Federal Appeals Court Remands 100-hour “Emergency” Generator “Exemption” in NESHAP and NSPS RICE Rules

On May 1, 2015, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision partially granting and partially denying multiple petitions for review of 40 CFR Part 63, Subpart ZZZZ and 40 CFR Part 60, Subparts IIII and JJJJ as they apply to the operation of emergency Reciprocating Internal Combustion Engines (RICE).  Specifically, the decision remands the so-called 100-hour “exemption” for RICE providing power to emergency or “back-up” electric generators that take part in a demand response program.  A full text version of the decision is currently available on U.S. EPA’s Technical Info Page that includes, in painful legal detail, the reasons for the decision and the subsequent remand of certain rule provisions.  Calls placed to Research Triangle Park (RTP) since the issuance of the decision indicate that U.S. EPA is currently reviewing the decision in detail and the potential impacts to the three (3) RICE Rules affected.  Updates to the regulation stemming from the decision will be posted on here.

The Decision

Specifically, the decision remands (i.e., effectively vacates) the following rule provisions:

• 40 CFR §63.6640(f)(2) (40 CFR Part 63, Subpart ZZZZ)
• 40 CFR §60.4211(f)(2) (40 CFR Part 63, Subpart IIII)
• 40 CFR §60.4243(d)(2) (40 CFR Part 63, Subpart JJJJ)

Each of these three (3) rule provisions include language similar to the following:

“You may operate your emergency stationary RICE for any combination of the purposes specified in paragraphs…of this section for a maximum of 100 hours per calendar year.  Any operation for non-emergency situations as allowed by paragraphs…of this section counts as part of the 100 hours per calendar year allowed by this paragraph…

Prior to the decision, one (1) of the purposes allowed under the 100 hours of non-emergency operation “exemption” was operating an emergency RICE providing power to a back-up generator for emergency demand response purposes.  For this discussion, Pennsylvania, Jersey, Maryland (PJM) Interconnection’s Demand Response program can be considered an emergency demand response program.  This allowed owners of emergency RICE to participate in a demand response program, enter into a beneficial financial arrangement with a utility, and still categorize their RICE as emergency under the rule(s); thereby avoiding the more stringent and onerous emission limits, control device requirements, and/or work practice requirements applicable to non-emergency RICE.

However, the decision vacates the portion of the RICE rule(s) that allows owners and operators of emergency RICE providing power to back-up generators to operate for emergency demand response purposes for up to 100 hours per calendar year.  Until U.S. EPA responds to the decision the jury is still out on this officially; however, presumably this means that formerly “emergency” RICE can no longer operate for emergency demand response purposes under the 100 hour per calendar year exemption, since it has been vacated.  This also means (presumably) that such RICE, should they continue to participate in and operate for emergency demand response purposes, would no longer be considered emergency RICE but rather non-emergency RICE subject to the more stringent requirements that apply to such non-emergency RICE.

Behold…

Potential Rule Impact

Below is the pertinent portion of 40 CFR Part 63, Subpart ZZZZ impacted by the decision with the vacated provisions appearing in strikethrough text:

“(f) If you own or operate an emergency stationary RICE, you must operate the emergency stationary RICE according to the requirements in paragraphs (f)(1) through (4) of this section.  In order for the engine to be considered an emergency stationary RICE under this subpart, any operation other than emergency operation, maintenance and testing, emergency demand response, and operation in non-emergency situations for 50 hours per year, as described in paragraphs (f)(1) through (4) of this section, is prohibited.  If you do not operate the engine according to the requirements in paragraphs (f)(1) through (4) of this section, the engine will not be considered an emergency engine under this subpart and must meet all requirements for non-emergency engines. 

(1) There is no time limit on the use of emergency stationary RICE in emergency situations.

(2) You may operate your emergency stationary RICE for any combination of the purposes specified in paragraphs (f)(2)(i) through (iii) of this section for a maximum of 100 hours per calendar year. Any operation for non-emergency situations as allowed by paragraphs (f)(3) and (4) of this section counts as part of the 100 hours per calendar year allowed by this paragraph (f)(2).

