standard in place for engines operated in rural Alaska

. Engine manufacturers have indicated they intend to use selective catalytic reduction as the means to meet Tier I V NOx standards. For stationary eng ines, SCR technology means the use of liquid ammonia which is vaporized in the exhaust gas stream to remove NOx. The two primary concerns with
ammonia are related to the remoteness of the power plants and the lack of training of their operators. Shipping t anks of liquid ammonia to rural Alaska is a spill hazard. Adding one more dangerous product to the list of environmental worries remote villages must deal with is not prudent. Already it is expensive and logistically difficult to backhaul empty barrels of lubricating oil, solvents, batteries and other hazardous wastes out of a village. The lack of roads and rail means these materials must be flown or barged out at immense costs. The result often is these materials do not make it out of a village, contamina ting local soil and water for years. The second concern is worker safety. It is already difficult to get remote workers trained in enclosed space and fuel tank safety. Handling and recovering a caustic substance like ammonia will put worker’s health at mor e risk than is already experienced. We
feel these two drawbacks of SCR are more of a health concern than reduction of NOx

.

Remove limitations on using fuels mixed with used waste oil that do not meet
the f uel requirements of Subpart III.

Improper disposa l of used oil is a significant environmental threat to rural Alaska communities. There are no permitted used oil disposal facilities in rural communities, and the freight cost of exporting used oil can be as much or more than the purchase price of new oil. The Alaska Energy Authority developed a cost effective and reliable
used

- oil blending system that is part of many rural Alaska power plants funded by
the Denali Commission. The used

- oil blending system utilizes the oil in an environmentally approved manne r and captures the energy content of the lubricating oil. Eliminating used

- oil blending increases the risk of improper disposal and spills,17 of 22 and forces a community to pay for shipping used oil out and fuel oil in to make up for the loss of heat energy.

Ca lculations by ADEC permit engineers find that blending waste fuel through a system (equivalent to the WOTEC brand) at 1.75% or less will keep fuel within ASTM specifications. The exact percentage under this maximum level that keeps final fuel
stream sulfur levels within limits tolerated by new engines depends on the sulfur
levels in delivered fuel and in the waste oil. Initial calculations find that fuel delivered at 10 ppm sulfur can tolerate a 1.75% blend of waste oil if the waste oil sulfur level is
belo w 200 ppm. This is equivalent to 1750 gallons of waste oil burned for every 100,000 gallons of diesel delivered. As the sulfur level of the waste oil increases, the percent of the blend necessarily must go down. At 2000 ppm sulfur in the waste oil,
the m aximum blend will be 0.23%. This is equivalent to 230 gallons of waste oil burned for every 100,000 gallons of diesel delivered. ADEC recommends a maximum blend of 1.75% with the exact percent of the blend dependent on the estimated sulfur
level of delive red fuel and blended waste oil. ADEC and AEA acknowledge that engines equipped with aftertreatment devices must burn fuel meeting sulfur requirements.

Review emission control design requirements needed to meet new NSPS emission standards, including the p ossibility of r emoving or delaying emissions standards requir ing advanced exhaust gas emissions aftertreatment technologies until the technology is proven for remote applications

.

Most rural Alaska power plants are unmanned or are run by part

- time staff. Diesel engine use throughout Alaska is a manifestation of the economy and reliability of heavy

- duty diesel engines. Selective catalytic reaction (SCR) systems are used in large

- scale electric utilities in Alaska. However the aftertreatment technologies

pr esently available for small

- scale heavy

- duty diesel engines are not sufficiently18 of 22 robust and reliable for use in unmanned rural power plants. These technologies are mostly untested in arctic climates.

In addition to the increased risk to reliable electric power, substantial capital and operating costs will be incurred. Due to the need to store fuel supplies for an entire winter, typically a minimum of 9

- months supply, each utility will be required to
in vest substantially in new infrastructure to support the use of urea for SCR . General estimates of urea use range from 3.5% to 6.5% of annual diesel fuel consumption. A small rural utility using 100,000

- gallons of diesel fuel to serve a community with a population of 350 will require a minimum urea storage capacity of 6500 gallons. Due to the aggressive nature of urea, the storage and handling facilities will need to constructed of stainless steel and insulated and heated to p revent freezing during
winter. C ost of installation will vary widely depending on the remoteness of a community and the soil type . The estimated cost for a 6500 gallon urea storage and handling facility in an accessible area with good soils is in exces s of $200,000. In a more remote area with marginal permafrost soil conditions the cost could exceed well over $300,000.

In combination with the extreme logistical issues and co sts associated with transporting, storing and utilizing urea in small rural villages, SCR does not warrant the risk associated with its implementation in small and remote stationary diesel engines. The lack of available recovered heat from small SCAC engi nes further exacerbates the risk of using SCR systems in unmanned power plants as there will be a lack of available heat to keep the urea from freezing in winter.

ADEC suggests EPA list likely technologies necessary to meet proposed emission
standards. EPA should determine whether these technologies are feasible in rural Alaska and the arctic in general. If the likely technologies prove unfeasible for use in rural Alaska, EPA should consider an engine standard that reflects technologies robust enough to function in the arctic.19 of 22 Ultimately, t he goal of emission reductions in rural Alaska may best be achieved through a technology based provision rather than specific gram per hour reduction requirements. AEA concerns with use of selective catalytic reductio n technology convince ADEC that rural Alaskans need the flexibility to explore use of control devices that are feasible for the rural Alaskan environment. Initially, the coupling of ULSD with either oxidative catalysts or particulate traps could be consid ered a better bet to reduce diesel exhaust concentrations without introducing the severe health, environmental, and logistical concerns associated with SCR.

The loss of heat recovery will lead to increased fuel oil use. As air quality professionals, this increase use of fuel oil is a concern as there are emissions associated with burning fuel oil in a boiler. Perhaps even worse, the increasing cost of fuel in rural Alaska is forcing many to wood. Wood is one of the few alternative fuels
to oil available an d wood burns many hundreds of times dirtier than fuel oil. We need to ensure the well meaning requirements to improve stationary diesel engine emissions do not lead to unintended consequences such as an inability to afford heat and power, a reduction in ai r quality due to a switch from diesel to wood or coal, or an accident with the storage and transport of urea in these remote areas.



### Summary of ADEC Recommendations

**•** Allow NSPS owner

- operator requirements to apply only to model year 2011 and later engines.

**•** Maintain a December 01 2010 deadline for transition regulated engines to ULSD.

**•** Authorizing continued use of single circuit jacketwater marine diesel engines for prime power applications.

**•** Remov e limitations on using fuels mixed with used lubricating oil t hat do not meet the fuel requirements of Subpart III of the rule.

**•** Review emission control design requirements needed to meet new NSPS emission standards, including the possibility of removing or delaying emissions standards20 of 22 requiring advanced exhaust gas e missions aftertreatment technologies until the technology is proven for remote and arctic applications.

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