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# Colorado Petroleum Association

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### BEFORETHE AIRQUALITY CONTROLCOMMISSION STATEOFCOLORADO

## qr:CE~Vf;: '. IN THE MAITEROF PROPOSED REVISIONS TO COMMON PROVISIONS 

# =. t REGULATION REGARDING UPSET PROVISIONS 

## :'/!h: Ij

### 1~1iJ~ o\lH iJlMln 'r 

### PRELIMINARY PREHEARING STATEMENTOF COLORADO

### PETROtf~IS!iK),' ASSOCIATION

Executive Summary Colorado Petroleum Association ("CPA") is anon-profit trade organizationthat represents the oil and gas industry before state, regional and federal governmental entities. CPA and several ofits members that are subjectto regulation under the Clean Air Act have a vested interest in the outcome ofthis rulemaking. CPA questions the need for a change in the existing upsetprovisions as these provisions have been a part ofthe Colorado State Implementation ("SIP") for over thirty (30) years and Colorado is in attairunent with all ofthe National Ambient Air Quality Standards (''NAAQS''), However, CPA understands that the AirPollution Control Division has decided to work with the United States Envirorunental ProtectionAgency to resolve concerns regarding the existing upset conditions. CPA does not support Option I-draftedbythe EPA. CPA has worked withthe Air Pollution Control Division (APCD) todevelop Option 2, whichis fully protective ofpublic health, provides reasonable certainty to industry onthe upset fl:J,ctors (Option I hasten (10) factors which provide uncertainty and vagueness), and provides consistency with the five (5)existing upset conditions and factors. Specifically, CPA suggests that: • The Division retain (and incorporate into the newregulation) the five (5) specific factors thatthe Division has used for the past ten years in determining whether an upset occurs as these are reasonable, effective and certain factors that have worked in practice; • The Division continue to provide relieffrom enforcement when a valid upsetoccurs; • The upsetprovisionsdo not negate or supersede any applicable regulation orpermit requirement, including any malfunction exemptions contained within theNational Emissions Standardsfor Hazardous Air Pollutants C"NESHAP"), New Source Performance Standards ("NSPS") or otherprovisions ofthe Clean Air Act; • TheDivision only use injunctive reliefinthose rare circumstances where an upset might cause adverse air quality such that injunctive re1iefis warranted. • The Commission not approve Option 1and its ten (10) vague factors at it will lead to uncertainty and greater litigation due to that uncertainty. The APCD and Commission will lose control ofits air program to the courts due to expanded citizen suits to resolve this uncertainty.

"'DE·020840_3· !02614v1BEFORE THE AIR QUALITY CONTROL COMMISSION STATE OF COLORADO

IN THE MAITER OF PROPOSED REVISIONS TO COMMON PROVISIONS REGULAnON REGARDING UPSET PROVISIONS

PRELIMINARY PREHEARING STATEMENT OFCOLORADO PETROLEUM ASSOCIATION

Pursuant to Rule 1.5.5(5)(c) ofthe Colorado Air Quality Control Commission's Procedural Rules, this Preliminary Prehearing Statement is submitted on behalfofColorado Petroleum Association ("CPA"). CPA is a non-profit trade organization that represents the oil and gas industry before state, regional and federal governmental entities. CPA and several ofits members that are subject to regulation under the Clean AirAct have a vested interest in the outcome ofthis rulemaking. CPA questions the need for a change in the existingupset provisions as these provisions have been a part ofthe Colorado State Implementation ("SIP") for overthirty (30) years and Colorado is in attainment with all ofthe National AmbientAir Quality Standards ("NAAQS"). However, CPA understands that the Air Pollution Control Division (APCD)has decided to work with the United States Environmental Protection Agency to resolve concerns regardingthe existing upset conditions. CPA supports Option 2 as drafted by the APCD and believes it keeps the framework ofthe existing upset factors, clearly accommodates the EPA and citizen concerns by allowing injunctive relief, and fully protects ambient air quality and the attairunent ofthe NAAQS. 1. Factual and Legal Issues CPA'sprimary issue is to ensure that the upset provisions as revised are adequately protective ofpublic health, provide reasonable certainty to industry and provide as much consistency as possible withthe existingupset regulations. The five (5) specific factors that the Divisionhas used as guidance for the past ten years are reasonable, effective and viable factors for determining the validity ofreported upsets. These factors should 