(i) Emergency stationary RICE may be operated for maintenance checks and readiness testing, provided that the tests are recommended by federal, state or local government, the manufacturer, the vendor, the regional transmission organization or equivalent balancing authority and transmission operator, or the insurance company associated with the engine. The owner or operator may petition the Administrator for approval of additional hours to be used for maintenance checks and readiness testing, but a petition is not required if the owner or operator maintains records indicating that federal, state, or local standards require maintenance and testing of emergency RICE beyond 100 hours per calendar year.

(ii) Emergency stationary RICE may be operated for emergency demand response for periods in which the Reliability Coordinator under the North American Electric Reliability Corporation (NERC) Reliability Standard EOP-002-3, Capacity and Energy Emergencies (incorporated by reference, see §63.14), or other authorized entity as determined by the Reliability Coordinator, has declared an Energy Emergency Alert Level 2 as defined in the NERC Reliability Standard EOP-002-3.

(iii) Emergency stationary RICE may be operated for periods where there is a deviation of voltage or frequency of 5 percent or greater below standard voltage or frequency.

(3) Emergency stationary RICE located at major sources of HAP may be operated for up to 50 hours per calendar year in non-emergency situations. The 50 hours of operation in non-emergency situations are counted as part of the 100 hours per calendar year for maintenance and testing and emergency demand response provided in paragraph (f)(2) of this section. The 50 hours per year for non-emergency situations cannot be used for peak shaving or non-emergency demand response, or to generate income for a facility to supply power to an electric grid or otherwise supply power as part of a financial arrangement with another entity.

(4) Emergency stationary RICE located at area sources of HAP may be operated for up to 50 hours per calendar year in non-emergency situations. The 50 hours of operation in non-emergency situations are counted as part of the 100 hours per calendar year for maintenance and testing and emergency demand response provided in paragraph (f)(2) of this section. Except as provided in paragraphs (f)(4)(i) and (ii) of this section, the 50 hours per year for non-emergency situations cannot be used for peak shaving or non-emergency demand response, or to generate income for a facility to an electric grid or otherwise supply power as part of a financial arrangement with another entity.

(i) Prior to May 3, 2014, the 50 hours per year for non-emergency situations can be used for peak shaving or non-emergency demand response to generate income for a facility, or to otherwise supply power as part of a financial arrangement with another entity if the engine is operated as part of a peak shaving (load management program) with the local distribution system operator and the power is provided only to the facility itself or to support the local distribution system.

(ii) The 50 hours per year for non-emergency situations can be used to supply power as part of a financial arrangement with another entity if all of the following conditions are met:

(A) The engine is dispatched by the local balancing authority or local transmission and distribution system operator.

(B) The dispatch is intended to mitigate local transmission and/or distribution limitations so as to avert potential voltage collapse or line overloads that could lead to the interruption of power supply in a local area or region.

(C) The dispatch follows reliability, emergency operation or similar protocols that follow specific NERC, regional, state, public utility commission or local standards or guidelines.

(D) The power is provided only to the facility itself or to support the local transmission and distribution system.

(E) The owner or operator identifies and records the entity that dispatches the engine and the specific NERC, regional, state, public utility commission or local standards or guidelines that are being followed for dispatching the engine. The local balancing authority or local transmission and distribution system operator may keep these records on behalf of the engine owner or operator.”

As a result of the decision, emergency RICE operated for emergency demand response purposes would no longer be operated according to the requirements of paragraphs (f)(1) through (4) of the above provided section.  Therefore, such RICE would no longer be considered emergency RICE, but non-emergency RICE, required to meet all requirements for non-emergency RICE in the rule(s) (see bold underlined text above).  40 CFR Part 60, Subparts IIII and JJJJ would be similarly impacted.

Remaining Questions

You may be asking yourself, “Okay, but what does that mean for RICE located at major sources versus RICE located at area sources?”  That’s an excellent question that we will explore further in a future post.  However, we won’t know definitively until U.S. EPA provides additional guidance.

Interested in discussing this further?  Feel free to give me a call at (610) 933-5246 ext. 119 or email at rharding@all4inc.com.