### State of Rhode Island Department of Environmental Management Office of Air Resources

In re: Proposed revisions to Air Pollution Control Regulation No. 8 "Sulfur Content of Fuels" and Air Pollution Control Regulation No. 20 "Burning of Alternative Fuels.

DECISION

Introduction On 14 March 2014 a notice was posted on the websites of the Rhode Island Department of Environmental Management (RI DEM) and the Rhode Island Office of Secretary of State and was mailed to interested parties announcing a public hearing and public comment period to accept comments on the adoption of proposed revisions to Air Pollution Control Regulation Nos. 8 and 20. A public hearing was held on 11 April 2014 at 10:00 AM in Room 230 of the Department of Environmental Management. The public comment period ended at 4:00 PM on 14 April 2014.
The Department is proposing to revise Air Pollution Control Regulation No. 8 to lower the allowable limits on the sulfur content of petroleum-based distillate and residual fuel oils and remove some outdated provisions of the regulation. In 2009, Rhode Island adopted its Regional Haze State Implementation Plan Revision, committing to various control measures representing Rhode Island's "fair share" contribution towards achieving the reasonable progess visibility goals in the Mid-Atlantic Northeast Visibility Union (MANE-VU) region by 2018. (EPA established 5 regional planning organizations to coordinate regional haze efforts. Rhode Island is a member of one of these regional organizations, MANE-VU). These measures included a two-phased reduction in the sulfur content of fuel oils. The specific commitment was to reduce the sulfur content (by weight) of:

• Distillate oil to 0.05 percent (560 ppm) by no later than 2014 (Phase I);

• Distillate oil to 0.0015 percent (15 ppm) by no later than 2018 (Phase II);

• Residual oil to 0.5 percent (5000 ppm) by no later than 2018.
APC Regulation No. 8 is being revised to incorporate the control measures committed to in the Regional Haze Plan. Limitations on the sulfur content of fuel oils consistent with what RI is proposing have been adopted in the states of Maine, Vermont and Massachusetts and proposed for adoption in Connecticut. New York and New Jersey have adopted the same limitations, but they become effective sooner.The outdated provisions that are proposed to be removed are subsections 8.3.2 "Emission

Bubbling", 8.3.3 "Conversion and Conservation Incentive", 8.3.4 "Large Fuel Burning Devices Using Coal" and 8.4.2 "Residual Fuel Oil Shipments to Marine Terminals. Additionally, DEM is proposing a revision to APC Regulation No. 20 to revise the sulfur content limitation of alternative fuels so that they are consistent with the proposed amendments to APC Regulation No. 8.

Written and/or oral comments were received from the United States Environmental Protection Agency, Capital Terminal Company, Dominion Energy Manchester Street, Inc., The Oil Heat Institute of Rhode Island, The National Biodiesel Board, Kenyon Industries and the Sprague Energy. Some of the comments below have been paraphrased. Similar comments have been grouped together. The following is the Office of Air Resources' responses to the comments received:
Response to Comments
Comment: Section 8.2.1 states "Unless the Director declares in writing after a hearing that a

shortage of fuel oil meeting the requirements of the regulation exists, no person shall store for sale, offer for sale, sell or deliver for use in Rhode Island and no person shall use any fuel oil having a sulfur content in excess of that in Table 1." The rule should not include such an open-ended exemption from the required emission limits. EPA, however, recognizes that in certain limited emergency situations, a temporary exemption might be appropriate. Therefore, Section 8.2.1 should be revised to require EPA approval of exemptions and include the criteria by which such a determination will be made, as well as the maximum period of time for which an exemption would be granted. (USEPA) The proposed amendments in Section 8.2.1 will be overly cumbersome and difficult to manage should there actually be a supply shortage of product meeting the specifications of Table 1. The time it takes to have a public hearing, including proper notification, conduct the hearing and then have the director make a declaration that a waiver will be allowed, will be far too long to avoid a product outage. We suggest that the regulations resemble language being proposed by the State of Connecticut to address fuel shortage emergencies. (Capital Terminal Company)An emergency waiver system that would allow for an exemption of the sulfur-infuel limits and the use of alternative supplies during situations where supplies of low-sulfur fuels become constrained would be prudent fro electric generating facilities, assuming alternative fuels can even be sourced from outside of the region. For this reason, the department should include such a waiver in its regulation. (Dominion Energy Manchester Street, Inc.)

