6560-50-P

                        ENVIRONMENTAL PROTECTION AGENCY
                                40 CFR Part 63
                      [EPA-HQ-OAR-2008-0708, FRL-XXXX-Y]
                                 RIN 2060-AQ58
National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines; New Source Performance Standards for Stationary Internal Combustion Engines

AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
SUMMARY: The EPA is proposing amendments to the national emission standards for hazardous air pollutants for stationary reciprocating internal combustion engines under section 112 of the Clean Air Act. The proposed amendments include alternative testing options for certain large spark ignition (generally natural gas-fueled) stationary reciprocating internal combustion engines, management practices for a subset of existing spark ignition stationary reciprocating internal combustion engines in sparsely populated areas and alternative monitoring and compliance options for the same engines in populated areas. The EPA is also proposing to include a limited temporary allowance for existing stationary emergency area source engines to be used for peak shaving and non-emergency demand response. In addition, the EPA is proposing to increase the hours that stationary emergency engines may be used for emergency demand response. The proposed amendments also correct minor mistakes in the pre-existing regulations.
DATES: Comments. Comments must be received on or before [INSERT DATE 45 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER], or 30 days after date of public meeting if later.
Public Meeting. If anyone contacts us requesting to speak at a public meeting by [INSERT DATE 7 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], a public meeting will be held on [INSERT DATE 15 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER]. If you are interested in attending the public meeting, contact Ms. Pamela Garrett at<PHONE_NUMBER> to verify that a meeting will be held.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2008-0708, by one of the following methods:
   * www.regulations.gov: Follow the on-line instructions for submitting comments.
   * Email<EMAIL_ADDRESS>   * Fax:<PHONE_NUMBER>.
   * Mail: Air and Radiation Docket and Information Center, Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania Ave., NW, Washington, DC 20460. Please include a total of two copies. The EPA requests a separate copy also be sent to the contact person identified below (see FOR FURTHER INFORMATION CONTACT).
   * Hand Delivery: Air and Radiation Docket and Information Center, U.S. EPA, Room B102, 1301 Constitution Avenue, NW, Washington, DC. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2008-0708. The EPA's policy is that all comments received will be included in the public docket without change and may be made available on-line at www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through www.regulations.gov or email. The www.regulations.gov website is an "anonymous access" system, which means the EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to the EPA without going through www.regulations.gov, your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, the EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If the EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, the EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses.
Public Meeting: If a public meeting is held, it will be held at the EPA's campus located at 109 T.W. Alexander Drive in Research Triangle Park, NC or an alternate site nearby.
Docket: All documents in the docket are listed in the www.regulations.gov index. The EPA also relies on documents in Docket ID Nos. EPA-HQ-OAR-2002-0059, EPA-HQ-OAR-2005-0029, EPA-HQ-OAR-2005-0030, and EPA-HQ-OAR-2010-0295, and incorporated those dockets into the record for this action. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in www.regulations.gov or in hard copy at the Air and Radiation Docket, EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is<PHONE_NUMBER>, and the telephone number for the Air Docket is<PHONE_NUMBER>.
FOR FURTHER INFORMATION CONTACT: Ms. Melanie King, Energy Strategies Group, Sector Policies and Programs Division (D243-01), Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number<PHONE_NUMBER>; facsimile number<PHONE_NUMBER>; email address<EMAIL_ADDRESS>SUPPLEMENTARY INFORMATION: Organization of This Document. The following outline is provided to aid in locating information in the preamble.
I. General Information
A. Executive Summary
B. Does this action apply to me?
C. What should I consider as I prepare my comments for the EPA?
II. Summary of Proposed Amendments
A. Total Hydrocarbon Compliance Demonstration Option
B. Emergency Demand Response/Peak Shaving
C. Non-Emergency Stationary SI RICE Greater than 500 HP Located at Area Sources
D. Stationary Agricultural RICE in San Joaquin Valley
E. Remote Areas of Alaska
F. Miscellaneous Corrections and Revisions
G. Compliance Date
III. Summary of Environmental, Energy and Economic Impacts
A. What are the air quality impacts?
B. What are the cost impacts?
C. What are the benefits?
D. What are the non-air health, environmental and energy impacts?
IV. Solicitation of Public Comments and Participation
V. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act of 1995
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments
G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks
H. Executive Order 13211: Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution or Use
I. National Technology Transfer and Advancement Act
J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations

I. General Information
A. Executive Summary
1. Purpose of the Regulatory Action
      The purpose of this action is to propose amendments to the national emission standards for hazardous air pollutants (NESHAP) for stationary reciprocating internal combustion engines (RICE) under section 112 of the Clean Air Act (CAA). This proposal was developed to address certain issues that have been raised by different stakeholders through lawsuits, several petitions for reconsideration of the 2010 RICE NESHAP amendments and other communications. This proposal also provides clarifications and corrects minor mistakes in the current RICE NESHAP and revises the new source performance standards (NSPS) for stationary engines, 40 CFR part 60, subparts IIII and JJJJ, for consistency with the RICE NESHAP.
      This action is conducted under the authority of section 112 of the CAA, "Hazardous Air Pollutants," (HAP) which requires the EPA to establish NESHAP for the control of hazardous air pollutants (HAP) from both new and existing sources in regulated source categories.
2. Summary of the Major Provisions of the Regulatory Action
      After promulgation of the 2010 RICE NESHAP amendments, the EPA received several petitions for reconsideration, legal challenges, and other communications raising issues of practical implementability, and certain factual information that had not been brought to the EPA's attention during the rulemaking. The EPA has considered this information and believes that amendments to the rule to address certain of these issues are appropriate. Therefore, the EPA is proposing to amend 40 CFR part 63, subpart ZZZZ, NESHAP for Stationary RICE. The current regulation applies to owners and operators of existing and new stationary RICE at major and area sources of HAP emissions. The applicability of the rule remains the same and is not changed by this proposal. The EPA is also proposing to amend the NSPS for stationary engines to conform with certain of the amendments proposed for the NESHAP.
      The EPA proposes to add an alternative compliance demonstration option for stationary 4-stroke rich burn (4SRB) spark ignition (SI) engines subject to a 76 percent or more formaldehyde reduction. Owners and operators of 4SRB engines would be permitted to demonstrate compliance with the 76 percent formaldehyde reduction emission standard by testing total hydrocarbon (THC) emissions and showing that the engine is achieving at least a 30 percent reduction of THC emissions. The alternative compliance option would provide a less expensive and less complex, but equally effective, method for demonstrating compliance than testing for formaldehyde.
      Certain stationary RICE are maintained in order to be able to respond to emergency power needs. The EPA proposes to allow owners and operators of such stationary emergency RICE to operate their engines as part of an emergency demand response program within the 100 hours per year that is already permitted for maintenance and testing of the engines. The 100 hours per year allowance would ensure that a sufficient number of hours are permitted for engines to meet independent system operator (ISO) and regional transmission organization (RTO) tariffs and other requirements for participating in various emergency demand response programs and would assist in stabilizing the grid, preventing electrical blackouts and supporting local electric system reliability. A temporary limited allowance that will expire on April 16, 2017 (the date by which full compliance with the NESHAP From Coal and Oil-Fired Electric Utility Steam Generating Units (77 FR 9304) is expected), is being proposed for stationary emergency engines located at area sources of HAP emissions to be used for up to 50 hours per year for any non-emergency purpose, including peak shaving. The 50 hours is part of the 100 hours per year total allowance for all types of emergency engine operation (except during emergencies where no other power is available, which is not restricted by the rule). The temporary allowance for peak shaving would give sources time to address reliability issues and develop solutions to reliability issues while facilities are coming into compliance with the National Emission Standards for Hazardous Air Pollutants From Coal and Oil-Fired Electric Utility Steam Generating Units, which were promulgated on February 16, 2012 (77 FR 9304).
	The EPA proposes management practices for owners and operators of existing stationary 4-stroke SI engines above 500 horsepower (HP) that are area sources of HAP emissions and where the engines are remote from human activity. A remote area is defined as either a Department of Transportation (DOT) Class 1 pipeline location, or, if the facility is not on a pipeline, if within a 0.25 mile radius of the facility there are 5 or less buildings intended for human occupancy. The 0.25 mile radius was chosen as the area would be similar to the area used for the DOT pipeline Class location. The EPA proposes that these sources be subject to management practices rather than numeric emission limits and associated testing and monitoring. This would address reasonable concerns with accessibility, infrastructure, and staffing that stem from the remoteness of the engines and higher costs that would be associated with compliance with the existing requirements. The EPA proposes that existing stationary 4-stroke SI engines above 500 HP at area sources that are in populated areas (defined as not in DOT pipeline Class 1 areas, or if not on a pipeline, if within a 0.25 mile radius of the facility there are more than 5 buildings intended for human occupancy) be subject to an equipment standard that requires the installation of HAP-reducing aftertreatment. The EPA has the discretion to set an equipment standard as GACT for engines located at area sources of HAP. Sources would be required to test their engines to demonstrate compliance initially, perform catalyst activity check-ups, and either monitor the catalyst inlet temperature continuously or employ high temperature shutdown devices to protect the catalyst.
      To address how certain existing compression ignition (CI) engines are currently regulated, the EPA proposes to specify that any existing certified CI engine above 300 HP at an area source of HAP emissions that was certified to meet the Tier 3 engine standards and was installed before June 12, 2006, is in compliance with the NESHAP. This provision would create regulatory consistency between the same engines installed before and after June 12, 2006. Engines at area sources of HAP for which construction commenced before June 12, 2006, are considered existing engines under the NESHAP.
      The EPA is proposing amendments to the requirements for existing stationary Tier 1 and Tier 2 certified CI engines located at area sources that are subject to state and locally enforceable requirements requiring replacement of the engine by June 1, 2018. This is meant to deal with a specific concern regarding the interaction of the NESHAP with certain rules for agricultural engines in the San Joaquin Valley in California. The EPA is proposing to allow these engines to meet management practices under the RICE NESHAP from the May 3, 2013 compliance date until January 1, 2015, or 12 years after installation date, but not later than June 1, 2018. This provision would deal with the issue of owners and operators having to install controls on their engines in order to meet the RICE NESHAP, and then having to replace their engines shortly thereafter due to state and local rules specifying the replacement of engines. Owners and operators will have additional time to replace their engines without having to install controls, but will be required to use management practices during that period.
      The last major change the EPA proposes to make is to broaden the definition of remote area sources of Alaska in the RICE NESHAP. Currently, remote areas are those that are not on the Federal Aid Highway System (FAHS). This change would permit existing stationary CI engines at other remote area sources in Alaska to meet management practices as opposed to emission standards likely necessitating aftertreatment. These remote areas have the same challenges as areas not on the FAHS, and complying with the current rule would similarly be prohibitively costly and potentially infeasible. In addition to area sources located in areas of Alaska that are not accessible by the FAHS being defined as remote and subject to management practices, the EPA also proposes that any stationary RICE in Alaska meeting all of the following conditions be subject to management practices:
       (1) The only connection to the FAHS is through the Alaska Marine Highway System (AMHS), or the stationary RICE operation is within an isolated grid in Alaska that is not connected to the statewide electrical grid referred to as the Alaska Railbelt Grid, and
      (2) At least 10 percent of the power generated by the stationary RICE on an annual basis is used for residential purposes, and
      (3) The generating capacity of the area source is less than 12 megawatts, or the stationary RICE is used exclusively for backup power for renewable energy and is used less than 500 hrs per year on a 10 year rolling average.
3. Costs and Benefits
	These proposed amendments would reduce the capital and annual costs of the original 2010 amendments by $287 million and $139 million, respectively. The EPA estimates that with the proposed amendments, the capital cost of the rule is $840 million and the annual cost is $490 million ($2010).
      These proposed amendments would also result in decreases to the emissions reductions estimated in 2013 from the original 2010 RICE NESHAP amendments. The estimated reductions in 2013 from the 2010 RICE NESHAP rulemaking with these proposed amendments are 2,800 tons per year (tpy) of HAP, 36,000 tpy of carbon monoxide (CO), 2,800 tpy of particulate matter (PM), 9,600 tpy of nitrogen oxide (NOx), and 36,000 tpy of volatile organic compounds (VOC). The reductions that were estimated for the original 2010 RICE NESHAP amendments were 7,000 tpy of HAP, 124,000 tpy of CO, 2,800 tpy of PM, 96,000 tpy of NOx, and 58,000 tpy of VOC.
      The EPA estimates the monetized co-benefits in 2013 of the original 2010 RICE NESHAP amendments with these proposed amendments incorporated to be $830 million to $2,100 million (2010 dollars) at a 3-percent discount rate and $740 million to $1,800 million (2010 dollars) at a 7-percent discount rate. The benefits that were estimated for the original 2010 RICE NESHAP amendments were $1,500 million to $3,600 million (2010 dollars) at a 3-percent discount rate and $1,300 million to $3,200 million (2010 dollars) at a 7-percent discount rate.
B. Does this action apply to me?
Regulated Entities. Categories and entities potentially regulated by this action include:
Category
NAICS[1]
Examples of regulated entities
Any industry using a stationary internal combustion engine as defined in the proposed amendments.
2211
Electric power generation, transmission, or distribution.

