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# OAR Box 1778 Prepped by Ollie Stewart



### Document

Number: 

# 24 ) ll-A- 8

Docket Number: 

# A-90-0 6

Printed 10/28/2008 9:50:52 AM Sheet 24 of 276P. 2 

# eB* \ avnyironrmnu i Prouc i Agtncy Ai r 

# //ir^i y C3 ; ^

11-A- 8 

# Equipmen t Leak s o f VO C i n Petroleu m Refinin g Industr y— Backgroun d Informatio n fo r Promulgate d Standard s EI S

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# j B 6 B B .IJLP) } J U JU M 

## I 2 1891 

## U JP. 3



## EPA-450/3-81-0 1



# Equipmen t Leak s o f VO C i n Petroleu m Refinin g Industr y- Backgroun d Informatio n fo r Promulgate d Standard s

Emissio n Standard s an d Engineerin g Divisio n

U.S

. ENVIRONMENTA L PROTECTIO N AGENC Y Offic e o f Air , Noise , an d Radiatio n Offic e o f Ai rQuaiit vPlannin g an a Standara s Researc n Triangl e Park , Nor m Carolin a 2771 1

Decembe r 7 , 198 3P. 4

4. 0 MODIFIE D SOURCE S

4. 1 EMISSIO N

INCREAS E Comment : A numbe r o f commenter s (IV-D-14 , IV-0-15 , IV-D-16 , an d IV-0-21 ) requeste d tha t th e EPA allo w a nincreas e o f a d e minimi s leve l o f emission s befor e a

nexistin g facilit y

woul d b e considere d t o hav e modified . D e minimi s value s o f 5 ton s pe r yea r and 4 0 ton s pe r yea r (a s i n4 0 CF R51.18(j) ) wer e suggeste d b y th e commenters . Response : Unde r th e definitio ninSectio n111(a)(4) , an y physica l o r operationa l chang e resultin g i na nincreas e inemission s constitute s a "modification. " EPA ha s exempte d certai nsmal l emission s increase s fro m consideratio ni ndecidin g whethe r ther e ha s bee na nincreas e i n emission s constitutin g a "modification " fo r purpose s o f PS D applicabilit y (4 0 CF R52.21(b)(2 ) an d (b)(231)) . Thi s actio nfollowe d th e decisio n i nAlabam a Powe r Co . v . Costle , 63 6 F.2 d 32 3 (D.C . Cir . 1979) , inwhic h th e D.C . Circui t hel d tha t EPA ha s authorit y

t o interpre t th e definitio n
o f "modification " s o a s t o exemp t source s wit hsmal l emission s increase s fro m PS D revie w

onground s o f administrativ e necessit y (_Id_ . a t 400) . Th e Alabam a Powe r decisio ndoe s no t requir e EP A t o provid e a d e minimi s exemptio nfro m applicatio no f th e "modification " definitio nfo r NSP S applicabilit y

purposes . No r ha s EPA' s experienc e i nimplementin g th e NSP S progra m

suggeste d a

nadministrativ e nee d fo r relievin g existin g source s fro

m NSP S applicabilit y

whe nthe y

underg o change s resultin g i n onl y a smal l increas e i nemissions . Thi s differ s somewha t fro m EPA' s implementatio no f th e definitio no f "modification " fo r PS D applicabilit y purposes . I

ntha t area , th e Agenc y ha s determine d tha t th e administrativ e burde no f applyin g th e ful l preconstructio nrevie w proces s t o a sourc e wit honl y

a smal l emission s increas e ma y b e unreasonabl e (4 5 F R52705 ; Augus t 7 , 1980) . Th e administrativ e burde nassociate d wit hth e NSP S program , however , i s relativel y minimal . I

ncontras t t o PS D requirements ,



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NSPS' s ar e categoricall yapplicabl e technology-base a requirement s only , the yd o no t involv e a n assessmen t o f ambien t effect s an a d o no t requir e case-by-cas e review