2Should something catastrophic occur and ultra low sulfur heating oil is unavailable, time will be of the essence. We recommend that the Governor, after consultation with the Director of the Department of Environmental Management and the RI Emergency Management Agency, be given the authority to issue and Emergency Declaration suspending the requirement until the emergency has passed, similar to the authority the Governor has to suspend the Federal Hours of Service regulations. (The Oil Heat Institute of Rhode Island)
Response: The commenters discuss fuel supply shortages that could be due to either a

catastrophic event/natural disaster or limited availability of supply for other
reasons. For catastrophic events/natural disasters, the current air pollution law contains the following provision:
§23-23-15(d) Notwithstanding the limitations of this section, the director may, upon application, defer compliance with the whole or any part of this chapter or of any rule or regulation promulgated under this chapter where compliance is not possible because of breakdowns or malfunction of equipment, acts of God, or other unavoidable casualties; provided that this order shall not defer compliance for more than three (3) months.
The Department believes this authority is adequate to address fuel supply shortages due to catastrophic events/natural disasters and includes a maximum period of time for the exemption. The Office of Air Resources will add the following provision to Air Pollution Control Regulation No. 8:
8.7 Fuel Supply Shortages
8.7.1 The Director may, upon application, defer compliance with subsection 8.2.1 of this regulation where compliance is not possible because of breakdowns or malfunction of equipment, acts of God, other unavoidable casualties or for good cause shown; provided that the order shall not defer compliance for more than three (3) months.
8.7.2 The Director shall notin) the Administrator within five (5) business days after issuing an order deferring compliance with subsection 8.2.1.

Comment: In Section 8.4.1, compliance with the applicable limitations set forth in the

regulation can be shown by emission testing by the owner or operator of the source, the owner or operator of the stationary source receiving certification from

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### the fuel supplier, or "Laboratory analysis of fuel oils by the owner or operator of the stationary source or by the supplier. Sampling and analysis shall be conducted after each new shipment of fuel oil is received by the source." The rule should also explicitly state the compliance requirements for supplies to non-stationary sources, specifically, the compliance requirements for home heating oil. (USEPA) 

### Response: The Department believes the only practical method for addressing compliance

with the sulfur content requirements for home heating oil is to have compliance requirements at the distribution rack. Therefore a definition of fuel oil terminal and the following requirement has been added to the regulation as follows:

"Fuel oil terminal" means a fuel oil storage and distribution facility that is supplied by pipeline or waterborne vessel, and from which fuel oil may be distributed at a loading rack into a truck, trailer, or railroad car. Fuel oil terminals may be supplied by additional means such as tank trucks or railroad
cars.
8.4.2 Fuel Oil Terminals
The owner or operator of a fuel oil terminal shall determine the sulfur content of any fuel oil sold that is subject to the sulfur content limitations in Table I of this regulation and provide certification of the sulfur content of the fuel oil to each purchaser of the fuel. Certifications shall meet the requirements of subsection 8.4.1(b)(1)-(3). All fuel oil must be sampled and analyzed in accordance with applicable ASTM methods or another method which has the prior approval of or are required by the Director.

Comment: 

### The proposed amendments to the regulations limit a terminal operator and

supplier from blending "out of spec" petroleum products with other ultra low sulfur grade products to produce a product meeting the specification in Table 1 of the regulations. This is common practice even today in the 3000 ppm sulfur market where "out of spec" product may be delivered to the aboveground storage facility and blended in tanks at the facility prior to sale at the rack for delivery to the end user, within the required specifications. The following proposed language, we believe, would meet your goals and would be acceptable to facility operators handling distillate products:
8.3.4 A fuel oil storage facility having a total storage capacity in excess of 100,000 barrels which is engaged in the storage and distribution at wholesale of fuel oil may receive and store, but not distribute or sell, non-conforming product if it meets the following conditions:



