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# OAR Box 1140 Prepped by RyanDugan



### Document

Number: 

# 40 ) IV-F- 1 Docket Number: 

# A-86-0 3

Printed 4/23/20087:58:42 AM

Sheet 40of 48

# T2.-F-/

UNITE D STATE S O F AMERICA ENVIRONMENTAL PROTECTIONAGENC Y

I n th e Matte r of : Docke t No . A-86-0 3 Regulatio n o f Fuel s an d Fue l Additives : Fue l Qualit yRegulation s fo r HighwayDiese l Fue l Sol d i n 199 3 an d Late r Calenda r Year s / PUBLI C HEARIN

G

PROCEEDING S HA

D i n th e above-entitle d matte r befor e th e Environmenta l Protectio n Agency , CHARLE S L . GRAY , JR. , Hearing Officer , a t th e Moto r Vehicl e Emissio n Laboratory , Ann Arbor , Michigan , commencing a t 10:0 5 a.m. , Octobe r 11 , 1989 . APPEARANCES :

MR . CHARLE S L . GRAY , JR . Director , Emissio n Contro l Technology Divisio n MR . JOH N F . ANDERSON , Senio r Projec t Manager , SDS B MR . CHARLE S MOULIS , Chemica l Engineer , SDS B MR . STEV

E HOOVER , Chief , Plan s an

d Progra

mSection , FOS D

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 3

1 . 2 . 3 . 4 .
5 . 6 .
7 . 8 . 9 . 1 0

1 1 WITNESSE S Mr . Joh n G . Buckle y Pag e 8 Mr . Bria n W . Taylo r Pag e 2 7 Mr . Je d R . Mande l Pag e 3 8 Mr . Dav e Milleric k Pag e 4 3 Mr . Jac k Freema n Pag e 4 6 Mr . Donal d E . Weinber g Pag e 5 1 Mr . Crai g Moye r Pag e 7 4 Mr . Stev e Piate k Pag e 10 6 Mr . Jef f Krame r Pag e 10 9

. Mr . Sta n Piore k Pag e 12 2

. Mr . Maci e L . LaMott e Pag e 13 1 Independen t Fue l Termina l Operator s Associatio n API/NPRA/NCF C Engin e Manufacturer s Associatio n For d Moto r Compan y

Su n Refiner y& Marketin g Compan y Golde n Bea r Divisio n o f Witc o Corporatio n AIR A

Huntwa yRefiner y Frontie r Princeto n Gamma-Tec h

Colorad o Departmen t o f Healt h 12 . 13 . 14 . Ms . Ver a Haskin s Pag e 14 3 Mr . Rober t D . Lync h Pag e 1 7 9 Mr . Richar d Shepher d Pag e 2 0 0 PMAA Empir e Stat e Petroleu m Associatio n Buckey e Pipelin e

PATRICI AMURRAY& ASSOCIATE S BRIGHTO N(313 ) 229-823 8P. 4 DOCKE T NO . A-86-0 3 1 Ann Arbor , Michiga n 2 Octobe r 11 , 198 9 3 10:0 5 a.m .

5 MR . GRAY : Goo d morning , Mynam e i s 6 Charle s Gray . I' mDirecto r o f th e Emissio n Contro l 7 TechnologyDivisio n i n EPA' s Offic e o f Mobil e 8 Sources . 9 O n behal f o f th e Environmenta l Protectio n 1 0 Agenc yI' d lik e t o welcome al l o f yo u t o thi s publi c 1 1 hearin g o n th e Notic e o f Propose d Rulemaking tha t 1 2 appeare d i n th e Augus t 24 , 198 9 editio n o f th e 1 3 Federa l Register . 1 4 Th e notic e propose d th e establishmen t o f 1 5 sulfu r and cetan e inde xspecification s fo r 1 6 on-highwaydiese l fue l along wit hothe r relate d 1 7 regulatoryprovisions . 1 8 EPA' s intentio n t o hol d thi s hearin g wa s 1 9 announce d i n th e Federa l Registe r o n Monday , 2 0 Septembe r th e 25th , 1989 . 2 1 Tha t notic e designate d Richar d Wilson , th e 2 2 Directo r o f ou r Offic e o f Mobil e Sources , a s 2 3 th e Hearing Officer . However , Mr . Wilso n isn' t abl e 2 4 t o b e her e todayan d ha s designate d m e t o ac t a s 2 5 Hearing Office r i n hi s place . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTON(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 5

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 4 Representin g EP Awit hm e toda yo n th e Hearin g Pane l ar e Charle s Mouli s a t th e fa r righ t fro mou r Standard s Developmen t Branch , Joh n Anderso n t o m yimmediat e right , Senio r Manage r i n th e Standard s Developmen t Branch , an d Stev e Hoove r o n th e left , who' s Chie f o f th e Plan s an d Program s Grou p withi n ou r Enforcemen t Division , responsibl e fo r fue l program s enforcement .

W e ar e conductin g thi s hearin g i n accordanc e wit hSectio n 30 7 (d)(5 ) o f th e Amende d Clea n Ai r Ac t whic hrequire s EP At o provid e intereste d person s wit ha n opportunit yfo r th e ora l presentatio n o f data , view s o r argument s i n additio n t o a n opportunit yt o mak e writte n submissions . Thi s hearin g provide s th e opportunit yfo r suc hora l presentations .

Th e officia l recor d fo r thi s hearin g wil l b e kep t ope n fo r 3 0 day s a s provide d fo r i n th e Ac t fo r th e submissio n o f rebutta l an d supplementa l testimony . Thi s mean s tha t writte n comment s wil l b e accepte d throug hFriday , Novembe r 10th , 1989 .

Th e hearin g wil l b e conducte d informally , an d forma l Rule s o f Evidenc e wil l no t apply .

Th e Presidin g Office r i s authorized , however , t o strik e fro mth e recor d statement s whic h

PATRICI AMURRAY& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 ) 995-954 5 nP. 6 DOCKE T NO . A-86-0 3 1 ar e deeme d irrelevan t o r needlessl yrepetitious , an d 2 t o enforc e reasonabl e limit s o n th e duratio n o f th e 3 statemen t o f an ywitness . 4 Witnesse s ar e reminde d tha t an yfals e 5 statemen t o r fals e respons e t o question s mayb e a 6 violatio n o f law . 7 Witnesse s wil l b e allowe d t o mak e ora l 8 statement s whic htheymaylate r expand i n writing 9 fo r th e record . 1 0 Witnesse s ar e requeste d t o stat e thei r 1 1 name s an d affiliation s prio r t o makin g thei r 1 2 statements . 1 3 Whe n a witnes s ha s finishe d hi s o r he r 1 4 presentation , member s o f th e pane l wil l b e give n an 1 5 opportunit yt o as k tha t perso n question s concerning 1 6 issue s raise d i n th e testimony . 1 7 I f anyon e i n th e audienc e desire s t o 1 8 questio n a witness , pleas e writ e ou t th e questio n 1 9 an

d submi t i t t o th e pane l an d the n a decisio n wil l 2 0 b e mad e abou t th e appropriatenes s o f asking th e 2 1 question . 2 2 We'r e having thi s hearing recorded , an d a . 2 3 transcrip t wil l b e mad e availabl e fo r publi c 2 4 inspectio n an d copying i n th e Centra l Docke t 2 5 Section , an d th e docke t numbe r i s A-86-03 , an d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 7

• • >. - •-•;#-:

-

1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 " * " .-•-••"•"?-*-- . - -. . -. - -T- r ^ ,,-•.. , - • ....j . DOCKE T NO . A-86-0 3 6 that' s locate d i n RoomM-150 0 a t Watersid e Mal l i n Washington , D.C .

Anyon e wishing t o purchas e copie s o f th e transcrip t directl yfro mth e cour t reporte r shoul d mak e individua l arrangement s wit hth e reporte r befor e th e clos e o f th e hearing .

Tha t woul d probabl yexpedit e you r obtaining a copyo f th e record .

We'l l nowprocee d t o hea r testimon yfro m th e witnesses .

Ou r pla n i s t o g o i n th e orde r o f th e sign-u p sheet , thi s morning' s sign-u p sheet . I wil l g o ove r tha t lis t a t thi s point , an d i f tha t pose s an yhardshi p o n an

yo f yo u pleas e le t u s knowan d we'l l hav e some discussio n an d tryt o accommodat e you r hardshi p i f possible .

S o fa r w e hav e 1 4 peopl e an d organization s signe d up t o testif ythi s morning ; look s lik e abou t hal f o f th e peopl e here , almost .

Firs t o f al l le t m e mentio n th e organization s an

d the n g o fromthere . First , Independen t Fue l Termina l Operator s Association ;

Second , API , NPR

Aan d NCF C I gues s togethe r represente d i n tha t statement ;
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 8
DOCKE T NO . A-86-0 3 1 Thre e i s PMAA , an dthe nsomebod y marke da 2 nam e out ; 3 Nex t i s th e Engin e Manufacturer s 4 Association ; 5 Nex t woul db e For dMoto r Company ; 6 The nSu nRefinin gan dMarketin gCompany ; 7 The nth e Golde nBea r Divisio no f Witc o 8 Corporation ; 9 The nth e America nIndependen t Refiner s 1 0 Association ; 1 1 The nHuntwa y Refining ; 1 2 The nFrontier ; 1 3 I thin kthat' s Luca s Indu s — well , th e 1 4 firs t nam e woul db e Luca s I think ; 1 5 The nPrinceto nGamma-Tech ; 1 6 The nfinall y th e Ai r Pollutio nContro l 1 7 Divisio no f th e Colorad o Departmen t o f Health . 1 8 I s ther e anyon e els e tha t woul dlik e t o b e 1 9 include do nth e lis t o f peopl e makin gstatement s 2 0 that' s no t included ? 2 1 UNIDENTIFIE D SPEAKER : Woul dyo upleas e 2 2 strik e ou t Lucas ? I though t I wa s jus t signin gu p, 2 3 fo r th e meeting . 2 4 MR . GRAY : Okay . 2 5 An yothe r correction s t o th e list ?

PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P. 9

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 8 UNIDENTIFIE DSPEAKER : Coul dyo upleas e pu t th e Petroleu

m Marketer s Associatio no f America , PMAA , a t th e botto m o f th e list ? Becaus e Ver a Haskin s i s no t her e yet , th e perso nthat' s goin gt o b e testifyin gfo r us .

MR . GRAY : Certainly . Any othe r suggeste dchanges ? Okay . I f not , let' s procee dan das kJohnBuckle y to come forwar dandpresen t hi s statemen t o nbehal f o f th e Independen t Fue l Termina l Operator s Association .

MR . BUCKLEY : Than kyou , Mr . Chairman . MR . GRAY : Mr . Buckley , d o yo uhav e a cop y o f you r statement ? I f yo uhav e a nextr a copy fo r th e hearin gpane l o r copie s tha t woul db e appreciated , andprobabl y fo r th e cour t reporter , too .

MR . BUCKLEY : Than kyou , Mr . Chairman .

M y name i s JohnBuckley . I hav e bee ni n th e oi l busines s fo r 3 4 years , th e las t 2 1 o f whic h I'v e bee n associate d wit hth e independen t marketin g secto r wit hparticula r emphasi s o n hom e heatin g fuels . I currentl yamVic e Presiden t o f Marketin g fo r th e Gul f Oi l Divisio n o f Cumberlan d Farms .

PATRICI AMURRAY& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 ) 995-954 5 !"flP.1 0

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 . "~ r ' ~" " DOCKE T NO . A-86-0 3 9 Cumberlan d Farm s i s a family-owne d convenienc e stor e chai n tha t acquire d th e marketin g asset s o f Gul f Oi l a t th e tim e o f th e Chevron-Gul f merger . W e marke t i n 1 1 state s i n th e northeas t fro mMain e t o Ohio . I' mformerl yChairma n o f th e Departmen t o f Energ yFue l Oi l Advisor yCommitte e durin g th e lat e '70' s perio d o f petroleu m regulations , forme r Chairma n o f th e Petroleum Marketer s Associatio n o f th e America n Fue l Oi l Committe e a t th e tim e o f th e embarg o i n 1973 , a membe r o f th e Boar d o f Ne wEnglan d Counci l o f Associate d Industrie s i n Massachusetts .

I' mher e toda yt o spea k fo r IFTOA , th e Independen t Fue l Termina l Operator s Association . Tha t i s a grou p o f 2 1 companie s wh o ow n terminal s tha t ar e capabl e o f takin g tanke r loa d deliverie s o f petroleu m

products . M yow n companyown s an d operate s 2 0 terminal s i n th e northeas t fro mColumbus , Ohi o t o Bangor , Maine . W e mov e approximatel y160,00 0 barrel s a da yo f petroleumproducts , o f whic h90,00 0

a da yi s gasolin e throug h5,00 0 Gul f stations , and th e balanc e o f 60,00 0 middl e distillat e supply , hom e heatin g oil , je t fuel , diese l fuel .

PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 ) 995-954 5 

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1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 1 0 I certainl ythank yo u fo r inviting u s t o testif ytodayan

d fo r inviting comment s o n you r propose d regulation s t o g o t o 0.0 5 percen t sulfu r wit ha 4 0 minimu

mcetan e inde xand you r proposa l t o dy e hom e heating oi l t o differentiat e i t fro mth e ne wpropose d verylowsulfu r diese l fuel .

Yo u hav e a copyo f m ystatement , whic hI woul d lik e t o inser t fo r th e record , and instead o f reading i t I woul d lik e t o mak e a numbe r o f point s orall ytha t I think ar e mos t importan t point s tha t
nee d t o b e covered .

Firs t o f all , w e d o believ e tha t you r analysi s t o dat e ha s bee n focuse d to o narrowl yan d shoul d b e broadene d t o examin e th e economic , competitiv e an

d internationa l suppl yconsequence s o f implementing th e propose d regulation .

Secondly , I woul d lik e t o stres s tha t t o th e exten t tha t yo u hav e a liabilit yfo r failur e t o perform , tha t tha t liabilit yshoul d no t b e a slap on th e wrist . I t shoul d b e importan t enought o insur e compliance .

Wit hrespec t t o segregate d systems , mos t o f th e companie s i n th e associatio n tha t I spea k fo r toda yhav e sufficien t flexibilit yt o establis ha segregate d systemfo r diesel . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 "" HP.1 2

,-„. .

1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 ^ '" ' " ""'" " ' • " "--['I ' " f T-|

- • T DOCKE T NO . A-86-0 3 1 1 Oh , we'l l hav e t o mak e som e investmen t i n pipelin e connection s an d perhap s designat e certai n rac k distributio n nozzle s fo r diese l whic htoday ca n carrydiese l o r No . 2 heating oil , bu t mos t o f
ou r member s wil l no t hav e t o mak e significan t investment . Some will .

I think wha t yo u hav e t o loo k at , obviously , i s no t s o muc ha t th e termina l operator s bu t a t wha t happen s t o some o f th e smalle r retai l distributors .

M ytestimon

ydoe s no t addres s that . Other s wh o wil l testif yher e todaywil l addres s that . Yo u hav e t o loo k a t ho wseriou s a problem tha t is , ho wman

ycompanie s ar e involved , ho wmuc h volume i s affected .

Nex t I think yo u nee d t o loo k a t source s o f supply . Todaymos t import s o f hom e heatin g oil/diese l fue l fro mforeign refiner s typicall yrun s clos e t o three-tenth s o f on e percent . Mos t domesti c refine d produc t i s close r t o two-tenth s o f on e percent . You'v e mad e a stud yo f refiner s whic h indicate s tha t domesticall ythe yca n withi n thi s timeframe mak e enougho f a n investmen t i n middl e distillat e desulfurization , whic hi s th e easies t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 T.P.1 3 DOCKE T NO . A-86-0 3 1 2 1 typ e o f desulfurizatio n i n a refinerycompare d t o 2 th e heav yends , an

d mos t o f th e ne wdistillat e 3 desulfurizing units , yo u know , ca n tak e ou t 4 something lik e 9 0 percen t o f th e sulfur . 5 S o i f yo u hav e a two-tenth s poo l yo u ca n 6 certainl ydesulfuriz e i t dow n t o something lik e two , 7 thre e one-hundredths , whic hi s withi n you r fiv e 8 one-hundredths . 9 Foreign refiners , however , mayno t wan t t o 1 0 mak e tha t investment . Certainl yth e informa l talk s 1 1 we'v e ha d wit hsome o f ou r foreign refining source s 1 2 woul d no t a t leas t initiall ypla n t o mak e th e 1 3 investmen t becaus e theywoul d stil l hav e th e 1 4 seasona l hom e heating oi l marke t t o shoo t at , an d 1 5 that' s wha t mos t o f themd o shoo t at . 1 6 Mos t o f th e foreign refiner s loo k a t tha t 1 7 winte r heating season , an d a s price s fo r heating oi l 1 8 • ris e i n th e Unite d State s eas t coas t and theyar e 1 9 abl e t o sel l int o thi s marke t afte r payin g fo r th e 2 0 cos t o f moving th e produc t here , the ybecom e 2 1 significan t supplier s during th e winte r months . 2 2 Tha t marke t woul d stil l b e availabl e t o 2 3 them , an d I hop e the ywoul d focu s o n tha t rathe r 2 4 tha n worrying abou t capturing some margina l o r 2 5 incrementa l shar e o f th e diese l marke t whic hwoul d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.1 4

v. . , - ,-

r - -y . —

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9

. 2 0 2 1 2 2 2 3 2 4 2 5 " " " ' -.--. . ..,., r - . - • • . • DOCKE T NO . A-86-0 3 1 3 b e primaril ysupplie d fro mdomesti c refining sources . Still , I think i t i s importan t t o recognize , yo u know , th e wayth e foreign marke t doe s interac t today . Yo u hav e t o remembe r tha t i n th e nin e northeas t state s fro mPennsylvania , Ne wYork , Ne wJerse yan

d up throughNe wEngland you'r e getting clos e t o abou t 6 0 percen t o f th e entir e nationwid e us e o f heating oil ; it' s tha t concentrated . S o termina l operator s wh o bring i n produc t fromabroad
an d fro mdomesti c source s playa majo r role . Ou r member s suppl yabou t 2 5 percen t o f th e heating oi l i n th e eas t coas t an d abou t 5 0 percen t i n Ne wEngland .