622110
Medical and surgical hospitals.

48621
Natural gas transmission.

211111
Crude petroleum and natural gas production.

211112
Natural gas liquids producers.

92811
National security.
1 North American Industry Classification System.

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. To determine whether your engine is regulated by this action, you should examine the applicability criteria of this proposed rule. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed in the preceding FOR FURTHER INFORMATION CONTACT section.
C. What should I consider as I prepare my comments for the EPA?
1. Submitting CBI. Do not submit this information to the EPA through regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to the EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. Send or deliver information identified as CBI to only the following address: Ms. Melanie King, c/o OAQPS Document Control Officer (Room C404-02), U.S. EPA, Research Triangle Park, NC 27711, Attention Docket ID No. EPA-HQ-OAR-2008-0708.
2. Tips for Preparing Your Comments. When submitting comments, remember to:
	(a) Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).
	(b) Follow directions. The EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
	(c) Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
	(d) Describe any assumptions and provide any technical information and/or data that you used.
	(e) If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
	(f) Provide specific examples to illustrate your concerns, and suggest alternatives.
	(g) Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
	(h) Make sure to submit your comments by the comment period deadline identified.
Docket. The docket number for this proposed rule is Docket ID No. EPA-HQ-OAR-2008-0708.
World Wide Web (WWW). In addition to being available in the docket, an electronic copy of this proposed rule will be posted on the WWW through the Technology Transfer Network Website (TTN Web). Following signature, the EPA will post a copy of this proposed rule on the TTN's policy and guidance page for newly proposed or promulgated rules at http://www.epa.gov/ttn/oarpg. The TTN provides information and technology exchange in various areas of air pollution control.
II. Summary of Proposed Amendments
	This action proposes amendments to the NESHAP for RICE in 40 CFR part 63, subpart ZZZZ. This action also proposes amendments to the NSPS for stationary engines in 40 CFR part 60, subparts IIII and JJJJ. The NESHAP for stationary RICE to regulate emissions of HAP was developed in several stages. The EPA initially addressed stationary RICE greater than 500 HP located at major sources of HAP emissions in 2004 (69 FR 33473). The EPA addressed new stationary RICE less than or equal to 500 HP located at major sources and new stationary RICE located at area sources in 2008 (73 FR 3568). Most recently, requirements for existing stationary RICE less than or equal to 500 HP located at major sources and existing stationary RICE located at area sources were finalized in 2010 (75 FR 9648 and 75 FR 51570).
	The EPA is proposing to address a number of issues that have been raised by different stakeholders through lawsuits, several petitions for reconsideration of the 2010 RICE NESHAP amendments, and other communications. The EPA is also proposing to revise 40 CFR part 60, subparts IIII and JJJJ for consistency with the RICE NESHAP and to make minor corrections and clarifications. The following sections present the issues that the EPA is addressing in this action, background information as to why these issues are causing concern among affected stakeholders, and how the EPA proposes to resolve the issues.
A. Total Hydrocarbon Compliance Demonstration Option
1. Background
	Currently, SI 4SRB non-emergency engines greater than 500 HP located at major sources and existing SI 4SRB non-emergency engines greater than 500 HP located at area sources have the option of meeting either a formaldehyde percent reduction or a formaldehyde concentration standard. Formaldehyde was established in the original 2004 RICE NESHAP as an appropriate surrogate for HAP emissions from 4SRB engines based on industry test data available at that time. Based on testing of stationary lean burn engines conducted at Colorado State University (CSU), the EPA was able to establish CO as a surrogate for HAP for lean burn engines. Rich burn engines were not tested at CSU and the data the EPA had available at the time that were used to set the standards for rich burn engines did not support the same relationship between CO and HAP reductions for rich burn engines. Therefore, the EPA was unable to establish CO as a surrogate for HAP emissions for rich burn engines and the emission standard for rich burn engines was specified in terms of formaldehyde, the hazardous air pollutant emitted in the largest quantity from stationary engines.
	The EPA has previously acknowledged that it is significantly more expensive and difficult to test for formaldehyde than for CO, but has been unable in the past to support the same flexibility for rich burn engines as is currently in the rule for lean burn engines with the option to meet the standards in terms of either formaldehyde or CO. For these reasons, and expecting that new data for rich burn engines may become available in the future for the EPA to review and reassess possible surrogates for HAP, the EPA requested comment on this issue when proposing NESHAP for stationary existing engines less than or equal to 500 HP at major sources and all stationary existing engines at area sources in 2009 (74 FR 9698). Specifically, the EPA solicited comment on whether it would be appropriate to include an alternative standard in terms of VOC and asked that commenters submit data supporting the relationship between HAP and VOC. Comments the EPA received back on the proposed rule asked that the formaldehyde standards for rich burn engines be replaced with emission standards for THC. The EPA determined at the time that it was not appropriate to adopt an alternative standard in terms of THC (or VOC) for rich burn engines and discussed the reasons why in the 2010 responses to comments. Compliance with the formaldehyde standard in the rule is, therefore, currently demonstrated by initial and continuous performance testing for formaldehyde.
	On October 19, 2010, engine manufacturer Dresser-Waukesha submitted a petition for reconsideration of the formaldehyde requirements. The EPA granted the petition for reconsideration on January 5, 2011. (In addition, on November 3, 2010, the Engine Manufacturers Association submitted a petition for judicial review of these requirements.) In the petition for reconsideration, Dresser-Waukesha argued that formaldehyde is difficult and costly to measure. The petition requested that the HAP surrogate for 4SRB engines should be THC rather than formaldehyde. Dresser-Waukesha submitted data from testing it conducted illustrating that THC reduction across the catalyst is an appropriate surrogate for HAP reduction across the catalyst. According to the petitioner, testing for THC is easier and less costly and would substantially reduce the burden of the rule for owners and operators of these engines. Testing for formaldehyde emissions could cost more than double that of testing for THC emissions and on a nationwide basis the EPA estimates that replacing formaldehyde testing with THC testing would result in substantial compliance cost savings annually while achieving the same reduction in HAP emissions.
      The EPA has reviewed the data submitted by Dresser-Waukesha. The data provided indicate that a strong relationship exists between percentage reductions of THC and percentage reductions of formaldehyde (the surrogate for HAP emissions in the NESHAP) on rich burn engines using non-selective catalytic reduction (NSCR). Data analyzed by the EPA indicate that if the NSCR is reducing THC by at least 30 percent from 4SRB engines, formaldehyde emissions are guaranteed to be reduced by at least 76 percent, which is the percentage reduction required for the relevant engines. Indeed, the percentage reduction of formaldehyde is invariably well above the 76 percent level, and is usually above 90 percent. Therefore, the EPA agrees with the petitioner that for SI 4SRB engines using NSCR and meeting the NESHAP by showing a percentage reduction of HAP, it would be appropriate to allow sources to demonstrate compliance with the NESHAP by showing a THC reduction of at least 30 percent. Including an optional THC compliance demonstration option would reduce the cost of compliance significantly while continuing to achieve the same level of HAP emission reduction because the emission standards would remain the same. Consequently, the EPA is proposing amendments to allow owners and operators of certain stationary 4SRB engines (i.e., the ones currently subject to a formaldehyde percent reduction requirement) to show compliance with an optional THC compliance demonstration option. The specific amendments the EPA is proposing are presented below.
2. Proposed Amendments
	The EPA is proposing to add an alternative method of demonstrating compliance with the NESHAP for stationary 4SRB non-emergency engines greater than 500 HP that are located at major sources of HAP emissions and for existing stationary 4SRB non-emergency engines greater than 500 HP that are located at area sources of HAP emissions that choose to meet the formaldehyde percent reduction requirement of 76 percent or more.
	Based on the arguments and evidence presented in the petition discussed above, the EPA is proposing to add a compliance demonstration option for stationary 4SRB engines meeting a 76 percent or more formaldehyde reduction. The compliance demonstration option would be an alternative to the existing method of demonstrating compliance with the formaldehyde percent reduction standard, which is to test engines for formaldehyde. The alternative for owners and operators of 4SRB engines meeting a 76 percent or more formaldehyde reduction would be to test their engines for THC showing that the engine is achieving at least a 30 percent reduction of THC emissions.
	Under the proposed amendments, existing and new stationary 4SRB engines greater than 500 HP and located at major sources would still be required to reduce formaldehyde emissions by 76 percent or more or limit the concentration of formaldehyde in the stationary RICE exhaust to 350 parts per billion by volume, dry basis or less at 15 percent oxygen (O2). However, owners and operators choosing to meet the formaldehyde concentration limit would not have the THC demonstration compliance option, because EPA could not verify a clear relationship between concentrations of THC and concentrations of formaldehyde in exhaust from these SI 4SRB engines. For the reasons discussed in section II.C.1 of this preamble, the EPA is proposing that existing stationary 4SRB non-emergency engines greater than 500 HP located at area sources located in populated areas be subject to an equipment standard and required to install a catalyst. These engines would be subject to testing to demonstrate initially and on an ongoing basis that the catalyst is reducing CO by 75 percent or more, or alternatively that THC emissions are being reduced by 30 percent or more.
	Owners and operators of existing stationary 4SRB engines less than or equal to 500 HP who are required to limit the concentration of formaldehyde in the stationary RICE exhaust to 10.3 parts per million by volume, dry basis (ppmvd) or less at 15 percent O2 do not have the option to demonstrate compliance using THC and must continue to demonstrate compliance by testing for formaldehyde following the methods and procedures specified in the rule.
	Owners and operators opting to use the THC compliance demonstration method must demonstrate compliance by showing that the average reduction of THC is equal to or greater than 30 percent. Owners and operators of 4SRB stationary RICE complying with the requirement to reduce formaldehyde emissions and demonstrating compliance by using the THC compliance demonstration option must conduct performance testing using Method 25A of 40 CFR part 60, appendix A  -  Determination of Total Gaseous Organic Concentration Using a Flame Ionization Analyzer. Measurements of THC at the inlet and the outlet of the NSCR must be on a dry basis and corrected to 15 percent O2 or equivalent carbon dioxide content. To correct to 15 percent O2, dry basis, owners and operators must measure oxygen using Method 3, 3A or 3B of 40 CFR part 60, appendix A, or ASTM Method D6522-00 (2005) and measure moisture using Method 4 of 40 CFR part 60, appendix A, or Test Method 320 of 40 CFR part 63, appendix A, or ASTM D6348-03. Because owners and operators are complying with a percent reduction requirement, the method used must be suitable for the entire range of emissions since pre and post-catalyst emissions must be measured. Method 25A is capable of measuring emissions down to 5 ppmv and is, therefore, an appropriate method for measuring THC emissions for compliance demonstration purposes. The EPA is allowing sources the option to meet a minimum THC percent reduction of 30 percent by using Method 25A of 40 CFR part 60, appendix A to demonstrate compliance with the formaldehyde percent reduction in 40 CFR part 63, subpart ZZZZ.
B. Emergency Demand Response/Peak Shaving
1. Background
	This action also proposes to amend provisions in the RICE NESHAP that currently allow owners and operators to operate stationary emergency engines for up to 15 hours per year as part of a demand response program if the RTO or equivalent balancing authority and transmission operator have determined there are emergency conditions that could lead to a potential electrical blackout, such as unusually low frequency, equipment overload, capacity or energy deficiency, or unacceptable voltage level. The final rule did not allow emergency engines to be used for purposes of peak shaving or other non-emergency purposes as part of a financial arrangement. These provisions were included in the RICE NESHAP when requirements for existing stationary CI engines were finalized on March 3, 2010 (75 FR 9648). Following the completion of that portion of the rule, the EPA received three main petitions for reconsideration. One petition was from CPower, Inc., EnergyConnect, Inc., EnerNOC, Inc., and Innoventive Power, LLC. (EnerNOC et al.)(EPA-HQ-OAR-2008-0708-0404). Another petition was received from the Delaware Department of Natural Resources and Environmental Control (DE DNREC) (EPA-HQ-OAR-2008-0708-0400). The third petition was from the National Rural Electric Cooperative Association (NRECA) (OAR-2008-0708-0580). In addition to these main petitions the EPA received a substantial number of letters from others in the electric generation industry.