### be incorporated into the newregulation to provide guidance to the operators and establish certainty, as well as transparency, as to the methods that the Division will use to analyze a reported upset. CPA 

### will present testimony that the ten (10) factors in Option I are vague and uncertain.

a. The proposed language ofOption 2 ofthe Revisions to the Upset Provisions (Common Provisions Regulation 

### 1.0 and II.E). Changes to Option 2 may be discussed and a new Exhibit A presented. b. Theproposed languageofthe Statement ofBasis, Specific Statutory Authority, and Pwpose for Option 2 ofthe Revisions to Common Provisions Regulation September 14, 2006. Changesto Option 2 SOBP may be discussed and Exhibit B offered.

\\\DE·02D.40J000003· 302614 vI 22. List ofIssues To BeResolved

• FACTORS: The Division should continue to use (and the Commission should incorporate into the new regulation) the five (5) specific factors that the Division has used as guidance for thepast ten years to evaluate whether an upsethas occurred as these are reasonable, effective and viable factors and establish certainty, as well astransparency, for the state and for industry; • ENFORCEMENT DISCRETION: The Division should continue to provide relieffrom enforcement ofregulation when a true upset occurs and the public health and welfare has not been impacted; • CURRENT PERMIT & REGULATIONS SHOULD NOT BE SUPERCEDED: Currently numerous federal regulations and approved permits provide 

### an exemption for malfunctions. Thisrevised upset regulation should not negate or supersede any applicable regulation orpermitrequirement, including any malfunction exemptions contained within the National Emissions Standardsfor Hazardous Air Pollutants ("NESHAP"), New Source Performance Standards ("NSPS") or other provisions ofthe Clean Air Act; • ENFORCEMENT & INJUNCTIVE RELIEF: The Division (and EPA and citizens ifthe statedoes not act) should use injunctive reliefin those rare circumstances where an upset might cause adverseair quality suchthat injW1ctive reliefis warranted. 

### 3. Exhibits No Exhibits are intended at this time, but revisions to Option 

### 2 may be discussed with the APCD and offered at the hearing. 4. Witnesses. Dennis 

### Arfmann orJennifer Morris ofHogan & Hartson, counsel to CPA,John Clouse ofWind River Environmental Group, andlor Stan Dempsey, President ofCPA, may testify regarding the factual and legal issues described above. CPA requests 

### 60 minutes for its presentation. 

### 5. Alternative Proposals. CPAhas no alternative proposals, butreserves the right to work withAPCDto develop variations on either Option 1or Option2. 

### 6. WrittenTestimony. CPA may have a Power Point or a handout**t~** facilitate its presentation before the Commission. 

### 7. Final Economic 

### ImpactAnalysis. We anticipate no revisions to the Final Economic Impact Analysis based on our issues and revisions.

"'\DE.OZ08401OOOOO3· 302614 vl 3Respectfully submitted**thi~.2th** day ofNovember, 2006 by Dennis 

### L. Arfmann and Jennifer 

### L. Morris, attorneys for Colorado Petroleum Association

..'**~.,./-!** 

### .; 

# /---!**/1~** / /' ,e--­ 

# - C.**~~~~** L. fmann, BA#17561

.' Jennifer 

### L. Morris, CBA # 35963 Hogan & Hartson' 1470 Walnut Street, Suite 200 Boulder, CO 80302

\ "DE·020840I000OO3

. 302614 vI 4CERTIFICATE OF SERVICE I hereby certify that on this 

### 13 day ofNovember, 2006, 

### an original and twenty (20) copies ofthe foregoing Preliminary Prehearing Statementwas sent via pre-paid, hand delivery service to the Colorado DepartmentofPublic Health & Environment, Air Quality Control Commission at the address below, and I hereby further certify that on this Uday ofNovember, 2006 a copy ofthe foregoing Preliminary Prehearing Statementwas sent viaelectronic mail to all ofthe recipients listed below: NAME Colorado DepartmentofPublic Health 

