EPA has proposed to allow a combined 100 hour operational limit for stationary emergency engines' use for non-emergency purposes, emergency demand response, maintenance and testing, and, for area sources only, peak shaving (50 hour limit until 4/16/17). Comments on this EPA proposal are due by July 23, 2012.

The current EPA Rule would prohibit existing stationary emergency engines from operating more than 15 hours for use in emergency demand response programs and from participating in peak shaving at all. As a result of multiple requests for reconsideration, EPA has agreed that emergency reciprocating internal combustion engines' (RICE) participation in demand response programs is desirable to ensure electricity system reliability. EPA has preliminarily concluded that: "The [emergency engine] 100 hours per year allowance would assist in stabilizing the grid, preventing electrical blackouts and supporting local electric system reliability." The EPA has also determined for most area sources (not major sources of HAPs), that until May 16, 2017, it is also appropriate to allow up to 50 hours of participation in peak shaving activities. The EPA states that: "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…[recently promulgated Utility MACT Rule]."

Note that, for stationary emergency engines above 500 HP that were installed prior to June 12, 2006, the existing rules do not allow participation in emergency response demand programs or limit maintenance and testing hours. As part of this Proposal, for consistency, EPA is including these engines in the program and applying identical limits on hours for maintenance and testing.

These revisions were published in the Federal Register (77 FR 33812, June 7, 2012); http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2008-0708-0866. Commercial and industrial facilities with emergency engines should comment on EPA's Proposed Regulation, by supporting the rule's proposed changes and providing other recommendations related to operation of the demand response and peak shaving programs.

EPA has specifically requested comments on its Proposal Rulemaking Action. Because we expect that EPA's proposals will engender opposition comments from many and varied interest groups (likely including certain states and environmental groups), we urge interested commercial and industrial emergency engine owners and operators to submit supporting comments, as well as responses to prior adverse comments, and suggestions to enhance the proposed rules. If interested industry stakeholders do not voice their support for the EPA proposal, EPA may be swayed by opponents and roll back its proposal.

McNees Wallace & Nurick LLC is reaching out to existing and potential clients to determine if there is sufficient interest to form an ad hoc coalition for the purpose of filing comments to this EPA Proposed Rule, in support of EPA's proposal to expand the hourly allowances for both demand response and peak shaving programs. Please contact either Rick Friedman at 717.237.5469 ( rfriedman@mwn.com) or Bob Weishaar at 202.898.5700 ( rweishaa@mwn.com) at your earliest convenience if you would like more information or to participate in the Group.

Thank you.