EPA Refinery Proposal Could Cost Industry Billions, Add Carbon Emissions, Industry Says

By Patrick Ambrosio

Nov. 4 — An Environmental Protection Agency proposed rule (RIN 2060-AQ75) targeting emissions of hazardous air pollutants from petroleum refineries could cost the industry more than $20 billion and increase greenhouse gas emissions, according to industry groups.

The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, in joint comments, said that in addition to the increased costs, the EPA's proposed revisions to national air toxics standards for refineries would increase safety risks while offering little reduction in emissions of hazardous air pollutants.

The EPA received numerous comments on its proposal, including comments from numerous environmental and public health groups that recommended strengthening the proposed standards to better protect public health and feedback from the Small Business Administration's Office of Advocacy, which urged the agency to reduce the burden of the proposal on small refineries.

The proposed rule, signed in May by EPA Administrator Gina McCarthy, would revise emissions control requirements for flares, storage tanks and coking units at refineries, set maximum achievable control technology standards for delayed coking units and establish fenceline monitoring requirements for benzene.

The EPA, under a settlement with environmental groups, has until April 17, 2015, to finalize the refinery rule (Air Alliance Houston v. McCarthy,D.D.C., No. 12-1607, motion filed 1/13/14).

Cost-Benefit Analysis Questioned

The API and AFPM comments estimated that the proposed refinery rule would cost industry more than $20 billion in compliance costs, plus tens of millions of dollars in annual operating costs.

Those estimates greatly differ from the EPA's economic impact analysis of the proposal, which predicted that the overall economic effect of the proposal would be minimal for the refining industry and consumers. The agency estimated that the proposal would result in $42.4 million in annual costs for the private sector.

The industry groups said that the EPA hasn't provided information on significant costs associated with the installation of pollution controls that would be necessary to meet the proposed air toxics requirements. The agency also hasn't provided data supporting the cost-effectiveness of several provisions included in the proposal, including new limitations on vents from delayed coking units.

The groups also criticized the EPA's analysis of the proposal's benefits, claiming that the rule would achieve “little, if any reduction” in emissions of hazardous air pollutants. The EPA estimates the proposal would reduce emissions of benzene, xylene and other pollutants by 5,600 tons per year.

Increase in Other Pollutants Expected 

The API and AFPM said that in addition to the minimal air toxics benefits, the proposed rule would actually result in an increase in emissions of other pollutants, including greenhouse gases.

The proposed rule's flaring provisions, which the industry groups described as being overly conservative, would result in large quantities of gas being burned unnecessarily, resulting in an increase in greenhouse gas emissions, the groups said.

Facilities would need to construct hundreds of new flare systems as a result of the EPA's proposal, which would prohibit releases from pressure relief valves and broaden flare limits on tip velocity and visible emissions. The capital cost for those new flares alone is estimated by industry to be between $10 billion and $20 billion.

The industry groups also objected to the EPA's proposed fenceline monitoring requirements, which they said would result in a de facto limit on emissions of benzene, which isn't authorized under Section 112 of the Clean Air Act, the section of that law concerning air toxics.

The proposed fenceline monitoring language would impose a corrective action requirement when monitored levels of benzene exceed a certain level, without any limits on cost or feasibility, the API and AFPM said.

Push for Real-Time Monitoring

While industry opposed several provisions included in the EPA's proposal, several organizations urged the agency to strengthen the proposed fenceline monitoring provisions.

The proposed rule would require passive monitoring that would measure concentrations of benzene at a refinery's fenceline.

The National Association of Clean Air Agencies suggested that the EPA instead require real-time fenceline monitoring, which would allow for immediate feedback on leaks.

Data from passive monitoring could make it difficult to determine when or if a short-term spike in emissions occurred because the monitoring data are averaged over a two week period, something that wouldn't be an issue with real-time monitoring, according to NACAA.

The association, which represents state and metropolitan air pollution control agencies, suggested that the EPA conduct a more thorough cost-benefit analysis of requiring real-time fenceline monitoring.