	The petition from EnerNOC, et al., asked that EPA increase the period of time permitted for emergency demand response operation in the rule to 60 hours per year, or the minimum number of hours required by the emergency demand response program. By contrast, the DE DNREC petition asked EPA to reconsider the emergency demand response provision because of the adverse effects that it believes would result from increased emissions from these engines. The petition from NRECA requested that the EPA eliminate the restriction on the use of stationary emergency engines for demand response purposes. The EPA granted the petitions from EnerNOC, et al., DE DNREC and NRECA, and issued a notice on December 7, 2010 (75 FR 75937), requesting comments on whether to amend the 15 hours per year limitation on the operation of stationary emergency RICE participating in emergency demand response programs.
      The EPA received more than 120 comments from a number of different entities including various state agencies, utilities, electric cooperatives and industry organizations. Many commenters expressed that 15 hours per year is not sufficient to meet current emergency demand response requirements for participation. For example, several emergency demand response programs have ISO tariff requirements greater than 15 hours per year, including the Electric Reliability Council of Texas emergency demand response program, which has a tariff requirement of 24 hours per year; the Pennsylvania Jersey Maryland ("PJM") Interconnection, known as the Emergency Load Response Program, which has a tariff requirement of 60 hours per year; and the ISO New England ("ISO-NE"), which forecasts that backup resources would be expected for 55 hours over a 12-month period. Tariff requirements are developed to specify the mandatory time load resources (engines) must be willing and able to operate if the units are enrolled in the program. Conversely, some commenters urged the EPA to allow stationary emergency engines to only operate during true emergencies or when voltage or frequency varies beyond specified parameters.
	Based on the EPA's review of the petitions and comments that the EPA has received, the EPA has found it appropriate to propose to amend the current rule to increase the allowance for stationary emergency engine participation in emergency demand response programs to up to 100 hours per year, which would be included as part of the pre-existing allowance of 100 hours for owners of emergency engines to test and maintain their emergency engines. The EPA believes that the emergency demand response programs that exist across the country are important programs that protect the reliability and stability of the national electric service grid. Allowing stationary emergency engines to operate as part of emergency demand response programs can help prevent grid failure or blackouts, by allowing these engines to be used in circumstances of grid instability prior to the occurrence of blackouts. Preventing stationary emergency engines from being able to qualify and participate in emergency demand response programs without having to apply aftertreatment could force owners and operators to leave their engines out of these programs, which will impair the ability of ISOs and RTOs to use these relatively small, quick-starting and reliable sources of energy to protect the reliability of their systems. The EPA does not wish to potentially jeopardize electrical reliability or create a disincentive for stationary emergency engines to participate in these programs. The circumstances during which the EPA would allow stationary emergency engines to operate for emergency demand response purposes include periods during which the regional transmission authority or equivalent balancing authority and transmission operator has declared an Energy Emergency Alert Level 2 (EEA Level 2) as defined in the North American Electric Reliability Corporation Reliability Standard EOP-002-3, Capacity and Energy Emergency, plus during periods where there is a deviation of voltage or frequency of 5 percent or more below standard voltage or frequency. During EEA Level 2 alerts there is insufficient energy supply and a true potential for electrical blackouts. System operators must call on all available resources during EEA Level 2 alerts in order to stabilize the grid to prevent failure. Therefore, this situation is a good indicator of severe instability on the system. Consistent normal voltage provided by the utility is often called power quality and is an important factor in local electric system reliability. Reliability of the system requires electricity being provided at a normal expected voltage. The American National Standards Institute standard C84.1-1989 defines the maximum allowable voltage sag at below 5 percent. On the local distribution level local voltage levels are therefore important and a 5 percent or more change in the normal voltage or frequency is substantial and an indication that additional resources are needed to ensure local distribution system reliability. This situation would be indicative of severe instability on the system. The EPA has revised the language identifying the emergency conditions that currently appears at 40 CFR 63.6640(f) because that language is not as specific as the newly proposed language. The EPA believes that the newly proposed language, along with the preexisting language in the definition of emergency engine describing non-demand response emergency situations, will address all emergency events, including all those that would be recognized solely by the local system operators, such as local weather events. The EPA requests comments on the scope of the new language.
      Emergency demand response programs rely on agreements under which owners of engine agree to make their engines available to be called upon for a specific number of hours per year, as required by the relevant ISO or RTO tariff, under specified circumstances considered to indicate emergencies. In order to be enrolled in an emergency demand response program, participants must qualify their engines and must be able to use their emergency engines for the number of hours the program requires. Engines are not generally called upon for the maximum hours required by the tariffs. However, even though the engine may not be called at all or may run for fewer hours than the program requires it to be available in a particular year, the engine must still be available for those theoretical number of hours in order to join the program. Demand response contracts require more hours than the 15 hours per year that is currently in the regulations, and the commenters state that the 15 hours per year is not a sufficient amount of time to ensure the reliability of the program; some programs require up to 60 hours per year, as discussed earlier in this preamble. For these reasons, the EPA believes it is appropriate to allow additional hours for emergency demand response operation in order for such programs to be accessible to stationary emergency engines. Consequently, the EPA is proposing amendments to the rule to increase the limitation on emergency demand response operation to 100 hours per year for stationary emergency engines. It is expected that owners and operators of stationary emergency engines that seek to qualify their units as demand resources would with the proposed increase to 100 hours per year be able to meet the operational and qualification requirements of the different ISOs and RTOs in the country.
      As stated, stationary emergency engines that participate in demand response programs may not be called upon at all, but must nonetheless be available to operate for the required amount stipulated by the specific program. The purpose of the limited allowance for emergency demand response is to respond to emergencies, and the EPA is persuaded by the information that has been submitted that 15 hours per year is an insufficient amount of time to allow for emergency demand response needs, given past experience. The EPA believes 100 hours per year is sufficient to cover any potential demand response operation as well as the required maintenance and testing that is also included within the 100 hours of operation.
      The EPA has previously determined that stationary emergency engines typically operate well below 50 hours per year and more commonly about 1 to 2 hours per month. A survey conducted by the California Air Resources Board (CARB) indicated the average yearly operation for emergency diesel engines was 31 hours over a period of 3 years. The majority of those hours were for the purpose of maintenance and testing; less than 5 hours was for interruptible service contracts, and the remaining amount for emergency/standby operation (EPA-HQ-OAR-2005-0029-0011). Data from demand response programs in ISO-NE and PJM territories show that backup generation was dispatched for less than 30 hours during the summers of 2008, 2009 and 2010.
      However, again, emergency units must be available to operate more than that in most cases to qualify for demand response programs. For instance, PJM requires a minimum ISO tariff of 60 hours per year of engine availability for program participation. Consequently, in order to ensure that a sufficient amount of operating time is available for maintenance and readiness testing, and for demand response operation, the EPA is proposing 100 hours of operation. A number of commenters requested that an allowance of 100 hours per year be allowed in order to provide adequate hours consistent with minimum required hours that customers must be available to operate and to address local distribution system emergencies. For instance, in Hawaii, the emergency demand response program operated by the Hawaiian Electric Company requires that emergency engines be able to operate for 100 hours per year in the event of an emergency in order to participate in the program. In order to provide a sufficient amount of time to cover annual maintenance and testing, which is typically more than 20 hours per year according to the survey conducted by CARB (see EPA-HQ-OAR-2005-0029-0011), plus to cover hours necessary for qualifying for emergency demand response programs or local distribution system emergencies, EPA believes an allowance of 100 hours per year would be appropriate for these activities. Taking into account that there may be situations where annual maintenance and testing could exceed the typical 1 to 2 hours per month and accounting for other emergency demand response programs that require more than 60 hours per year for program participation (e.g., the Hawaiian Electric Company), the EPA believes that 100 hours per year is appropriate for emergency demand response plus maintenance and testing.
      The proposed amendment to the rule would mean that stationary emergency engines could operate for a total of 100 hours per year for emergency demand response operation as part of the 100 hours already permitted for maintenance and readiness testing while maintaining their status as emergency units, rather than non-emergency units, and continue to meet the requirements that apply to emergency engines.
	On the issue of peak shaving and non-emergency demand response, the EPA is proposing to include a temporary limited allowance for peak shaving and other types of non-emergency use as part of a financial arrangement for existing stationary emergency engines at area sources of HAP, if the peak shaving is done as part of a peak shaving (or load management) program with the local distribution system operator. The power generated under this allowance can only be used at the facility or towards the local system.
	The EPA has determined that it is appropriate to include the option for existing stationary emergency engines at area sources to operate for a small number (50) of hours per year for any non-emergency reason and not be penalized or considered a non-emergency engine and subsequently required to install aftertreatment that could be prohibitively costly for these sources in the near term. The EPA is proposing that the 50-hour allowance for peak shaving for emergency engines at area sources be allowed for a limited period of time, but then removed after April 16, 2017. The peak shaving would also be limited to operation as part of a peak shaving (load management program) with the local distribution system operator. Owners would still have the pre-existing 50 hours per year allowance for non-emergency operation after April 16, 2017, but those 50 hours could no longer be used for peak shaving. The temporary allowance for peak shaving would give sources an additional resource for maintaining reliability while facilities are coming into compliance with the NESHAP From Coal and Oil-Fired Electric Utility Steam Generating Units (77 FR 9304). While the EPA does not expect the NESHAP From Coal and Oil-Fired Electric Utility Steam Generating Units to cause regional reliability problems, this limited allowance would allow the owners and operators of these engines more flexibility to run reliability critical units in order to minimize potential grid-related interruptions as coal- and oil-fired baseload power plants may be temporarily shut down to install emission controls to comply with the NESHAP From Coal and Oil-Fired Electric Utility Steam Generating Units.
