Natural gas producers, engine manufacturers, and other industry
groups have launched an assault on the U.S. EPA's recent rule
requiring operators of existing stationary natural gas-fired
engines to control emissions of certain hazardous air pollutants.
Among other assertions, they claim that this latest rulemaking
imposes requirements on small engines that cannot be practically
implemented, and that EPA's cost-benefit analysis was
substantially flawed, leading to unreasonably low emission
limits.
Background: On August 20, 2010, EPA issued its
final rule targeted at reducing the emissions of formaldehyde,
benzene, toluene, acrolein and other air toxins from spark-ignited
(SI) reciprocating internal combustion engines (RICE), which are
engines that burn gasoline, natural gas and landfill gas. SI RICEs
generate electric power, pump fluids or compress air for machinery.
Outside the utility context, such internal combustion engines are
most frequently used in natural gas transmission, gathering,
underground storage tanks and processing plants.
Whether a particular RICE is subject to numerical emissions
standards or merely "work practice standards" (primarily
complying with a set maintenance schedule) depends on whether the
engine is located at a major source or an area source of hazardous
air pollutants, as well as the size of the engine itself.
Generally, a "major source" is any facility that emits
more than ten tons per year of an individual air toxin or 25 tons
per year of any combination of air toxins, and an "area
source" is any facility that is not a major source. For
engines greater than 100 HP located at major sources and engines
greater than 500 HP located at area sources, EPA has established
numerical carbon monoxide or formaldehyde emissions standards
(where the CO or formaldehyde emissions act as surrogates for other
emissions EPA is seeking to reduce). Generally the other engines
encompassed by the rule (as well as certain emergency engines) must
only comply with work or management practice standards. The rule
also establishes operational standards that must be followed during
times of startup, malfunction or normal operation, as well as
monitoring, recordkeeping and notification requirements.
The rule will not be fully implemented until 2013, but before then,
existing SI RICE must comply with certain notification
requirements, with an "initial notification" due
February 16, 2011 (120 days after the effective
date of the rule). EPA estimates that the final costs of
implementing the rule are $253 million (in 2009 dollars), and that
the majority of these costs will fall on the electric power sector.
EPA expects that approximately 331,000 existing stationary SI
engines will be affected by the new regulation. The annualized
compliance costs per engine varies by engine size, estimated by EPA
to be less than $1,200 per engine for engines sized 500 HP or less,
and between $7,200 and $8,500 for higher HP engines.
Earlier this year EPA issued a related rule setting emissions
limits for air toxins from diesel compression-ignited engines sized
comparably to the engines addressed by the August 2010 rule.
Existing RICE with greater than 500 horsepower ratings at major
sources were encompassed by a 2004 EPA rule.
The Latest Challenge: The week of October 18th,
industry attacked the recent RICE rule on two fronts: by filing
petitions for reconsideration at EPA, and by filing lawsuits at the
U.S. Court of Appeals for the D.C. Circuit. Challengers to the rule
include the Interstate Natural Gas Association of America, Engine
Manufactures Association, Gas Processors Association, EnerNOC Inc.,
American Petroleum Institute, the National Rural Electric
Cooperative Association, Dresser-Waukesha and Exterran Energy. In
the petitions before the agency, industry claims that the
"continuous parametric monitoring system" requirement
imposed on engines at smaller sources is infeasible and was not
adequately presented in the rulemaking process; EPA incorrectly
used available data to derive emissions limits that are too low;
EPA miscalculated benefits associated with the rule by assuming
that NOx reductions would be achieved; EPA failed to account for
rural locations in assessing the health benefits associated with
the rule's anticipated emissions reductions; that formaldehyde
is too costly and complex to be used as a surrogate; and that
restrictions placed on small emergency generating units for peak
shaving programs and demand reduction service should be
lessened.
At this stage, the appeals before the court are mere placeholders,
with issues to be fleshed out at a later date and, assuming the
court follows its typical process, briefing will not be scheduled
until EPA rules on the pending petitions for reconsideration.
Depending on how EPA addresses industry's issues on
reconsideration, those issues are likely to be argued to the court
as well. The court's review of the rule, however, will be
broader than EPA's; because of this, challengers before the
court can also be expected to raise issues challenging EPA's
core authority (under the Clean Air Act, court precedent and
elsewhere) to impose its new restrictions on the combustion
engines.
Because the RICE rule has been challenged, it is subject to change.
However, the current posture is such that owners and operators of
existing engines encompassed by the new rule must take steps to
comply with that rule now; such compliance steps should be taken
with an eye on the actions of EPA and the D.C. Circuit Court.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