### & Environment Air Quality Control Commission Theresa 

### L. Martin EDO-AQCC-A5 

### Garry Kaufman APCD-B1

Steve Brown Attorney for the Commission

Thomas Roan Attorney for the Division

Rocky Mountain CleanAirAction Environmental Integrity Project St. Vrain Valley Community Watchdogs Mothers Against Burning Tires Friends ofthe St. Vrain River Valley REPRESENTED BY/ADDRESS 4300 Cherry Creek Drive South Denver, CO 80246-1530 Ph: (303) 692-1530 Fax: (303) 692-0278

4300 Cherry Creek Drive South Denver, CO 80246 Ph: (303) 692-3111 Attorney General's Office 1525 ShennanStreet Denver, CO 80203 Ph: (303) 866-5039 Fax: (303) 866-3558 Attorney General's Office 1525 Shennan Street Denver, CO 80203 Ph: (303) 866-5039 Fax: (303) 866-3558 Jeremy Nichols Director 1536 Wynkoop, Suite B501 Denver, CO 80202

\\\DE

. 0208401000003 • 302614 .1Colorado Petroleum Association (CPA)

Colorado Utilities Coalition for Clean Air (CUC)

- Platte River Power Authority

- Tri·State Generation and Transmission Association Inc.

- Public Service Company ofColorado doing business as Xcel Energy Rocky Mountain Steel Mills d/b/a CF&I

Colorado Association ofCommerce and Industry (CACI)

Colorado Ready Mixed Concrete Association and The Colorado Rock Products Association DeIUlis 

### L. Arfmann Jennifer L. Morris Hogan & Hartson 1470Walnut Street, Suite 200 Boulder, CO 80302

H. Stanley Dempsey, Jr. 1580 Lincoln Street, Suite 1125 Denver, CO 80203 James W. Sanderson Ryley Carlock & Applewhite 1775 Shennan Street, Twenty-First Floor Denver, CO 80203

Eugene F. Megyesy, Jr. Dufford & Brown, P.C. 1700 Broadway, Suite 2100 Denver, CO 80290·2101 Dennis 

### L. Arfmann JeIUlifer 

### L. Morris Hogan & Hartson 1470 Walnut Street, Suite 200 Boulder, CO 80302

Donald K. Shandy Ryan, Whaley & Coldiron P.C. 900 Robinson Renaissance 119North Robinson Avenue OklahomaCity, OK73102 Melissa I. Young 6855 South Havana Street, Suite 540 Centennial,.**/8~** 12



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\\"\DE· 020114011l00003· 30:&14 vI

### BEFORETHEAIR QUALITY CONTROL COMMISSION STATE OF COLORADO

rN THE MATTER OF PROPOSED REVISIONS TO COMMON PROVISIONS REGULATION REGARDING UPSET PROVISIONS



### REBUTTAL STATEMENT OF COLORADO PETROLEUM ASSOCIATION ("CPA")

Executive Summary ColoradoPetroleum Association ("CPA") is a non-profit trade organizationthat represents the oil and gas industry before state, regional and federal governmental entities. CPA and several ofits members that are subjectto regulation underthe CleanAirAct have a vested interest in the outcome ofthis rulemaking. CPA questions the need for a change in the existing upset provisions as these provisions have been a part ofthe Colorado State Implementation ("SIP") for overthirty (30) years and Colorado is in attainment with all ofthe National AmbientAir Quality Standards ("NAAQS"). However, as CPA Wlderstands that the Air Pollution Control Division has decided to work with the United StatesEnvironmental ProtectionAgencyto resolve concerns regarding the existing upset conditions. As noted in its Prehearing Statement, CPA does not support Option**l~afted** by the EPA. Accordingly, CPA has worked with the AirPollution Control Division (Division) to develop Option 2, which is fully protective ofpublic health, providesreasonable certainty to industry on the upset factors. CPA disagrees with factual and legal statements that the Rocky Mountain Clean AirAction ("RMCAA") made in itsPrehearing Statement, particularly those statements regarding ambient air quality in the StateofColoradoand those statementsregarding Option 2. Accordingly, CPAhasprepared this Rebuttal Statement to refute many ofthe arguments set forth by RMCAA. A more detail analysis is contained herein.