	Including this allowance is important for small electric cooperatives and other entities located at area sources that use these engines to maintain voltage and electric reliability. Many rural electric cooperatives enter agreements with owners of small emergency engines and rely on the engines to reduce demand on the central power supply during periods of high demand, which reduces the cost of power during periods of high demand for the members of the cooperative. Commenters promoting the continued use of peak shaving programs said that maintaining the cost of power as low as possible is important across the country, but is particularly of significant importance to rural electric cooperatives that, according to the commenter, service customers in the most economically depressed areas of the country, where options are the most limited. The commenters argued that if small emergency engines would no longer be permitted to operate for peak shaving purposes without having to be reclassified as non-emergency engines and subsequently subject to costly emissions controls, owners could no longer afford to participate in such programs. Cooperatives argued that this would lead to increased costs that would ultimately be passed along to the customers. Commenters also maintained that keeping peak shaving programs would not lead to additional public health risks or emissions because the operation for peak shaving is minimal. If peak shaving is not allowed under the rule, commenters said that this would lead to an increase in central power station capacity and possibly more transmission and distribution line capacity to accommodate the increase in demand resulting from eliminating small emergency engines from being used. This could lead to a larger impact on the environment and public health than allowing a small number of hours for peak shaving purposes. Certain small and remote facilities also rely on financial programs to generate additional income in order to maintain their engines and stay in operation. The additional funds can be essential for many smaller facilities and operations. Providing a limited allowance for peak shaving and non-emergency demand response could generate sufficient income to prevent small facilities and owners from ceasing operation where these engines are in service. In order to further limit the operation of these engines to small, remote facilities, the EPA is proposing that the power generated under this allowance can only be used at the facility or towards the local system. In addition, while the EPA is proposing this allowance until the end of April 16, 2017, the EPA does not believe it is appropriate to continue the program beyond that time. Generators receive considerable compensation for their availability in peak shaving programs and the EPA believes that it is not appropriate to allow these engines to continue receiving compensation for this non-emergency use beyond 2017 without having to reduce their emissions. The generators must by that time decide whether to restrict their use to emergency or limited non-compensated non-emergency use or to reduce the emissions from their engines. The EPA also encourages engine owners and operators, as well as larger system planners, to consider the use of alternative peak shaving options, such as load curtailments, lower emitting distributed generation, combined heat and power, and reduced line losses on the electricity grid.
      The previous estimate of emissions from stationary emergency engines is not expected to change due to this proposed limited allowance. To estimate emissions from stationary emergency engines, the EPA has previously estimated that emergency engines would on average operate for 50 hours per year. There is a wide range in how much these engines operate (some well below 50 hours per year), but on average and to be conservative, the EPA believes that 50 hours per year is still representative and consequently the environmental impact the EPA has calculated previously remains appropriate. In consideration of all these issues, the EPA is proposing amendments to the rule to provide a limited allowance for peak shaving for existing stationary emergency engines at area sources of HAP. The specific amendments the EPA is proposing are discussed below.
2. Proposed Amendments
a. Emergency Demand Response. Based on the discussion in section II.B.1 of this preamble, the EPA is proposing to revise the current provisions for stationary engines used for emergency demand response operation. The provisions the EPA is proposing to amend are in §§63.6640(f) and 63.6675 of 40 CFR part 63, subpart ZZZZ. Currently, §63.6640(f)(1)(iii) allows a maximum of 15 hours per year to be spent towards demand response operation under certain qualifying conditions. Also, §63.6640(f)(1)(ii) currently includes an allowance of 100 hours per year for purposes of maintenance checks and readiness testing. The EPA is proposing that owners and operators of stationary emergency RICE be permitted to operate their engines as part of an emergency demand response program within the 100 hours per year that is permitted for maintenance and testing in §63.6640(f)(1)(ii). Owners and operators of stationary emergency engines can operate for emergency demand response during periods in which the regional transmission authority or equivalent balancing authority and transmission operator has declared an EEA Level 2 as defined in the North American Electric Reliability Corporation Reliability Standard EOP-002-3, Capacity and Energy Emergency and during periods where there is a deviation of voltage or frequency of 5 percent or greater below standard voltage or frequency. The hours spent for emergency demand response operation are added to the hours spent for maintenance and testing purposes and counted towards the 100 hours per year. If the total time spent for demand response operation and maintenance and testing exceeds 100 hours per year the engine will not be considered an emergency engine under this subpart and will need to meet all requirements for non-emergency engines. The EPA is recognizing that these engines may be called to operate not only by the regional transmission operator or equivalent to maintain the reliability of the bulk power system, but also by the local transmission and distribution system operators to support the local power systems.
	For stationary emergency engines above 500 HP that were installed prior to June 12, 2006, there is currently no emergency demand response allowance and there is no time limit on the use of emergency engines for routine testing and maintenance in §63.6640(f)(2)(ii). Those engines were not the focus of the 2010 RICE NESHAP amendments; therefore, the EPA did not make any changes to the requirements for those engines as part of the 2010 amendments. For consistency, the EPA is now also proposing that owners and operators of stationary emergency engines installed prior to June 12, 2006, be permitted to operate their engines as part of a demand response program as well for a total of 100 hours per year, including time spent for maintenance and testing.
	The EPA is also proposing to amend the NSPS for stationary CI and SI engines in 40 CFR part 60, subparts IIII and JJJJ, respectively, to provide the same allowance for stationary emergency engines for emergency demand response operation as for engines subject to the RICE NESHAP. The NSPS regulations currently do not include such an allowance for emergency demand response operation. For the reasons discussed in section II.B of this preamble as to why the EPA finds it appropriate to allow stationary emergency engines to participate in emergency demand response programs and remain being considered emergency units, and for consistency across engine regulations, the EPA is proposing to add an emergency demand response allowance under the NSPS regulations. Consequently, the EPA is proposing to revise the existing language in §§60.4211(f) and 60.4219 of 40 CFR part 60, subpart IIII, and §§60.4243(d) and 60.4248 of 40 CFR part 60, subpart JJJJ, to specify that emergency engines may participate in demand response programs for up to 100 hours per year, including hours spent towards maintenance and testing of the emergency engines.
b. Peak Shaving and other Non-emergency Use as Part of a Financial Arrangement. In addition to the changes the EPA is proposing related to emergency demand response operation, the EPA is also including a further provision for owners and operators of existing stationary emergency RICE located at area sources for the reasons discussed in section II.B.1 of this preamble. Paragraph §63.6640(f) currently allows owners and operators of emergency stationary RICE to operate their engine for 50 hours per year in non-emergency situations. As currently written, the 50 hours per year for non-emergency situations cannot be used for peak shaving 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; except that owners and operators of certain emergency engines may operate the engine for a maximum of 15 hours per year as part of an emergency demand response program. As discussed, the 15 hours per year allowance for emergency engines to participate in emergency demand response programs is being increased to 100 hours per year, but will also include hours spent towards maintaining and conducting readiness testing of the emergency engines. However, additionally, the EPA is also proposing that stationary emergency engines located at area sources be permitted to apply the 50 hours per year that is currently allowed under §63.6640(f) for non-emergency operation towards any non-emergency operation, including operation as part of a financial agreement with another entity. The peak shaving allowance would expire in 2017. The EPA is specifying that the power can only be used at the facility or towards the local system, and the engine can only be operated for peak shaving as part of a program with the local distribution system operator. The EPA is also clarifying that an engine that exceeds the calendar year limitations on non-emergency operation, including emergency demand response or peak shaving, will be considered a non-emergency engine and subject to the requirements for non-emergency engines for the remaining life of the engine.
C. Non-Emergency Stationary SI RICE Greater than 500 HP Located at Area Sources
1. Background
	The EPA is also proposing to amend the requirements that apply to existing stationary non-emergency 4 stroke SI RICE greater than 500 HP located at area sources of HAP emissions, which are generally natural gas fired engines. Currently, the RICE NESHAP requires owners and operators of such engines to 1) either meet a CO concentration limit of 47 parts ppmvd at 15 percent O2 or reduce emissions of CO by 93 percent or more, if the engines are 4SLB; and 2) to meet a formaldehyde concentration limit of 2.7 ppmvd at 15 percent O2 or reduce formaldehyde emissions by 76 percent or more, if the engines are 4SRB. In both cases, the EPA expects that the standards would be met using aftertreatment; oxidation catalysts for 4SLB engines and NSCR for 4SRB engines. In addition to these emission requirements, owners and operators of existing stationary 4-stroke engines greater than 500 HP at area sources are also subject to monitoring, testing, recordkeeping and reporting requirements.
      After the final requirements for existing stationary SI engines greater than 500 HP at area sources were published on August 20, 2010 (75 FR 51570), the EPA received petitions from Exterran (EPA-HQ-OAR-2008-0708-0581), the American Petroleum Institute (EPA-HQ-OAR-2008-0708-0582), the Interstate Natural Gas Association of America (EPA-HQ-OAR-2008-0708-0584), and the Gas Processors Association (EPA-HQ-OAR-2008-0708-0587) requesting that the EPA reconsider the requirements of the final rule. The petitioners expressed many similar concerns. As relevant to this rulemaking, petitioners stated that the EPA did not take into account the difference in population density and subsequently did not consider the difference in health impacts in remote versus more heavily populated locations. In the petitioners' opinion, there should be less concern about engines that are located farther away from people; the petitioners believed that the EPA has substantial latitude in requiring less stringent standards for owners and operators of stationary engines in remote areas.
	While the EPA does not share all of the views of the petitioners regarding the difference between engines based on their location, the EPA does believe that it is reasonable to create a subcategory of existing stationary SI 4SLB and 4SRB engines above 500 HP located in areas remote from human activity. Engines located in remote areas that are not close to significant human activity may be difficult to access, may not have electricity or communications, and may be unmanned most of the time. The costs of the emission controls, testing, and continuous monitoring requirements may be unreasonable when compared to the HAP emission reductions that would be achieved, considering that the engines are in sparsely populated areas. The EPA believes that establishing a subcategory for SI engines at area sources of HAP located in sparsely populated areas accomplishes the agency's goals and is adequate in protecting public health.
	The EPA is proposing to subcategorize sparsely populated engines using criteria based on the existing DOT classification system for natural gas pipelines. This system classifies locations based on their distance to natural gas pipelines covered by the Pipeline and Hazardous Materials Safety Administration safety regulations. The DOT system defines a class location unit as an onshore area that extends 220 yards or 200 meters on either side of the centerline of any continuous 1-mile (1.6 kilometers) length of natural gas pipeline. The DOT approach further classifies pipeline locations into Class 1 through Class 4 locations based on the number of buildings intended for human occupancy. A Class 1 location is defined as an offshore area or any class location unit that has 10 or fewer buildings intended for human occupancy. The DOT classification system also has special provisions for locations that lie within 100 yards (91 meters) of either a building or a small, well-defined outside area (such as a playground, recreation area, outdoor theater, or other place of public assembly) that is occupied by 20 or more persons on at least 5 days a week for 10 weeks in any 12-month period. To be considered remote under this proposal, a source could not fall under this special provision and, in addition, must be in a Class 1 location. The EPA requests comment on whether engines located in class location units where buildings with four or more stories above ground are prevalent (Class 4 areas under the DOT classification system) should also specifically not be considered remote.
      Stakeholders from the oil and gas industry have indicated to the EPA that the DOT system is well-established and there would be substantial overlap between engines on natural gas pipelines affected by the rule and covered by the DOT pipeline classification system. Incorporating this approach would also create harmonization between the EPA and DOT and would reduce the implementation and enforcement burden for states. Implementation for affected sources would also be less burdensome because the system is already in place and used by the natural gas pipeline industry and covers the majority of these engines. Stakeholders have indicated they are required to review the class location status of natural gas pipeline segments annually. The EPA believes this approach is reasonable for defining the subcategory of remote engines for those engines that are associated with natural gas pipelines. For those engines not associated with pipelines, the EPA is using similar criteria. An engine would be considered to be in sparsely populated areas if within 0.25 mile radius of the engine there are 5 or fewer buildings intended for human occupancy. EPA requests comment on whether, to be considered remote, an engine not associated with a natural gas pipeline should also need to be farther than 100 yards (91 meters) of either a building or a small, well-defined outside area (such as a playground, recreation area, outdoor theater, or other place of public assembly) that is occupied by 20 or more persons on at least 5 days a week for 10 weeks in any 12-month period.
