Excerpt from Preamble V.A.1.d

When considering the proposed Tier 3 sulfur standards, refineries can be grouped into three general categories based on their current post - Tier 2 refinery configurations: those without an FCC unit, those hydrotreating the gasoline stream coming from their FCC unit (i.e., postreating) 1 , and those hydrotreating their FCC feed (i.e., pretreating). Most refineries without FCC units would not need to do any thing to meet the proposed Tier 3 sulfur standards. Refineries equipped with FCC units that invested in an FCC postreater under Tier 2 would likel y just need to revamp (i.e., renovate) their existing unit for a modest cost. Refineries that onl y have an FCC pretreater would meet the Tier 3 sulfur standards b y either revamping their existing pretreaters (perhaps also cutting the heav y portion of FCC naphtha into the diesel pool ) or invest in a grassroots FCC postreater. Our refinery - by - refinery modeling suggests that 29 refineries would not need to make any capital changes , 66 would need to revamp their existing FCC postreaters, and 16 would need to add grassroots postreaters (we did not model any undercutting of heav y FCC na

phtha into the distillate pool ) . 2 Refiners that need to install a new postreater would have to make the largest desulfurization investments under Tier 3, typical of man y of the refinery investments made under Tier 2. For more on our estimated sulfur control costs, refer to Section VII.B. We believe that the choice of technology for each refinery is fairl y insensitive to capital cost assumptions . Revamping an existing FCC postreater will almost alway s be the preferred compliance path if it i s available. The 16 refineries we project would add grassroots postreaters do not have existing pos treaters that could be revamped . We believe based on conversations with industry

technology vendors and engineering firms that installing a grassroots postreater would be more likel y for these refineries than revamping their pretreater , which would still incur a significant capital cos t and reduc e compliance flexibility . Thus, the refinery - by - refinery anal ys is performed by

EPA for this proposal, higher capital costs (either directly or thru a higher ROI) would be unlikel y to alter the selectio n of pretreater vs postreater c ontrol technology in our anal ys is . H igher capital costs would likely impact both technology options proportionally with no overall effect . We have built in a number of flexibilities that will reduce the compliance burden for refiners. In particular, coupling the proposed 10 - ppm annual average sulfur standard with refinery gate and downstream per - gallon caps should continue to allow for batch - to - batch variability , refinery

upsets, and turnarounds while still maintaining the overall air quality benefits of the program. For more information on the applicable per - gallon sulfur caps, refer to Section V.A.3.

1 Som e of them may also have an FCC pretreater. 2 Our in - house refinery modeling considers 111 operational refineries producing non - California gasoline.Excerpt from Preamble III.B.7

These reductions would be offset to some degree by CO 2 emissions associated with higher energy

use required in the process of removing sulfur within the refinery . To assess the potential refinery

permitting implications of the Tier 3 proposal , we calculated the CO 2 emission impacts on a refinery - by - refinery basis. We used the projected refinery - specific changes from our refinery - by - refinery

modeling (see Chapter 5 of the draft RIA) to estimate cha n ges in process energy and then applied emission factors that correspond to those changes. The results showed an increase of up to 4.6 MMTCO 2 e in 2017 with the implementation of the lower sulfur standards. 3 The actual increase is expected to be considerabl y lower, since this is a permitting anal ys is and refineries will not be operating at their permit capacity . The actual increase will also be a function of several factors, including technology options selected by

the refinerie s and the projected use of averaging, banking and trading in avoiding the need for investments at some refineries. As a result, 4.6 MMTCO 2 e represents an upper - bound estimate of the possible increase in refinery

CO 2 emissions due to the need for additio nal process heat and h ydrogen production to enable the additional hydrotreating required.

3 Keller, P. ( February, 201 3 ). New Source Review Permitting Impact Analysis for Proposed Tier 3 Gasoline Program. Memorandum to the docket.