A t th e presen t time w e d o bu ya lo t fro

m abroad , an

d i f heating oi l i s kep t a t curren t sulfu r level s —an

d I'v e see n nothing t o sugges t tha t there' s anything unhealth yabou t tha t becaus e i t i s widel ydispersed , it' s scattere d primaril yt o individual , privat e homes . N o singl e poin t i s enought o caus e a publi c healt hhazard . It' s disperse d easily , i t burn s efficiently , it' s clean fuel . An

d wit hforeign refiner s no t supplying diese l bu t focusing al l o f thei r additiona l capacit y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 " 1P.1 5

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 •" ' -..--. . .,..,, , ^ ^ . j., r „ ,,. TTT(( , . „ DOCKE T NO . A-86-0 3 1 4

—an d i t exist s i n th e Caribbean an d i n Canad a an

d i n Europ e an

d i n th e Middl e Eas t an d i n Africa , I woul d se e a verysalutaryeffec t o n hom e heating oi l prices . Mor e suppl yi s competing fo r th e same market , i n effect .

S o tha t on e o f th e fallout s fro mthi s proposa l woul d b e fro mm ystandpoin t th e possibilit y o f lowe r heating oi l price s whic hpoliticall yI think i s important , whic heconomicall yi s importan t t o home heating oi l dealer s an d t o thei r suppliers , suc ha s ou r company , becaus e w e hav e t o d o battl e wit hnatura l gas , an d th e lowe r pric e w e have , th e better . That' s no t th e intentio n o f you r proposal , t o mak e heating oi l mor e competitive , bu t I think it' s on e o f th e thing s tha t wil l happen .

Nex t I think yo u nee d t o focu s o n something tha t ha s nothing t o d o wit henvironmen t bu t i s nonetheles s a majo r problem , an d that' s th e prospec t fo r cheating . Diese l fue l carrie s 1 5 cent s taxpe r gallon . That' s $6.3 0 a barrel . That' s a lo t o f money .

Ther e ha s bee n cheating , a s yo u know , o n th e gasolin e side .

Congres s jus t a year-and-a-half , tw o year s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 " '"f l1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 . ..,.-, . . - .. , - ^ DOCKE T NO . A-86-0 3 1 5 ag o change d th e poin t o f collectio n o f ta xfromth e retai l statio n u

p t o th e termina l leve l i n orde r t o lesse n th e numbe r o f taxpayers , t o bette r audi t th e taxpayer s an

d t o preven t some o f th e cheating tha t ha s gon e o n o n th e gasolin e side .

No wi f I a

mrigh t abou t th e impac t o n home heating oi l prices , namel ytha t they'r e likel yt o fall , obviousl ydiese l price s wit hth e investment s tha t ar e going t o b e mad e a t th e refineryleve l i n ne wdesulfurizatio n an d th e necessit yfo r segregate d storage , thos e investment s wil l hav e t o b e recovered , s o yo u woul d expec t diese l price s t o g o up . Th e differenc e betwee n thes e tw o wil l ad d t o th e temptatio n t o cheat . I f yo u ca n pic k up $ 6
o n th e taxdifferentia l an d a coupl e mor e dollar s o n th e pric e differentia l you'r e looking a t larg e numbers , an

d that' s wh

yI sai d earlie r yo u nee d t o b e verycarefu l abou t you r sanctions . Mak e sur e they'r e viable , enforceabl e an d stif f enought o preven t cheating .

On e wa ytha t ca n b e done , tha t you'v e covere d in you r regulation s perhap s fo r othe r purposes , i s t o requir e dyeing o f th e hom e heating oil , th e non-taxproduct . Tha t woul d creat e a clea r
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.1 7

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKET NO . A-86-0 3 1 6

physica l trai l a s wel l a s a clea r audi t trail , an d I think mak e i t possibl e t o ferre t ou t cheating mor e easil yb

yth e enforcemen t armo f IRS . I think it' s essentia l tha t yo u dye , an d i f yo u don' t dy e you'r e asking fo r rea l troubl e i n th e are a o f cheating .

And I think i f yo u dy e yo u nee d t o dy e a t th e termina l level . Tha t doesn' t mea n tha t a refine r selling a t hi s rac k int o truck s shouldn' t als o dye , h e should , tha t reall yi s lik e a terminal , bu t o n pipelin e deliverie s ou t o f th e refineryo r carg o deliverie s ou t o f th e refinery , yo u don' t wan t t o dy e a t th e refinerylevel . A s w e kno wfromyou r stud yo f pipelines , slug s g o throughtha t line . Yo u ofte n don' t ge t th e produc t yo u pu t in .

I t need s t o b e don e a t th e termina l level , wher e it' s veryeasy . Yo u jus t add th e dy e a t th e rack , an

d an d a s yo u discharg e int o a truc k that' s wher e yo u ad

d th e dye , an

d it' s a relativel yeas y step . We'v e bee n studying variou s dyeing technique s use d toda yb ypeopl e wh o dy e diese l an d • b yprovince s i n Canada tha t dy e heatin g oil , an d we wil l b e submitting mor e dat a o n tha t befor e th e en d
o f th e commen t period . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 

### 1P.1 8

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 1 7 A s I mentioned , th e gasolin e ta xha s bee n move d t o th e termina l a s a poin t o f taxation , an d I think dyeing shoul d als o b e pu t a t th e termina l leve l fo r eas e i n monitoring .

On e othe r poin t I' d lik e t o rais e befor e I summariz e i s th e questio n tha t ha s bee n propose d b y other s o f lowering th e sulfu r leve l o f th e whol e distillat e pool ; i n othe r words , no t onl y requir e five one-hundredth s sulfu r fo r diese l fue l bu t als o fo r home heating oil .

Certainl ytha t woul d eliminat e th e nee d fo r segregate d storage , i t woul d solv e some o f th e marketing problem s tha t smal l retai l distributor s have . Th e questio n I hav e abou t i t is , wha t leve l o f sulfu r woul d yo u nee d t o achiev e th e result s you'r e looking fo r o n th e clea n ai r side ?

I f yo u tel l m e tha t instead o f th e curren t tw o tenths-thre e tenth s you' d g o to , say , 1. 5 fo r th e whol e poo l I probabl ywoul d favo r that .

Bu t i f yo u tel l m e tha t t o achiev e th e en d result s yo u wan t fro mth e emissio n fro

mtruck s tha t you'v e go t t o g o prett yclos e t o wher e yo u wan t t o go , namel yfive one-hundredth s fo r th e whol e pool , the n I think yo u wil l b e imposing a very

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 "T.P.1 9

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 1 8

sever e penalt yo n home heating oil .

I t woul d b e a bigge r problemfo r refiner s t o mee t tha t kin

d o f sulfu r leve l fo r th e entir e distillat e stream . I t wil l virtuall yshu t ou t a t leas t initiall ymos t foreign refiners , wh o a s I mentione d earlie r ar e significan t supplier s o f heating oi l o n th e eas t coas t wher e mos t o f i t i s consumed . I t wil l driv e up heating prices , heating oi l price s unnecessarily . I think politicall yi n Congres s tha t wil l b e no t viewe d veryfavorably . I don' t believ e heating oi l —no r hav e I see n an y studie s tha t indicat e tha t heating oi l i n an yway pose s healt hproblems . It' s a clean-burning fue l a t two-tenth s sulfur , whic hmos t o f i t is . A s I mentioned , n o singl e poin t cause s problem s becaus e they'r e verysmal l an d it' s dissipate d i n th e ai r befor e i t cause s an yproblems . I f th e whol e poo l ha s t o b e droppe d t o thos e lowlevel s I think it' s going t o b e a very sever e penalt yfo r home heating oi l an d hur t it s competitiv e positio n wit hnatura l ga s unnecessarily .

S o I would , therefore , no t favo r that , no r woul d our associatio n favo r i t i f yo u ar e going t o deman

d a leve l tha t i s very , verylow , clos e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 1 995-954 5P.2 0

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 "'" r ' ' . - . . .^.^^^^^ ^ ,„.-.-..

_, . DOCKE T NO . A-86-0 3 1 9 t o fiv e one-hundredths , lik e seve n one-hundredth s o r something o f tha t sort .

I f you'r e going t o come i n a t 15 0 —1 5 part s instead o f 2 0 the n w e might , w e migh t hav e a differen t view .

I n conclusio n I think yo u nee d t o closel y analyz e th e impac t o n th e marketplace , including th e impac t o f segregate d storag e complication s and th e impac t o n availabilit yo f foreign sourc e material .

Yo u shoul d requir e dyeing a t th e termina l leve l o f distribution .

And i f thi s rul e i s adopte d ou r member s wil l comply . Fo r th e mos t par t w e d o no whav e th e flexibilit yt o establis hsegregate d storage , and whe n w e d o not , w e shal l mak e th e necessarycapita l
an d operationa l expenditure s t o insur e tha t w e ca n delive r diese l fue l tha t full ymeet s you r ne w propose d specifications .

I thank yo u agai n fo r inviting me . I'l l b e happyt o answe r an yquestion s t o th e bes t o f m

yability . MR . GRAY : Thank you , Mr . Buckley . Le t m e as k firs t abou t th e las t concep t tha t yo u mentione d i n you r statemen t abou t th e broade r distillat e sulfu r level , a s yo u use d th e

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 'T l1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 2 0

phras e .1 5 poo l level .

MR . BUCKLEY : 1 5 one-hundredth s instea d

o f five . MR . GRAY : I' mwondering , whe n yo u sa y pool , woul d tha t stil l b e a maximu mleve l o r a n average ? MR . BUCKLEY : Yo u woul d establis ha ne w propose d regulatio n tha t sai d tha t sulfu r level s i n al l diese l fue l an d hom e heatin g oil , al l middl e distillate s i n effect , woul d hencefort hb e require d b yOctobe r 9th , 199 3 t o hav e n o greate r tha n 1 5 one-hundredth s part s —instea d o f fiv e one-hundredths .

MR . GRAY : I understand . MR . BUCKLEY : I mean , i f you'r e a t 5 , 1 0

o r 20 , yo u know , ver yclos e t o wha t w e ca n bu y
now , 20 , the n obviousl ytha t woul d b e somethin g tha t woul d eas e al l o f th e othe r problem s you'r e goin g t o hea r abou t toda ywit hindependen t retai l marketers .

If , o n th e othe r hand , t o mee t th e standards , ai r standards , ai r qualit ystandard s tha t currentl yimpac t fro mtruc k traffic , on-highwa y diese l use , i f yo u hav e t o mak e th e entir e poo l instea d o f fiv e one-hundredth s let' s sa yseve n one-hundredths , ver yclos e t o fiv e one-hundredths ,

PATRICI AMURRAY& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 1 995-954 5 P.2 1 "• *DOCKET NO . A-86-0 3 2 1

1 thenI thin ktha t wil l impos e severe penaltie s in 2 term

s o f cos t o

nth e home s tha t hea t withoi l an d 3 the retai l dealer s tha t distribut e tha t oil , becaus e 4 the

y wil l be shut of f fro m one o f the mos t 5 significant source s o f suppl y tha t the

y currently 6 dra

w on : th

e foreig

nrefiner s who com

e ininth

e 7 wintertim e an dprovide substantia l volume s o f hom e 8 heatin

goi l tha t mee t current standard s for hom e 9 heatin

goi l but wil l no t mee t somethin gvery , ver

y 1 0 low . 1 1 Tha t wil l forc e the entire distillat e 1 2 marke t backo nth e U S domesti c refiner who , A , wil l 1 3 hav

e t o make a lot more investment t o desulfuriz e 1 4 hi s entire distillat e strea m instea do f jus t th

e 1 5 diese l portio nan dwil l giv

e yo ulimite

dsupply 1 6 availability , an dwhenthe weathe r get s cold , yo u 1 7 know , yo uge t pric e spikes , thing s o f tha t sor t 1 8 happenin gwhere heatin

goi l goe s u

p1 0 cent s in 1 9 thre e weeks , an d that' s politicall yver y difficul t 2 0 for u s t o live b ya s supplier s o f hom e heating oi l 2 1 an

d it' s eve n mor e difficul t fo r th e smal l 2 2 independen t retai l distributo r o f heating oi l wh o 2 3 ha s t o answe r question s tha t hi s neighbor s raise . 2 4 MR . GRAY : I' msur e you'l l late r b e hearing 2 5 fro

m thos e companie s representing th e diese l engin e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.2 3

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 2 2

manufacturer s o f th e necessit yt o insur e tha t highwaydiese l fue l i s belo w.0 5 i n orde r fo r them t o compl ywit hth e 199 4 EPAstandards , s o —

MR . BUCKLEY : I f that' s wha t th e poo l ha d t o be , I' msaying tha t —

MR . GRAY : I understand . MR . BUCKLEY : —

i s a veryseriou s problem . MR . GRAY : An

d certainl ythat' s a majo r consideratio n tha t wa s associate d wit hth e EPA decisio n t o propos e th e regulation s onl yaffecting highwaydiese l fuel , wa s th e impac t tha t i t migh t hav e i f i t wer e applie d mor e broadly .

Bu t I als o wante d t o understand you r sens e o f th e leve l tha t migh t feasibl yreasonabl yb e expecte d i f a t some late r poin t Congres s o r othe r motivatio n ha s EPAloo k a t al l distillat e fue l fo r sulfu r control . S o I appreciat e that .

Jus t a s yo u suggeste d i n you r statement , i t i s importan t t o insur e tha t suc ha regulatio n provid e fo r read

yenforceabilit yand , o f course , tha t wa s th e principa l reaso n fo r th e dyein g suggestio n whic horiginate d fro mth e industryfolk s tha t wer e investigating thi s issue .

I gues s m

yquestio n ther e is , yo u stres s th e nee d t o focu s th e dyeing a t th e termina l level . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBORf.313 ) 995-954 5P.2 4
DOCKE T NO . A-86-0 3 2 3 1 I s i t you r sens e tha t ou r propose d 2 regulation s woul d requir e o r forc e th e dyeing 3 upstrea

mo f th e terminal ? 4 MR . BUCKLEY : No , I just

—yo u know , a s 5 yo u ge t int o th e nitty-gritt yand al l th e 6 regulation s tha t g o int o implementing th e propose d 7 regulation s that' s a n issu e you'r e goin g t o hav e t o 8 loo k at . 9 I jus t think tha t th e logica l an d easies t 1 0 plac e t o ge t tota l complianc e i s t o d o i t a t th e 1 1 termina l level , whe n ther e ar e sale s ou t o f a 1 2 refinery , a t th e refineryleve l whe n i t goe s int o a 1 3 truck , becaus e it' s eas yt o dispens e a n additiv e o r 1 4 a dy e int o th e truc k along wit hth e fuel . 1 5 Yo u can buil d thos e int o you r terminal s a t 1 6 fairl ymodes t cos t an d withou t a long lead tim e 1 7 whethe r you'r e a t a refineryo r a terminal . I f yo u 1 8 require d i t al l a t th e refineryleve l s o tanker s go t 1 9 loade d wit hdye d materia l an d pipelin e slug s wen t 2 0 throughwit hdye d materia l I think we' d hav e som e 2 1 rea l problems . 2 2 MR . ANDERSON : I jus t hav e a coupl e 2 3 question s relate d t o thi s topi c o f dyeing . 2 4 I f w e di d tha t tha t waywoul d th e termina l 2 5 b e th e plac e tha t woul d assume th e principa l
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKET NO . A-86-0 3 -.,.-. T r ...,,,. . 2 4 1 liability fo r whenw

e starte

dlookin

gfo r dyed 2 versu s undye dfuel ? 3 MR . BUCKLEY : Yes . A s I mentioned , 4 Congres s di dmov e th e gasoline ta

xcollectio

npoint 5 an

dliabilit

y point to the termina l leve l tw o year s 6 ag

o inorder to ge t better complianc e o ntha t 7 crucia l issue , s o tha t the termina l bothi nterm s o f 8 pape r audi t trai l an dphysica l trai l woul dcertainl y 9 hav

e t o take th

e liabilit

y associatedwithth e 1 0 distributio nof dye

dan dundye dmateria l a s i t 1 1 leave s th e termina l gate . 1 2 MR . ANDERSON : One other questio n 1 3 concernin gyour comment s about desulfurizin gthe 1 4 entire fue l pool . I wantedt o make sure I 1 5 understood . 1 6 You r opinio

ni s tha t i f the entir e fue l 1 7 poo l wa s require dto b e desulfurizedto som e 1 8 level , .0 7 or belo w .1 , tha t th

e foreig

nsupplier s 1 9 woul dabando n th e hom e heatin

gmarke t rathe r than 2 0 desulfurize ? 2 1 MR . BUCKLEY : I don' t thin kthe y woul dal l 2 2 abando n it . Eac hwoul dloo kat ho w muchvolum

e they 2 3 mov e t o thi s market . 2 4 I thin ka lot o f foreig

nrefiner s an

d 2 5 foreign storag e facilitie s —ther e ar e bi gone s a t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 2 5

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 Rotterdam , fo r example , the ygenerall yrun thei r

refinerie s t o mee t loca l Europea n demand , let' s say , an d European storag e requirements .

Bu t i f i t happen s t o b e muc hcolde r i n th e Unite d State s o r i f a coupl e o f refinerie s g o down wit hfire s o r w e hav e a hurrican e tha t knock s ou t a majo r suppl ysourc e lik e th e refineryi n th e Virgi n Island s an

d yo u se e price s mov e t o reflec t bot hth e fac t o f physica l constraint s and th e perceptio n o f physica l constraint s s o yo u ge t a gap betwee n th e European valu e fo r heatin g oi l an d th e U S valu e fo r heating oil , you'l l se e thos e tanker s star t getting loade d ove r ther e an d com e ove r her e t o captur e tha t extr a economi c retur n tha t the ycan get . And I' mno t sur e they'l l mak e th e necessaryinvestmen t i f yo u chang e th e entir e poo l t o a verylowleve l fo r -—i f al l they'r e going t o los e i s th e occasiona l opportunit ycargo .