      The EPA is proposing management practices as generally available control technologies for existing stationary SI 4SLB and 4SRB area source non-emergency engines located in sparsely populated areas. Given the remote location of the engines from human activity, the EPA believes that it is appropriate not to include requirements that would necessitate aftertreatment and extensive testing and monitoring. The EPA has previously estimated that the costs of oxidation catalyst for existing 4SLB and 4SRB engines above 500 HP at area sources are $310 and $150 million, for capital and annual costs, respectively. The capital and annual costs of the RICE NESHAP for existing 4SLB and 4SRB engines above 500 HP at area sources would be $30 million and $12 million, respectively, if these proposed amendments are incorporated into the rule. Creating a subcategory of these engines for the ones located in sparsely populated areas and not mandating emission controls would significantly reduce the cost of the rule for such engines.
      For existing stationary SI 4SLB and 4SRB area source non-emergency engines that are located in populated areas, the EPA is proposing an equipment standard that requires the installation and operation of a catalyst that will have to be tested initially and annually to ensure that the catalyst is working properly and reducing emissions as required. In addition, these units will be required to have devices to shut down the engine if the catalyst is exposed to dangerous temperatures or have continuous monitoring equipment installed to record catalyst inlet temperatures. The EPA is proposing shorter test duration and less rigorous methods than currently required while still ensuring that HAP reductions remain at expected levels for these engines located in populated areas. The specific amendments the EPA is proposing are discussed below.
2. Proposed Amendments
	 Owners and operators of engines in sparsely populated areas would have to conduct a review of the surrounding area every 12 months to determine if the nearby population has changed. If the engine no longer meets the criteria for a sparsely populated area the owner and operator must within 1 year comply with the emission standards specified below for populated areas. The EPA requests comment on whether engines that are not associated with pipelines should be required to conduct the review less frequently than every 12 months.
      Owners and operators of existing stationary 4SLB and 4SRB greater than 500 HP at area sources that are in sparsely populated areas as described above would be required to perform the following:
   * Change oil and filter every 1,440 hours of operation or annually, whichever comes first;
   * Inspect spark plugs every 1,440 hours of operation or annually, whichever comes first, and replace as necessary; and
   * Inspect all hoses and belts every 1,440 hours of operation or annually, whichever comes first, and replace as necessary.
Sources have the option to use an oil analysis program as described in §63.6625(i) of the rule in order to extend the specified oil change requirement. The oil analysis must be performed at the same frequency specified for changing the oil in Table 2d of the rule. The analysis program must at a minimum analyze the following three parameters: Total Acid Number, viscosity, and percent water content. The condemning limits for these parameters are as follows: Total Acid Number increases by more than 3.0 milligrams of potassium hydroxide per gram from Total Acid Number of the oil when new; viscosity of the oil has changed by more than 20 percent from the viscosity of the oil when new; or percent water content (by volume) is greater than 0.5. If all of these condemning limits are not exceeded, the engine owner or operator is not required to change the oil. If any of the limits are exceeded, the engine owner or operator must change the oil within 2 days of receiving the results of the analysis; if the engine is not in operation when the results of the analysis are received, the engine owner or operator must change the oil within 2 days or before commencing operation, whichever is later. The owner or operator must keep records of the parameters that are analyzed as part of the program, the results of the analysis, and the oil changes for the engine. The analysis program must be part of the maintenance plan for the engine.
	Owners and operators of existing stationary 4SLB and 4SRB area source engines above 500 HP in sparsely populated areas would also have to operate and maintain the stationary RICE and aftertreatment control device (if any) according to the manufacturer's emission-related written instructions or develop their own maintenance plan which must provide to the extent practicable for the maintenance and operation of the engine in a manner consistent with good air pollution control practice for minimizing emissions.
	For engines in populated areas, i.e., existing stationary 4SLB and 4SRB non-emergency engines greater than 500 HP at area sources that are located on DOT Class 2 through Class 4 pipeline segments or, for engines not associated with pipelines, that do not meet the 0.25 mile radius with 5 or less buildings criteria, the EPA is proposing to adopt an equipment standard requiring the installation of a catalyst to reduce HAP emissions. Owners and operators of existing area source 4SLB non-emergency engines greater than 500 HP in populated areas would be required to install an oxidation catalyst. Owners and operators of existing area source 4SRB non-emergency engines greater than 500 HP in populated areas would be required to install NSCR. Owners and operators must conduct an initial test to demonstrate that the engine achieves at least a 93 percent reduction in CO emissions or a CO concentration level of 47 ppmvd at 15 percent O2, if the engine is a 4SLB engine. Similarly, owners and operators must conduct an initial performance test to demonstrate that the engine achieves at least a 75 percent CO reduction or a 30 percent THC reduction, if the engine is a 4SRB engine. The initial test must consist of three test runs. Each test run must be of at least 15 minute duration, except that each test run conducted using the proposed appendix A to 40 CFR part 63, subpart ZZZZ must consist of one measurement cycle as defined by the method and include at least 2 minutes of test data phase measurement. To measure CO, emission sources must use the CO methods already specified in subpart ZZZZ, or the proposed appendix A to 40 CFR part 63, subpart ZZZZ. The THC testing must be conducted using EPA Method 25A.
	The owner or operator of both engine types must also use a high temperature shutdown device that detects if the catalyst inlet temperature is too high, or, alternatively, the owner or operator can monitor the catalyst inlet temperature continuously and maintain the temperature within the range specified in the rule. For 4SLB engines the catalyst inlet temperature must remain at or above 450°F and at or below 1,350°F. For 4SRB engines the temperature range must be greater than or equal to 750°F and less than or equal to 1,250°F at the catalyst inlet.
      Owners and operators must in addition to the initial performance test conduct annual checks of the catalyst to ensure proper catalyst activity. The annual check of the catalyst must at a minimum consist of one 15-minute run using the methods discussed above, except that each test run conducted using the proposed appendix A to 40 CFR part 63, subpart ZZZZ must consist of one measurement cycle as defined by the method and include at least 2 minutes of test data phase measurement. Owners and operators of 4SLB engines must demonstrate during the catalyst activity test that the catalyst achieves at least a 93 percent reduction in CO emissions or that the engine exhaust CO emissions are no more than 47 ppmvd at 15 percent O2. Owners and operators of 4SRB engines must demonstrate that their catalyst is reducing CO emissions by 75 percent or more, or alternatively, that THC emissions are being reduced by at least 30 percent during the catalyst activity check.
      If the emissions from the engine do not exceed the levels required for the initial test or annual checks of the catalyst, then the catalyst is considered to be working properly. If the emissions exceed the specified pollutant levels in the rule, the exceedance(s) is/are not considered a violation, but the owner or operator would be required to shut down the engine and take appropriate corrective action (e.g., repairs, clean or replace the catalyst, as appropriate). A follow-up test must be conducted within 7 days of the engine being started up again to demonstrate that the emission levels are being met. If the retest shows that the emissions continue to exceed the specified levels, the stationary RICE must again be shut down as soon as safely possible, and the engine may not operate, except for purposes of start-up and testing, until the owner/operator demonstrates through testing that the emissions do not exceed the levels specified.
D. Stationary Agricultural RICE in San Joaquin Valley
      In the 2010 amendments to the RICE NESHAP, the EPA required existing non-emergency CI engines above 300 HP to meet a standard of either 70 percent reduction of CO emissions or 49 ppmvd CO, for engines between 300 and 500 HP, or 23 ppmvd CO for engines above 500 HP. The requirements also included testing and monitoring provisions. As with all requirements for existing engines in that rule, owners and operators were required to meet the requirements within 3 years of the effective date of the regulations (May 3, 2013).
      Since the finalization of the rule for existing stationary CI engines, stakeholders from the agricultural industry in the San Joaquin Valley area of California have expressed concern regarding the effect of certain of these requirements on engines in the San Joaquin Valley. The San Joaquin Valley Air Pollution Control District (APCD) has indicated that there are 17 stationary CI engines at area sources in San Joaquin Valley certified to the Tier 3 standards in 40 CFR part 89 that were installed between January 1 and June 12, 2006. Under the NESHAP, stationary CI engines at area sources are existing if construction of the engine commenced prior to June 12, 2006. These 17 Tier 3 engines in the San Joaquin Valley, which were built to meet stringent emission standards, would not be able to comply with the applicable RICE NESHAP emission standards for existing engines without further testing and monitoring, and possible retrofit with further controls, due to differences in the emission standards and testing protocols in the RICE NESHAP versus the Tier 3 standards in 40 CFR part 89. However, an identical engine certified to the Tier 3 standards (or Tier 2 standards for engines above 560 kilowatts (kW)) in 40 CFR part 89 that was installed after June 12, 2006, would not have to be retrofit in order to comply with the NESHAP. Stationary CI engines installed after June 12, 2006, at area sources of HAP are required to comply with the NSPS for stationary CI engines, which requires engines to be certified to the standards in 40 CFR parts 89, 94, 1039, and 1042, as applicable. Thus, a 2006 model year stationary CI engine installed after June 12, 2006, that is certified to the applicable standards would meet the requirements of the NESHAP without further controls or testing. While the EPA does not know if other certified Tier 3 engines besides these 17 engines in the San Joaquin Valley were installed prior to June 12, 2006, EPA believes the same rationale should apply to any such engine.
      The EPA believes that the Tier 3 standards (Tier 2 for engines above 560 kW) are technologically stringent regulations and believes it is unnecessary to require further regulation of engines meeting these standards. Engines meeting the Tier 3 standards typically employed emission control technologies such as combustion optimization and better fuel control to meet the Tier 3 standards. In order to address the concerns raised by the engine owners in the San Joaquin Valley, the EPA is proposing changes to amend the requirements for any certified Tier 3 (Tier 2 for engines above 560 kW) stationary CI engine located at an area source and installed before June 12, 2006. The EPA is proposing amendments to specify that any existing certified Tier 3 (Tier 2 for engines above 560 kW) CI engine that was installed before June 12, 2006, is in compliance with the NESHAP. This amendment would include any existing stationary Tier 3 (Tier 2 for engines above 560 kW) certified CI engine located at an area source of HAP emissions.
	Another concern brought to the EPA's attention by the San Joaquin Valley agricultural industry is that due to state and local requirements in the San Joaquin Valley, many of the Tier 1 and Tier 2 stationary CI engines that are regulated as existing sources under the NESHAP must be replaced in the next few years, only a short time after the emission standards for existing engines must be met. Specifically, the San Joaquin Valley APCD rule for internal combustion engines (Rule 4702) requires Tier 1 and Tier 2 certified engines to meet Tier 4 standards by January 1, 2015, or 12 years after the installation date, but no later than June 1, 2018. The concern is that owners and operators of these engines would have to install aftertreatment by 2013 to meet the emission standards of the RICE NESHAP and then only a few years later be required to replace their engines per San Joaquin Valley APCD Rule 4702. The San Joaquin Valley APCD has identified 49 Tier 1 engines and 360 Tier 2 engines that are scheduled to be replaced under the local rule. The EPA has not identified any engines outside the San Joaquin Valley APCD area that are in the same or similar situation (i.e., required to be replaced shortly after the compliance date for existing engines), but the EPA does not preclude the possibility that there are such engines in other areas, and requests comment and information on other areas that may have similar concerns.