. Furthermore , EP Abelieve s tha t th e curren t straightforwar d applicatio n o f th e "modification " definitio n fo r NSP S purpose s nes t
serve s Sectio n Ill' s intent

. On e ke ypurpos e o f tn e NSP S progra mi s t o M preven t ne wpollutio n problem s fro marising

. On e wa ytha t th e statut e M seek s t o achiev e thi s i s b yrequirin g applicatio n o f tn e bes t demonstrated: ! technolog yat , and therebyminimizin g emission s from , existin g facilitie s wit h increase d emissions

. Th e curren t NSP S approac h o f no t providin g an exemptio n fro mth e "modification " provisio n base d on th e siz e o f th e emission s source s i s no t intende d t o cove r existin g plant s makin g routin e and mino r additions

. Th e "modification " provision s i n th e Genera l Provision s o f 4 0 CF R Par t 6 0 exemp t change s suc n a s addition s mad e t o increas e productio n rat e (i f the yca n b e accomplishe d withou t capita l expenditure , a s define d i n th e Genera l Provisions ) an a routin e replacement s (4 0 CF R 60.14(e))

. In addition , thes e standara s woul d exemp t addition s mad e fo r proces s improvement s i f the yar e mad e withou t incurrin g a capita l expenditure

. Comment : Othe r commenter s (IV-0- 8 an d IV-D-14) , concerne d abou t th e complexit y o f th e modificatio n provisions , endorse d revisin g th e modificatio n provision s suc h tha t a modificatio n occur s whe n th e numbe r o f component s exceed s 1 0 percen t o f th e tota l numbe r o f th e sam e typ e an d ther e i s a ne t increas e i n emission s fro mth e proces s unit

. ResDonse : A s discusse d i n Sectio n 4.2 , EP Ai s promulgatin g a n alternativ e procedur e tha t wil l reduc e th e complexit yo f th e modificatio n provision s (i n particular , ho wt o determin e a capita l expenditure)

. I n EPA' s vie w 4 0 CF R 60.1 4 o f the

Genera l Provision s adequatel yspecifie s th e categorie s o f change s t o a n existin g facilit ytha t shoul d brin g th e facilit yunde r NSP S a s a "modified " source . I t shoul d b e note d that , unde r Sectio n 50.14(e) , certai n change s mad e i n an affecte d facilit ywithou t a capita l expenditur e ar e no t considere d "change s i n operation " oy EP Aand , therefore , ar e no t modifications

. See , e.g. , 4 0 CF R 50.14(e)(2 ) — productio n rat e increases

.

.- ?P. 6



### A s propose dinth e standards , certai nchange s (proces s improvements ) mad e ina

naffecte dfacilit y

withou t a capita l expenditur e ar e no t W considere d"change s i noperation " by EP A and , therefore , ar e no t modi fications . Thi s generall y exclude s coverag e from industr y

practice s tha t involv e addin g a fe w valve s andmayb e a samplin g system an dmakin g ]'• othe r mino r change s inequipmen t configurations . Th e 1 0 percen t increas e ± inth e numbe r o f fugitiv e emissio ncomponent s a s suggeste db y th e j ^ commenter , woul dmos t likel y b e associate dwit ha VO C emission s increas e o f abou t 1 0 percent . Makin g suc ha chang e woul dlikel y b e associate d wit hcapita l expenditur e and , therefore , EP A consider s thi s a modification . Therefore , EP A

di dno t revis e th e modificatio nprovisio na s requested , r Comment :