Othe r supplier s tha t regularl ysuppl yth e marke t mayloo k a t i t differently , particularl y thos e i n eastern Canada an d some o f thos e i n th e Caribbean . Bu t i t mayb e mor e difficul t fo r th e Caribbean refiners , particularl ythos e i n Venezuela , PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.2 7

DOCKE T NO . A-86-0 3 2 6 1 becaus e they'r e runnin gcrude s tha t are mediu m an d 2 hig

hsulfur crude s rather thanswee t crude s fro m the 3 NorthSea or Nigeri a or Algeria , an dyo ukno w the 4 mor e sour the crude , the mor e desulfurizatio nyou 5 need , the mor e intens e desulfurizatio nyo unee do f 6 the distillat e strea m inorde r t o ge t dow nt o thes e 7 very , ver y lo w levels . 8 They' dhav e to loo

ka t makin

gth e require

d 9 investment an ddecide whethe r it' s wort hthei r whil e 1 0 or whethe r the y shouldjus t focu s o nsellin

gheatin

g 1 1 oi l int o the Europea nmarke t wher e the

y have 1 2 refinin gan dmarketin

goutlets , th

e Venezuelan s I 1 3 mean . 1 4 Certainl y th e tota l amount o f foreig n 1 5 refinin gcapability

availabl e woul dbe diminished , 1 6 a t leas t initially . 1 7 Obviously i f th e retur ni s stron

genoug h 1 8 lon

genoug hyou'l l see peopl e makin gthe 1 9 investments , an ddon' t forge t wha t yo udo her e 2 0 soone r o r late r —an dinthi s era o f globa l 2 1 communication s spee d usually sooner rathe r than 2 2 late r —happen s abroad , too . 2 3 I mean , yo u starte d desulfurizing heav y 2 4 fue l an d requiring three-tenths , five-tenths , on e 2 5 percen t sulfu r i n No . 6 residua l fue l bac k whe n th e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTON(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.2 8
DOCKET NO . A-86-0 3 2 7 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 Clea n Ai r Ac t wa s initiall yforce d throughb y Senato r Muski e i n th e lat e '60's , earl y'70's , an d Europ e wa s veryconcerne d abou t that .

Th e lead time betwee n thi s kind o f actio n an d wha t subsequentl yhappen s i n Europ e i s likel yt o b e a lo t les s than that , mayb e a matte r o f three , fou r years , bu t generall yw e liv e o n on e plane t tha t generall yi s know

n mor e an

d more , and I think t o th e exten t tha t step s ar e take n b ythi s governmen t i n thi s er a o f clean ai r there' s goin g t o b e a goo d dea l o f pressur e t o tak e th e same kind o f step s i n othe r industrialize d countries , whic ho f cours e woul d mak e themmak e th e investmen t i n desulfurization , an d the n we' d b e bac k t o wher e w e starte d fro

mtoday . Ther e wil l b e some la g time , that' s all .

Buckley .

NCFC . MR . ANDERSON : Thank you .

MR . GRAY : Thank yo u verymuch , Mr .

Brian Taylor , representing API , NPR Aan d

MR . TAYLOR : Thank you , Mr . Chairman . M yname i s Brian Taylor . I' mVic e Presiden t o f Product s Researc hfo r Chevro n Researc h

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBCR(313 ) 995-954 5P.2 9

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKET NO . A-86-0 3 2 8

Company . M

y statement toda

y i s o nbehal f o f the America nPetroleu

m Institute , the Nationa l Petroleu m Refiner s Associatio nan dth e Nationa l Counci l
o f Farmer Cooperatives .

Thes e organization s represent virtuall y al l refiners , large an

dsmall , inthe UnitedStates . Thei r member s are als o engagedinal l aspect s o f th

e oi l industry , includin gexploration , production , refining , marketin gan dtransportation . API , NPR

A an dNCFC membe r companie s hav e a substantia l interes t inmatter s relatin gt o manufacturin

gdiese l fue l an

ddistributin

gi t t o th

e motorin gpublic . W e appreciat e thi s opportunity t o participat e i

nthi s publi c hearin go nproposed regulation s fo

r highwa

y diese l fuel . I'l l be makin

ga brie f ora l statement toda y fo r th e record . W e pla nto submi t detailedwritten comment s on th e issue s raise d b y EP A i n your Augus t 24t hFedera l Registe r Notic e befor e th e clos e o f the commen t period .

A s yo u know , i

nJul y o f 198 8 withth e encouragemen t o f EP Arepresentative s o f th e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 1 995-954 5 " !1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 r"" ~ v - DOCKE T NO . A-86-0 3 2 9 petroleu

m refinin gandth e heavy-dut y diese l engin e manufacturin gindustrie s develope da systemati c approac hfo r improvinghighwa y diese l fue l qualit y whic hwil l assis t engin e manufacturer s i nmeetin g EPA' s 199 1 and199 4 particulat e standards .

A t th e outse t I woul dlik e t o say tha t we'r e encourage dtha t EP A too kint o consideratio n
many o f th e join t recommendation s submitte dto EP A las t summe r b

y th e API , NPRA , NCF C andth e Engin e Manufacturer s Association . W e commendth e Agenc y fo r it s diligen t andthoroug htechnica l analysi s o f th e element s o f it s diese l proposal .

We believ e th e Agency' s adoptiono f sulfu r
an dcetan e indexlimit s a s propose dwoul db e th e mos t cost-effectiv e andenvironmentall y beneficia l approac ht o regulatin gdiese l fue l quality .

T o summarize , w e as kth e following : First , w e encourag e EPA t o promulgat e th e fina l rul e promptl y s o a s t o giv e refiner s sufficien t lea d tim e t o comply . Speedy EPA actio n i s necessar yt o allo wrefiner s t o pla n investment s
s o the yca n produc e th e require d fuel s b y1993 .

SpeedyEP Aactio n als o wil l provid e heavy

dut ydiese l engin e manufacturer s wit hinformatio n o n diese l fue l specification s tha t i s necessar yfo r

PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 ) 995-954 5P.3 1

DOCKE T NO . A-86-0 3 3 0 1 engin e andafter-treatmen t design s to mee t th e 2 particulat e standards . 3 Second , w e strongl y recommendtha t EPA 4 adop t th e join t industry recommendation s ondiese l 5 fue l quality . 6 A s state di nthos e recommendations , a .0 5 7 weigh t percen t sulfu r specificatio nwil l allow 8 engin e manufacturer s to us e a ful l rang e o f engin e 9 andafter-treatmen t technology to mee t desig ntarge t 1 0 levels . 1 1 I naddition , wit hthes e technologie s 1 2 aromatic s reductio nfro m curren t level s i s no t 1 3 neede d t o mee t th e exhaus t standards . 1 4 However, by specifyin ga minimu m cetan e 1 5 inde xo f 4 0 aromatic s conten t wil l b e prevente dfro m 1 6 increasingsignificantl y i nth e future . Thi s 1 7 specificatio nwil l maintainth e ignitio nqualit y o f 1 8 diese l fuel , a facto r whic hi s mor e importan t fro m 1 9 a nemission s standpoin t thanaromatic s content . 2 0 Cetan e indexi s a widel y accepte dindustr y 2 1 standar d an d i s th e mos t practica l mean s t o 2 2 characteriz e diese l fuel-burnin g quality . 2 3 W e agre e wit hth e EP Atha t reducin g 2 4 aromatic s belo wcurren t level s i s no t 2 5 cost-effective .
PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.3 2

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 3 1 Third , w e believ e tha t fue l specification s shoul d appl yuniforml yt o al l supplier s and tha t al l on-highwaydiese l fue l shoul d compl ywit hthes e specifications .

Finally , w e believ e tha t enforcemen t o f th e fue l specification s shoul d focu s o n potentia l misfuelers . Whil e w e recogniz e tha t produc t certificatio n an

d some amoun t o f complianc e testing b yrefiner s an

d importer s wil l b e necessary , w e ar e disappointe d tha t EPAdoe s no t includ e i n th e Notic e o f Propose d Rulemaking an yenforcemen t mechanism s fo r reducing intentiona l misfueling .

EPAdoe s no t addres s wha t enforcemen t actio n i t plan s t o tak e whe n a part ypurposel y introduce s noncomplying dye d materia l int o highway vehicles .Dyeing o f noncomplying materia l b yfue l supplier s couple d wit hstric t enforcemen t actio n b y EPAagains t misfueler s wil l b e a ver yeffectiv e way o f insuring tha t th e environmenta l benefit s envisione d a s a resul t o f regulating highwaydiese l fue l wil l b e realized .

I n addition , stric t enforcemen t agains t en d
use r misfueling coul d reduc e los s o f federa l tax revenues . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 -fP.3 3

DOCKE T NO . A-86-0 3 3 2 1 Agai n w e appreciat e thi s opportunit yt o 2 participat e i n thi s publi c hearing o n EPA' s propose d 3 regulatio n fo r highwaydiese l fuel . 4 W e ar e preparing mor e comprehensiv e 5 informatio n o n man yo f thes e issue s fo r submissio n 6 t o th e Docke t befor e th e clos e o f th e proceedings . 7 Th e submissio n wil l respond t o th e specifi c 8 question s raise d b yEPAi n th e Federa l Registe r 9 Notic e an d commen t o n some o f th e finding s containe d 1 0 i n th e Draf t RegulatoryImpac t Analysi s accompanying 1 1 th e Notice . 1 2 I n th e interi mI'l l b e please d t o answe r 1 3 an

yothe r question s yo u mayhave . 1 4 Thank you , Mr . Chairman . 1 5 MR . GRAY : Thank you , Mr . Taylor . 1 6 D o yo u hav e a n opinio n abou t th e logica l 1 7 poin t wher e dyeing shoul d occur ? 1 8 D o yo u think there' s an ycircumstance s 1 9 wher e a fue l distributio n compan yo r retaile r o r 2 0 refine r woul d prefe r t o dy e i t upstreamo f th e 2 1 terminals , mor e specifically ? 2 2 MR . TAYLOR : I think having th e 2 3 flexibilit yt o dye , I think dyeing wil l occu r wher e 2 4 refiner s ca n mos t easil yoffse t an d reduc e an

y 2 5 liabilit ytha t theyhave , an d having th e flexibilit y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARECR(313 ) 995-954 5DOCKE T NO . A-86-0 3 3 3

1 t o dy e a t refinerie s fo r th e truckloadin gsituatio n 2 o r a t terminal s I thin kwa s a par t o f th e thinkin g 3 behindth e join t proposal . 4 MR . GRAY : S o th e basi c concep t o f addin g 5 th e dy e whenit s committe dto a noff-highwa y 6 application , whereve r tha t is , i s a flexibilit y tha t 7 yo use e stil l desired ? 8 MR . TAYLOR : (Nodding ) 9 MR . GRAY : It' s m y impressio ntha t some 1 0 off-highway diese l fuel s mayb e fo r specia l purpos e 1 1 application s ar e dye deve nnow . 1 2 I f tha t impressio ni s correct , d o yo u 1 3 forese e wit hyou r experienc e wit hfue l dye s an d 1 4 technology , i f yo u will , an y possibilit yo f 1 5 retainin g tw o dyes , s o t o speak ; on e colo r fo r 1 6 off-highwa yan d mayb e anothe r colo r fo r a premiu m 1 7 on-highwa ydiese l fuel , o r d o yo u thin k tha t th e dy e 1 8 chemistr ywoul db e suc hthat , yo uknow , mixe s coul d 1 9 b e ver ydifficul t t o distinguis hfro ma n 2 0 enforceabilit ystandpoint ? 2 1 D o yo u hav e anycomment s i n tha t area ? 2 2 MR . TAYLOR : No , I don' t thin k I do . 2 3 I thin k th e dyein g you'r e referrin g t o a t 2 4 thi s poin t i s designe d t o segregat e premiu mdiesel , 2 5 identif ypremiumdiese l fue l fro mth e so-calle d

PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 1 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 .*••'-.- . - - T,-.-• • „ - n,*-.

- - • •
DOCKET NO . A-86-0 3 3 4
commo nNo . 2 pool . I suspec t thos e wh

o choos e t o marke t a premiu m diese l fuel , whatever tha t might be , wil l hav e thei r ow

nway s o f either distinguishin gi t or not , dependin

go nthei r particular interest . MR . GRAY : But withth e EP A proposa l tha t on-highwa

y premiu m diese l fue l woul dno t be allowe d t o hav e a dye , I' m

asking , do yo

use e tha t a s posin g an y specia l hardship s fro m you r perspectiv

e o f th e industry ?MR . TAYLOR : I can't , I can' t speakfor th e industr y member s o

ntha t issue . Fro m a Chevro

npoint o f view , w e don' t marke t premiu

m diese l fue l s o i t woul dcertainl y not

— at thi s point anywa y not hav

e an y impac t o

nus . MR . GRAY : Mr . Anderso nsays tha t hi s impressio

ni s tha t i t coul dstil l have a different dye , but tha t get s backto th e fundamenta l initia l par t of m

y question . I f yo uha dmor e tha

non e dye , do youhav e a sens e o f whethe r or not that woul dcomplicat e th e enforcemen t approach ?

MR . TAYLOR : I can' t answer that . MR . HOOVER : I jus t woul dlike t o clarif y you r comment s o n enforcemen t fo r intentiona l

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 P.3 5

• wDOCKE T NO . A-86-0 3 3 5

1 misfueling . 2 I presume wha t yo u woul d lik e t o se e i n 3 tha t enforcemen t are a woul d b e something simila r t o 4 wha t th e curren t unleade d fuel s regulation s hav e 5 whic hprohibi t introductio n int o unleadedvehicles , 6 wit htha t liabilit yaccruing a t th e retai l leve l o r 7 wholesal e purchaser . 8 MR . TAYLOR : Yes . 9 MR . HOOVER : Becaus e on e thing tha t w e di d 1 0 ge t int o th e regulation s i n term s o f —o r th e 1 1 propose d regulatio n her e unde r prohibite d activitie s 1 2 i s th e wor d dispense , an d I think tha t wa s pu t i n 1 3 ther e aime d a t that , eve n thoughthere' s no t a 1 4 specifi c sectio n tha t define s tha t a s bein g a 1 5 prohibite d act . Wit hth e affirmativ e defense s 1 6 attache d t o it , ou r intentio n wa s tha t th e 1 7 dispensing o f a n imprope r fue l woul d als o constitut e 1 8 a violation , an d tha t coul d b e construe d t o carry 1 9 int o individua l vehicles . 2 0 Bu t we'l l tak e a loo k a t whethe r that' s 2 1 appropriat e i n term s o f th e same a s w e hav e o n th e 2 2 unleade d fue l regulations . 2 3 MR . TAYLOR : I think frompreviou s 2 4 testimon yher e it' s fairl yclea r tha t ther e woul d be 2 5 a significan t economi c incentiv e fo r misfueling . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.3 7

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKET NO . A-86-0 3 3 6 MR . ANDERSON : I' d lik e t o as k a coupl e o f question s tha t ar e relate d t o th e firs t testimon yw e heard , an

d whic hI think we'l l hea r mor e abou t i n subsequen t testimony , abou t issue s relate d t o firs t
o f al l desulfurizing potentiall yth e entir e distillat e fue l poo l rathe r tha n jus t on-highway fuel , an

d I wonde r i f you' d commen t o n th e abilit y o f you r member s t o compl ywit htha t kind o f a provision , o r wha t kin d o f vie wyo u hav e o n i t a s representing you r associations .

MR . TAYLOR : Well , I think desulfurizing th e entir e distillat e poo l woul d pu t undu e economi c stres s o n a larg e numbe r o f smal l refinerie s —no t jus t smal l refiners , bu t smal l refinerie s becaus e th e capita l investmen t require d fo r desulfurizatio n i s verymuc hdependen t o n th e siz e o f th e refinery , an d s o I think i t woul d pu t undu e economi c pressur e o n th e smal l refinerie s t o desulfuriz e th e whol e pool . MR . ANDERSON : Asid e fro mtha t issu e d o yo u perceiv e an

ylead-time issue s relate d t o doing tha t in the deadline , th e timeframe o f th e propose d rules ? MR . TAYLOR : Well , I think on e o f th e thing s w e urg e i s tha t th e fina l rul e b e promulgate d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 " 1P.3 8

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKET NO . A-86-0 3 3 7

promptly , becaus e there clearly i s goin

gt o be a significant amount o f investment an dassociated construction , refiner y constructio

nactivity associate

dwithmeetin

gthes e requirements , an d that' s goin

gto put pressure o nthe A an dE firm

s i n th e country , becaus e i nthe las t severa l year s there' s beenrelatively littl e investment an dman y o f thos e companie s are no t staffedu pt o th e level s tha t the

y wer e a number o f year s ago whenrefiner y expansion s an

dchemica l plant expansion s wer e mor e common . S o I thin ka crucia l issue i s availability o f A an dE an dconstructio

nfirm s t o carr

y out th e necessar

y expansions . MR . ANDERSON : Okay . Anothe r important questio nfo r u s i s goin

gt o be the amount o f segregatio

no f regulate

dfue l fro

m othe r fuels , an

d I wonde r i f yo

uwoul dcomment a littl e bi t o nwha t th e industr

y foresee s happenin

ginterms o f change i nsegregatio

npattern s i

nrespons e t o havin gt o lowe r th e sulfur content .

MR . TAYLOR : I thin kthat' s something frankl ytha t wil l b e addresse d mor e effectivel ythan I ca n addres s i t i n th e writte n comment s tha t w e pla n t o submit .