	The EPA does not think it is appropriate to require emission controls on a stationary CI engine that is going to be retired only a short time after the rule goes into effect. Stationary CI engines would have to comply with this rule by May 3, 2013, and owners of engines above 300 HP are expected to have to install aftertreatment on their engines in order to meet the emission standards. The EPA estimates that the one-time cost to equip a 500 HP stationary CI engine with the controls necessary to meet the emission standards under this rule is close to $14,000 and more than $3,000 on a yearly basis, not accounting for additional costs associated with monitoring, testing, recordkeeping and reporting. These engines (equipped with aftertreatment) could end up being in operation for less than 2 years or at most only 5 years before having to be replaced with a certified Tier 4 engine, as required by San Joaquin Valley District Rule 4702. It would not be reasonable to require the engine owner to invest in costly controls and monitoring equipment for an engine that will be replaced shortly after the installation of the controls.
      Consequently, the EPA is proposing amendments to existing stationary CI engines located at area sources of HAP emissions to address this concern. The EPA is proposing to amend the requirements for existing stationary Tier 1 and Tier 2 certified CI engines located at area sources that are greater than 300 HP that are subject to a state or local rule that requires the engine to be replaced. The EPA is proposing to allow these engines to meet management practices from the applicable May 3, 2013, compliance date until January 1, 2015, or 12 years after installation date (whichever is later), but not later than June 1, 2018. This proposed change would provide owners enough time to replace their engines without mandating a possibly cost prohibitive requirement to change all of the engines in a short amount of time, while still requiring that replacement of the engine or a retrofit of the engine occur relatively quickly after the owner would have to comply with the NESHAP. The EPA is proposing that these engines be subject to management practices until January 1, 2015, or 12 years after installation date (whichever is later), but not later than June 1, 2018, after which time the CO emission standards discussed above (and that are in Table 2d of the rule) apply. The management practices include requirements for when to inspect and replace the engine oil and filter, air cleaner, hoses and belts. The complete details of which management practices are required are shown in Table 2d of the rule. Owners and operators of these existing stationary CI engines located at area sources of HAP emissions that intend to meet management practices rather than the emission limits prior to January 1, 2015, or 12 years after installation date, but not later than June 1, 2018, must submit a notification by March 3, 2013, stating that they intend to use this provision and identifying the state or local regulation that the engine is subject to.
E. Remote Areas of Alaska
1. Background
	The RICE NESHAP currently specifies less stringent requirements for existing non-emergency CI engines at area sources located in remote areas of Alaska. Remote areas are defined as those not accessible by the FAHS. The FAHS includes areas with year-round ferry service that are not on the contiguous road system. Under the current regulation, stationary non-emergency CI engines at area sources in areas of Alaska that are not accessible by the FAHS are subject to management practices as opposed to numerical emission standards.
      Following the publication of the final rule in 2010, the EPA received requests to expand the definition of remote areas of Alaska. Stakeholders asserted that facilities in areas that are accessible by the FAHS but are not connected to the Alaska Railbelt grid face the same challenges as those in areas not accessible by the FAHS. The Alaska Railbelt Grid refers to the service areas of the six regulated public utilities that extend from Fairbanks to Anchorage and the Kenai Peninsula. These utilities are the Golden Valley Electric Association, Chugach Electric Association, Matanuska Electric Association, Homer Electric Association, Anchorage Municipal Light & Power, and the City of Seward Electric System. According to the stakeholders, one reason for broadening the definition of remote areas in Alaska is high energy costs, which provide a natural incentive to run CI engines as little as possible. The cost of energy is utilities' greatest concern in Alaska. Also, the stakeholders indicated that extreme weather conditions in certain areas of Alaska is another reason for including additional areas in the definition of remote areas of Alaska. The climate issue is unique to remote areas of Alaska that experience some of the most extreme temperatures in the country. Heavy snowfall and high winds are not uncommon in several areas that are accessible by the FAHS. For instance, Copper Valley Electric Association (CVEA) is a utility accessible by the FAHS, but it includes areas that face the same challenges as other communities not accessible by the FAHS. The utility operates on an isolated grid and relies on diesel power generation. In one of CVEA's territories, Valdez, Alaska, CVEA indicated that this area experiences brutal conditions and stated that Valdez is considered to have the greatest snowfall (326 inches per winter) in any city of the United States. Also, winds at more than 100 miles per hour are not uncommon for Valdez, Alaska, according to CVEA. Temperatures between 40 and 50 below zero are also not abnormal, which emphasizes the extreme reliance on power, CVEA asserted. Travel times and accessibility are issues on a regular basis, but can be additionally exacerbated due to severe weather, which in some cases may lead to avalanches and road closings. In particular, even if a site is on the FAHS, in the event of poor weather conditions and road closings, there are in many cases no alternate roads to travel on. Further, access to specific isolated sites can also be problematic in particular remote areas of Alaska and the problems are unique to Alaska because of the infrastructure and environment. For example, communities made the case that sources along the AMHS that are only accessible by the AMHS should be treated the same way as communities not accessible by the FAHS. The AMHS primarily serves passengers and vehicles, and is not intended for transporting goods. Therefore, the same methods used to bring in goods to communities not on the FAHS are the same as those Alaskan villages served only by the AMHS. Goods are typically brought in to remote communities by barge and this is another example of a scenario that is unique to Alaska. Other arguments for expanding the definition of remote areas of Alaska beyond those not accessible by the FAHS include very low population density in many other remote areas although accessible by the FAHS, and the fact that many of these areas are not connected to the electric grid and rely on back up diesel generation to support fluctuating renewable energy systems. The energy supply system is another area that is particularly different in Alaska compared to the rest of the country where the majority of customers are connected to the grid. Therefore, for the reasons discussed, the EPA is proposing expansion of the remote area source category. This proposal is supported by the Alaska Department of Environmental Conservation and communities with whom the EPA has discussed this issue.
2. Proposed Amendments
	The EPA is proposing to expand the current definition of remote areas of Alaska to extend beyond areas that are not accessible by the FAHS. Specifically, the EPA is proposing that areas of Alaska that are accessible by the FAHS and that meet all of the following criteria are also considered remote and subject to management practices under the rule:
   * The stationary CI engine is located in an area not connected to the Alaska Railbelt Grid,
   * At least 10 percent of the power generated by the engine per year is used for residential purposes, and
   * The system capacity is less than 12 megawatts, or the engine is used exclusively for backup power for renewable energy and is used less than 500 hours per year on a 10-year rolling average.
The EPA is proposing limiting the remote classification to engines that are used at least partially for residential purposes, where the impact of higher energy costs is of greatest concern. The classification is further limited to sources that are used infrequently as backup for renewable power, or that are at smaller capacity facilities, which are generally in more sparsely populated areas.
F. Miscellaneous Corrections and Revisions
	The EPA is making some minor corrections to the stationary engine rules to address miscellaneous issues. The EPA is making some minor revisions in the rules to correct mistakes in the current rules or to clarify the rules. The revisions are as follows:
   * Revising Tables 1b and 2b of 40 CFR part 63, subpart ZZZZ to correct language requiring the pressure drop to be at plus or minus 10 percent 100 percent load for all engines. The engines that were regulated in 2010 are not subject to the load requirements and therefore the EPA is correcting these tables to make this clear.
   * Adding a footnote to Table 1b of 40 CFR part 63, subpart ZZZZ stating that sources can petition the Administrator for a different temperature range consistent with Table 2b of the rule.
   * Correcting rows 8 and 10 in Table 2d of 40 CFR part 63, subpart ZZZZ to indicate that the requirements apply to non-emergency, non-black start stationary RICE greater than 500 HP that are 4SLB and 4SRB that operate more than 24 hours per year, as intended in the original rule.
   * Revising the language in §63.6625(b) of 40 CFR part 63, subpart ZZZZ that states "...in paragraphs (b)(1) through (5) of this section" to "in paragraphs (b)(1) through (6) of this section."
   * Changing Tables 2c and 2d of 40 CFR part 63, subpart ZZZZ, where it currently specifies to inspect air cleaner, to also specify that it must be replaced as necessary.
   * Revising §63.6620(b) of 40 CFR part 63, subpart ZZZZ to indicate that testing must be conducted within plus or minus 10 percent of 100 percent load for stationary RICE greater than 500 HP located at a major source (except existing non-emergency CI stationary RICE greater than 500 HP located at a major source) that are subject to testing.
   * Specifying that, as was intended in the rule adding these requirements, the operating limitations (pressure drop and catalyst inlet temperature) in Tables 1b and 2b of 40 CFR part 63, subpart ZZZZ do not have to be met during startup.
   * For consistency, and as provided in the original RICE NESHAP for other stationary RICE, clarifying in 40 CFR part 63, subpart ZZZZ that the existing stationary RICE regulated in 2010 (i.e., engines constructed before June 12, 2006 that are less than or equal to 500 HP located at major sources or engines located at area sources) must burn landfill or digester gas equivalent to 10 percent or more of the gross heat input on an annual basis in order to qualify as a landfill or digester gas engine under the rule.
   * Clarifying §60.4207(b) of 40 CFR part 60, subpart IIII to specify that owners and operators of stationary CI engines less than 30 liters per cylinder that are subject to the subpart that use diesel fuel must use diesel fuel that meets the requirements of 40 CFR 80.510(b), except owners and operators may use up any diesel fuel acquired prior to October 1, 2010, that does not meet the requirements of 40 CFR 80.510(b) for nonroad diesel fuel.
   * Adding appendix A to 40 CFR part 63, subpart ZZZZ, which includes procedures that can be used for measuring CO emissions from existing stationary 4SLB and 4SRB stationary RICE above 500 HP located at area sources of HAP that are complying with the emission limits in Table 2d of 40 CFR part 63, subpart ZZZZ.
   * Reinstating the footnotes for Table 2 of 40 CFR part 60, subpart JJJJ. The footnotes were inadvertently removed when the rule was amended on June 28, 2011 (76 FR 37954).
   * Adding "part 60" in Table 4 of the NESHAP, in row 2 where it refers to 40 CFR appendix A.
   * Clarifying in §63.6625(a) of 40 CFR part 63, subpart ZZZZ that a continuous emission monitoring system is only required to be installed at the outlet of the control device for engines that are complying with the requirement to limit the concentration of CO.
   * Clarifying that, as was intended in the rule adding these requirements, all of the standards for stationary SI RICE in §60.4231(b) of 40 CFR part 60, subpart JJJJ are for stationary SI RICE that use gasoline.
   * Clarifying that, as was intended in the rule adding these requirements, all of the standards for stationary SI RICE in §60.4231(c) of 40 CFR part 60, subpart JJJJ are for stationary SI RICE that are rich burn engines that use LPG.
   * Clarifying that, as was intended in the rule adding these requirements, all of the standards for stationary SI RICE in §60.4231(d) of 40 CFR part 60, subpart JJJJ are for stationary SI RICE that are not gasoline engines or rich burn engines that use LPG.
G. Compliance Date
	The EPA has received questions regarding whether the compliance dates for engines impacted by the 2010 amendments and this proposed reconsideration will be extended. Affected sources that may be impacted by this action have expressed concern about having sufficient time to comply with the rule by the compliance date, which is May 3, 2013, for existing stationary CI RICE and October 19, 2013, for existing stationary SI RICE. Sources impacted by this reconsideration are particularly concerned with compliance in the event that the EPA does not finalize changes that are substantially similar to the changes being proposed in this action. The EPA does not intend to extend the May 3, 2013, and October 19, 2013, compliance dates, because there are many engines that must meet those compliance dates that are not impacted by this reconsideration. However, the EPA notes that sources that are affected by the reconsideration and that may need additional time to install controls to comply with the applicable requirements can request up to an additional year to install controls, as specified in 40 CFR 63.6(i). The EPA requests comment regarding whether special consideration should be given to engines whose requirements would be reduced by this proposal if, in the final rule, the EPA does not finalize the proposed reduced requirements.
III. Summary of Environmental, Energy and Economic Impacts
A. What are the air quality impacts?
      The EPA estimates that the rule with the proposed amendments incorporated will reduce emissions from existing stationary RICE as shown in Table 1 of this preamble. The emissions reductions the EPA previously estimated for the 2010 amendments to the RICE NESHAP are shown for comparison. Reductions are shown for the year 2013, which is the first year the final RICE NESHAP will be implemented for existing stationary RICE.
          Table 1. Summary of Reductions for Existing Stationary RICE
                                   Pollutant
                          Emission Reductions (tpy)
                               in the year 2013

