energ.,-ti'I wsp~

February 23,2010

The Honorable Regina McCarthy

Assistant Administrator

Office ofAir and Radiation

U.S. Environmental Protection Agency

1200 Pennsylvania Ave, NW

Washington, DC 20460

Re: New Source Performance Standards for Petroleum Refineries

Dear Assistant Administrator McCarthy:

The American Petroleum Institute ("APr), the National Petrochemical and Refiners

Association ("NPRA"), and the Western States Petroleum Association ("WSPA") have been

working closely with your stafffor the last several years on the revised New Source Performance

Standard for Petroleum Refineries, NSPS Ja. Most recently, this work has focused on a limited

number of issues that are the subject of an ongoing administrative reconsideration action. l We

understand that the Agency is preparing to take final action on these reconsideration issues

sometime in the next few weeks. We are writing to provide you with our perspective on key

issues that will be addressed in the final action. We look forward to meeting with you sometime

soon to talk about these important issues.

Petroleum Refmery Flares: The final NSPS Ja rule that is now under reconsideration

included two provisions related to flares that together would have made the rule extremely

burdensome and legally indefensible. The first provision was a flare-specific modification

definition that would have caused even the most minor and routine changes to flare and header

systems (including many that would not cause an emissions increase) to trigger NSPS Ja for such

systems. This provision would have caused virtually all flares in the petroleum refinery industry

to become subject to NSPS Ja within a short time after the effective date ofthe rule.

The second provision was a total flare flow limit that was set at a level far below normal

operational levels for many flares in the industry. To meet this standard, many flare systems

would have to be equipped with flare gas recovery, at a cost oftens to hundreds ofmillions of

dollars per facility. Together, these provisions would have made NSPS Ja quickly and

I 73 Fed. Reg. 78522 (Dec. 22,2008) ("reconsideration proposal").
The Honorable Regina McCarthy

February 23,2010

Page 2

universally applicable to flare systems in the petroleum refining industry and imposed a total cost

to the industry in excess of a billion dollars.

On reconsideration, the Agency proposed to improve the modification provisions such

that specified inconsequential changes to flare systems would no longer be treated as

modifications. We recommended necessary additions to this list in our comments on the

reconsideration proposal. The Agency also proposed to eliminate the fixed flare flow limit. We

believe that these changes are vital to the integrity and workability ofthe final rule.

As we demonstrated in our comments to the reconsideration proposal, a modification

definition that quickly causes all flares in the industry to trigger NSPS la requirements cannot be

supported by the statute - particularly because such an approach presumes that all new

connections to a flare system cause an emissions increase, which simply is not the case under the

NSPS potential-to-potential emissions increase test. Moreover, a flow limit for flares would

impose substantial costs on petroleum refineries, yet would result in only a nominal reduction in

air emissions. Such a standard is not cost effective and, therefore, does not constitute best

demonstrated technology for petroleum refinery flares. In addition, not all flare systems can be

equipped with flare gas recovery because oflimitations on the use ofthe recovered gas. Because

the Agency's reconsideration proposal would help address these problems (as supplemented by

the recommendations spelled out in our comments), we urge you to follow through in the final

rule with the solutions outlined in the reconsideration proposal.

Process Heater Turndown: NSPS la would have imposed limitations on nitrogen oxide

("NOx") emissions from process heaters that would have been difficult, if not impossible, to

meet even for brand new process heaters employing state-of-the-art combustion technology. The

reconsideration proposal included an updated assessment of process heater technology in support

of modestly revised standards that are more in keeping with the current technology. The

proposed standards are expressed in terms of ppmv and pounds per million Btu ("lb/mmBtu").

In our comments on the reconsideration proposal and in subsequent discussions with your

staff, we pointed out that a significant number of process heaters in the petroleum refining

industry operate for extended periods oftime at reduced firing rates - i.e., the units regularly

operate on "turndown." When a process heater operates on turndown, NOx emissions in ppmv

and Ib/mmBtu go up because combustion conditions unavoidably deteriorate at low firing rates.

As a result, even with an extended averaging time, many units that operate for long periods on

turndown could not meet the proposed standards.