### 4Notifies the Director of its intention to store nonconforming fuel oil prior to the initial receipt and storage thereof and
Tests at the point of distribution of such product not less than once every three months to determine that the fuel oil being distributed meets the requirements of this regulation for sale and use, and maintains the results of such tests as part of its business records for not less than three (3) years and provides the results of such tests to the Director at his request. Nothing herein shall prevent a fuel oil storage facility from transferring previously stored non-conforming fuel oil to a ship, barge or rail fro transportation out of State.
Response: The Department agrees with the commenter that the regulation should allow for

fuel blending. The Department will add a section to the regulation that allows "fuel oil terminals" to blend product. The proposed language is similar to what the commenter proposed. 8.6 Blending of Fuel Oils
8.6.1 A fuel oil terminal may receive and store, but not offer for sale, sell or deliver for use in Rhode Island, fuel oil that does not meet the sulfur content limitations in Table 1 of this regulation, if it meets the following conditions:
(a) The higher sulfur fuel will be blended with lower sulfur fuel to meet the sulfur content limitations in Table I of this regulation; and,
(b) Notifies the Director, in writing, of its intention to store and blend fuel oil that does not meet the sulfur content limitations in Table I of this regulation prior to the initial receipt and storage thereof and 8.6.2 Nothing herein shall relieve a fuel oil terminal from compliance with the requirements of subsection 8.4.2 of this regulation.
8.6.3 Nothing herein shall prohibit a fuel oil terminal from receiving and storing fuel oil in the state of Rhode Island for shipment, sale

5and use outside of the state of Rhode Island.

Comment: We agree with the proposed provision under 8.3.2 that allows for fuel oil stored in

Rhode Island that met the applicable sulfur-in-fuel requirements at the time the fuel was stored to be continued to be stored or used after the effective date of the revised sulfur-in-fuel limits. This exemption for stored fuel will appropriately allow sources to use up existing supplies of stored fuel and eliminate the need to remove existing inventories. (Dominion Energy Manchester Street, Inc.) We have a concern with section 8.3.2 of the proposed regulation. Because the date of inception is only about ten weeks from now and because heating oil sales fall dramatically between April and July 1, we are concerned about those companies who have their own storage facilities and their ability to deplete that storage in time for the new requirements. The inability to sell off the product could have serious impact on those companies. (The Oil Heat Institute of Rhode Island)
Response: The Department believes the concerns raised by The Oil Heat Institute of Rhode

Island are reasonable and therefore will revise subsection 8.3.2 in response to this comment to read:
8.3.2 Fuel oil stored in Rhode Island that met the applicable requirements of subsection 8.2.1 at the time the fuel oil was received for storage in Rhode Island may be stored for sale, offered for sale, sold or delivered for use or used after the effective date in subsection 8.2.1.

Comment: The Oil Heat Institute wholeheartedly endorses the lowering of the sulfur content

in heating oil as proposed. Not only will it help the environment and the air we all breathe, it will also benefit oil heating, soon to be bio-heating, consumers in our state. Even if there is a price discrepancy between the two products, research has shown that the systems will run more efficiently-reducing consumption and service-related issues, including the annual tune-up, which will be done less frequently. Once we get to 15 ppm, systems will only need a tune-up once every five years. (The Oil Heat Institute of Rhode Island) The National Biodiesel Board commends the RIDEM for proposing lower allowable sulfur limits for No. 2 and No. 6 heating oil. Recent testing at Brookhaven National Laboratory has shown that sulfur-based compounds usually comprise the majority share of particulate emissions from oil-fired heating systems. Lower sulfur in heating oils thus leads directly to reduced PM-2.5 concentrations in the air that we breathe. The new sulfur standards will also lead to greater efficiency of oil-fired heating

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### equipment by helping to keep heat exchanger surfaces cleaner over the long term. The customer can thus achieve both fuel savings as well as reduced maintenance costs. These factors can more than offset any additional base cost of the fuel due to sulfur removal. (The National Biodiesel Board) 