                                2010 Final Rule
                2010 Final Rule with these Proposed Amendments

                                      CI
                                      SI
                                      CI
                                      SI
                                      HAP
                                     1,014
                                     6,008
                                     1,005
                                     1,778
                                      CO
                                    14,342
                                    109,321
                                    14,238
                                    22,211
                                      PM
                                     2,844
                                      N/A
                                     2,818
                                      N/A
                                      NOx
                                      N/A
                                    96,479
                                      N/A
                                     9,648
                                      VOC
                                    27,395
                                    30,907
                                    27,142
                                     9,147

	The EPA estimates that more than 900,000 stationary CI engines will be subject to the rule in total, but only a small number of stationary CI engines are affected by the proposed amendments in this action. It is estimated that approximately 330,000 stationary SI engines will be subject to the rule in total; however, only a subset of stationary SI engines are affected by the proposed amendments in this action. The decrease in estimated reductions for SI engines is primarily due to proposed amendments to the requirements for existing 4SRB and 4SLB SI engines larger than 500 HP at area sources of HAP that are in remote areas. Those engines were required by the 2010 rule to meet emission limits that were expected to require the installation of aftertreatment to reduce emissions; under these proposed amendments, those engines are required to meet management practices that would not require the installation of aftertreatment. Further information regarding the estimated reductions of this final rule can be found in the memorandum titled, "RICE NESHAP Reconsideration Amendments - Cost and Environmental Impacts," which is available in the docket (EPA-HQ-OAR-2008-0708). The EPA did not estimate any reductions associated with the minor changes to the NSPS for stationary CI and SI engines.
B. What are the cost impacts?
      The proposed amendments are expected to reduce the overall cost of the original 2010 RICE NESHAP amendments. The EPA estimates that with these proposed amendments incorporated the cost of the rule for existing stationary RICE will be as shown in Table 2 of this preamble. The costs the EPA previously estimated for the 2010 amendments to the RICE NESHAP are shown for comparison. The costs that were previously estimated are shown in the original year ($2008 for CI and $2009 for SI), as well as updated to 2010 dollars.
         Table 2. Summary of Cost Impacts for Existing Stationary RICE

                                    Engine

                                2010 Final Rule

                2010 Final Rule with these Proposed Amendments

                               Total Annual Cost
                                      SI
                             $253 million ($2009)
                             $251 million ($2010)
                             $115 million ($2010)
                                      CI
                             $373 million ($2008)
                             $375 million ($2010)
                             $373 million ($2010)

                              Total Capital Cost
                                      SI
                             $383 million ($2009)
                             $380 million ($2010)
                             $103 million ($2010)
                                      CI
                             $744 million ($2008)
                             $748 million ($2010)
                             $740 million ($2010)

Further information regarding the estimated cost impacts of the proposed amendments, including the cost of the proposed amendments in 2010 dollars, can be found in the memorandum titled, "RICE NESHAP Reconsideration Amendments - Cost and Environmental Impacts," which is available in the docket (EPA-HQ-OAR-2008-0708). The EPA did not estimate costs associated with the changes to the NSPS for stationary CI and SI engines. The changes to the NSPS are minor and are not expected to impact the costs of those rules.
C. What are the benefits?
Emission controls installed to meet the requirements of these rules will generate benefits by reducing emissions of HAP as well as criteria pollutants and their precursors, including CO, NOx and VOC. NOx and VOC are precursors to PM2.5 (particles smaller than 2.5 microns) and ozone. The criteria pollutant benefits are considered co-benefits for these rules. For these rules, we were only able to quantify the health co-benefits associated with reduced exposure to PM2.5 from emission reductions of NOx and directly emitted PM2.5.
The EPA previously estimated that the monetized co-benefits in 2013 of the stationary CI NESHAP would be $940 million to $2,300 million (2008 dollars) at a 3-percent discount rate and $850 million to $2,100 million (2008 dollars) at a 7-percent discount rate. For stationary SI engines, EPA previously estimated that the monetized co-benefits in 2013 would be $510 million to $1,200 million (2009 dollars) at a 3-percent discount rate) and $460 million to $1,100 million (2009 dollars) at a 7-percent discount rate.
The proposed amendments are expected to reduce the overall emission reductions of the rules. In addition to revising the anticipated emission reductions, we have also updated the methodology used to calculate the co-benefits to be consistent with methods used in more recent rulemakings, which is summarized below and discussed in more detail in the Regulatory Impact Analysis (RIA). We estimate the monetized co-benefits of the proposed amendments of the CI NESHAP in 2013 to be $770 million to $1,900 million (2010 dollars) at a 3-percent discount rate and $690 million to $1,700 million (2010 dollars) at a 7-percent discount rate. For SI engines, we estimate the monetized co-benefits of the proposed amendments in 2013 to be $62 million to $150 million (2010 dollars) at a 3-percent discount rate and $55 million to $140 million (2010 dollars) at a 7-percent discount rate.
Using alternate relationships between PM2.5 and premature mortality supplied by experts, higher and lower co-benefits estimates are plausible, but most of the expert-based estimates fall between these two estimates. A summary of the monetized co-benefits estimates for CI and SI engines at discount rates of 3 percent and 7 percent is in Table 3 of this preamble.
Table 3. Summary of the Monetized PM2.5 Co-Benefits for Proposed Amendments to the NESHAP for Stationary CI and SI Engines (millions of 2010 dollars)a, b

Pollutant
Emission reductions (tons per year)
Total monetized co-benefits
(3 percent Discount)
Total monetized co-benefits
(7 percent Discount)
                         Original 2010 Final Rules[c]
Stationary CI Engines
Total Benefits
2,844 PM2.5
27,395 VOC
$950 to $2,300
$860 to $2,100
Stationary SI Engines
Total Benefits
96,479 NOx
30,907 VOC
$510 to $1,300
$470 to $1,100
                2010 Final Rules with these Proposed Amendments
Stationary CI Engines
Directly emitted PM2.5
2,818
$770 to $1,900
$690 to $1,700
Stationary SI Engines
NOx
9,648
$62 to $150
$55 to $140
a All estimates are for the analysis year (2013) and are rounded to two significant figures so numbers may not sum across rows. The total monetized co-benefits reflect the human health benefits associated with reducing exposure to PM2.5 through reductions of PM2.5 precursors, such as NOX and directly emitted PM2.5. It is important to note that the monetized co-benefits do not include reduced health effects from exposure to HAP, direct exposure to NO2, exposure to ozone, ecosystem effects or visibility impairment.
[b] PM co-benefits are shown as a range from Pope, et al. (2002) to Laden, et al. (2006). These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effects estimates by particle type.
[c] The benefits analysis for the 2010 final rules applied out-dated benefit-per-ton estimates compared to the updated estimates described in this preamble and reflected monetized co-benefits for VOC emissions, which limits direct comparability with the monetized co-benefits estimated for these proposed rules. In addition, these estimates have been updated from their original currency years to 2010$, so the rounded estimates for the 2010 final rules may not match the original RIAs.

