E [C]/R Incorporated
                  Providing Environmental Technical Support Since 1989




MEMORANDUM   

DATE:		November 9, 2010

TO:		Melanie King, EPA OAQPS/SPPD/ESG

FROM:	Tanya Parise, EC/R, Inc.

SUBJECT:	Summary of the October 26, 2010 Meeting with the Gas Compressor Association Regarding the Proposed Amendments to the SI NSPS for Stationary Engines

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INTRODUCTION

      The Gas Compressor Association (GCA) requested this meeting with EPA to discuss the proposed amendments to the new source performance standards (NSPS) for stationary spark ignition (SI) engines.  The proposed NSPS amendments were published in the Federal Register on June 8, 2010 (75 FR 32612).  

ATTENDEES

Melanie King, EPA
John Dutton, J-W Power Company
Bob Wayland, EPA
David O'Leary, Compressor Systems Inc.
Michael Horowitz, EPA (by phone)
Mike Wasson, Exterran
John Dupree, EPA (by phone)
Kyle Jantzen, Exterran
Tanya Parise, EC/R Inc.
John Peck, Cameron Compression Systems

Levent Caglar, Compressor Systems Inc.

SUMMARY OF MEETING 

	GCA had previously submitted written comments on the proposed NSPS amendments (EPA-HQ-OAR-2010-0295-0050).  GCA requested this meeting to discuss and clarify those comments, and express to EPA the challenges the natural gas compression industry would face if the NSPS amendments are finalized as proposed.  Specifically, GCA wanted to address issues related to the definition of reconstruction and the date of manufacture.  An agenda was provided by GCA, which follows this meeting summary.  

EPA's Perspective

      GCA asked what prompted EPA to propose changes to the SI NSPS and what EPA's goals were with the proposed amendments.  EPA expressed that with respect to reconstruction, it intended to clarify how to conduct the reconstruction analysis and to streamline the process.  However, GCA said that the proposed changes represent a deviation from the historical interpretation of reconstruction.  GCA indicated that it has concerns with the proposed changes because they significantly impact the natural gas compression market and asked if any additional groups or other industries had expressed similar concerns.  Other groups have noted concern, but not necessarily concerns associated with any particular industry, EPA said.  It has been brought to EPA's attention that some manufacturers are acquiring old engines, stripping them down and selling them as old engines.  So EPA indicated that with the proposed amendments, it was also attempting to close this loophole where these engines should really be regulated under the NSPS, but are currently circumventing regulations.  In addition, EPA Regions and States have been confused about the reconstruction determination and asked for clarification on the NSPS regulations.  EPA added that while its intent is not to force the retirement of engines, engines do have a specific useful life and after a certain point engines that are rebuilt should not be able to avoid regulations.  EPA indicated that it is attempting to clearly define those constraints.  GCA indicated that it does not oppose EPA's objective and stressed that circumventing the regulation is not what its members do. 
      
Technological Differences of Natural Gas Engines
      
      GCA discussed the importance of differentiating between lean burn and rich burn engines in terms of nitrogen oxides (NOx) and carbon monoxide (CO) emissions.  According to GCA, it becomes incrementally harder to control these pollutants the lower the exhaust emissions standards (in terms of grams per horsepower-hour (g/HP-hr)) get.  It is not that costly to control NOx and CO for rich burn engines, specifically in order to go from 3.0 g/HP-hr to 2.0 g/HP-hr.  However, for lean burn engines, the magnitude of emissions is set by combustion and no catalyst is available for lean burn engines to reduce NOx because the oxygen level is too high, GCA said.  The cost to go from 2.0 g/HP-hr to 1.0 g/HP-hr on a lean burn engine approaches the cost of a new engine, according to GCA.  (Beginning in model year 2011, the rule requires a 1.0 g/HP-hr NOx standard for certain new engines.)  Non-selective catalytic reduction, the applicable control technology for rich burn engines, does not approach the cost of a new engine, GCA added.  Due to the date of manufacture definition in the proposed rule, GCA indicated that it could have lean burn engines emitting 2.0 g/HP-hr of NOx that become obsolete.  
      
      EPA asked about the viability of using selective catalytic reduction (SCR) on lean burn engines, but GCA said that SCR is typically not cost effective.  GCA said that it costs $50,000 to $60,000 per year to operate SCR.  Also, according to GCA, SCR works well for steady-state applications, but not with engines with varying load.  The injector technology associated with SCR is not able to keep up with the variable load, GCA said.  EPA explained that with the date of manufacture definition in the proposal it wanted to capture owners and operators of "new" engines where the engine should be treated as such.  GCA noted that it operates many rich burn engines, particularly smaller rich burn engines some that emit down to 0.25 g/HP-hr of NOx.  According to GCA, SCR technology is reserved as a last resort for lean burn engines and it seems that SCR is applied more in a project-like fashion.  EPA questioned why SCR is not feasible for the natural gas engines GCA members operate because the technology is relied upon for nonroad diesel engines.  GCA replied that the technology is not fully developed for the natural gas engine business.  
      
      GCA argued that lean burn engines use less fuel and emit less greenhouse gas emissions, and if lean burn technology becomes obsolete because of the high cost to meet the NOx standard for new engines, the trend might be to go back to using rich burn engines.  GCA added that once the operator dials in on lean burn engine settings, the engine operates and emits emissions consistently, as opposed to rich burn engines that are not that sophisticated and do not have as consistent emissions.  The outcome of the regulation might be that people may not purchase lean burn engines, GCA said.  EPA emphasized that it is not promoting any particular technology or engine type.   
      