### Response:

Comment: These comments support the regulation as proposed and no revision to the

regulation is necessary in response to the comments. The state's proposal to lower the allowable sulfur content of residual fuel oil from the current 1% to 0.5% will have a significant financial impact on our business. Today the actual price differential between 0.5% sulfur residual fuel oil and 1% sulfur residual fuel oil is 28.6 cents per gallon. If the allowable sulfur content of residual fuel oil took effect today, our annual cost for fuel oil would increase more than $250,000. If the state is unable or unwilling to delay imposing the restriction on fuel oil sulfur content, we would ask for two things:
1. We would ask that the proposed regulation be modified so that large industrial users who are currently permitted to burn 1% sulfur residual fuel oil and who do not have the option to switch to natural gas be allowed to continue to burn 1% sulfur residual fuel oil after July 1, 2018.
2. We would ask that the state assist large residual fuel oil users, who do not have the option to switch to natural gas, to have a natural gas pipeline extended to their facility. (Kenyon Industries) 

### Response: It is extremely difficult, if not impossible to accurately predict what the price of

0.5% sulfur residual fuel oil is going to be in 2018 relative to 1% sulfur residual fuel oil. The commenter suggested the same in his testimony. The commenter discussed the price differential today of the two products and the financial burden that would impose on their company. The commenter did not discuss the savings that would result as well. Lower sulfur fuel oil will result in less boiler scale and therefore reduced maintenance costs and improved combustion efficiency. The Department does not believe that the commenter provided sufficient adverse comment on the proposed revisions to warrant delaying implementation of the regulation. The commenter requested that if the Department did not delay implementation of the revised regulation that the Department either: 1. Allow large users who are currently permitted to burn 1% sulfur residual fuel oil and do not have the option to switch to natural gas be allowed to continue to burn 1% sulfur residual fuel oil after July 1, 2018; or,

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### 2. The state assist large residual fuel oil users, who do not have the option to switch to natural gas, to have a natural gas pipeline extended to their facility. The commenter (Kenyon Industries) currently has the capability of burning an alternative fuel (propane). The Department does not think it is warranted to revise the regulation to continue to allow the use of the higher sulfur fuel oil if a facility has an option for an alternative fuel. With respect to the commenter's second request, the Department will, if requested by the company, meet to discuss how it can assist the company with its effort to have a natural gas pipeline extended to their facility. If in 2018, when the lower sulfur requirements go into effect, the price differential between 1% sulfur residual fuel oil and 0.5% sulfur residual fuel oil is significant and the commenter believes there will be a significant financial burden on their company, the current air pollution law does contain the following provision:

§ 23-23-15 Variances. — (a) Upon application and after a hearing, the director may suspend the enforcement of the whole or any part of this chapter or of any rule or regulation promulgated under this chapter in the case of any person who shall show that the enforcement of this chapter would constitute undue hardship on that person without a corresponding benefit or advantage obtained by it; provided, that no suspension shall be entered deferring compliance with a requirement of this chapter or the rules and regulations promulgated under this chapter, unless that deferral is consistent with the provisions and procedures of the federal Clean Air Act, 42 US.C. § 7401 et seq. (b) In determining under what conditions and to what extent the variance may be granted, the director shall give due recognition to the progress which the person requesting the variance shall have made in eliminating or preventing air pollution. In this case, the director shall consider the reasonableness of granting a variance conditioned on the person's effecting a partial abatement of the pollution or a progressive abatement of the pollution or any other circumstances that the director may deem reasonable. No variance shall be granted to an), person applying for it who is causing air pollution which creates a danger to public health or safety. (c) Any variance granted under this chapter shall be granted for any period of time, not exceeding one year, as the director shall spec0), but any variance may be continued from year to year. No variance shall be construed as to relieve the person receiving it from any liability imposed

### Douglas McVay Hearing Officer by law for the commission or maintenance of a nuisance nor shall there be any appeal from a denial of a variance. 

### Therefore a variance request is an option for the commenter. No revision to the regulation will be made in response to this comment.

Decision 

### It is the decision of the Office of Air Resources to amend the draft Air Pollution Control Regulation Nos. 8 and 20 as indicated in the response to comments above. The final amended regulation is appended to this Decision.

Date

Approved:

Date Janet Coit, Director Department of Environmental Management

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