I'.'J)E

. O:lOWQIcooo01 • 10<19]7 .1

### BEFORETHE AIR QUALITY CONTROL COMMISSION STATE OF COLORADO

IN THE MAITER OF PROPOSED REVISIONS TO COMMON PROVISIONS REGULATION REGARDING UPSETPROVISIONS



### REBUTTAL STATEMENT OF COLORADO PETROLEUM ASSOCIATION ("CPA")

Colorado Petroleum Association ("CPA") is a non-profit trade organizationthat represents the oil and gas industry before state, regional and federal governmental entities. CPA and several ofits members that are subject to regulation underthe Clean Air Act have a vested interest in the outcome ofthis rulemaking. CPA disagrees with factual and legal statements that the Rocky Mountain Clean Air Action ("RMCAA") made in its Prehearing Statement, particularly those statements regarding ambient airquality in the State of Colorado and those statements regarding Option 2. Accordingly, CPA has preparedthis Rebunal Statementto refute many ofthe arguments set forth by RMCAA.



### I. CURRENT UPSET PROVISIONS DO NOT VIOLATE CLEAN AIR ACT Rocky Mountain Clean Air Action ("RMCAA,,)I first argues thatthe current upset provision is contraryto the federal Clean Air Act ("CAA,').2 Though RMCAA citesto EPA guidance and policies on upset provisions, Colorado's upsetprovision, though potentially inconsistent with EPA'scurrent guidance on upset provisions, is not contrary to the CAA. 1) The Eleventh Circuit recently addressed this issue in Sierra Clubv. Georgia Power Company, 443 F.3d 1346 (1 Itil Cir. 2006). • The court evaluated Georgia's SSM rule (arule very similarto Colorado's). • Sierra Club brought suit for exceedingpennit limits and Georgia Power wanted to utilize the affirmative defense available 

### in Georgia's SSMrule.

I RMCAA is generally referred to in this rebuttal. The RMCAA Prehearing Statement was also filed on behalfofEnvironmenta/lntegrityProject, St. Vrain Valley Community Watchdogs, Mothers Against Burning Tires, and Friends ofthe St. Vrain River Yalley. 2 42 U.S.C.A. § 7401, ct. seq.



### 2 \\\Dtt**02Ol~3** • 3049'7 vJ• Sierra Club contendedthat because Georgia's SSM rule provided a broader SSM defense thannow allowed by EPA, Georgia Power could not avail itselfofthe affinnative defense. • The court disagreed and noted that EPA's2001 clarification explains that EPA's 1999 Guidance did not alter the status ofany existing SSM provision in a SIP that has been approved by EPA. It applied only prospectively. • The court note distinguished the decision ofthe 6th Circuit in Michigan Dept. of Envtl. Quality v. Browner, 230 F.3d 181 (6th Cir. 2000), as irrelevant in detennining the validity ofan existing upset provision.3
• The court also determined that EPA's guidance is not due the same level of deference as a fonnally adoptedrule suchas a SIP. 2) Contrary to RMCAA's claims, the federal courts have not specifically determined or endorsed the ideathat an upset provision such as Colorado'sviolates the Clean Air Act ("CAA"). • In fact, it seems that the Georgia Power court detennined that at least Georgia's SSM provisions were not violations ofthe CAA as it allowed Georgia Powerto attempt to utilize the affirmative defense available under those provisions. • The court would not likely have allowed that defense 

### ifit violated the CAA. 3) CPA and its members support a change to the current upset rule-we support Option 2 which complies with the intent ofEPA'snew guidance and should 

### be adopted by this Commission and approved by EPA. 

### II. CURRENT UPSETPROVISIONS DO NOT THREATEN AIR QUALITY AND HUMAN 

### HEALTH IN COLORADO RMCAA also claims that the current upset provisions threaten airquality and hwnan health in Colorado. While RMCAA may have gone to great lengths to discuss upsets in Colorado, it has not provided any evidence supporting its claim that the current upset provisions have threatened airqualityand human health in Colorado over the last 30 years. I) First, during the time from 1999

- 2005 that RMCAA focuses on, the State ofColorado has moved from non-attainment into attainment for PM\o and CO. 2) Second, contrary to RMCAA'sclaims, the numberofupsets does not necessarily provide information about the amount ofexcess emissions, the duration ofthe events or the effect on air quality. RMCAA has not prpvided support its claims. 3) The State ofColorado, in the long and complicated process ofdeveloped a State Implementation Plan, does not rely onpennit limits alone to protect the NAAQS and PSD

1 The court found this to be true because in the Browner case. Michigan sought EPA approval for a SIP revision that included a new SSM provision. 