Active Monitoring Urged

The U.S. Chemical Safety and Hazard Investigation Board recommended in comments that the EPA should require large refineries and refineries located near high-population areas to use active monitoring. The board noted that real-time monitoring is already in place at three large U.S. refineries, including Chevron's Richmond refinery in California.

The board also called on the EPA to reduce the implementation time for the fenceline monitoring requirements from three years to one year and require monitoring data to be made publicly available in real-time, rather than the twice-per-year reporting requirement included in the proposal.

The American Lung Association said in comments that the EPA should expand the monitoring provisions to require monitoring of hazardous air pollutants other than benzene. Limiting the monitoring requirements to benzene fails to protect the public from exposure to acid gases, metals and other chemicals that have different trajectories than benzene, according to the association.

Other Improvements Recommended

Earthjustice and the Environmental Integrity Project filed joint comments on behalf of 19 other environmental and public health groups that were supportive of the EPA's proposal to target hazardous emissions from refineries but suggested several improvements that would strengthen the rulemaking effort.

Earthjustice and the Environmental Integrity Process said that while it supports the establishment of strong, enforceable emissions standards, fenceline monitoring requirements and removal of an exemption for startup, shutdown and malfunction, the EPA's proposal isn't protective enough of public health.

The improvements identified by the environmental and public health groups include:

• stronger emissions standards that apply to equipment leaks and wastewater emissions;

• limits on flaring to prevent unnecessary emissions;

• a limit on emissions of hydrogen cyanide from fluid catalytic cracking units;

• stronger compliance and enforcement provisions for refineries; and

• an analysis of emissions from the processing of new unconventional crude oils, such as Bakken crude oil and tar sands, that may require additional refining and abatement.

Small Business Concerns

Comments submitted by the Small Business Administration's Office of Advocacy called on the EPA to adopt alternatives in its final rule that would reduce the regulatory burden on small refineries.

The SBA advocacy office said that small refiners are concerned that the proposed fenceline monitoring provisions would impose unnecessary costs on small refineries that are unlikely to pose significant public health concerns. The EPA could exempt small refiners that emit levels of pollutants that are so low that the public would be protected with an ample margin of safety without the monitoring.

The advocacy office also questioned the EPA's cost estimates for continuous fenceline monitoring at small refineries, which the office said included an unreasonable expectation that small businesses would be able to hire enough staff and construct necessary facilities to conduct in-house testing.

The EPA's estimate also doesn't include the cost of additional monitors that would be required to demonstrate that higher emissions detected within the refinery come from emissions sources that are not subject to the rulemaking, according to the SBA advocacy office.

Inhofe Calls for Withdrawal

Several members of Congress weighed in on the refinery proposal during the public comment period, including Sen. James Inhofe (R-Okla.), who urged the EPA to withdraw the rule.

Inhofe's comments specifically objected to several provisions included in the proposal, including the EPA's “one-size fits all approach” to fenceline monitoring. He suggested that instead of requiring all refineries to conduct the monitoring, the EPA should tailor its rule to focus on refineries in higher-risk areas.

Inhofe also criticized the EPA's proposal to prohibit the use of pressure relief valves, which he said would punish refineries that take appropriate action to protect worker and public safety.

“It is not sound public policy to have conflicting safety and environmental mandates—they should be synergized and EPA needs to take steps to ensure this,” he said.

Reps. Pete Olson (R-Texas) and Cedric Richmond (D-La.) submitted joint comments calling on the EPA to use the flexibility it has under the Clean Air Act to focus on safety, as well as public health. The representatives highlighted the proposed prohibition on the use of pressure relief devices as a concern, given the importance of the technology in protecting facilities and the fact that the valves are rarely used.

Olson and Richmond also echoed industry concerns that fenceline monitoring may detect pollutants from other facilities and may not actually reduce risk.

To contact the reporter on this story: Patrick Ambrosio in Washington at pambrosio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

All comments filed on the EPA's refinery proposal are available at http://www.regulations.gov/ under Docket ID No. EPA-HQ-OAR-2010-0682.