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR;213 ) 995-954 5P.3 9

DOCKET NO . A-86-0 3 3 8 1 MR . ANDERSON : Yo u d o pla n t o addres s tha t 2 topi c i n thos e comments ? 3 MR . TAYLOR : (Nodding ) 4 MR . ANDERSON : Okay . 5 MR . GRAY : Thank you , Mr . Taylor . 6 Okay . Je d Mande l no wrepresenting th e 7 Engin e Manufacturer s Association . 8 9 MR . MANDEL : I believ e yo u alread yhav e 1 0 copie s o f m ystatement . 1 1 Goo d morning . I' mJe d Mandel , Genera l 1 2 Counse l fo r th e Engin e Manufacturer s Association . 1 3 Todaymark s anothe r importan t mileston e o n 1 4 th e road t o th e adoptio n o f th e landmar k Diese l Fue l 1 5 Qualit yRule . 1 6 During th e rulemaking proceeding s leading 1 7 up t o th e Marc h198 5 fina l rul e adopting toughne w 1 8 NO xan

d particulat e emission s standard s fo r 1 9 heavy-dut ydiese l engines , engin e manufacturer s 2 0 firs t expresse d thei r concern s regarding th e sulfu r 2 1 conten t o f diese l fuel . 2 2 Generally , manufacturer s wer e concerne d 2 3 tha t fue l sulfur woul d inhibi t th e effectivenes s o f 2 4 after-treatmen t contro l technolog yan d i n genera l 2 5 woul d contribut e substantiall yt o th e particulat e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 0
DOCKE T NO . A-86-0 3 3 9 1 emission s fro mheavy-dut ydiese l engines . 2 Thereafter , wit hEPA' s encouragemen t th e 3 engin e manufacturing an d th e petroleu

mrefining 4 industrie s me t t o discus s an d i f possibl e agre e o n 5 th e solutio n t o th e emissio n problem s associate d 6 wit hth e sulfu r conten t o f diese l fuel . 7 I n a n histori c cooperativ e effort , th e tw o 8 industrie s jointl yrecommende d t o EPAi n Jul yo f 9 198 8 a progra mt o reduc e th e sulfu r conten t o f 1 0 diese l fue l fo r th e on-highwaymarke t t o a maximu m 1 1 o f .0 5 percen t b yweigh t effectiv e nationwid e o n 1 2 Octobe r 1 , 1993 . 1 3 Als o include d i n th e programwer e proposal s 1 4 t o contro l th e aromati c conten t o f diese l fue l a t 1 5 curren t level s b yspecifying a cetan e inde xo f n o 1 6 les s tha n 4 0 t o enabl e engin e manufacturer s t o us e a 1 7 lowsulfu r certificatio n fue l fo r mode l year s 199 1 1 8 through1993 , an d t o provid e a mean s o f enforcing 1 9 th e propose d ne wfue l specifications . 2 0 On Augus t 24 , 198 9 EPAissue d it s propose d 2 1 diese l fue l qualit yrul e whic hessentiall y 2 2 incorporate s al l o f th e element s o f th e join t 2 3 proposal . 2 4 Th e Engin e Manufacturer s Associatio n 2 5 strongl ysupport s th e propose d rule , applaud s EPA
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 1

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 4 0

fo r it s effort s an d urge s th e Agenc yt o swiftl y promulgat e a fina l rule .

Th e sulfu r conten t o f diese l fue l contribute s substantiall yt o th e particulat e emissio n o f diesel-fuele d engines . Th e mor e stringen t th e emissio n standar d th e highe r percentag e o f sulfur-derive d particulat e matte r t o tota l particulat e emissions .

Withou t lo wsulfu r fuel , heavy-dut ydiese l engine s wil l no t b e abl e t o achiev e complianc e wit h eithe r th e 199 1 o r th e 199 4 particulat e emission s standards .

Certificatio n fo r 199 1 mode l yea r engine s i s jus t aroun d th e corner . Immediatel yupo n u s i s certificatio n o f 199 0 engine s whic hsom e manufacturer s woul d lik e t o certif yt o th e 199 1 emission s standards .

I t i s criticall yimportan t tha t EP Amov e quickl ythroug hthi s rulemakin g proces s an d promulgat e th e propose d rul e i n fina l for mb yth e
en d o f 1989 . • Otherwis e manufacturer s fac e grea t uncertaint ya s t o thei r abilit yt o hav e product s availabl e t o mee t th e 199 1 standards .

I t woul d b e a sorr yconclusio n t o se e al l

o f ou r cooperativ e effort s waste d becaus e o f

PATRICI AMURRAY& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 ) 995-954 5 "' ' ; "T !P.4 2

DOCKET NO . A-86-0 3 4 1 1 unnecessar y administrativ

e delays . 2 EPA' s propose drul e an

dthi s hearin

gare 3 important steps . But th e culminatio

no f our effort s 4 wil l be the timely promulgatio

no f a fina l rule . 5 Toward s tha t end , EM A wil l submi t for the recor d 6 a mor e detaile dwrittenstatement befor e the clos e 7 o f the comment period . 8 Inth e meantime , i f yo

uhave an

y 9 question s I wil l attempt t o answer the m now . 1 0 MR . GRAY : Than kyou , Mr . Mandel . 1 1 I not e thi s i s a nimportant milestone for 1 2 a coupl e reasons : Thi s i s probabl y the shortes t 1 3 statement EMA' s represente dt o one o f our hearing s 1 4 an

d— 1 5 MR . MANDEL : I learne dI wasn' t pai db

y th e 1 6 wordan y longer . 1 7 MR . GRAY : — an dth e othe r one I jus t hav e 1 8 t o highlight here i s probably th e mos t significan t 1 9 milestone , th e statement —an

dI noticedyo

uchoke d 2 0 o n i t a littl e bi t whenyo uwere presentin

gyour 2 1 testimon y— whic hsays , an

d it' s wort hrepeating : 2 2 Th e Engin e Manufacturer s Associatio n applaud s EPA 2 3 fo r it s efforts , an d — 2 4 MR . MANDEL : I t wasn' t har d fo r u s t o say , 2 5 i t reall ywasn't . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 3

DOCKET NO . A-86-0 3 4 2 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 MR . GRAY : But inal l seriousnes s I thin k it' s probabl y

a nappropriat e tim

e for u s t o agai n stat e tha t thi s wa s a rather histori c precedent-setting , hopefully , effor t o nthe par t o f the industrie s tha t ofte nw e regulat e wit han adversaria l relationship , an dwe have reall y fel t tha t thes e tw

o major industrie s shoul dbe commende

dfo r thei r efforts , an dw e appreciat e you

r continuedconstructiv e assistanc e i nou r effort s t o insure tha t 199 1 an d199 4 diese l engine s are abl e t o comply wit hth

e ver y stric t standard s inthos e years . S o agai nw e appreciat e your effort s an d we'l l move a s swiftly a s w e cant o resolv

e the remainin

gissues , som

e o f whichwe'l l be hearin g today , o f course , an dmake a fina l decisiona s quickly a s possible . Anothe r milestone . MR . MANDEL : Tha t als o i s a first . John , g o ahead . MR . ANDERSON : Thi s hopefull y i s a neas y question .

certif y Yo u mentione d

199 0 D o engine s t o some manufacturer s

th e I presume tha t 199 1 standards . wan t

t o mea n the

y wante d t o

t o
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 4
DOCKE T NO . A-86-0 3 4 3 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 b e abl e t o us e th e propose d . 1 sulfu r fue l t o d o

tha t certification ?

MR . MANDEL : Well , i t al l depend s ho wyo u en d up issuing you r fina l rul e o n expande d averaging an d banking , bu t depending o n thought no wtha t migh t b e finall ypromulgate d an d th e nee d t o perhap s d o a pape r certificatio n agai n fo r 1990 , it' s uncertai n whethe r w e woul d nee d t o hav e tha t . 1 sulfu r fue l fo r certificatio n purpose s available .

I think th e mai n poin t her e i s tha t t o avoi d th e uncertaint ytha t i s stil l ove r engin e manufacturers ' head s fo r 199 1 w e nee d t o kno wreall y no w—an

d I gues s nowi s a t leas t define d t o th e balanc e o f thi s yea r — wha t th e fina l rul e fo r sulfu r i s going t o be , becaus e i t i s upo n us .

S o m ycomment s wit hrespec t t o 199 0 ar e somewha t contingen t o n wha t you r fina l rul e woul d
read fo r banking an d trading . MR . ANDERSON : Okay , thanks . MR . GRAY : Thank you , Mr . Mandel . MR . MANDEL : Thank yo u verymuch . MR . GRAY : Th e Ford Moto r Compan yi s nex t
o n th e agenda .

MR . MILLERICK : Goo d morning . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 5

DOCKE T NO . A-86-0 3 4 4 1 Myname i s Dav e Millerick , an d I represen t 2 For

dMoto r Compan

yan d Ford Ne wHolland . 3 I appreciat e th e opportunit yt o testif y 4 todayan d provid e inpu t t o th e Environmenta l 5 Protectio n Agenc yregarding it s propose d rul e o n 6 fue l qualit yregulation s fo r highwaydiese l fue l 7 sol d i n 199 3 an d late r calenda r years . 8 Mycomment s ar e base d o n For d Ne wHolland' s 9 curren t positio n a s a manufacture r o f heavy-dut y 1 0 diese l engines . 1 1 I n m ybrie f statemen t thi s mornin g —an d 1 2 I'l l underlin e brie f becaus e w e hav e a lo t o f peopl e 1 3 her e thi s morning — I wil l highligh t th e difficul t 1 4 positio n Ford wil l b e i n i f thi s rul e i s no t 1 5 adopted . 1 6 A s i s discusse d i n th e propose d rule , th e 1 7 sulfu r conten t o f diese l fue l contribute s 1 8 substantiall yt o th e particulat e emission s o f 1 9 diesel-fuele d engines . Th e mor e stringen t th e 2 0 emissio n standard , th e highe r th e percentag e o f 2 1 sulfur-derive d particulat e matte r t o tota l 2 2 particulat e emissions . 2 3 I n fact , withou t lowsulfu r diese l fue l 2 4 Ford heavy-dut ydiese l engine s wil l no t b e abl e t o 2 5 mee t eithe r 199 1 o r 199 4 particulat e emission s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 '113 ' -- " 

# J

AN NARBOR(313 ) 995-954 5P.4 6

DOCKE T NO . A-86-0 3 4 5 1 standards . 2 For d expect s t o b e abl e t o certif yit s 3 heavy-dut ydiese l engine s nea r o r belo wth e 4 particulat e standard o f .2 5 gram s pe r brak e 5 horsepowe r fo r year s 199 1 through'93 . However , 6 For d mus t tak e int o consideratio n deterioratio n an d 7 engin e an d tes t variabilit yt o assur e complianc e 8 wit hemissio n standard s ove r th e engine' s usefu l 9 life . 1 0 Therefore , Ford mus t desig n it s engine s t o 1 1 mee t emissio n level s substantiall ybelo wth e actua l 1 2 standard . 1 3 Withou t lowsulfu r fuel , For d wil l no t b e 1 4 abl e t o produc e engine s whic hwil l mee t th e 1 5 requisit e lowemissio n design targe t level s 1 6 necessaryt o assur e complianc e wit hth e 199 1 1 7 particulat e standard s ove r th e usefu l lif e o f th e 1 8 engine . 1 9 I n orde r t o mee t th e 199 4 particulat e 2 0 standard Ford wil l hav e t o develop and 2 1 commerciall yproduc e engine s wit hafter-treatmen t 2 2 contro l technology . Suc hafter-treatmen t hardware , 2 3 whethe r catalyti c o r regenerativ e traps , wil l no t 2 4 functio n fo r th e requisit e durabilit yperio d wit h 2 5 th e curren t sulfu r conten t o f diese l fuel . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 7

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 ^'""

' ' " ' ''"" ' " " ' *'"""' " " " ' " • 7

DOCKET NO . A-86-0 3 4 6 A s mentione

db y JedMandel , EM

A an dth e petroleu

m refinin

gindustrie s workedt o fin da solutio nt o th e sulfu r problem . The resul t wa s a jointly-recommende

dprogra

m t o EP A t o reduc e the diese l sulfu

r fue l fo

r on-highwa

y us e t o a maximu

m o f .0 5 b

y weight effectiv

e nationwide Octobe r 1st , 1993 . Giventh

e above , i t i s extremel y important tha t EP A mov e throug

hth e rulemakin

gproces s quickly s o For dan dother diese l manufacturer s do no t experienc e delays i ndevelopment , certificatio nor possibl y

production . Than kyo uver y muchfo

r allowin

gm e t o testify . MR . GRAY : Than kyou . N o questions . Than

kyouver

y much . MR . MILLERICK : Than kyou . MR . GRAY : Su

nRefinin

gan dMarketin

g Company , JackFreeman .

MR . FREEMAN : Goo

dmorning , gentlemen . An d goo d morning , ladie s an dgentlemen . M yname i s Jac k Freeman . I' m Manage r o f Technica l Liaiso n fo r Fuel s Development , Sun Refining an

d Marketing Company , whic hi s a uni t o f

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 8
DOCKET NO . A-86-0 3 4 7 1 Su n Company . 2 Sun refine s an d market s fuel s unde r th e 3 Sunoc o brand i n 2 8 state s eas t o f th e Rockie s wit ha 4 concentratio n i n th e northeast , a s wel l a s unde r th e 5 Atlanti c bran d i n Ne wYork , Ne wJerse yand 6 Pennsylvania . 7 A s yo u know , Sun wa s activel yinvolve d i n 8 th e negotiation s o f what' s bee n generousl ydescribe d 9 a s th e landmar k initiative b yth e diese l engin e 1 0 manufacturing an d petroleu

mrefining industrie s 1 1 whic hle d t o th e join t proposa l fo r on-highway 1 2 diese l fuel , a modificatio n tha t yo u hav e seen . 1 3 Naturally , tha t being th e case , we'r e 1 4 please d t o not e tha t EPAha s no wsee n fi t t o us e 1 5 tha t join t proposa l a s th e cor e fo r regulation . 1 6 I n additio n I shoul d mentio n tha t Sun wa s 1 7 firs t t o announc e a fiel d tes t involving a highway 1 8 diese l fue l whic hwoul d compl ywit hthes e propose d 1 9 regulation s starting o n o r abou t Novembe r 1s t o f 2 0 thi s year . 2 1 No wwhil e thi s tes t wil l b e confine d t o 2 2 curren t productio n heavy-dut ytruc k engine s i t 2 3 nonetheles s wil l provid e u s wit hexperienc e 2 4 i n lubricating oi l formulatio n developmen t an d 2 5 als o i n engin e emission s facto r deterioratio n
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 9

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 " " I " [S - TVTTT^..- - • [ J DOCKE T NO . A-86-0 3 4 8 pattern s whic hwe fee l wil l b e valuabl e i ndesigning fuel s andlubricant s fo r thes e futur e lo w emissio n engines . S o m

y purpos e reall y

i s to spea ko nbehal f

o f Suni nsuppor t o f thes e EP A regulation s a s propose dandals o t o registe r Sun' s suppor t fo r th e statement s bein gmad e by partie s to th e join t proposal , some o f whic hyo uhav e already heard , includingthos e o f th e America nPetroleu m Institute , th e Nationa l Petroleu m Refiner s Associationandth e Nationa l Counci l o f Farme r Cooperatives .

Now thi s i s no t to impl y tha t w e believ e th e regulation s bein gpropose dar e perfect , no r d o

w e sugges t tha t they ar e absen t o f numerou s technica l question s whic hstil l remai nt o b e resolve ddurin gth e implementatio nprocess .

A t th e same time w e believ e the y addres s thei r objectiv e i na cost-effectiv e manner , sharin g th e burde no f complianc e wit hfairnes s to al l o f th e stakeholders .

S o i n conclusion , w e urg e th e Agenc y t o promptl ypromulgat e a fina l rule , bu t t o d o s o onl yafte r a thoroug hconsideratio n o f writte n comment s t o b e submitte d b yAP I befor e th e clos e o f th e proceedings .

PATRICI AMURRAY& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNAREC R(31*3 ) 995-954 5DOCKE T NO . A-86-0 3 4 9

1 Finall yw e urg e th e agenc yt o wor k closel y 2 wit hAP I an d als o th e America n Societ yfo r Testin g 3 an d Material s i n th e resolutio n o f th e sometime s 4 numerou s technica l problem s tha t inevitabl yaris e 5 durin g implementatio n o f fue l regulations , tha t 6 alway s see mto . 7 S o tha t conclude s mybrie f statement . 8 MR . GRAY : Than k you , Mr . Freeman . 9 Mayb e a t thi s poin t sinc e you'v e 1 0 highlighte d "afte r a thoroug hconsideratio n o f 1 1 writte n comment s submitte d b yAPI " t o as k bot h 1 2 yoursel f an d Mr . Taylo r t o revie wth e comment s fro m 1 3 probabl yi n particula r som e o f th e marketer s tha t 1 4 we'l l hea r toda yi n regar d t o concern s tha t the y 1 5 rais e t o tr yt o mayb e mak e suggestion s t o u s a s t o 1 6 way s tha t thos e concern s migh t b e allaye d o r a t 1 7 leas t partiall yalleviate d s o w e ca n hav e a s 1 8 constructiv e a proces s a s w e ca n fro mher e t o sor t 1 9 o f fina l promulgation . 2 0 S o i f I coul d mak e tha t reques t t o bot h 2 1 o f yo u i n you r fina l comment s — 2 2 MR . FREEMAN : W e certainl yinten d t o d o 2 3 that . 2 4 MR . ANDERSON : I woul d jus t lik e t o as k i f 2 5 yo u coul d tal k abou t ho wyo u expec t th e introductio n

PATRICI AMURRAY& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 ) 995-954 5P.5 1 DOCKET NO . A-86-0 3 5 0 1 o f th e lowfue l spec s t o affec t segregatio n 2 practice s i n th e product s yo u distribute . 3 MR . FREEMAN : Well , I think it' s clea r fro m 4 ou r fiel d test s tha t w e ar e seriousl yintereste d i n 5 th e highwaydiese l fuel . Thi s i s no t a marke t tha t 6 Sun ha s bee n prominen t i n i n th e past . 7 I wis hI coul d outlin e fo r yo u ou r 8 tw

o oi l strateg

yfo r th e middl e '90's . I can' t d o 9 tha t because , quit e frankly , i t doesn' t exist , an d I 1 0 suspec t that' s th e cas e wit ha lo t o f companies . W e 1 1 generall yd o no t segregat e ou r 2 oi l i n Sun Company . 1 2 Obviousl yw e wil l b e doing som e 1 3 segregation , bu t I reall ycan' t enlighte n yo u a s t o 1 4 wha t th e natur e o f tha t i s goin g t o be . I jus t 1 5 can' t d o tha t a t thi s point . 1 6 MR . ANDERSON : Okay . I f there' s an ymor e 1 7 tha t yo u ca n sa yo n tha t i n you r fina l — 1 8 MR . FREEMAN : O n segregation . I understand 1 9 from

you r previou s questio n tha t you'r e intereste d 2 0 i n that . I suspec t that' s going t o b e on e o f th e 2 1 mor e difficul t question s fo r u s t o address , becaus e 2 2 it' s going t o varyb ycompany . It' s goin g t o b e 2 3 difficul t t o addres s tha t questio n fo r th e industry . 2 4 MR . ANDERSON : Sure . O n th e othe r hand , i f 2 5 peopl e ar e alread yfacing capita l expens e i n
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.5 2

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 5 1 

# ~ 1 operation s fo r i t theymus t hav e idea s ho wmuc h fue l they'r e going t o produce , and that' s go t t o involve some evaluatio n o f ho wmuc hsegregatio n i s going t o g o on .