### M. at 1354.

\\\DE .020140I000OO). JO.49]7 wI 

### 3increments. The SIP addresses numerous sources, including industrial sources, mobile sources and area source activities by the public that contribute to airpollution. In consideringthe emissions from these sources, the State ofColorado consider all emissions, including upset, startup and shutdown emissions, inpreparing a plan to protect the air quality standards. 4) The State ofColorado is in attainment for all pollutants across the state, and only the 8­ hourozone standard inthe Denvermetro area is threatened. The industry cites this evidence not because it believes the State ofColorado should wait for a NAAQS violation to occur before taking action; but because this information evidences that the Regional Air Quality Council, the Air Quality Control Commission, and Colorado's SIPs are working and have taken Denverfrom nonattainment to attainment for aU po})utants (the first major city in the United States to accomplishthis feat). 5) RMCAA argues that because ozone pollution in the Denvermetro area is linked to VOC emissions, RMCAA concludes that upsets ofVOCs from the BP Wattenberg natural gas plant and the Suncor DenverRefinery have contributedto violations ofthe NAAQS in that case. RMCAA has no support for this conclusion. • First, the types ofVOCs and structure ofthe VOCs significantly affect the likelihood that those VOCs will form Olone. RMCAA has provided no information onthe type and structure ofVOC emissions from the upsets atthe BP Wattenberg and Suncor DenverRefinery, and cannot automatically conclude that those VOCs significantly contributed to the fonnation ofozone. • Second, a review ofBP records atthe Division suggest that virtually aJl the upset reports touted by RMCAA as VOC "exceedances"were not reported as such by BP Wattenburg. Itappears that such w;ere inadvertentlyplaced indatabase by the Division. The Division 

### has since reconciled its database to accurately reflect BP Wattenburg's upset reports. • Third, BP Wattenberg has submitted numerous upset conditionreports to the Division since 2003. The majority ofthese submittals, (75%), were required as a pennit condition within its Title V Permit whenthe Thermal Oxidizer is off-line. In this case, the upsetreporting is arguably administrative in nature since emissions occurring as a result of

### this "pennit defined upset condition" are insignificant. • Finally, the State ofColorado has focused on mobile sources and oil and gas condensate tank emissions as the primary entities that must reduce VOC emissions to protect the 8·hourozone standard

- not limited upsets from these plants. 

### III. OPTION 2COMPLIESWITH EPA GUIDANCE ON UPSET CONDITIONSAND SHOULD BE APPROVED BY 

### THIS COMMISSION AND 

### EPA I) Both Options 1and 2 have both been deemed compliant with the CAA by the Colorado State Attorney General's office.

\\"DE**-ln~l.** l04911

### v, 4

### 2) Option I is not the best choice for very pragmatic reasons as it does not promote greater compliance and does not provide the regulated community certainty in terms ofwhat is necessary to insure compliance. Option 

### 2 will insure greater compliance because it provide five specific factors for which definitions and descriptions are provided where necessary. In contrast, Option I 

### provides a laundry list often factors that must

### be satisfied before 

### an entity can qualify for an affinnative defense a list that is cumbersome with factors that are ambiguous and lack adequate definition. The Commission should not adopt Option 1. 