Comments on Reconstruction Concepts

      In terms of the reconstruction process, GCA indicated that it inspects and evaluates the entire engine and tries to reuse as many components as possible.  This is the most economical approach and parts that normally wear are replaced.  EPA asked if GCA could identify the particular areas of the date of manufacture definition that could lead to triggering reconstruction.  GCA said that the crankshaft language is problematic because this component is typically removed for inspection and maintenance.  Also, the 75 percent threshold is a problem and the denominator of the cost of the facility, e.g., changing the camshaft can substantially increase the costs, but GCA indicated that this is mostly a problem on smaller engines.  GCA is concerned that lesser quality parts (e.g., parts that are not original engine manufacturer parts) may be used.  GCA also indicated that there are various overhaul "standards" basically all the way down to 0 hours, which is like a new engine.  GCA said the regulatory language, as proposed, would trigger reconstruction and a new date of manufacture for many engines.  
      
      Also, the serial number criteria is an issue, GCA said.  The serial number could inadvertently get knocked off and GCA does not believe this should force an engine to go from 2.0 g/HP-hr to 1.0 g/HP-hr.  In terms of the crankshaft, it has to be pulled in order to access other parts for maintenance, GCA explained.  GCA added that it is important to include in the reconstruction analysis components that are necessary to run the engine, even if the components are not connected to the engine.  EPA said that it is trying to clarify that the costs are for the engine and cited to the recent boiler rule where associated components necessary for boiler operation are included in the cost assessment for reconstruction.  GCA indicated that in its analysis it only counts components that are necessary for the engine, but that might include components that are not connected to the engine.  Consequently, GCA suggested that EPA define that as a bright line, i.e., components that are necessary for the engine to operate.  
      
      GCA asked that EPA clarify if the applicability would be retroactive and noted that most engines have a 5 year overhaul interval.  EPA said that it did not believe that anything would apply until the rule is final.  GCA also asked that EPA clarify what components could be included, e.g., the compressor obviously would not be included GCA said, but asked about components such as the cooler that is also used for other things.  GCA suggested that a percentage of the cooler cost could be included.  GCA also questioned whether the structural piece/skid could be included because it could not have an engine that is not supported; however, the skid also holds the compressor, which is not counted.  Essentially, the skid and cooler are the biggest prorate concern GCA has.  There is also the control panel, which includes the engine and compressor, but it is process related and only a minor portion of the panel is related to the engine.  There are other things that are not shared; for example, the lubrication system.  EPA indicated that it needs to discuss this with the Office of Enforcement and Compliance Assurance.  GCA said that as described during this meeting, historically this is how industry has done the reconstruction analysis and that there are some standard cookie cutters numbers or engineering estimates that are consistently used.  This process may be different for diesel engines GCA said, but asked that EPA at least define that for example the cooling system is needed to operate the engine even though it is not attached to the engine.  EPA asked if GCA had any information on proration.  GCA indicated that there is a guidance document that it uses for the natural gas compression industry that it could send to EPA, but that there is also substantive information on this in the comments that GCA submitted (EPA-HQ-OAR-2010-0295-0050).  GCA noted that the document may not be translatable to other industries.  Following the meeting, GCA submitted a reconstruction guidance document to EPA, which is available in the docket as EPA-HQ-OAR-2010-0295-0055. 
      
Comments on Proposed Date of Manufacture Concept
      
      GCA said that it may have to take lean burn engines that currently emit between 2.0 g/HP-hr and 3.0 g/HP-hr of NOx down to 1.0 g/HP-hr and again stressed the significantly high cost per ton of achieving such reduction.  GCA said that if EPA uses the traditional definition for costs to include in the denominator it is not so much an issue, but more an issue of the components to include rather than the specific percentage.  
      
      Regarding the serial number issue, GCA said that it is still possible to identify an engine without it, e.g., by the make and model information, maintenance records, etc.  However, there may be cases where an engine is acquired and it has no tag and GCA said it does not want to trigger a new date of manufacture based on a technicality.  When engines are bought and moved all the time records do not always stay with the engine.  EPA indicated that this is not what it is trying to get at and it is not EPA's intention to penalize owners in cases where maintenance folks may have accidentally knocked the serial number off.  In situations where there is no information on the engine, GCA asked if it could call the engine subject to 40 CFR part 60, subpart JJJJ.  
      
Comments on Confusion with Other Rules
      
      GCA said that it noticed a gap between 40 CFR part 60, subpart JJJJ and 40 CFR part 63, subpart ZZZZ, where there is a time window of about 1 (1/2) years where it appears there are no requirements.  GCA asked if this is accurate.  EPA confirmed that this is the case.  Further, GCA asked if EPA could make the two engine regulations consistent in terms of the reconstruction assessment and argued that since the definitions were different, this is a problem.  EPA indicated that it did not intend for the reconstruction analysis to be different under the two subparts and that it will consider this issue.  The analysis under 40 CFR part 60, subpart JJJJ and 40 CFR part 63, subpart ZZZZ should be the same, EPA said.  

Closing Discussion Regarding Future Regulation
      
      In closing, GCA indicated that it would like to continue the dialogue with EPA and asked when the final rule would come out.  EPA indicated that it has a settlement to finalize the rule by May 22, 2011, and additionally pointed out that with the proposed notice it was not intending on officially opening up 40 CFR part 60, subpart JJJJ.
                                    AGENDA
                                       
                       Gas Compressor Association (GCA)
                                      And
                     Environmental Protection Agency (EPA)
                                   10/26/10
                                       
                                       
I	Introductions
II	EPA's Perspective
III	Technological Differences of Natural Gas Engines
IV	Comments on Reconstruction Concepts
V	Comments on Proposed Date of Manufacture Concept
VI	Comments on Confusion with other Rules
VII	Closing discussion regarding future regulation