Anothe r commente r (IV-D-8 ) maintaine dtha t onc e a "modification " ha s occurred , th e NSP S requirement s shoul db e applie donl y t o thos e type s o f component s whic htrigge r th e definitio no f modification . Response : Unde r Sectio n11 1 o f th e Clea nAi r Act , th e applicatio no f modificatio ni s inextricabl y tie dt o th e designatio no f "ne w source, " ; o r inNSP S terminology , a naffecte dfacility . Sectio n111(a)(2 ) define s th e "new source " subjec t t o NSP S a s a sourc e onwhic hmodificatio nha s commence dafte r proposal , no t th e portio no f th e sourc e actuall y changed . Stateddifferently , modificatio nprovision s ar e triggere dwit hrespec t t o th e affecte dfacility ; therefore , applicabilit y i s t o al l component s affecte db

y th e standard s withi nth e affecte dfacility . Th e commente r i s implicitl y

requestin g EP A

t o defin e th e affecte dfacilit y a s a grou p o f on e typ e o f equipmen t withi na proces s unit . EPA , a s discusse di n Sectio n3.1 , reasonabl y conclude dtha t affecte dfacilitie s t o whic hth e standard s appl y

shouldremain : (1 ) th e grou po f al l fugitiv e emissio n source s (pumps , valves , sampling connections , pressur e relie f devices , an dope nende dlines ) withi na proces s uni t and(2 ) compressors . 4. 2 CAPITA L EXPENDITURE S Comment : Commenter s requeste dtha t th e capita l expenditur e determinatio n (a s i t relate s t o th e modificatio nprovisions ) b e revise ds o tha t i t i s mor e practicable . Commenter s (IV-D- 8 andIV-D-15 ) remarke dtha t .th e

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capita l expenditur e guideline s are outdate dan

dwoul dbe difficul t t o us e becaus e unit s hav e bee nsubstantiall y rebuil t ove r th e year s and record s o f cost s fo r determinin g th e cos t basi s ma y b e kep t o

na proces s uni t basi s rathe r tha nfo r individua l piece s o f equipment , o r simpl y ma y no t exist . I t is , therefore , very difficul t t o reconstruc t origina l costs . I nsuppor t o f thei r concer nabou t usin g origina l costs , th e comnient e state dthat , base do

nEPA' s curren t interpretatio no f capita l expenditur e 1 t o 3 percen t o f th e curren t replacemen t cost s woul dsubjec t unit s t o modification . Anothe r commente r (IV-D-14 ) claime dthat componen t cost s represen t 5 percen t o f th e tota l origina l cost s an dthat th e additio n o f a new pum pwit hsevera l valve s coul deasil y excee dth e "capita l expenditure " definition . Thi s commente r provide dth e hypothetica l exampl e o f a uni t wit ha tota l origina l cos t o f S1 6 millio nandcomponen t cos t o f 5815,000 . Th e additio no f a pum pwit hsevera l valve s woul d
excee d4 percen t o f th e tota l componen t costs , around556,000 . On e commente r (IV-0-10 ) suggeste dtha t replacemen t cost s rathe r tha norigina l cost s b e use dto determin e th e basi s fo r capita l expenditur e A fe w commenter s (IV-0-4 , IV-0-15 , an dIY-0-16 ) suggeste dtha t capita l expenditur e be define da s 7 percen t o f th e replacemen t cos t (base don th e Chemica l Engineerin g Constructio nIndexo r othe r suitabl e index ) o f
a naffecte dfacilit y

a t th e time o f proces s improvement . Response : Afte r reviewin g th e commen t letter s concernin g th e difficultie s wit husin g th e capita l expenditur e definition , EP A agree s tha t th e definitio nfo r capita l expenditur e ma y be difficul t t o us e fo r som e refineries . Accordingly , EPA decide d t o provid e a nalternativ e t o th e procedure s i nth e Genera l Provisions . Althoug hth e implementatio n o f th e capita l expenditur e definitio nha s bee nmad e mor e practicable , th e origina l inten t o f th e definitio nha s bee nmaintained . Th e alternativ e use s a nadjuste dannua l asse t guidelin e repai r allowanc e (AAGRA ) andth e replacemen t cost s t o determin e capita l expenditure . Th e adjuste dAAGR A i s determine db

