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February 23,2010

The Honorable Regina McCarthy AssistantAdministrator Office ofAir and Radiation U.S. Environmental Protection Agency 1200 Pennsylvania Ave, NW Washington, DC 20460

Re: New Source Performance Standards for Petroleum Refineries

DearAssistantAdministrator 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. Mostrecently, this workhas focused on a limited numberofissues that are the subject ofan ongoing administrative reconsideration action. l We understand that the Agency is preparing to take final action on these reconsideration issues sometimein the next few weeks. We are writing to provide you with ourperspective on key issues that will be addressed in the final action. We look forward to meeting with you sometime
soon to talk aboutthese important issues.

Petroleum Refmery Flares: The final NSPS Jarule that is now underreconsideration 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 triggerNSPS 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 afterthe effective date ofthe rule.

The second provision was a total flare flow limit that was set at a level farbelow normal operational levels formany flares in the industry. To meetthis standard, many flare systems would have to be equipped with flare gas recovery, at a costoftens to hundreds ofmillions of dollars per facility. Together, these provisions would have made NSPS Jaquickly 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 ofabillion dollars.

On reconsideration, the Agencyproposed to improve the modification provisions such that specified inconsequential changes to flare systems would no longerbe 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 thatthese changes are vital to the integrity and workability ofthe final rule.

As we demonstrated in ourcomments to the reconsideration proposal, amodification definition that quickly causes all flares in the industryto trigger NSPS la requirements cannotbe supportedbythe statute

- particularlybecause such an approach presumes that all new connections to a flare system cause an emissions increase, which simply is not the case underthe 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 airemissions. Such a standard is not cost effective and, therefore, does not constitutebest 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 ourcomments), 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, ifnot impossible, to meet even forbrand new process heaters employing state-of-the-art combustion technology. The reconsideration proposal included an updated assessment ofprocess heatertechnology in support ofmodestly revised standards that are more in keeping with the currenttechnology. The proposed standards are expressed in terms ofppmv and pounds permillion Btu ("lb/mmBtu").

In ourcomments on the reconsideration proposal and in subsequentdiscussions with your staff, we pointed outthat a significant number ofprocess heaters in the petroleum refining industry operate for extended periods oftime at reduced firing rates

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### i.e., the units regularly operate on "turndown." When aprocess heateroperates on turndown, NOx emissions in ppmv and Ib/mmBtugo up because combustion conditions unavoidablydeteriorate at low firing rates. As aresult, 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 otherwords, the amount ofNOx entering the atmosphere is low even though NOx emissions measured in ppmv and Ib/mmBtu are somewhat higherduring 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 aprocedureby which the NOx turndown standard is specifically tailored for each affected unitbased on its unit-specific combustion characteristics.The Honorable Regina McCarthy February23, 2010 Page 3

Such an approach would be environmentally sound and protectivebecause itwould require affected units to operate underfiring conditions duringturndown 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) thatcannotbe 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 TriggerDate: The Clean AirActprovides that NSPSs apply to any affected source that is constructed, reconstructed, ormodified afterthe date thatthe applicable NSPS was proposed. In otherwords, the "triggerdate" for an NSPS is the date thatNSPS is proposed. In the contextofthis NSPS 1areconsideration action, we believe that the only way that this provision can rationally be applied to the circumstances is for EPA to determine that the triggerdate forthe provisions addressed in the reconsideration proposal is the date thatthe reconsideration proposal was published in the Federal Register.

We have discussed this issue at length with your staffand with Agency attorneys. At least some in the Agency appearto believe that the triggerdate should extend back to the date the NSPS Ja final rule was published in the Federal Registeroreven back to the much earlier date that NSPS 1a was first proposed. Both ofthese interpretations would cause intractable implementation problems. Forexample, until the reconsideration proposal was published, no facility operatorcould know how EPA might intend to define modification for flares. As a result, no facility operatorcould design, build, oroperate changes to flare systems with knowledge ofwhat legal obligations might ultimatelybe imposed as aresult ofthose changes. Only afterthe reconsideration proposal was published could facility operators reasonably understand what actions mighttriggerNSPS 1a and whatmightberequired ifNSPS 1awas triggered.

In short, we believe thatthe statute mustbe interpreted such thatthe triggerdate for NSPS requirements is keyed to the date those requirements are actually proposed

- which in this
case is December22, 2008, the date the reconsideration proposal was published in the Federal Register. We urge you to follow this approach.2

2We note that the administrative stay extends to certain standards that are not within the scope ofthe reconsideration action

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### e.g., the process heater sulfur standard. EPA also should makc it clearthat such requirements will become effectiveupon the effective date ofthe final reconsideration rule and that such requirements will be applied prospectively from thattime.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 effectivelytreated for sulfurremoval 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 commenton the equivalency ofthe proposed amended NSPS Jarequirements and SCAQMD Rule 1118 and whether a facility in compliance with Rule 1118 orother equivalent State orlocal rules should be deemed to be in compliance with NSPS Ja. As demonstrated in ourcomments on the reconsideration proposal, Rule 1118 and its BAAQMD counterpart, Rules 12-11 and 12-12, clearly are at least equivalentto 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 thatunavoidably would impose additional costs on affected facilities. Allowing implementation ofthe district rules to satisfy NSPS Jarequirements would avoid cost and complexity while assuring a level ofenvironmental protection at least equivalent to thatprovided by NSPS Ja.



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Thank you for yourconsideration ofthese issues. As mentioned above, we hope to meet with you soon to talk abouthow they might bc resolved in the final NSPS Jareconsideration rule. In themeantime, please do nothesitate to contact me or Ron Chittim, API, at 202-682- 8176 orChittim@ api.org ifyou have anyquestions orneed 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