MR . FREEMAN : Surely . MR . GRAY : Thank yo u verymuch , Jack . Nex t w e hav e th e Golde n Bea r Divisio n o f Witc o Corporation .

MR . WEINBERG : M

yora l testimon

ywil l no t b e exactl yth e same a s wha t i s written ; i t wil l expan d o n that . Firs t o f all , a littl e bi t abou t m y company . Witc o Corporatio n i s a multi-divisiona l compan ydealing primaril yi n chemicals , specialt y chemicals , specialt yoils , a billion-and-a-hal f dollar s i n sales .

W e employ , I think th e handou t says , abou t 7,60 0 people .

I n th e 2 1 operating division s tha t Witc o ha s theyhav e tw o refineries , on e i n Bradford , Pennsylvani a an

d on e i n Bakersfiel d o r Oildale , California .

Th e refinerie s ar e primaril ylub e oi l refineries , an

d whe n w e ge t int o talking abou t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.5 3

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 5 2

diese l fue l I' mgoing t o b e talking abou t a byproduct .

Th e Bradford refinery , becaus e i t work s froma superio r crud e oil , Pennsylvani a crud e oil , reall ydoesn' t hav e muc hproblemwit hth e regulation s tha t yo u proposed .

Th e Bakersfiel d o r Oildal e refinery , becaus e i t work s fro ma naphtheni c crud e oi l doe s hav e somewha t o f a problem , whic hI'l l expand on .

M yname i s Donal d Weinberg . I a mth e Vic e Presiden t an

d Genera l Manage r o f th e Golde n Bea r Division . I' ma Witc o Corporat e Vic e President . I'v e bee n i n th e oi l busines s fo r abou t 3 2 years , an d primaril yi n th e lub e oi l sectio n o f th e business .

Th e Golde n Bea r Divisio n run s abou t 25 0 barrel s pe r strea

mda yo f diese l fuel . No wthat' s a miniscul e amount , an d yo u migh t wonde r wh yI came al l th e wayt o Detroi t t o tal k t o yo u abou t it .

Th e thing is , it' s th e toehold . I f w e don' t mov e tha t produc t int o th e bes t marke t i t upset s th e economi c viabilit yo f ou r refinery .

Le t m e tel l yo u a littl e bi t abou t th e product s w e make . W e mak e primaril ynaphtheni c lube oils . Abou t 6 0 percen t o f ou r barre l —actuall y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 ~ T1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 5 3

les s tha n that , abou t 4 5 percen t o f ou r barre l come s ou t a s naphtheni c lub e oil s whic har e use d i n th e chemica l proces s industrie s use d fo r makin g rubber , plastics , printing in k an d s o forth . Abou t 4 0 percen t o f our barre l come s ou t
a s asphalt , road asphalt , an d th e res t o f it , th e othe r 1 5 percent , 25 0 barrel s pe r strea mdayfind s it s wayint o th e diese l fue l market .

I' d lik e t o procee d o n this . I hesitate d giving yo u a chemistrylesso n today , bu t i n orde r t o develop m

ypoin t I reall yhav e t o d o that , s o I hop e yo u wil l bea r wit hme , especiall yth e Vic e Presiden t o f Researc hfro mChevro n wh o wil l fin d thi s infinitel yboring .

I'l l nee d th e overhead fo r this . I'l l nee d m

ynote s here . Le t m e sa

ythis : I' mgoin g t o kee p m y comment s o n onl yon e item , an d tha t i s cetan e index . You'v e aske d i n you r Federa l Registe r fo r comment s o n cetan e indexan d whethe r o r no t tha t i s a goo d measur e o f aromatics .

That' s al l I wan t t o tal k abou t today , is ' cetan e index .

Cetan e index , a s yo u know , i s a calculatio n fro

mgravit yan

d fro mth e midpoin t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 1P.5 5 DOCKE T NO . A-86-0 3 5 4 1 o f th e diese l fuel . I t say s i n th e AST Mmanua l tha t 2 al l cetan e inde xi s i s a wayo f estimating wha t th e 3 cetan e numbe r is . 4 Th e cetan e numbe r — and w e d o thi s 5 regularl ywit hou r diese l fue l —ca n b e improve d 6 wit hcetan e improvers . 7 Cetan e index , you'r e stuc k wit hit . Yo u 8 can' t improv e it . It' s whateve r i t come s ou t base d 9 o n th e gravit yand th e midpoint . 1 0 Actually , it' s probabl ymor e base d o n th e 1 1 gravit ybecaus e th e midpoin t i s determine d b yth e 1 2 fac t tha t i t ha s t o functio n a s a diese l fuel . 1 3 S o you'v e prett ywel l go t a fixe d midpoint . 1 4 S o gravit yi s th e determining facto r yo u 1 5 coul d have , o r API , NPR Aan d EM Asimpl ycoul d hav e 1 6 pu t a s a n aromati c contro l gravity . I t woul d hav e 1 7 give n th e same contro l an d woul d hav e pu t m e int o 1 8 th e same pickl e tha t I' mi n currently . 1 9 Okay , let' s tal k abou t th e naturall y 2 0 occurring hydrocarbon s tha t occu r i n crud e oi l an d 2 1 tha t occu r i n th e finishe d product s tha t com e ou t o f 2 2 th e crud e oil , an d wha t I wan t t o d o i s relat e thes e 2 3 t o cetan e index . 2 4 Firs t o f all , ther e ar e norma l paraffins . 2 5 Tha t i s a straigh t chai n hydrocarbon . That' s wha t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.5 6 DOCKE T NO . A-86-0 3 5 5 1 ou r Bradfor d divisio n has , Pennsylvani a crud e oil , 2 an

d there' s iso-paraffins , whic hi s a straigh t chai n 3 wit hsome branc hchains . 4 Thos e product s exhibi t a hig hgravity , a 5 lowdensity , a highgravity , becaus e AP I gravit yi s 6 inverse d t o density , an d a s a resul t th e cetan e 7 inde xo f diese l fue l tha t i s distille d ou t o f 8 paraffini c crud e i s rathe r high . Th e gravity' s 9 high , th e cetan e indexi s high . 1 0 And th e peopl e wh o ar e operating fro m 1 1 norma l paraffini c o r iso-paraffini c crude s hav e n o 1 2 problemmeeting th e 4 0 cetan e inde xtha t i s i n 1 3 you r regulation . 1 4 Nex t w e hav e tw o additiona l type s o f 1 5 hydrocarbon s tha t occur . W e hav e naphthenes , an d 1 6 tha t i s a saturate d ring-structure d hydrocarbon . 1 7 Some peopl e cal l thos e cyclo-paraffins . 1 8 And w e hav e aromatics . Aromatic s ar e 1 9 unsaturate d ring-structure d hydrocarbons . Aromatic s 2 0 ar e wha t you'r e trying t o control , fo r some prett y 2 1 good , vali d reasons . 2 2 N o one' s eve r ha d problem s wit h 2 3 naphthenes . Naphthene s ar e no t carcinogens . 2 4 They'r e fin e products . A s a matte r o f fact , they 2 5 hav e highBT Uconten t pe r gallo n o f diese l fuel . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 5 6

1 Th e diese l fuel s hav e a highBTUcontent , whic h 2 woul d indicat e yo u ge t mor e power , bette r diese l 3 fue l mileage , whic hi s desirabl e froma n emission s 4 viewpoint . 5 I n an yevent , a naphthen e i s no t a n 6 aromati c an d a n aromati c i s no t a naphthene , bu t 7 bot ho f thes e product s exhibi t a lo wAP I gravit y 8 becaus e theyar e dens e molecules , they'r e compac t 9 molecules , an d a s a resul t neithe r o f thes e product s 1 0 wil l exhibi t a highcetan e index . 1 1 Okay . I'v e show n eac ho f thes e 1 2 hydrocarbon s a s separat e an d distinc t hydrocarbons , 1 3 bu t actuall yth e waytha t everything occur s i s tha t 1 4 you'v e go t mixtures . You'l l hav e som e straigh t 1 5 chain s i n there , you'r e going t o hav e a few 1 6 aromatic s floating around , you'l l hav e some branc h 1 7 chain s coming off , an d tha t show s structurall ywha t 1 8 woul d normall yoccu r i n crud e oil . 1 9 However , you'l l fin d tha t whe n yo u g o t o 2 0 th e differen t pool s o f crud e tha t ar e availabl e on e 2 1 typ e o f structur e usuall ypredominates . S o w e cal l 2 2 a paraffini c crud e on e that' s mostl yparaffini c 2 3 an

d a naphtheni c crud e on e tha t i s mostl y 2 4 naphthenic . 2 5 S o the n yo u can hav e a paraffini c grou p — PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.5 8 DOCKET NO . A-86-0 3 5 7 1 a paraffini c crud e containing naphtheni c groups , 2 yo u ca n hav e a paraffini c containing aromati c group s 3 an

d yo u ca n hav e a naphthen e containing some 4 aromati c rings . 5 No wI' mstil l goin g t o stayo n th e theory , 6 bu t I' mgoing t o bring yo u som e dat a i n a minute . 7 Yo u ca n hav e a naphtheni c oi l tha t ha s th e 8 same o r les s aromaticit ytha n i n paraffini c oil . 9 Paraffini c i s going t o mee t th e cetane . Th e 1 0 naphtheni c wil l not . 1 1 S o reall ywha t yo u ar e measuring b ycetan e 1 2 index , i f yo u think abou t it , you'r e no t measuring 1 3 th e aromaticity , you'r e measurin g th e typ e o f 1 4 saturate d structur e that' s attache d t o tha t 1 5 aromatic . S o you'r e reall yno t controlling th e 1 6 aromaticity . 1 7 Le t m e sho wyo u som e goo d examples . 1 8 Ther e wa s a pape r tha t wa s publishe d 1 9 b

yGenera l Motor s Research . The ydidn' t hav e cetan e 2 0 inde xi n tha t paper , bu t the ydi d hav e th e 2 1 mid-boiling poin t i n th e paper , i n th e table , an d 2 2 theyals o ha d th e aromatic s i n th e tabl e —I' m 2 3 sorry , theydidn' t hav e —theyha d th e mid-boiling 2 4 poin t an d theyha d th e gravit yand the yha d th e 2 5 aromatics , s o fro mth e mid-boiling poin t an d fro m
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKET NO . A-86-0 3 5 8

1 th e gravit yw e figured out wha t th e cetan e inde x 2 was . I t wa s jus t a calculation . 3 An dthere are some , youknow , surprisin g 4 thing s inhere . Here i s a produc t tha t i s 5 4 5 percent aromati c b y FIA , an

di t meet s —

i t woul d 6 pass . I t woul dbe okay . 7 O nth e other hand , here' s a produc t tha t 8 i s 3 8 percent aromati c an di t wouldn' t be okay . 9 Th e purpos e o f a tes t i s t o separat e th e 1 0 goo d guy s fro mth e bad guys . It' s t o rejec t thos e 1 1 product s wit haromatic s an d accep t thos e product s 1 2 tha t don' t hav e aromatics , an dthi s show s tha t — 1 3 an

d remembe r thi s wa s only , what , abou t te n 1 4 differen t diese l fuels . I t didn' t d o tha t o n tw o o f 1 5 them . 1 6 Le t m e showyo u wha t i t doe s t o us . Whe n 1 7 thi s thing firs t came ou t w e starte d doin g som e wor k 1 8 i n ou r laboratory . W e hav e a hydrotreater , an d w e 1 9 kne wwe' d hav e t o lowe r th e sulfur , an d ou r 2 0 hydrotreate r wil l d o some mil d saturations , s o w e 2 1 starte d hydrotreating . W e als o starte d recutting 2 2 an

d refractionating , becaus e yo u ca n sometime s 2 3 separat e ou t some aromatic s tha t way ; aromatic s ten d 2 4 t o boi l lighter . An d w e too k variou s fraction s 2 5 tha t had bee n hydrotreate d an d w e measure d th e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 5 9

aromatic s b

yFIA , an

d the n w e calculate d th e cetan e index . Th e amazing par t o f thi s i s i t run s th e revers e o f wha t yo u think i t woul d run . A s th e aromatic s wen t down ~ o r a s theywen t up I guess , th e cetane , th e cetan e inde xwen t up .

No ww e ca n onl yspeculat e o n th e reason s wh ytha t happened . Anaphtheni c molecul e ha s additiona l hydrogen , i t migh t b e denser , an d i f it' s dense r i t migh t b e doing that . Als o th e midpoin t o f th e boiling rang e wa s floating around a s
w e recut . Bu t i n an yevent , ther e isn' t muc hw e ca n d o o n th e 4 0 cetan e —t o reac ha 4 0 cetan e index .

I think w e ca n tur n thi s off . I'v e finishe d th e slides .

No wwh yi s thi s importan t an d wh yshoul d yo u b e concerned ?

Well , I coul d spea k o n th e basi s tha t I'v e bee n i n th e busines s fo r 3 2 year s and I hav e te n year s t o g o t o retiremen t an d I' d lik e t o b e i n th e busines s fo r 4 2 year s an d no t b e rule d ou t becaus e . o f an inappropriat e test .

Bu t le t m e als o pu t i t i n th e term s o f the environmen t an

d als o th e economy . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.6 1

DOCKE T NO . A-86-0 3 6 0 1 Sa n Joaqui n Valle ycrud e oi l supplie s 7 0 2 percen t o f Californi a crud e oil , and it' s 1 3 percen t 3 o f th e U S domesti c supply . We'r e importing ove r 4 hal f o f ou r crud e oi l righ t now . 5 Yo u certainl ydon' t wan t t o byvirtu e o f 6 choosing a n inappropriat e tes t rul e ou t 1 3 percen t 7 o f th e U S domesti c suppl yo f crud e oi l and en d up 8 importing eve n mor e crud e oil . 9 And environmentall ywhe n yo u impor t mor e 1 0 crud e oi l yo u pu t a burden , a n environmenta l burde n 1 1 o n th e harbors . W e don' t wan t Long Beac ht o becom e 1 2 know

n a s Valde z II . 1 3 Th e crud e oi l i n th e Sa n Joaqui n Valle yI 1 4 gues s I shoul d hav e sai d i s naphtheni c aromati c 1 5 crud e oil . It' s tha t ring-structure d crud e oil . 1 6 There' s n o waythat' s going t o change . And i f 1 7 that' s goin g t o b e use d something ha s t o b e don e 1 8 wit hyou r specification . 1 9 A s I sai d i n th e beginning , t o tak e th e 2 0 diese l an d downgrad e it , I notice d i n th e stud ytha t 2 1 yo u di d ~ i n Jul y'8 9 ther e wa s a statemen t tha t 2 2 smal l refiner s mayno t b e abl e t o mak e diese l fuel . 2 3 That' s lik e telling a cattl e ranche r t o rais e cow s 2 4 tha t don' t hav e an yhoove s becaus e there' s n o sal e 2 5 fo r them . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5- n DOCKE T NO . A-86-0 3 6 1 1 Th e diese l fuel' s going t o com e up . Tha t 2 cu t come s up fro mth e well , s o something ha s t o b e 3 don e wit hit , an d i f it' s sol d int o th e bunke r fue l 4 market , w e don' t hav e a hom e heatin g oi l marke t o n 5 th e wes t coast , o r a n insignifican t one . I f 6 something i s going t o b e don e wit htha t i t ha s t o g o 7 int o th e bunke r market , and i t change s th e whol e 8 economi c viabilit yo f ou r refinery . 9 Wha t abou t hydrocracking ? Whe n yo u d o a 1 0 billion-and-a-hal f dollar s i n sales , m ycompan

yi s 1 1 no t exactl ystrappe d fo r capita l t o pu t i n a 1 2 humongou s hydrocracke r an d crac k ope n thos e rings . 1 3 Th e problemis , whe n yo u crac k ope n th e 1 4 ring s yo u als o crac k chains , an d whe n yo u crac k 1 5 chain s w e en d u p i n a busines s wher e —w e end up i n 1 6 th e gasolin e business , w e en d up i n th e propan e 1 7 business . Yo u ge t al l kind s o f sidestrearns tha t 1 8 yo u neve r intende d t o get , an d yo u pu t a n 1 9 environmenta l burde n o n th e northeas t corne r o f 2 0 Bakersfiel d becaus e you'v e go t volatil e 2 1 hydrocarbon s ther e tha t yo u didn' t hav e 2 2 previously . 2 3 Hydrocracking als o i s no t economicall y 2 4 viable . I f I hav e t o si t an d hydrocrac k Sa n Joaqui n 2 5 Valle ycrud e whil e somebod ysitting ove r o n th e
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' ' " "•'"TTflF-