y a formul a andi s base dona rati o tha t reflect s inflatio no f cost s ove r th e las t severa l years . Th e adjuste dAAGR A i s multiplie db

y th e replacemen t cost s o f

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### the equipmen t withi nth e facilit y t o determin e th e valu e o f a capita l i expenditure . • Th e burde nassociate dwit husin g th e capita l expenditur e definitio n

inthe propose dstandard s wa s no t quantifie db y th e commenters ; however , i f som e o f thes e problem s ca nb e resolve dwithou t changin g th e applicatio n
r 

### o f the modificatio nprovisions , EP A find s n o reaso nno t t o d o so . Accordingly , EPA

i s providin g a

nalternativ e metho dt o th e Genera l } Provisions .

A s mentione dabove , th e alternativ e metho dfo r determinin g capita l expenditur e enable s refiner s t o use-replacemen t cost s rathe r than origina l costs . A

ninflatio ninde xca nb e applie dt o th e replacemen t valu e o f a

naffecte dfacilit y

t o approximat e the origina l cos t basi s o f the affecte dfacility . Th e relationshi pbetwee nreplacemen t an dorigina l cost s ha s bee ndetermine d(Documen t Nos . IV-B-4'andIV-B-14 ) as :

Y= 1. 0 - 0.57 5 lo g (X) , where : Y= th e percen t o f th e presen t replacemen t cos t whic hi s equivalen t t o th e origina l cost , and X= th e yea r o f construction . i 

### f Usin g th e abov e equation s an dth e annua l asse t guidelin e repai r allowanc e (AAGRA ) o f 7 percen t (se e IR S Publicatio n534 , pag e 20) , capita l expenditur e 1 

### ca nb e expresse dinreplacemen t dollar s as :

Capita l Expenditur e = A xY x0.07 , where : A = existin g facilit y

replacemen t cost . Anothe r alternativ e metho dtha t wa s considere di s simila r t o tha t j o f th e firs t i ntha t aninflatio nindex , Y (a s define dabove) , an dth e ! AAGR

A basi s o f 7 percen t ar e use dt o allow refiner s t o us e replacemen t f costs . However , thi s secondalternativ e woul dals o allow refiner s t o f us e the cos t o f th e entir e proces s uni t rathe r tha nth e affecte dfacilit y § (th e fugitiv e emissio ncomponents) . Th e secondalternativ e woul d | reduc e the numbe r o f unit s tha t woul dus e a detaile dcostin g o f equipment .

However , th e equipmen t covere db y the standard s represen t a variabl e portio no f th e tota l cost s o f al l the equipmen t i na proces s unit .

r . • Therefore , i t i s not_pj*atrcicaDi e t o assig n a singl e percentag e tha t woul d reflec t th e modificatio n cost s contribute d byfugitiv e emissio n pieces

. Thus , EP

A i s no t adoptin g thi s alternative

.

4- 5 £P. 9

Eve nthoug hEPA

wa s unabl e t o establis ha nalternativ e tha t woul d allow refiner s t o us e the cos t o f th e entir e proces s unit , EPA woul d conside r estimation s fro m refiner s tha t clearl y sho w tha t a nexpenditur e woul d b e les s thanth e quantit y associate d wit ha capita l expenditure . Ther e ma y

b e a variet y

o f way s tha t thes e estimation s ca nbe made . Fo r example , a refine r ma y hav e proo f tha t i ncertai nunit s 5 percen t o f th e tota l replacemen t valu e a t th e proces s uni t i s th e valu e o f th e equipmen t covere d b