However, the total NOx mass emissions on turndown would be quite low because

relatively little fuel is being combusted at low firing rates. In other words, the amount of NOx

entering the atmosphere is low even though NOx emissions measured in ppmv and Ib/mmBtu are

somewhat higher during turndown. To assure that units operating on turndown for extended

periods have an appropriate NOx emissions limitation under NSPS la, we have recommended to

your staffthat the final rule include a procedure by which the NOx turndown standard is

specifically tailored for each affected unit based on its unit-specific combustion characteristics.
The Honorable Regina McCarthy

February 23, 20 10

Page 3

Such an approach would be environmentally sound and protective because it would

require affected units to operate under firing conditions during turndown that are optimized for

that operating condition. This approach also would solve the problems that would be caused by

a one-size-fits-all rate-based NOx limit for turndown. We urge you to include such an approach

in the final rule.

Co-fired Process Heater Limits: The final rule contained NOx limits for co-fired

process heaters (which are heaters fired by oil and gas) that cannot be met. Oil fired process

heaters are used at some refineries that do not have access to natural gas. The Agency is

considering changes to these limits and we ask for your support in those changes.

Applicability Trigger Date: The Clean Air Act provides that NSPSs apply to any

affected source that is constructed, reconstructed, or modified after the date that the applicable

NSPS was proposed. In other words, the "trigger date" for an NSPS is the date that NSPS is

proposed. In the context ofthis NSPS 1a reconsideration action, we believe that the only way

that this provision can rationally be applied to the circumstances is for EPA to determine that the

trigger date for the provisions addressed in the reconsideration proposal is the date that the

reconsideration proposal was published in the Federal Register.

We have discussed this issue at length with your staff and with Agency attorneys. At

least some in the Agency appear to believe that the trigger date should extend back to the date

the NSPS Ja final rule was published in the Federal Register or even back to the much earlier

date that NSPS 1a was first proposed. Both ofthese interpretations would cause intractable

implementation problems. For example, until the reconsideration proposal was published, no

facility operator could know how EPA might intend to define modification for flares. As a

result, no facility operator could design, build, or operate changes to flare systems with

knowledge ofwhat legal obligations might ultimately be imposed as a result ofthose changes.

Only after the reconsideration proposal was published could facility operators reasonably

understand what actions might trigger NSPS 1a and what might be required ifNSPS 1a was

triggered.

In short, we believe that the statute must be interpreted such that the trigger date for

NSPS requirements is keyed to the date those requirements are actually proposed - which in this

case is December 22, 2008, the date the reconsideration proposal was published in the Federal

Register. We urge you to follow this approach.2

2 We note that the administrative stay extends to certain standards that are not within the

scope ofthe reconsideration action - e.g., the process heater sulfur standard. EPA also should

makc it clear that such requirements will become effective upon the effective date ofthe final

reconsideration rule and that such requirements will be applied prospectively from that time.
The Honorable Regina McCarthy

February 23, 2010

Page 4

Process Upset Gas Definition: We support EPA's proposal to amend the definition of

process upset gas to include startups and shutdowns, as is the case with NSPS Subpart J. These

intermittent streams cannot be cost effectively treated for sulfur removal because oftheir

infrequent occurrence. Even where flare gas recovery exists, the variable heat and oxygen

contents and short, high volumes usually make these streams unusable as fuel gas.

Local Rule Equivalency: On reconsideration, the Agency requested comment on the

equivalency ofthe proposed amended NSPS Ja requirements and SCAQMD Rule 1118 and

whether a facility in compliance with Rule 1118 or other equivalent State or local rules should be

deemed to be in compliance with NSPS Ja. As demonstrated in our comments on the

reconsideration proposal, Rule 1118 and its BAAQMD counterpart, Rules 12-11 and 12-12,

clearly are at least equivalent to NSPS Ja in their overall emission reduction results. Moreover,

imposing both federal and district requirements would result in an overlapping and unnecessarily

complex regulatory scheme that unavoidably would impose additional costs on affected

facilities. Allowing implementation ofthe district rules to satisfy NSPS Ja requirements would

avoid cost and complexity while assuring a level of environmental protection at least equivalent

to that provided by NSPS Ja.

* * * * * * * * * *

Thank you for your consideration ofthese issues. As mentioned above, we hope to meet

with you soon to talk about how they might bc resolved in the final NSPS Ja reconsideration

rule. In the meantime, please do not hesitate to contact me or Ron Chittim, API, at 202-682-

8176 or Chittim@ api.org if you have any questions or need more information.

Sincerely,

Robert Greco

API Group Director,

Downstream & Industry Operations

cc: S. Page

P. Tsirigotis

K.C. Hustvedt

B. Shine

R.Ossias

S. Stahle

C. Sunstein, OMB OIRA