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EPA declines to redo rule allowing backup generators to run absent controls

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EPA declines to redo rule allowing backup generators to run absent controls

TheU.S. EPA has decided not to issue a new rule in response to a 2015 federalappeals court decisionvacating portions of a rule allowing backup generators to operate absentemissions controls for up to 100 hours annually.

Theagency had asked the U.S. Court of Appeals for the District of Columbia Circuitto stay the mandate while the agency mulled over whether to issue a newregulation in the aftermath of the court's May 1, 2015, ruling. EPA agreed to aone-year stay, and now that the stay has expired without any further action bythe EPA the agency effectively let the court decision stand.

In aMay 3 statement the EPA said the next step is for the D.C. Circuit to issue amandate effectuating the vacatur, which the court was expected to do soshortly, if it had not done so already with the paperwork still being processed.

In2010 the EPA began allowing backup generators to operate without emissionscontrols for 15 hours annually as part of demand response programs duringemergency conditions that could lead to a potential electrical blackout.

Butthe agency in January 2013 issued new standards — the reciprocating internalcombustion engines national emissions standards for hazardous air pollutants,or RICE NESHAP — that allowed backup generators to operate exempt fromemissions controls to provide "emergency demand response" for up to100 hours each year, in addition to actual emergency situations and maintenance.

Environmentalgroups fiercely opposed the new rule, claiming that it could undermine effortsto clean up the air by allowing some consumers to replace capacity fromtraditional sources with that provided by much dirtier backup generators. TheElectric Power Supply Association and electric generators also opposed therule, arguing that it distorts the marketplace by giving demand responseproviders a competitive advantage.

Aftera Delaware state agency, supported by EPSA, environmental organizations andpublic health advocates, asked the D.C. Circuit to review the rule, the courtin May 2015 sided with the petitioners in Delawarev. EPA (No. 13-1093). EPA failed to consider concerns about the rule'simpact on the efficiency and reliability of the energy grid, relied on faultyevidence when justifying the exemption increase from 15 hours to 100 hours, andshould have sought the advice of FERC or the North American ElectricReliability Corp. before issuing the rule, the court reasoned. The courttherefore vacated the rule as it relates to the operation of emergencygenerators for demand response programs.

Signalingit was not going to issue a new rule in response to the court decision, the EPAin April offered guidanceon how it intended to implement certain regulatory requirements once the RICENESHAP was officially vacated.

EPAnoted that the D.C. Circuit in September 2015 in a different case – Conservation Law Foundation v. EPA(13-1233) – agreed to allow EPA to continue to allow emergency engines tooperate for up to 50 hours annually if certain conditions are met while theagency considers how to respond in that proceeding on voluntary remand. Thoseprovisions will not be affected by the vacation of the RICE NESHAP, EPA stated.

Inaddition, EPA said that since the court apparently does not intend to reinstatethe 2010 standards, once the RICE NESHAP is vacated no engine may operate forany hours without complying with the emissions standards applicable tonon-emergency engines. The agency offered other guidance as well, such as whenand for how long emergency engines may be operated annually and on therequisite testing requirements and deadlines.

ThePJM Interconnection LLC,which EPSA estimates has the largest amount of impacted backup generators, hasalready moved to begin compliance with a court mandate and providednotification to impacted generators, according to a presentation at an April 29stakeholder meeting.