y th e standards . I f anestimatio nclearl y demonstrat e it s results , EP A

coul d quickl y

decid e whethe r a proces s improvemen t involve s a capita l expenditure . = • Base d onth e example , i f th e valu e o f th e proces s improvemen t ma y b e 0.0 4 percen t o f th e replacemen t valu e o f th e proces s unit , thi s woul d be clearl y les s than12. 5 percen t o f 5 percen t o f th e valu e o f th e tota l unit . I f a nestimatio ndoe s no t clearl y sho w it s results , the nth e time and effor t require d b y EPA i n evaluatin g th e estimatio nwoul d no t provide-th e owne r o r operato r a quic k respons e and , therefore , a more-detaile d costin g o f equipmen t (eithe r b

y estimatin g replacemen t o r accountin g existin g equipment ) woul d b e th e owne r o r operator s bes t approach . I f EPA ca njudg e easily throug hrevie w

o f a clea r demonstratio ntha t a proces s improvemen t doe s no t involv e a capita l expenditure , i t wil l d o so . I ncontrast , i f EPA' s review

raise s concern s o r questions , EPA wil l rejec t the estimatio n unles s furthe r convincin g suppor t i s presented . Comment : On e commente r (IY-0-8 ) wrot e tha t th e Genera l Provision s exemp t "proces s improvements " fro m bein g considere d modification s i f mad e withou t incurrin g a capita l expenditure ; however , usin g th e propose d definitio no f "capita l expenditure " limit s th e exemption . Anothe r commente r (IY-0-21 ) recommende d deletin g th e modificatio nprovision s whic hrequir e tha t proces s improvement s b e accomplishe d withou t a capita l expenditure . Response : Th e Genera l Provision s d o no t includ e a "proces s improvement " exemption . However , i nthe propose d standard s EPA state d it s inten t tha t mino r modification s woul d no t b e covere d b y the standards : "additio n o r replacemen t o f fugitiv e emissio nsource s fo r the purpos e o f proces s improvemen t whic hi s accomplishe d withou t a capita l expenditur e shal l

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r S no t b

y itsel f b e considere da modificatio nunde r thi s subpart. " Th e capita l expenditur e criterio nwa s include ds o tha t mino r proces s improvement s ina proces s uni t tha t caus e a nincreas e inemission s woul dno t subjec t a

nexistin g facilit y

t o thi s NSPS . Afte r reviewin g thes e comments , EP A

ha s maintaine dth e same exemption . EPA consider s an y increas e i nemission s tha t result s fro m a proces s improvemen t wit h
a capita l expenditur e a "modification " unles s on e o f th e othe r exception s i nth e Genera l Provision s applies . I t shoul db e note dtha t an y potentia l emissio nincreas e tha t result s fro m change s i noperatio ntha t requir e th e additio no f a fe w fugitiv e emissio nsource s coul db e offse t o r nullifie db y controllin g existin g equipmen t o r installin g component s wit hn o fugitiv e emissions . Accordingly , ther e woul db e no modificatio ni nsuc ha cas e eve ni f th e emission s occurre dwit ha capita l expenditure . Th e standard s do no t requir e tha t proces s improvement s b e mad e withou t a capita l expenditure . The y merel y provid e anexemptio nwhe nth e proces s improvement s ar e mad e wit h
suc hanexpenditure . Comment : On e commente r (IV-D-30 ) argue dtha t th e "no capita l expenditure " exemptio nfo r modification s coul db e construe db y a plan t a s including , fo r example , th e additio no f fugitiv e component s fro m existin g inventor y o f spar e parts . Th e commente r requeste dtha t EPA mak e i t clea r tha t th e additio no f equipmen t already i nstoc k i s stil l considere di n determinin g a capita l expenditure . Response : A s discusse di nth e respons e t o th e previou s comment , th e capita l expenditur e criterio napplie s t o proces s improvemen t o r productio nrat e increas e exemption s tha t ar e considere dwhe ndeterminin g whethe r a n increas e i nemission s a t a facilit y result s i na modification . Thi s criterio ni s use dt o judge i f th e activit y result s i na chang e i n operation . A s such , a capita l expenditur e i s determine db y wha t i s adde dt o a proces s unit , no t b y wha t i s purchased . Accordingly , i t make s no differenc e whethe r th e ite m wa s already

i nstoc k whe nth e proces s improvemen t occurred .