-

DOCKE T NO . A-86-0 3 6 2 1 coas t bring s i n Alask a Nort hSlop e crud e an d the y 2 onl yhav e t o distil l it , I maymak e diese l fue l bu t 3 I can' t sel l i t becaus e I hav e to o muc hcos t i n it . 4 Afte r w e wen t througha lo t o f laboratory 5 wor k an

d a lo t o f thinking a s t o wha t ou r 6 alternative s were , w e realize d tha t th e overriding 7 questio n i n thi s whol e thing is , wh yd o w e hav e t o 8 come u p wit ha solutio n fo r a problemthat' s cause d 9 no t b

yth e aromatic s conten t bu t b ya poo r wayo f 1 0 measuring th e aromatics ? 1 1 That' s reall yth e rub . That' s wher e th e 1 2 problemis . It' s reall yno t a n environmenta l 1 3 problem . It' s a problemtha t i s i n you r rule . 1 4 Th e questio n is , w e spend a lo t o f mone yo n 1 5 environmenta l matter s righ t now , a grea t dea l o f 1 6 ou r capita l budge t goe s int o it , an d doe s i t seem 1 7 reasonabl e tha t w e shoul d commi t a bi g portio n o f 1 8 tha t environmenta l budge t t o —fo r th e purpos e o f 1 9 accommodating a tes t tha t reall yisn' t appropriat e 2 0 fo r measuring th e environmenta l impact ? I t seem s 2 1 ludicrou s t o d o that . 2 2 W e hav e a solutio n a s t o ho wt o ge t around 2 3 this . There' s tw o possibilities . On e i s fo r EPAt o 2 4 recogniz e tha t naphtheni c diese l fuel s ar e no t 2 5 paraffini c diese l fuel s an d allo wfo r a lowe r cetan e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.6 4

DOCKE T NO . A-86-0 3 6 3 1 inde xfo r —an d I don' t hav e th e detail , I haven' t 2 though t throughit . I coul d come up wit hth e detai l 3 o n it . Bu t allo wfo r a lowe r cetan e inde xfo r 4 ring-structure d diese l fuels . 5 And th e othe r wayt o d o i t i s t o simpl y 6 leve l th e playing field . Jus t contro l aromatics . 7 Jus t sayif , yo u know , i f cetan e inde xdoesn' t wor k 8 g o bac k t o controlling aromatic s fo r everybody . 9 Thos e peopl e tha t hav e paraffini c oil s ar e going t o 1 0 hav e t o hav e a n aromati c control . Thos e peopl e wit h 1 1 naphthenic s ar e going t o hav e t o hav e a n aromati c 1 2 control . 1 3 Tha t woul d pu t I think a burde n o n 1 4 everybody , probabl yisn' t th e bes t conclusion , bu t 1 5 i t doe s kee p th e playing fiel d level . 1 6 That' s it . 1 7 MR . GRAY : Sinc e w e ar e doing a littl e 1 8 chemistrylesson , i f yo u coul d mayb e hel p me , wa s 1 9 naphtheni c cetan e valu e —ho wdoe s tha t compar e t o 2 0 th e cetan e valu e o f a n aromati c o f th e same 2 1 molecula r weight ? 2 2 Fo r example , I assume it' s higher , bu t I 2 3 wonde r i f yo u coul d — 2 4 MR . WEINBERG : I t is . Yo u mea n th e cetan e 2 5 index ?
PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5DOCKE T NO . A-86-0 3 6 4

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 MR . GRAY : Well , I reall ymea n th e cetan e

value , number .

MR . WEINBERG : Number . MR . GRAY : It s characteristi c t o automaticall yignit e whe n yo u injec t th e fue l i n a diese l engin e i s th e cetan e number .

MR . WEINBERG : I don' t hav e th e informatio n i n fron t o f me , bu t I suspec t mayb e i t i s slightl y higher . MR . GRAY : Bu t it' s no t a majo r factor ? MR . WEINBERG : I don' t think so .

MR . GRAY : S o th e produc t o f you r Californi a refinery , althoughlo wi n aromatic s —

MR . WEINBERG : No , I wouldn' t cal l i t particularl ylowi n aromatics .

MR . GRAY : Coul d yo u giv e m e a fee l fo r th e distillat e tha t come s —

MR . WEINBERG : I think w e measure d ou r distillate , an

d i t wa s around 30 , somewher e betwee n 30 , 3 5 percen t aromatic .

MR . GRAY : Okay . Yo u mentione d earlie r in you r statemen t tha t yo u sometime s hav e t o ad d cetan e improvers . I s th e distillat e fairl ylo wcetane-numbe r
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 6 5 1 distillate ? 2 MR . WEINBERG : Yes , i t is . It' s a low 3 cetan e number . I t run s 3 0 t o 35 , and t o mee t th e 4 ASTMspe c a s wel l a s Stat e o f Californi a spe c i t 5 ha s t o g o up t o 4 0 i f it' s going t o b e sol d fo r 6 truc k diesel . S o w e —i f we'r e going t o sel l i t 7 fo r truc k diese l i t ha s t o b e sol d a s 40 . 8 I' msur e ther e ar e peopl e tha t ar e buying 9 i t an

d using i t fo r truc k diese l withou t telling 1 0 us , bu t i f w e kno wtha t it' s going t o g o fo r truc k 1 1 diese l th e onl ywayw e ca n d o i t i s t o add cetan e 1 2 improver . 1 3 MR . GRAY : Okay . I t seeme d lik e on e o f 1 4 you r option s tha t yo u recommende d fo r consideratio n 1 5 was , though , a contro l o n aromatics . 1 6 I f you r distillat e cu t i s 30 , 35 , whic h 1 7 yo u sugges t i s no t low , a t least , aromatics , wha t 1 8 typ e o f leve l woul d yo u b e suggesting ? 1 9 MR . WEINBERG : Well , th e thin g i s i f w e — 2 0 yo u mea n o n cetan e index ? 2 1 MR . GRAY : No , o n aromatics . 2 2 MR . WEINBERG : O n aromatics ? Well , I think 2 3 I read i n you r Federa l Registe r tha t you r ai mi s t o 2 4 contro l aromatic s a t presen t level s rathe r tha n t o 2 5 reduc e it , don' t le t i t ris e up , and i f that' s wha t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.6 7

DOCKE T NO . A-86-0 3 6 6 1 you r goa l is , i f — an d I didn' t commen t o n i t 2 becaus e i t di d sa ytha t tha t wa s th e goal , the n I 3 woul d leave i t a s i t is . Yo u know , it' s onl y25 0 4 barrel s pe r strea m day . I t doesn' t amoun t t o a hil l 5 o f bean s a s fa r a s th e tota l amoun t o f diese l use d 6 i n Californi a goes . 7 MR . GRAY : O f cours e th e principa l problem 8 i s a wayt o appl ya regulatio n tha t stil l i s 9 equitabl e among al l th e folk s tha t ar e i n th e 1 0 market , an d o f cours e that' s wh ywe'r e trying t o 1 1 bette r understand you r concern , you r issue , and tha t 1 2 lead s sor t o f t o a differen t are a o f thought . 1 3 Considering th e siz e o f tha t distillat e 1 4 output , wh ywouldn' t i t b e feasibl e fo r yo u t o 1 5 marke t int o th e off-highwaydiese l market ? 1 6 MR . WEINBERG : W e d o some o f that , bu t w e 1 7 expec t tha t onc e you r rule s g o i n tha t marke t i s 1 8 going t o b e flooded . Tha t marke t —I mean , 1 9 everybody' s talking abou t wher e they'r e goin g t o 2 0 dum

p thei r product , an d agai n I' m

looking a t 2 1 economi c viabilit yfo r th e entir e refinery . 2 2 That' s certainly , I mentioned , th e bunke r 2 3 market , bunkering ships . Tha t certainl yi s a n 2 4 alternative . 2 5 Ther e ar e a numbe r o f alternative s tha t w e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.6 8
DOCKE T NO . A-86-0 3 6 7 1 have , bu t there' s going t o hav e t o b e some entry 2 int o th e diese l market . 3 Some o f th e off-highwaymarket s ar e unde r 4 pressur e t o bu ylowsulfur , lowaromati c diese l 5 fuel s eve n thoughit' s no t —doesn' t com e unde r th e 6 law . 7 Whe n I tal k wit hbuyer s i n thos e market s 8 theyhav e emission s requirement s an d they'r e being 9 tol d i f theyus e a lowsulfur , lo waromati c diese l 1 0 they'l l contro l thei r emissions , s o tha t off-highway 1 1 marke t mayno t continu e t o b e a n off-highwaymarket , 1 2 and i f i t is , i f i t end s up a dumping plac e it' s 1 3 going t o b e a n uneconomica l market . 1 4 MR . GRAY : Wouldn' t yo u think it' s mor e 1 5 economica l tha n th e bunker ? I mean , tha t woul d 1 6 sugges t tha t off-highwaydiese l fue l woul d ge t 1 7 pretty , prett yinexpensiv e i f it' s —i f everybod y 1 8 i s competing wit htha t market , wouldn' t it ? 1 9 MR . WEINBERG : That' s right . 2 0 MR . GRAY : Okay . What' s goin g o n i n 2 1 California , th e Californi a Ai r Resource s Board ? 2 2 Certainl ythey'r e exploring diese l fue l 2 3 an

d petroleu

mfue l qualit ystandards . 2 4 What' s you r projectio n o f th e actio n they 2 5 migh t tak e i n thi s regard ?
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.6 9
DOCKE T NO . A-86-0 3 6 8 1 D o yo u se e i t being compatibl e wit hyou r 2 concerns , o r — 3 MR . WEINBERG : Well , I'l l tel l you , I woul d 4 lik e t o defe r t o th e nex t speake r o n that , wh o i s 5 AIRA , a boar d membe r o f AIRA , wh o I think i s goin g 6 t o spea k mor e completel yo n that . He' s certainl y 7 mor e knowledgeabl e tha n I am . 8 MR . GRAY : S o i n su m you r recommendatio n i s 9 —a s I understand i t i s tha t ther e mayb e tw o 1 0 measures , fo r example , tha t th e diese l fue l woul d 1 1 hav e t o mee t eithe r a cetan e inde xo r a maximu m 1 2 percen t aromatics , i s tha t wha t — 1 3 MR . WEINBERG : No , no , I think tha t yo u 1 4 tak e eithe r on e o r th e othe r an d impos e it . You'v e 1 5 —yo u can' t le t certai n peopl e i n th e industrymee t 1 6 a cetan e indexan d other s mee t a n aromatic , becaus e 1 7 i t give s a n economi c advantag e t o on e ove r th e 1 8 other . 1 9 MR . GRAY : Doe s i t giv e mor e o f a n economi c 2 0 advantag e ove r th e wayw e propos e th e rule , whic hi s 2 1 a cetan e index , though ? 2 2 MR . WEINBERG : I hav e no t reall yassesse d 2 3 wha t ou r economi c disadvantag e wil l be . It' s very 2 4 difficul t t o d o tha t becaus e you'r e looking a t 2 5 alternativ e markets . You'r e looking a t running
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.7 0
DOCKE T NO . A-86-0 3 6 9 1 differen t crudes . 2 I think als o yo u wan t t o —yo u certainl y 3 wan t t o focu s o n th e alternative s tha t th e othe r 4 refiner s i n Californi a wil l b e facing , thos e tha t 5 ca n swing betwee n Californi a crud e oil , Sa n Joaqui n 6 Valle ycrud e oi l an d Alask a Nort hSlope , mainl yth e 7 peopl e o n th e coast . They'r e al l goin g t o buy 8 Alaska n Nort hSlope . 9 Yo u pu t a tremendou s burde n o n th e harbor s 1 0 fo r that , wher e there's , oh , abou t eigh t o r nin e 1 1 smal l refiner s i n th e L Abasi n wher e the ydraw 1 2 substantia l amount s o f thei r crud e oi l fromth e 1 3 Sa n Joaqui n Valleyb ypipeline , they'v e simpl ysai d 1 4 tha t they'l l bu yAN S throughth e harbor . Yo u hav e a 1 5 tremendou s environmenta l hazar d doin g that . 1 6 MR . GRAY : Well , notwithstanding tha t 1 7 concern , I' mstil l trying t o probe , yo u know , wha t 1 8 migh t b e some option s tha t w e ca n consider , becaus e 1 9 w e d o hav e —a s yo u hear d fro msome o f th e 2 0 just-preceding witnesses , there' s a lo t o f effor t 2 1 investe d i n trying t o fin d a mean s t o le t u s mov e 2 2 forward toward , yo u know , th e diese l engin e 2 3 standard s whic hha s prompte d thi s proposal , an d the 2 4 cetan e indexcertainl yha s bee n strongl ysupporte d 2 5 b

ya lo t o f th e representative s o f th e petroleu m
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.7 1
DOCKE T NO . A-86-0 3 7 0 1 industry , an d s o a t thi s poin t i n tim e t o totall y 2 abando n tha t concep t i n favo r o f something ne wwoul d 3 a t minimu mdelayth e fina l actio n o f thi s rulemaking 4 whic hwoul d impac t th e heavy-dut yengin e industry , 5 e t ceter a an d hav e environmenta l implication s 6 potentially . 7 S o wha t I' masking basicall yi s i f yo u 8 coul d mayb e sugges t some options , some wayo f 9 approaching thi s tha t woul d b e reasonabl yresponsiv e 1 0 t o you r concer n without , yo u kno w— 1 1 MR . WEINBERG : I woul d propos e tha t anyon e 1 2 working fro mSa n Joaqui n Valle ycrud e b e allowe d t o 1 3 mee t a 3 0 minimu mcetan e index . I think that' s i n 1 4 m

ywritte n proposal . 1 5 MR . GRAY : I s ther e some othe r waytha n 1 6 cetan e inde xtha t tha t coul d b e expresse d tha t mayb e 1 7 i s mor e responsiv e t o you r situation ? That' s wh yI 1 8 suggeste d mayb e th e aromatic s level . 1 9 Coul d yo u als o rais e tha t possibility ? 2 0 MR . WEINBERG : Well , rais e th e aromatic s 2 1 leve l i f everyon e i s o n th e — i f everyon e i s o n an 2 2 aromatic s basis , becaus e i f I a mpu t o n a low 2 3 aromatic s leve l an d everyon e els e i s o n a 4 0 cetan e 2 4 leve l they'r e going t o mak e distillat e an d I hav e t o 2 5 mak e hydrotreate d product , hydrosaturate d product . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.7 2
DOCKE T NO . A-86-0 3 7 1 1 I' mtrying t o kee p th e playing fiel d 2 level . 3 MR . GRAY : Wha t abou t th e ide a o f a n optio n 4 fo r a minimu mcetan e number ? 5 I think Californi a alread yha s a minimu

m 6 o f 4 0 cetan e number . 7 MR . WEINBERG : Tha t woul d b e fine , that' s 8 fine , i f yo u wan t a 4 0 cetan e number , a s long a s 9 yo u understand I' mgoing t o tak e tha t produc t an d 1 0 improv e i t wit hcetan e improver . 1 1 MR . GRAY : What' s you r judgmen t o f th e 1 2 implicatio n tha t tha t migh t hav e i f ther e wer e a n 1 3 optio n o f a minimu mo f 4 0 cetan e inde xo r a minimu m 1 4 o f 4 0 cetan e valu e number ? D o yo u think tha t woul d 1 5 resul t i n a n increas e i n aromati c leve l o f diese l 1 6 fuel? . 1 7 MR . WEINBERG : No . I think th e aromatic , 1 8 yo u know , th e aromati c leve l i s a functio n o f th e 1 9 crud e oil , an d i n ou r cas e a t leas t I don' t kno w— 2 0 yo u know , othe r peopl e hav e option s o n crud e oil . 2 1 M

ycrud e oi l i s going t o come fromth e Sa n Joaqui n 2 2 Valle yn o matte r wha t yo u do , an d ther e i s a certai n 2 3 aromaticit yi n tha t crud e oil , an d it' s going t o 2 4 stayth e same da yafte r day . 2 5 MR . GRAY : I understand you r situation . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.7 3
DOCKE T NO . A-86-0 3 7 2 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 S o yo u reall ydon' t hav e a sens e o f wha t

tha t migh t d o t o overal l diese l fue l aromati c levels ?

MR . WEINBERG : No , I think eac hcompan y produce s differentl yan d you' d reall yhav e t o fin d
ou t wha t eac hcompan yi s going t o do . MR . ANDERSON : Mayb e you'v e alread y answere d thi s question , bu t i f yo u ha d a n option , bein g eithe r th e cetan e inde xo r a n aromatic s tha t

—I think th e leve l w e said , curren t leve l i s around 35 , mee t eithe r specification , woul d tha t similarl ymee t you r need ?

MR . WEINBERG : I t depends , o f course , wha t th e number s are .

MR . ANDERSON : Well , i f i t wa s around th e 3 5 range ? I don' t kno wwha t i t woul d be , bu t that' s I think i n th e neighborhoo d o f curren t number s tha t we'v e bee n dealing with .

MR . WEINBERG : Around a 3 5 range , tha t probabl ywould . I woul d wan t th e chanc e t o revie w ou r la bdat a o n tha t an

d mak e a furthe r comment . Jus t of f th e top o f m yhea d tha t migh t d o it . Again , I g o bac k t o wha t i t sai d i n th e Federa l Register . Yo u wer e no t looking t o reduc e aromatic s a s muc ha s yo u wer e t o capping it .