These co-benefits estimates represent the total monetized human health benefits for populations exposed to less PM2.5 in 2013 from controls installed to reduce air pollutants in order to meet these rules. To estimate human health co-benefits of these rules, the EPA used benefit-per-ton factors to quantify the changes in PM2.5-related health impacts and monetized benefits based on changes in directly emitted PM2.5 and NOx emissions. These benefit-per-ton factors were derived using the general approach and methodology laid out in Fann, Fulcher, and Hubbell (2009). This approach uses a model to convert emissions of PM2.5 precursors into changes in ambient PM2.5 levels and another model to estimate the changes in human health associated with that change in air quality, which are then divided by the emission reductions to create the benefit-per-ton estimates. However, for these rules, we utilized air quality modeling of emissions in the "Non-EGU Point other" category because we do not have modeling specifically for stationary engines.[,] The primary difference between the estimates used in this analysis and the estimates reported in Fann, Fulcher, and Hubbell (2009) is the air quality modeling data utilized. While the air quality data used in Fann, Fulcher, and Hubbell (2009) reflects broad pollutant/source category combinations, such as all non-EGU stationary point sources, the air quality modeling data used in this analysis has narrower sector categories. In addition, the updated air quality modeling data reflects more recent emissions data (2005 rather than 2001) and has a higher spatial resolution (12km rather than 36 km grid cells). The benefits methodology, such as health endpoints assessed, risk estimates applied, and valuation techniques applied did not change. As a result, the benefit-per-ton estimates presented herein better reflect the geographic areas and populations likely to be affected by this sector. However, these updated estimates still have similar limitations as all national-average benefit-per-ton estimates in that they reflect the geographic distribution of the modeled emissions, which may not exactly match the emission reductions in this rulemaking, and they may not reflect local variability in population density, meteorology, exposure, baseline health incidence rates, or other local factors for any specific location.
We apply these national benefit-per-ton estimates calculated for this sector separately for directly emitted PM2.5 and NOx and multiply them by the corresponding emission reductions. The sector modeling does not provide estimates of the PM2.5-related benefits associated with reducing VOC emissions, but these unquantified benefits are generally small compared to other PM2.5 precursors. More information regarding the derivation of the benefit-per-ton estimates for this category is available in the technical support document, which is available in the docket.
These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effects estimates by particle type. The main PM2.5 precursors affected by these rules are directly emitted PM2.5 and NOX. Even though we assume that all fine particles have equivalent health effects, the benefit-per-ton estimates vary between precursors depending on the location and magnitude of their impact on PM2.5 levels, which drive population exposure. For example, directly emitted PM2.5 has a lower benefit-per-ton estimate than direct PM2.5 because it does not form as much PM2.5; thus, the exposure would be lower, and the monetized health benefits would be lower.
It is important to note that the magnitude of the PM2.5 co-benefits is largely driven by the concentration response function for premature mortality. Experts have advised the EPA to consider a variety of assumptions, including estimates based both on empirical (epidemiological) studies and judgments elicited from scientific experts, to characterize the uncertainty in the relationship between PM2.5 concentrations and premature mortality. We cite two key empirical studies, one based on the American Cancer Society cohort study and the extended Six Cities cohort study. In the RIA for this proposed amendments rule, which is available in the docket, we also include benefits estimates derived from the expert judgments and other assumptions.
The EPA strives to use the best available science to support our benefits analyses. We recognize that interpretation of the science regarding air pollution and health is dynamic and evolving. After reviewing the scientific literature, we have determined that the no-threshold model is the most appropriate model for assessing the mortality benefits associated with reducing PM2.5 exposure. Consistent with this finding, we have conformed the previous threshold sensitivity analysis to the current state of the PM science by incorporating a new "Lowest Measured Level" (LML) assessment in the RIA accompanying these rules. While an LML assessment provides some insight into the level of uncertainty in the estimated PM mortality benefits, the EPA does not view the LML as a threshold and continues to quantify PM-related mortality impacts using a full range of modeled air quality concentrations.
Most of the estimated PM-related co-benefits for these rules would accrue to populations exposed to higher levels of PM2.5. For this analysis, policy-specific air quality data are not available due to time or resource limitations, and thus, we are unable to estimate the percentage of premature mortality associated with this specific rule's emission reductions at each PM2.5 level. As a surrogate measure of mortality impacts, we provide the percentage of the population exposed at each PM2.5 level using the source apportionment modeling used to calculate the benefit-per-ton estimates for this sector. Using the Pope, et al. (2002) study, 77 percent of the population is exposed to annual mean PM2.5 levels at or above the LML of 7.5 micrograms per cubic meter (ug/m3). Using the Laden, et al. (2006) study, 25 percent of the population is exposed above the LML of 10 ug/m3. It is important to emphasize that we have high confidence in PM2.5-related effects down to the lowest LML of the major cohort studies. This fact is important, because, as we model avoided premature deaths among populations exposed to levels of PM2.5, we have lower confidence in levels below the LML for each study.
      Every benefit analysis examining the potential effects of a change in environmental protection requirements is limited, to some extent, by data gaps, model capabilities (such as geographic coverage) and uncertainties in the underlying scientific and economic studies used to configure the benefit and cost models. Despite these uncertainties, we believe the benefit analysis for these rules provides a reasonable indication of the expected health benefits of the rulemaking under a set of reasonable assumptions. This analysis does not include the type of detailed uncertainty assessment found in the 2006 PM2.5 National Ambient Air Quality Standard (NAAQS) RIA because we lack the necessary air quality input and monitoring data to run the benefits model. In addition, we have not conducted air quality modeling for these rules, and using a benefit-per-ton approach adds another important source of uncertainty to the benefits estimates. The 2006 PM2.5 NAAQS benefits analysis provides an indication of the sensitivity of our results to various assumptions.
It should be noted that the monetized co-benefits estimates provided above do not include benefits from several important benefit categories, including exposure to HAP, NOx, ozone exposure, as well as ecosystem effects and visibility impairment. Although we do not have sufficient information or modeling available to provide monetized estimates for these proposed amendments, we include a qualitative assessment of these unquantified benefits in the RIA for these proposed amendments.
For more information on the benefits analysis, please refer to the RIA for these proposed amendments, which is available in the docket.
D. What are the non-air health, environmental and energy impacts?
	The EPA does not anticipate any significant non-air health, environmental or energy impacts as a result of these proposed amendments.
IV. Solicitation of Public Comments and Participation
	The EPA seeks full public participation in arriving at its final decisions, and strongly encourages comments on all aspects of this proposed rule from all interested parties. Whenever applicable, full supporting data and detailed analysis should be submitted to allow the EPA to make maximum use of the comments. The agency invites all parties to coordinate their data collection activities with the EPA to facilitate mutually beneficial and cost-effective data submissions. A redline/strikeout version of the complete NESHAP for stationary RICE, which shows the changes that are being proposed in this action, is available from the rulemaking docket.
	The EPA is seeking specific comment on the proposal to temporarily allow stationary emergency engines located at area sources to apply the 50 hours per year that is currently allowed under §63.6640(f) for non-emergency operation towards any type of non-emergency operation, including peak shaving and non-emergency demand response if the peak shaving is done as part of a peak shaving (load management) program with the local distribution system operator. The EPA is proposing that the allowance be removed after April 16, 2017.
      The EPA recognizes that the electricity grid achieves demand response and grid stability with and without the use of emergency stationary RICE. Alternative approaches include reductions or shifts in energy use, electricity storage, distribution automation, microgrids, natural gas-fired combustion turbines, and grid-connected distributed generation, including non-emergency engines and combined heat and power. Many of these approaches can provide additional benefits, such as additional energy efficiency, lower costs, shorter electricity outage times, and better integration of renewable energy generation into the electricity grid. Several studies project a significant future potential for using less energy in homes, buildings, and industry during times of peak electricity demand. The EPA seeks comment on how these investments may affect the number of hours which emergency stationary RICE are needed in the future to address electricity peak shaving and grid stability.
	The EPA is also specifically seeking comment on the proposed criteria for expanding the current definition of remote areas of Alaska beyond areas that are not accessible by the FAHS. The EPA requests comment on whether the proposed system capacity limitation of 12 megawatts and the alternative 500 hour cap on annual usage (based on a 10-year rolling average) are the appropriate criteria for distinguishing the areas of Alaska that, while accessible by the FAHS, have the same unique challenges as the areas that are not accessible by the FAHS.
      The EPA is also seeking information related to irrigation pump engine sizes. During the 2010 rulemaking, the EPA relied upon several sources to determine the potential number of irrigation engines that may be impacted by the rule. Using these sources, the EPA estimated that the vast majority of the existing irrigation engines were less than or equal to 300 HP. The EPA received several comments confirming this estimation. The EPA seeks comprehensive, nationwide information on the size of existing irrigation engines to either confirm or refute our understanding of existing irrigation engine sizes; this information will assist EPA in assessing the impacts of the 2010 rule on existing irrigation engines. The EPA has placed information in the docket for this rulemaking (see EPA-HQ-OAR-2008-0708-0495) on the number of irrigation engines provided by the U.S. Department of Agriculture after the 2010 RICE NESHAP amendments were finalized.
V. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review
Under section 3(f)(1) of Executive Order 12866 (58 FR 51735, October 4, 1993), this action is an "economically significant regulatory action" because it is likely to have an annual effect on the economy of $100 million or more. Accordingly, the EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Order 12866 and Executive Order 13563 (76 FR 3821, January 21, 2011), and any changes made in response to OMB recommendations have been documented in the docket for this action. In addition, the EPA prepared a RIA of the potential costs and benefits associated with this action.
A summary of the monetized benefits, compliance costs and net benefits for the 2010 rule with the proposed amendments to the stationary CI engines NESHAP at discount rates of 3 percent and 7 percent is in Table 4 of this preamble. The summary for stationary SI engines is included in Table 5 of this preamble. OMB Circular A-4 recommends that analysis of a change in an existing regulatory program use a baseline that assumes "no change" in the existing regulation. For purposes of this rule, however, the EPA has decided that it is appropriate to assume a baseline in which the original 2010 rule did not exist. The EPA feels that this baseline is appropriate because full implementation of the final rule has not taken place as of yet (it will take place in 2013). In addition, this assumption is consistent with the baseline definition applied in the recently proposed NESHAP for Industrial, Commercial, and Institutional Boilers (76 FR 80532) and NSPS for Commercial/Industrial Solid Waste Incineration Units (76 FR 80452).
Table 4. Summary of the Monetized Benefits, Compliance Costs and Net benefits for the 2010 Rule with the Proposed Amendments to the Stationary CI Engine NESHAP in 2013 (millions of 2010 dollars)a

3-Percent Discount Rate
7-Percent Discount Rate
Total Monetized Benefitsb
$770 to $1,900
$690 to $1,700
Total Compliance Costsc
$373
$373
Net Benefits
$400 to $1,500
$320 to $1,300
Non-Monetized Benefits
Health effects from exposure to HAP

Health effects from direct exposure to NO2 and ozone

Health effects from PM2.5 exposure from VOC

Ecosystem effects

Visibility impairment
a All estimates are for the implementation year (2013) and are rounded to two significant figures.
b The total monetized co-benefits reflect the human health benefits associated with reducing exposure to PM2.5 through reductions of PM2.5 precursors, such as NOX and directly emitted PM2.5. Co-benefits are shown as a range from Pope, et al. (2002) to Laden, et al. (2006). These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effects estimates by particle type.
c The engineering compliance costs are annualized using a 7- percent discount rate.

Table 5. Summary of the Monetized Benefits, Compliance Costs and Net benefits for the 2010 Rule with the Proposed Amendments to the Stationary SI Engine NESHAP in 2013 (millions of 2010 dollars)a

3-Percent Discount Rate
7-Percent Discount Rate
Total Monetized Benefitsb
$62 to $150
$55 to $140
Total Compliance Costsc
$115
$115
Net Benefits
$-53 to $35
$-60 to $25
Non-Monetized Benefits
Health effects from exposure to HAP

Health effects from direct exposure to NO2 and ozone

Health effects from PM2.5 exposure from VOC

Ecosystem effects

Visibility impairment
a All estimates are for the implementation year (2013) and are rounded to two significant figures.
b The total monetized co-benefits reflect the human health benefits associated with reducing exposure to PM2.5 through reductions of PM2.5 precursors, such as NOX and directly emitted PM2.5. Co-benefits are shown as a range from Pope, et al. (2002) to Laden, et al. (2006). These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effects estimates by particle type.
c The engineering compliance costs are annualized using a 7- percent discount rate.

For more information on the cost-benefit analysis, please refer to the RIA for these proposed amendments, which is available in the docket.
B. Paperwork Reduction Act
	This action does not impose any new information collection burden. This action does not impose an information collection burden because the agency is not requiring any additional recordkeeping, reporting, notification or other requirements in these proposed amendments. The changes being proposed in this action do not affect information collection, but include revisions to emission standards and other minor issues. However, the OMB has previously approved the information collection requirements contained in the existing regulations under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0548. The OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9.
C. Regulatory Flexibility Act
	The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations and small governmental jurisdictions.
	For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. The companies owning facilities with affected RICE can be grouped into small and large categories using SBA general size standard definitions. Size standards are based on industry classification codes (i.e., North American Industrial Classification System, or NAICS) that each company uses to identify the industry or industries in which they operate. The SBA defines a small business in terms of the maximum employment, annual sales, or annual energy-generating capacity (for electricity generating units -- EGUs) of the owning entity. These thresholds vary by industry and are evaluated based on the primary industry classification of the affected companies. In cases where companies are classified by multiple NAICS codes, the most conservative SBA definition (i.e., the NAICS code with the highest employee or revenue size standard) was used.
      As mentioned earlier in this preamble, facilities across several industries use affected CI and SI stationary RICE; therefore, a number of size standards are utilized in this analysis. For the 15 industries identified at the 6-digit NAICS code represented in this analysis, the employment size standard (where it applies) varies from 500 to 1,000 employees. The annual sales standard (where it applies) is as low as 0.75 million dollars and as high as 33.5 million dollars. In addition, for the electric power generation industry, the small business size standard is an ultimate parent entity defined as having a total electric output of 4 million megawatt-hours (MW-hr) in the previous fiscal year. The specific SBA size standard is identified for each affected industry within the industry profile to support this economic analysis.
      After considering the economic impacts of this proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. This certification is based on the economic impact of this action to all affected small entities across all industries affected. The percentage of small entities impacted by this proposal having annualized costs of greater than 1 percent of their sales is less than 2 percent according to the small entity analysis. We conclude that there is no significant economic impact on a substantial number of small entities for this rule.
      For more information on the small entity impacts associated with the rule, please refer to the Economic Impact and Small Business Analyses in the public docket. These analyses can be found in the RIA for each of the rules affected by this action.
      Although the proposed reconsideration rule would not have a significant economic impact on a substantial number of small entities, EPA nonetheless tried to reduce the impact of the rule on small entities. When developing the revised standards, EPA took special steps to ensure that the burdens imposed on small entities were minimal. EPA conducted several meetings with industry trade associations to discuss regulatory options and the corresponding burden on industry, such as recordkeeping and reporting. In addition, as mentioned earlier in this preamble, EPA proposes to reduce regulatory requirements for a variety of area sources affected under each of the RICE rules with amendments to the final RICE rules promulgated in 2010. We continue to be interested in the potential impacts of this proposed rule on small entities and welcome comments on issues related to such impacts.
D. Unfunded Mandates Reform Act of 1995
	This rule does not contain a federal mandate that may result in expenditures of $100 million or more for state, local, and tribal governments, in the aggregate, or the private sector in any one year. The EPA is proposing management practices for certain existing engines located at area sources and is proposing amendments that will provide owners and operators with alternative and less expensive compliance demonstration methods. As a result of these proposed changes, the EPA anticipates a substantial reduction in the cost burden associated with this rule. Thus, this rule is not subject to the requirements of sections 202 or 205 of UMRA.
	This rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. The changes being proposed in this action by the agency will mostly affect stationary engine owners and operators and will not affect small governments. The proposed amendments will lead to a reduction in the cost burden.
E. Executive Order 13132: Federalism
	This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This proposed action primarily affects private industry, and does not impose significant economic costs on state or local governments. Thus, Executive Order 13132 does not apply to this action. In the spirit of Executive Order 13132 and consistent with the EPA policy to promote communications between the EPA and state and local governments, the EPA specifically solicits comment on this proposed action from state and local officials.