The D.C. Circuit Court of Appeals decided last year that stationary engines operated under demand response programs or to stabilize power line voltage are not eligible for exemption from U.S. Environmental Protection Agency (EPA) air emission standards as “emergency” generators. Delaware v. EPA, 785 F. 3d 1 (D.C. Cir. 2015). The court granted EPA’s request for a delay in the invalidation of those rule provisions through May 1, 2016. The court issued its mandate on May 4, 2016, and the provisions became invalid as a result of the court’s decision even though EPA has not yet revised its rules. Engines relying on those invalidated provisions for an exemption could face immediate compliance obligations as outlined in new EPA guidance dated April 15, 2016.

By way of background, EPA regulates air pollutant emissions from stationary “reciprocating internal combustion engines” (RICE) under its rules promulgated pursuant to the Clean Air Act: 40 CFR Part 63 Subpart ZZZZ and 40 CFR 60 Subparts IIII and JJJJ. Internal combustion engines are used at power plants and manufacturing facilities to generate electricity as well as to power pumps and compressors. These engines are common in Florida at not only manufacturing facilities but also at hospitals, shopping centers, office buildings, and other commercial and industrial facilities– typically to provide electricity during power outages. Many homeowners also have emergency generators available for use during power outages. Under contracts with electric utility providers, owners of RICE engines located at commercial and industrial facilities will sometimes agree to provide power to the grid when it is needed by the utility. At issue is how these engines should be regulated.

EPA’s RICE rules exempt “existing emergency” engines from compliance with emission limits and related requirements. “Existing” engines include those manufactured or ordered before the year 2002, up through the year 2009 for certain categories. “Emergency” engines are those used to provide power in true emergency situations such as a power outage or flood. EPA also allowed “emergency” engines to operate 100 hours per year for non-emergency purposes while maintaining their “emergency” status. Several entities filed suit against EPA challenging this 100-hour allowance, and the DC Circuit subsequently overturned that part of this rule. Specifically, the court vacated two provisions allowing non-emergency operations without affecting an engine’s status as an emergency generator: (1) when a blackout is imminent and the reliability coordinator has declared an Energy Emergency Alert Level 2 and (2) when the grid’s standard frequency or voltage deviates by at least five percent.

When court issued its mandate on May 4th, the vacatur became effective and engines that had relied on EPA’s invalided exemption provisions must either immediately discontinue operations under those circumstances or comply with the applicable emission limits and standards for non-emergency engines, which can include the addition of pollution control equipment and demonstrations of compliance with numerical emission standards.

The court’s vacatur does not affect other parts of the exemption. “Emergency” engines may continue to be operated a limited number of hours for testing and maintenance purposes without affecting their status. “Emergency” engines may also be operated for unlimited hours in true em+ergency situations.

EPA’s new guidance provides that owners and operators of engines changing from emergency to non-emergency status must conduct their initial performance tests within 180 days after the vacatur effective date (i.e., October 31, 2016). These engines are also subject to notice, recordkeeping, and reporting requirements. Owners and operators of engines affected by the court’s decision should notify EPA and their state or local air pollution control program regarding their intent for future operations.

Unfortunately, EPA’s new guidance did not address whether and the extent to which extensions of compliance deadlines might be available, which may be especially important for those units that must install add-on pollution control equipment to meet the applicable emission limits.