MR . ANDERSON : Bu t i f w e provid e a n
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.7 4
DOCKE T NO . A-86-0 3 7 3 1 alternativ e t o peopl e it' s go t t o b e something 2 simila r t o a n averag e leve l s o w e don' t fin d 3 everybod ymoving up t o some highe r level , o r i t 4 migh t hav e t o b e eve n lowe r tha n that . It' s no t 5 something w e reall ythough t abou t yet . 6 Mayb e yo u ca n giv e u s some mor e commen t i n 7 tha t are a i n you r fina l comments . 8 MR . WEINBERG : Okay . A s I said , I'l l hav e 9 t o revie wsome laboratorydat a i n orde r t o pu t a 1 0 fina l commen t o n that . 1 1 MR . ANDERSON : Probabl ywe' d als o b e 1 2 intereste d i n hearing fro m AP I an d othe r intereste d 1 3 partie s o n thes e kind s o f options , too . 1 4 MR . HOOVER : Sinc e you r outpu t i n term s o f 1 5 diese l fue l seem s t o b e fairl ysmall , and yo u 1 6 identifie d that , doe s mos t o f i t o r al l o f i t g o 1 7 toward s on-road diese l fue l a t thi s time ? 1 8 MR . WEINBERG : Mos t o f i t righ t no wgoe s 1 9 fo r off-road . 2 0 MR . HOOVER : Oh , okay . Becaus e I gues s I 2 1 wa s unde r th e impression , obviousl yincorrectly , 2 2 tha t mos t o f i t wa s on-road , an d I wa s curiou s abou t 2 3 ho wyo u woul d perceiv e th e dyeing o f tha t fro ma 2 4 contro l standpoin t being don e a t th e refinery . 2 5 MR . WEINBERG : Dyeing an d segregating i s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.7 5
DOCKE T NO . A-86-0 3 7 4 1 absolutel yn o problemfo r u s becaus e we'r e a lub e 2 oi l refinery . W e hav e a zillio n tank s an d ou r 3 busines s i s making specialties , s o tha t isn' t a 4 problem

a t all . 5 I' monl ylooking a t th e —t o answe r you r 6 questio n mor e fully , I loo k fo r th e off-highway 7 diese l marke t t o becom e a sloppymarket , a terribl e 8 marke t a s peopl e dum p int o i t i n orde r t o avoi d th e 9 on-highwayrules . S o ou r strateg yi s t o mov e int o 1 0 th e on-highwaymarket . 1 1 MR . GRAY : Okay . Thank yo u verymuch . 1 2 Th e America n Independen t Refiner s 1 3 Associatio n i s next . 1 4 1 5 MR . MOYER : Goo d morning . Mynam e 1 6 i s Crai g Moyer . I a mGenera l Counse l t o th e 1 7 America n Independen t Refiner s Association . 1 8 AIR Ai s please d t o t o hav e th e opportunit y 1 9 t o submi t thes e comments . 2 0 A s yo u ca n see , I'v e als o hande d ou t 2 1 writte n comments . 2 2 AIR Ai s a nationa l trad e associatio n mad e 2 3 up o f smal l an d independen t refiners . I t i s th e 2 4 onl ynationa l trad e associatio n whic hspeak s 2 5 exclusivel yfo r smal l an d independen t refiners . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 7 5

1 Th e Notic e o f Propose d Rulemaking regarding 2 thi s matte r an d testimon

yyo u hav e hear d today 3 referre d t o a landmar k initiativ e i n whic hmember s 4 o f th e diese l engin e manufacturing and petroleu m 5 industrie s submitte d a join t proposa l fo r on-highway 6 diese l fue l modificatio n t o th e Environmenta l 7 Protectio n Agency . 8 AIR Awishe s t o mak e i t clea r tha t al l o f 9 th e element s o f thi s join t proposa l ar e no t 1 0 supporte d b yal l member s o f th e petroleu mrefining 1 1 industry . 1 2 M ycomment s todaywil l briefl ydiscus s th e 1 3 importanc e o f smal l refiner s t o th e consume r an d t o 1 4 ou r economy . I'l l the n discus s th e significan t 1 5 advers e impac t o f th e propose d regulation s t o smal l 1 6 refiners , an d finall yI wil l se t fort hAIRA' s 1 7 proposa l fo r a three-yea r extensio n beyond th e 1 8 Octobe r 1 , 199 3 deadlin e fo r complianc e b ysmal l 1 9 refinerie s wit hth e sulfu r conten t aspec t o f th e 2 0 propose d rulemaking . 2 1 I t i s ou r belie f tha t thi s three-yea r 2 2 extensio n fo r smal l refiner s woul d achiev e 2 3 substantiall yal l o f th e ai r qualit ybenefit s sough t 2 4 b

yth e EPAwithou t implementing measure s tha t woul d 2 5 eliminat e man ysmal l refiner s fro mth e diese l fue l
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 7 6

market . Unlik e majo r oi l companies , smal l refiner s d o no t hav e acces s t o substantia l amount s o f funds . Acredi t lin e o f a smal l refineryi s almos t alway s full yutilized.jus t t o purchas e crud e oi l and t o kee p up wit hday-to-dayrequirements .

Accordingly , eve n i f smal l refiner s attemp t t o retrofi t thei r refinerie s s o tha t they ca n achiev e th e spec s i n th e Notic e o f Propose d Rulemaking theymayb e unabl e t o obtai n th e financing t o payfo r suc hchanges .

I n ligh t o f th e unavailabilit yo f credi t thes e refinerie s woul d hav e t o shu t down sinc e they d o no t hav e sufficien t retaine d earning s o r alternativ e mean s t o undertak e th e substantia l cost s whic hwil l b e a par t o f an yproposa l t o chang e diese l fue l specifications .

If , however , a smal l refine r ca n sho wtha t i t woul d no t b e economicall ydisadvantage d an d instead woul d b e abl e t o pas s throughth e cost s o f th e refinerymodification s necessaryt o achiev e th e standard s o f a rul e o n diese l fue l specification s i t migh t b e possibl e t o persuad e a financia l institutio n t o provid e th e necessaryfinancing .

Thi s i s wh

yw e see k regulation s whic hwil l

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 H*9j r DOCKE T NO . A-86-0 3 7 7

1 no t pu t smal l refiner s a t a n economi c disadvantag e 2 compare d t o larg e refiners . I n an ycase , th e 3 financing proces s generall ywil l tak e longe r fo r 4 smal l refiner s tha n fo r larg e refiners . 5 Diese l fue l i s a particularl yimportan t 6 produc t t o mos t smal l refiners . A s a primaril y 7 straight-run product , moto r vehicl e diese l fue l doe s 8 no t requir e a highleve l o f refinerycomplexit yand , 9 therefore , historicall yha s bee n a n extremel y 1 0 importan t par t o f eac hsmal l refiner s produc t slate . 1 1 Accordingly , th e smal l refiner s wh o ar e 1 2 force d ou t o f th e diese l fue l busines s mayb e force d 1 3 ou t o f th e refining busines s altogether . 1 4 Th e Federa l Trad e Commissio n an d th e 1 5 AttorneyGenera l o f Californi a hav e acknowledge d th e 1 6 importan t influenc e o f smal l an d independen t 1 7 refiner s i n mitigating th e anti-competitiv e effect s 1 8 o f concentrating th e suppl yo f petroleu mproduct s i n 1 9 th e hand s o f jus t a fewcompanies . 2 0 A s th e Federa l Trad e Commissio n foun d i n 2 1 it s Septembe r 198 2 stud yentitle d Merger s i n th e 2 2 Petroleu mIndustry , th e independen t refiner s provid e 2 3 assuranc e tha t th e marke t wil l continu e t o behav e 2 4 competitivel yb yvirtu e o f thei r selectiv e presenc e 2 5 i n th e market . Theyac t a s a chec k o n th e abilit y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.7 9 DOCKE T NO . A-86-0 3 7 8 1 o f majo r integrate d oi l companie s t o manipulat e th e 2 pric e an d suppl yo f variou s petroleu mproduct s 3 including diese l fuel , thu s exerting a strong 4 downwar d pressur e o n petroleu mprice s t o th e benefi t 5 o f consumers . 6 Althougheac hsmal l refine r individuall y 7 represent s a smal l shar e o f th e market , cumulativel y 8 thei r influenc e i s substantia l and decidedl y 9 pro-competitive . Fo r example , i n Californi a smal l 1 0 refiner s produc e abou t 1 5 percen t o f th e diese l fue l 1 1 sold , a substantia l amoun t o f th e gasolin e an d 1 2 militaryje t fue l sold , virtuall yal l th e asphal t 1 3 sol d i n southern Colorad o and 5 0 percen t o f th e 1 4 asphal t sol d i n norther n California . 1 5 Nationall yindependen t refiner s suppl y5 0 1 6 percen t o f al l defens e fue l need s o f defens e fue l 1 7 suppl ycente r facilities . 1 8 A s t o othe r product s nationall yw e woul d 1 9 estimat e abou t 1 5 t o 2 0 percen t o f fuel s ar e 2 0 supplie d b ysmal l an

d independen t refiners . 2 1 A s show n o n th e overhead Scott' s abou t t o 2 2 pu t u

p here , i n recen t time s smal l refiner s hav e 2 3 bee n decimate d b yunprecedente d bankruptc yan d 2 4 departure s fro mth e marketplace . 2 5 Th e dat a yo u se e her e i s subsequen t t o
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 v 2 3 2 4 2 5 —- r--,,.- . • -..„. r -•. - , - •• TyaDOCKET NO . A-86-0 3 7 9 eliminatio n o f th e Entitlement s Progra mwhic hgo t ri d o f a lo t o f th e uneconomi c smal l refinerie s and , therefore , compensate s fo r th e Entitlement s Program .

Notwithstanding tha t compensation , th e number o f smal l refiner s ha s continue d t o declin e ove r time unti l today , whe n theyrepresen t abou t 9. 3 percen t o f th e nationa l refining capacity .

Congres s an

d th e EP

A previousl yhav e repeatedl yacknowledge d th e importanc e o f smal l refiner s i n th e marketplace . Tha t preceden t wil l b e discusse d briefl ylater .

I woul d urg e todaytha t nothing ha s occurre d whic hwoul d alte r tha t conclusion . I f anything , th e pro-competitiv e impac t o f th e smal l refiner s i s mor e importan t t o consumer s no w tha n a t an

ytime i n th e pas t becaus e o f continuing concentration s o f petroleu msupply . A s larg e oi l companie s trad e operation s an d acquir e reserves , regiona l concentratio n o f supplie s i s increasing . No wthi s regiona l concentratio n i s occurring eve n thoughperhap s on a nationa l leve l marke t shar e mayno t chang e much .

A s thi s loca l an

d regiona l concentratio n increase s th e pro-competitiv e impac t o f th e smal l refine r become s eve n mor e important . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 

## " I

1 iVTf.JVrm.-jf^fpaaa.a.-.m: —T T P.8 1 DOCKE T NO . A-86-0 3 8 0 1 Regiona l refiner s als o serv e nearb ymarket s 2 an

d generall yhav e a loca l sourc e o f rawmaterial . 3 Individuall ythes e refiner s serv e local , 4 specialt ymarket s wit hminima l transportatio n cost s 5 o n bot hcrud e oi l an d products . Eac hha s it s ow n 6 nich e an d economi c situatio n whic hi s difficul t t o 7 addres s i n th e aggregate . 8 Processing loca l crud e oil s t o suppl y 9 loca l market s clearl yprovide s a competitiv e 1 0 advantag e i n transportatio n cost s compare d t o 1 1 shipping crud e oil s t o distan t refining center s an d 1 2 the n shipping product s back . 1 3 Generall ydesigne d i n th e oi l field s t o 1 4 proces s indigenou s production , regiona l refinerie s 1 5 mayhav e specia l processing capabilitie s tha t 1 6 provid e greate r economi c upgrading capabilitie s fo r 1 7 th e particula r crud e oil s being processe d tha n 1 8 woul d b e feasibl e afte r commingling suc hcrud e oil s 1 9 fo r shipmen t elsewhere . 2 0 Also , sinc e theyca n b e designe d fo r a 2 1 specifi c crud e oi l mi xcapita l cost s ca n b e 2 2 minimized , a s yo u hear d fro m Mr . Weinber g 2 3 previously . 2 4 Proximit yt o th e marke t serve d mayprovid e 2 5 th e regiona l refinerywit hcompetitiv e advantag e i n
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.8 2 DOCKE T NO . A-86-0 3 8 1 1 identifying an d supplying unusua l loca l produc t 2 demand s an d shoul d provid e a n advantag e i n 3 responding mor e rapidl yt o changing loca l marke t 4 conditions . 5 I n summary , then , smal l refiner s ar e 6 importan t fo r bot hthei r impac t individuall ya s 7 regiona l refinerie s serving loca l an d specialt y 8 market s an d i n th e aggregat e fo r thei r abilit yt o 9 contro l a larg e enoughcumulativ e shar e o f th e 1 0 marke t t o insur e tha t competitiv e force s ca n work . 1 1 Bu t no t onl yi s ther e a consumer-oriente d 1 2 reaso n fo r encouraging th e continue d existenc e o f 1 3 smal l refiners , bu t als o a n ai r qualit yrationale . 1 4 O n a barrel-per-barre l basis , smal l 1 5 refiner s a s stationarysource s generall yemi t les s 1 6 pollutant s tha n larg e refineries . 1 7 Fo r example , smal l refinerie s ar e 1 8 generall ymor e efficien t a t controlling NO x 1 9 emission s tha n larg e refinerie s base d o n a 2 0 throughpu t o f a barre l o f oi l becaus e the yd o les s 2 1 downstrea mprocessing tha n larg e refineries . 2 2 I n orde r t o compar e refinerie s o f 2 3 differen t size s theymus t b e reduce d t o some commo n 2 4 basi s o f comparison . 2 5 I' d lik e t o showyo u th e nex t overhead , PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 8 2

1 whic hsummarize s dat a fo r refinerie s i n th e sout h 2 coas t ai r basi n i n souther n California , showing 3 crud e oi l throughpu t NO xemission s and a NO xcontro l 4 efficienc yfacto r fo r larg e refineries , whic hi s 5 define d her e a s mor e tha n 50,00 0 barrel s a day , 6 simpl e topping refineries , man yo f whic hmak e mostl y 7 asphalt , an d mor e comple xsmal l refineries . 8 Th e lowe r th e NO xcontrolle d efficienc y 9 factor , th e les s NO xemission s pe r barre l o f crud e 1 0 oi l throughput . 1 1 Therefore , th e lowe r th e numbe r i n tha t 1 2 thir d column , th e better . 1 3 A s yo u ca n se e fro mthi s overhead , whic h 1 4 relie s exclusivel yo n dat a fro mSout hCoas t Ai r 1 5 Qualit yManagemen t Distric t documents , smal l 1 6 refinerie s i n tha t basi n almos t uniforml yemi t 1 7 les s NO xpe r barre l tha n refinerie s owne d bymajo r 1 8 oi l companies . 1 9 No walthoughI'v e base d thi s documen t o n 2 0 refinerie s i n th e sout hcoas t ai r basin , I hav e don e 2 1 tha t becaus e th e dat a i s readil yavailabl e from th e 2 2 district , whic hha s don e a tremendou s amoun t o f dat a 2 3 gathering . 2 4 Th e conclusion , however , i s applicabl e t o 2 5 refinerie s nationwide . Smal l refinerie s ar e
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Y& ASSOCIATE S BRIGHTON(313 ) 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 • r ' , r DOCKE T NO . A-86-0 3 8 3 generall ymor e efficien t a t controlling NO x emission s becaus e theyd o les s downstreamprocessing tha n large , comple xrefineries .

W e believ e thi s facto r viewe d along wit h th e importan t pro-competitiv e impac t o f smal l refiner s mor e tha n justifie s a regulatoryscheme i n whic hth e smal l refiner s woul d no t b e competitivel y disadvantage s vis-a-vi s larg e refiners .

Th e smal l refiner s acknowledg e thei r obligation s a s goo d corporat e citizen s t o d o whateve r theyca n t o assis t i n improving ai r quality . I' d lik e th e opportunit yt o continu e working wit hyou r staf f t o construc t a regulatory scheme wher e th e ai r qualit ybenefit s sough t b ythi s propose d regulatio n ar e substantiall yachieve d withou t placing smal l refiner s a t a n unbearabl e economi c disadvantag e compare d t o larg e refiners .

W e believ e th e three-yea r extensio n w e hav e propose d accomplishe s thes e goals .

Ou r proposal s involv e a grea t dea l o f sacrific e fo r th e smal l refiners . Wha t w e hav e trie d t o accomplis hi s a regulatoryscheme wher e the ai r qualit ybenefit s sough t ar e substantiall y achieve d withou t causing smal l refiner s t o curtai l

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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 P.8 4T 1 DOCKE T NO . A-86-0 3 8 4 1 o r ceas e operations . 2 I n th e Preambl e t o th e Notic e o f Propose d 3 Rulemaking EPAstate s tha t th e proposal , quote , 4 shoul d no t have , close-quote , a significan t impac t 5 o n a substantia l numbe r o f smal l refineries . 6 I n thi s regard EPAstate s it s assumptio n 7 firs t tha t th e cos t pe r gallo n o f sulfu r remova l i s 8 generall yth e same fo r bot hsmal l refinerie s an d th e 9 industrya s a whol e and , second , tha t some smal l 1 0 refinerie s unabl e t o compl ywit hth e regulatio n wil l 1 1 fin

d alternativ e off-highwayus e fo r thei r diese l 1 2 fuel . 1 3 I woul d urg e yo u todayt o reconside r thes e 1 4 conclusion s an d th e assumption s o n whic htheyar e 1 5 base d a s unsupporte d b yth e facts . 1 6 I t appear s tha t thes e conclusion s ar e 1 7 base d o n th e Sobotk a Compan yrepor t title d Cos t an d 1 8 Feasibilit yo f Lowering Diese l Fue l Sulfu r an d 1 9 Aromati c Content , Impac t o n Smal l Refiners , whic h 2 0 I' m

referring t o todaya s th e Draf t Report . 2 1 Tha t Draf t Report , however , provide s tha t 2 2 it s analysis , quote , wil l provid e th e initia l basi s 2 3 fo r a revie wo f th e specia l situatio n o f smal l 2 4 refiners . 2 5 Th e Draf t Repor t als o acknowledge s tha t
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 8 5

it s conclusion s maygrossl yunderestimat e th e impac t
o n smal l refiners .

Asimila r effor t t o determin e cos t i n th e Stat e o f Californi a whic hha s alread yvisite d thi s issue , a s you'r e wel l aware , show s cost s betwee n 13. 6 cent s pe r gallo n an d 17. 5 cent s pe r gallo n fo r smal l refiner s t o reduc e th e sulfu r conten t o f diese l fue l t o .0 5 percen t b yweight . Th e variatio n depende d upo n th e surveyan d th e assumption s use d i n tha t survey .