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4. 3 SMAL L FACILITIE S Comment : Commenter s (IV-0- 9 andIV-0-23 ) state dtha t smal l refiner s mor e easil y trigge r th e modificatio nandreconstructio nprovision s o f th e standard s tha ndo larg e refiners . A smal l capita l expenditur e o na smal l uni t woul d caus e th e uni t t o b e classifie d a s "modified " mor e easil y tha nth e sam

e expenditur e woul dcaus e a larg e uni t t o be s o defined . Som

e commenter s (IY-0- 8 an dIY-D-15 ) als o remarke dtha t th e definitio no f "capita l expenditure " woul dimpac t smal l facilitie s mor e severely . Response : Th e provision s o f th e standard s ca nbe triggere db y severa l differer actions . Som

e o f thes e action s ar e relativ e change s tha t ar e considere d importan t becaus e they involv e a certai npercen t o f th e cos t o f th e unit . Othe r triggerin g action s ar e absolut e change s tha t ar e considere d importan t becaus e they involv e a

nabsolut e increas e inai r pollutan t emission s fro

m th e existin g unit . Eve ni f th e reconstructio nan d modificatio nprovision s ar e mor e burdensom e o nsmal l refineries , th e overal l impac t o f th e standard s i s stil l reasonable , however . I f th e commenter' s clai m

i s true , the nther e mus t b e a differenc e betwee n unit s a t smal l refinerie s o nth e on e hand , andthos e a t larg e refinerie s o nth e other . Th e differenc e coul db e relate dt o size , age , abilit y t o respon dt o today' s changin g markets , o r myria do f othe r factors . Th e questio no f uni t size , measure db y throughpu t or

equipmen t count , i s discusse di na previou s response ; th e relationshi pbetwee nuni t siz e andfir m siz e i s no t clear . I ngeneral , smal l change s ca ntrigge r th e provision s fo r unit s wit hcomparativel y fe w pump s an dvalves . However , i t i s no t clea r tha t th e capita l expenditur e criterio nwoul d b e exceede d quicke r b

y a smal l proces s uni t tha nb y a larg e proces s unit . I t i s no t necessaril y

tru e tha t th e cos t o f a give nse t o f equipmen t woul d b e th e sam e fo r a smal l an

dlarg e proces s unit . Larg e proces s unit s ca n us e larg e equipmen t o r smal l equipmen t (the cost s o f whic hwoui d b e related , i na very

genera l sense , t o th e siz e of.equipment ) andsmal l proces s unit s ca nus e larg e o r smal l equipment . Th e valu e o f an y on e pum pi na proces s uni t ma y b e relativel y

smal l o r larg e dependin g o n the specification s ina particula r application , no t solel y o nthe siz e

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o f th e pump . Th e commenter s di dno t mentio nspecifi c smal l refiner y characteristic s tha t woul dexplai nwhy smal l refiner s migh t suffe r a greate r burde ntha nlarg e refiners . Ag e andobsolescenc e o f equipment , the mos t obviou s characteristics , do no t appea r t o b e significan t factors . Ther e ar e n o dat a t o indicat e tha t unit s i nneedo f modernizatio n ar e situate dpredominantl y a t smal l refineries . Eve ni f ther e ar e difference s an

d smal l refinerie s ar e disproportionatel y affected , EPA doe s no t conside r thi s unreasonabl e becaus e EP A believe s tha t the standard s ar e appropriat e fo r al l existin g facilitie s tha t become affecte db

y th e standards . Fo r thes e reason s EPA conclude s tha t th e modificatio nan dreconstructio n provision s o f th e standard s wil l no t subjec t smal l refiner s t o unreasonabl e advers e impacts .

lll l

4- 9