### 3) RMCAA argues that Option 2 does not comply with the CAA and will be rejected by the EPA and lead to 

### a SIP call. RMCAA does nol support its argwnents and provides rebuttal on certain ofRMCAA's statements: • Option 2 

### does not aHow single sources or small groups ofsources to cause exceedances ofthe NAAQS orPSD requirements 

### with immunity. • Option 2 does Dot allowthe owner/operator to define what constitutes poor maintenance, instead it relies on independent decisionmakers such as the Division and the courts to determine whether 

### an owner/operators' actions were reasonable. • Option 2 only allows 

### an upset condition to be 

### unpredictable atthe point in time when it is unpredictable. Once it has occurred, is predictable and can be prevented, future reoccurrence would not likely qualify as an upset. • Option 2 

### does not allow an affinnative defense when the owner oroperator could have prevented 

### an upset condition. Again, it is not the owner/operator's determination ofreasonable that determines whether

### an upset has occurred. • Finally, Option2 does notpreclude injunctive reliefunder federal law. The language does nothing ofthe sort. It simply affirms the right to pursue injunctive reliefunder Colorado law. In conclusion, RMCAA's concerns with Option 2 are unfounded. Option 2provides a workable solution for the State ofColorado, EPA, industry and the citizens ofColorado. It



### 1470 Walnut Street, Suite 200 Boulder, CO 80302 (720) 406-5374 

### (Telephone) (720) 406-5301 

### (Fascirnile) protects ambient air quality while providing certainty and flexibility for 0 

### rs. Respectfully**SUbm~**
,.",,,­ 

## D s ..--JenniferL. Morris

Hogan & 

### Hartson

'.\IDE. C2ll14Q'UOOOOJ. 304937 vi 

### 5

### CERTIFICATE OFSERVICE I hereby certify that on the 28th day ofNovember, 2006, an original and fifteen (15) copies of the foregoing Rebuttal Statement of The Colorado Petroleum Association was sent via pre-paid, hand delivery service to the Colorado Department of Public Health 

### & Environment, Air Quality Control Commission at the address below, and I hereby further certify that on this 28th day ofNovember, 2006 a copy ofthe foregoing RebuttaJ Statement of Colorado PetroJewn Association was sent via electronic mail to all of the recipients listed below: Colorado Department ofPublic Health & Environment Air Quality Control Commission Theresa 

### L. Martin EDQ-AQCC-A5 Garry Kaufman APCD-BI

Steve Brown Attorney for the Commission

Thomas Roan Attorney for the Division

Rocky Mountain Clean Air Action Environmental Integrity Project St. Vrain Valley Community Watchdogs Mothers Against Burning Tires Friends ofthe St, Vrain River Valley Colorado Association for Industry and Commerce (CACI) 4300 Cherry Creek Drive South Denver, CO 80246-1530 (303) 692-1530 (Telephone) (303) 692-0278 (Fascimile)

4300 Cherry Creek Drive South Denver, CO 80246 (303) 692-3111 (Telephone) Attorney GeneraJ's Office 1525 Sherman Street Denver, CO 80203 (303) 866-5039 (Telephone) (303) 866-3558 (Fascimile) Attorney General's Office 1525 Sherman Street Denver, C080203 (303) 866-5039 (Telephone) (303) 866-3558 (Fascimile) Jeremy Nichols Director 1536 Wynkoop, Suite B501 Denver, CO 80202 DennisArfmann Jennifer L. Morris Hogan 

### &Hartson 1470 Walnut Street, Suite 200 Boulder, CO 80302

',I\DE

. 02_1· 100917 _. 

### 7Centennial, CO 80112 Products Association Colorado Utilities Coalition for CleanAir (CUe) Platte River Power Authority Tri·State Generation and Transmission Association Inc. Public Service Company of Colorado doing business as Xcel Energy Rocky Mountain Steel

### MiHs d/b/a CF&I

Colorado Ready Mixed Concrete Association and The Colorado Rock Don Shandy Donald K. Shandy, OBA # 11511 Ryan, Whaley, & Coldiron, P.C. 119 North Robinson Oklahoma City, OK 73102 James W. Sanderson Ryley Carlock & Applewhite 1775 Shennan Street, Twenty-First Floor Denver, CO 80203

Eugene F. Megyesy, Jr. Dufford & Brown, P.C. 1700 Broadway, Suite 2100 Denver, CO 80290-2101 Melissa I. Young 6855 South Havana Street, Suite 540

\\'lIE •020&40lO0OOO3 • 3_37.1 

### 8