Eve n a t th e lowend , however , 13. 6 cent s pe r gallon , that' s severa l time s mor e tha n th e on e t o two-and-a-hal f cent s pe r gallo n estimate d fo r th e industr

ya s a whol e t o obtai n equivalen t reduction s i n sulfu r content .

Othe r commenter s an d ou r associatio n wil l submi t i n writing mor e detai l o n th e Draf t Repor t
an d o n th e impac t o f th e propose d regulatio n o n smal l refiners .

I n summary , however , dat a presente d t o EPA i n th e Draf t Repor t an d i n NPRA' s 198 6 surve y entitle d U S Refining IndustryCapabilit yt o Manufactur e Ultr a LowSulfu r Diese l Fuel s indicate s clearl ytha t al l o f th e refinerie s whic har e topping refinerie s an

d some unspecifie d bu t potentiall y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 iDOCKE T NO . A-86-0 3 8 6

1 larg e portio n o f th e remaining smal l refiner s mayb e 2 unabl e t o compl ywit hth e propose d regulation . 3 I n a situatio n suc ha s this , wher e 4 regulatio n woul d impos e a disproportionat e burde n o n 5 on e segmen t o f a n industry , th e Regulatory 6 Flexibilit yAc t require s tha t EPAexamin e th e 7 impact s o f it s regulation s o n smal l entitie s an d 8 conside r whethe r th e goal s o f th e regulatio n ca n b e 9 achieve d b ya mean s tha t doe s no t hav e a n advers e 1 0 economi c impac t o n a substantia l numbe r o f smal l 1 1 entities . 1 2 Sinc e a larg e numbe r o f smal l refinerie s 1 3 woul d suffe r a substantia l advers e economi c impac t 1 4 fro

mth e regulatio n o f sulfu r i n diese l fuel , EPA 1 5 mus t examin e thi s impac t befor e adopting an ysuc h 1 6 regulations . 1 7 Nothing i n th e Notic e o f Propose d 1 8 Rulemaking o r i n th e underlying documentatio n meet s 1 9 th e statutoryrequirement . 2 0 Neithe r doe s i t satisf yth e Regulatory 2 1 Flexibilit yAc t t o alleg e a s EPAdoe s i n it s Notic e 2 2 o f Propose d Rulemaking tha t thos e refinerie s whic h 2 3 mayb e unabl e t o compl ywit hth e propose d 2 4 requirements , quote , shoul d b e abl e t o shif t thei r 2 5 produc t slate s t o mee t off-highwaydistillat e need s
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5- TT " P.8 8
DOCKE T NO . A-86-0 3 8 7 1 i n thei r geographi c area , clos e quote . 2 Ther e i s n o informatio n i n th e Docke t o n 3 th e actua l abilit yo f smal l refiner s t o fin d 4 alternat e markets . 5 A s previousl yindicate d i n thes e comments , 6 man

ysmal l refiner s ar e nich e refinerie s o f regiona l 7 importanc e an d ar e unabl e t o fin d alternat e market s 8 quickly , i f a t all . 9 We'l l hea r fro mjus t a fewo f thes e 1 0 regiona l refiner s today . Other s wil l submi t 1 1 writte n comment s o n thei r ow n particula r situations , 1 2 detailing th e difficult yo f finding thos e 1 3 alternativ e market s economically . 1 4 I n fact , however , dat a availabl e t o EPA 1 5 indicate s tha t it s proposa l woul d resul t i n a n 1 6 unachievabl e quantit yo f on-highwaydiese l fue l 1 7 being force d int o th e off-highwaymarket . 1 8 Dat a presente d t o EPAi n th e NPR Astud y 1 9 —o r survey , rather , indicate s tha t 3 7 o f th e 2 0 plant s tha t wer e surveye d representing 1 7 percen t o f 2 1 th e diese l fue l capacit yi n th e Unite d State s woul d 2 2 b e unabl e t o compl ywit hth e propose d regulations . 2 3 Thes e facilitie s an d other s no t include d withi n th e 2 4 NPR

Asurveywoul d b e attempting t o fin d off-highway 2 5 market s fo r thei r diese l product . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.8 9 DOCKE T NO . A-86-0 3 8 8 1 AlthoughEPAstate s tha t theyshoul d b e 2 abl e t o fin d alternat e markets , thi s hop e i s 3 unsupporte d b yan ydat a showing tha t th e marke t ca n 4 accommodat e thi s tremendou s influ xo f produc t an

d 5 provid e a n adequat e return t o th e refineries . 6 I t mus t b e remembere d tha t approximatel y 7 7 0 percen t o f th e marke t fo r hom e heating oil , a 8 majo r portio n o f th e off-highwaydiese l market , i s 9 i n th e northeast . 1 0 EPAt o m yknowledg e ha s n o dat a showing 1 1 tha t refinerie s i n th e wester n o r souther n area s o f 1 2 th e Unite d State s wil l b e abl e profitabl yt o fin d 1 3 alternativ e market s fo r thei r product . 1 4 W e tur n no wt o ou r proposal , then , fo r ho w 1 5 t o resolv e thi s difficulty . 1 6 I woul d urg e tha t EPAgran t t o smal l 1 7 refiner s a t leas t thre e additiona l year s beyond th e 1 8 deadlin e impose d fo r larg e refiner s t o mee t th e 1 9 reductio n o f diese l fue l sulfu r conten t t o th e leve l 2 0 o f 50 0 part s pe r millio n b yweight . 2 1 Thi s extr a time i s necessaryfo r existing 2 2 smal l refiner s t o obtai n financing eithe r 2 3 individuall yo r cooperativel yt o obtai n require d 2 4 environmenta l an d constructio n permits , an d t o 2 5 engineer , financ e an d construc t necessaryprocessing
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.9 0 DOCKE T NO . A-86-0 3 8 9 1 units . 2 During th e three-yea r extensio n perio d al l 3 o f th e diese l fue l no t produce d b ysmal l refiner s 4 woul d b e subjec t t o th e 50 0 part s pe r millio n 5 b

yweigh t standard . 6 Th e implicatio n o f th e Draf t Repor t i s tha t 7 smal l refiner s accoun t fo r onl yapproximatel y 8 8. 5 percen t o f th e tota l refine d on-highwaydiese l 9 fuel . 1 0 W e d o no t hav e detaile d dat a o n eac hsmal l 1 1 refiner' s production . Conservatively , however , I 1 2 woul d estimat e tha t substantiall yles s tha n 2 0 1 3 percen t o f th e diese l fue l sol d during thi s 1 4 three-yea r perio d woul d b e subjec t t o th e exemptio n 1 5 tha t w e propose . 1 6 Accordingly , i t i s clea r tha t during th e 1 7 propose d three-yea r extensio n onl ya smal l 1 8 percentag e o f fue l woul d b e exempte d fromth e ultr a 1 9 lowsulfu r requirement . Afte r th e three-yea r perio d 2 0 10 0 percen t o f th e highwaydiese l fue l sol d woul d b e 2 1 subjec t t o th e 50 0 part s pe r millio n b yweigh t 2 2 standard . 2 3 Thus , EPAcoul d secur e substantiall yal l 2 4 th e ai r qualit ybenefit s sough t withou t placing the 2 5 continue d existenc e o f a larg e numbe r o f smal l

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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5' p^"->^-«i"r"* » ' w- P.9 1
DOCKET NO . A-86-0 3 9 0 1 refiner s i n jeopardy . 2 There' s a grea t dea l o f preceden t fo r 3 separat e treatmen t o f smal l refiner s — o r smalle r 4 entitie s i n general , and smal l refiner s i n 5 particular . 6 We'v e written , and othe r commenter s hav e 7 writte n i n detail , an d s o I won' t discus s o r revisi t 8 tha t issu e here . 9 Some example s o f separat e treatmen t ar e 1 0 se t fort ho n th e overhead tha t you'r e looking at , 1 1 however . 1 2 Th e RegulatoryFlexibilit yAc t whic hI 1 3 briefl ytouche d upon , EPApreviousl yha d a n 1 4 exemptio n fo r smal l refiner s fo r th e lead reductio n 1 5 requirement . Eve n thereafte r ther e wa s subsequen t 1 6 EPAregulation s o n lead reduction . Th e Clea n Ai r 1 7 Ac t itsel f i n Sectio n 2 (11)(g ) discusse s th e lead 1 8 requirement , EmergencyPetroleu mAllocatio n Act , th e 1 9 —there' s jus t s o man yo f themI coul d g o o n an d 2 0 on . 2 1 Th e poin t her e i s tha t ther e i s ampl e 2 2 preceden t bot hfro mCongress , fromth e Agenc yan d 2 3 fro

mperhap s th e strictes t stat e i n th e natio n o n 2 4 ai r qualit ystandards , California , fo r a smal l 2 5 refinerybias . Eac ho f thes e entitie s ha s
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.9 2 DOCKE T NO . A-86-0 3 9 1 1 acknowledge d th e importanc e o f smal l refiners , th e 2 importanc e o f maintaining thei r presenc e i n th e 3 marketplace , an d mad e some accommodatio n fo r them . 4 I woul d als o urg e yo u tha t th e Regulatory 5 Flexibilit yAc t no t onl yauthorize s suc hseparat e 6 treatmen t bu t require s EPAt o suppor t an y 7 determinatio n no t t o provid e separat e treatmen t wit h 8 detaile d evidenc e an d findings , whic hbase d o n th e 9 record t o dat e EPAcanno t make . 1 0 No r ca n i t b e claime d tha t a smal l refinery 1 1 exemptio n woul d preven t engin e manufacturer s fro m 1 2 achieving th e 199 4 heavy-dut ydiese l emission s 1 3 standards . Certificatio n stil l woul d b e o n th e 1 4 ultr a lowsulfu r diese l fo r diese l fuel . 1 5 Moreover , smal l refiner s mak e up s o littl e 1 6 o f th e marke t tha t i t i s unlikel ymos t trucker s 1 7 woul d b e expose d t o muc hhighsulfu r diese l fue l a t 1 8 al l afte r 1993 . 1 9 I n an yevent , man

ydiese l fue l supplier s 2 0 blend on-highwa ydiese l fue l wit heithe r je t fue l o r 2 1 kerosene , No . 1 diese l fuel , a t highelevation s 2 2 during winte r t o improve pou r poin t and/o r cloud 2 3 specification . Ther e i s n o requiremen t t o reduc e 2 4 th e sulfur conten t o f thi s blending fuel . 2 5 I n fact , i n th e Californi a Ai r Resource s
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5'-.-T

T P.9 3
DOCKE T NO . A-86-0 3 9 2 1 Board regulatio n o n thi s matter , fo r example , suc h 2 blend s wer e exemp t fro m th e 50 0 part s pe r millio n b y 3 weigh t sulfu r conten t standard . 4 Thus , i t canno t b e legitimatel yclaime d 5 tha t exposur e t o occasiona l tank s o f diese l fue l 6 containing i n exces s o f 50 0 part s pe r millio n sulfu r 7 wil l permanentl ydefea t th e emissio n contro l 8 mechanism s o f th e engin e manufacturers . 9 I' d lik e t o mak e tw o brie f fina l point s no t 1 0 specificall yrelate d t o th e pligh t o f smal l 1 1 refiners . 1 2 First , AIR Aan d it s member s ar e seriousl y 1 3 concerne d abou t th e aspec t whic hwoul d requir e 1 4 distinguishing highwaydiese l fue l fromoff-highway 1 5 diese l fue l us e b yus e o f a colore d dye . 1 6 W e woul d suppor t th e comment s o f th e 1 7 independen t termina l operator s i n thi s regar d tha t 1 8 dyeing b e don e a t th e termina l level . 1 9 Finally , I' d lik e t o discus s expedite d 2 0 permitting . Althoughwe'v e sough t her e todayonl ya 2 1 three-yea r extension , smal l refiner s ar e extremel y 2 2 concerne d abou t th e difficult yo f obtaining permit s 2 3 fo r constructio n o f th e unit s necessaryt o mak e low 2 4 sulfu r diese l fuel . 2 5 Fo r example , citie s and loca l sanitatio n
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.9 4
DOCKE T NO . A-86-0 3 9 3 1 district s mus t approv e plan s befor e thes e unit s may 2 b e constructed . 3 Ofte n th e regulatoryagencie s ar e hostil e 4 t o refiners . Accordingly , permitting o f change s t o 5 existing refinerie s ha s becom e a majo r undertaking 6 i n bot htime an d expense . 7 We'r e particularl yconcerne d abou t th e 8 abilit yan d willingnes s o f th e Ai r Pollutio n Contro l 9 district s i n non-attainmen t area s t o issu e permit s 1 0 timel yt o construc t th e unit s neede d t o compl ywit h 1 1 th e propose d rulemaking . 1 2 Accordingly , we' d urg e tha t languag e b e 1 3 include d i n th e propose d regulatio n requiring th e 1 4 loca l agencie s t o expedit e revie wo f permi t 1 5 applications . 1 6 I f th e permit s t o construc t o r permit s 1 7 require d b yothe r agencie s canno t b e timel yissue d 1 8 despit e du e diligenc e b yth e companie s seeking 1 9 permits , th e applicabl e deadlin e shoul d b e extende d 2 0 unti l permit s ca n b e obtaine d an d unit s ca n b e 2 1 built . 2 2 I wil l agai n tak e th e opportunit yt o thank 2 3 yo u fo r allowing u s t o presen t thes e comments . 2 4 W e think tha t we'v e worke d veryhar d t o 2 5 propos e a regulatoryscheme tha t wil l resul t i n
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.9 5 DOCKE T NO . A-86-0 3 9 4 1 substantia l improvement s i n ai r qualit ywithou t 2 implementing measure s tha t unfairl ydisadvantag e on e 3 secto r o f th e affecte d industry . 4 I woul d b e happyt o respond t o an y 5 comment s o r question s yo u hav e a t thi s time , 6 gentlemen . 7 MR . GRAY : Thank yo u fo r you r statement . 8 Le t m e firs t as k wha t you r definitio n o f 9 smal l refineryis . 1 0 MR . MOYER : There' s ampl e preceden t fo r a 1 1 definitio n o f smal l refiners . W e hav e no t addresse d 1 2 tha t i n ou r comment s an d woul d leav e i t t o th e 1 3 Agency' s discretion . 1 4 Previousl yth e Agenc yha s use d a 50,00 0 1 5 barre l a daynumbe r wit h—that' s b yrefinery , an

d 1 6 n o mor e tha n 175,00 0 barrel s i n tota l capacity . 1 7 I shoul d mentio n tha t veryfewo f ou r 1 8 member s hav e mor e tha n on e refinery , bu t I think i f 1 9 yo u loo k a t a les s tha n 50,00 0 barre l a dayrefinery 2 0 tha t numbe r work s verywell . 2 1 MR . GRAY : D o yo u hav e an yide a o f wha t 2 2 percentag e o f th e diese l fue l o r distillat e woul d 2 3 come fro mrefinerie s tha t ar e les s tha n 50,00 0 2 4 barrel s pe r day ? 2 5 MR . MOYER : Well , th e firs t overhead I
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5- 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 9 5

showe d yo u show s nin e percent . Th e numbe r I use d i n
m ycomment s ar e les s tha n 20 . I suspec t i t i s a lo t close r t o nin e percent . I t migh t b e slightl yabov e nin e percen t sinc e some o f th e large r refinerie s — tha t i s nin e percen t bein g th e tota l refining capacit yi n th e countrytha t represent s smal l refiners , assuming tha t al l refinerie s hav e mor e o r les s equivalen t diese l fue l production . Yo u loo k a t 9.3 , you'r e looking a t nin e percent .

I suspec t tha t smal l refiner s hav e a greate r portio n o f thei r capacit ydevote d t o th e moto r vehicl e diese l fue l marke t tha n some o f th e large r refinerie s and , therefore , i t migh t b e somewha t abov e nin e percent , bu t certainl yles s tha n 20 . Probabl ysomewher e betwee n 1 0 an d 1 5 percent . That' s base d o n wha t we'v e don e i n California .

MR . GRAY : Th e previou s witnes s spok e o f th e cetan e indexa s being th e limiting factor , no t th e sulfu r level .

Coul d yo u giv e u s a bette r sens e o f ho w tha t migh t varyamong th e membe r companies ?

MR . MOYER : I t varie s tremendously . I think th e issu e tha t th e previou s speake r addresse d
wa s a uniqu e typ e o f feedstoc k whic hle d t o a
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5 P.9 6P.9 7

DOCKE T NO . A-86-0 3 9 6 1 particula r problem fo r thei r facility . Tha t 2 obviousl yi s a problemwit hanyon e wh o run s Sa n 3 Joaqui n crud e oil . 4 I think that , however , ther e ar e other s 5 wh o run non-naphtheni c crud e oil s o r lo wnaphtheni c 6 crud e oil s wh o don' t hav e an ykind o f problemwit h. 7 cetan e indexan d ye t mayhav e a relativel yhigh 8 aromati c conten t b yFI Ao r some othe r standard . 9 MR . GRAY : Wha t abou t th e sulfur , though , 1 0 mor e specifically ? D o yo u hav e a fee l fo r what , 1 1 yo u know , wha t fractio n o f you r companie s woul d — 1 2 yo u know , ar e limite d b yth e sulfu r leve l a s oppose d 1 3 t o th e cetane ? 1 4 MR . MOYER : Yo u mea n ho wman ypeopl e hav e 1 5 desulfurizatio n capacit ytoday , you'r e asking ? 1 6 MR . GRAY : Ho wmany ? 1 7 MR . MOYER : Hydrotreating capacity ? 1 8 MR . GRAY : Ho wman ycoul d compl ywit hth e 1 9 sulfu r requiremen t bu t no t th e cetan e inde xo r 2 0 aromati c level ? 2 1 MR . MOYER : Veryfew . Mos t o f th e other . 2 2 Exactl yth e opposite . Mos t canno t compl ywit hth e 2 3 sulfu r conten t bu t coul d readil ymee t a 4 0 cetan e 2 4 index . 2 5 MR . GRAY : S o yo u think th e previou s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.9 8

DOCKE T NO . A-86-0 3 9 7 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 speake r represente d a veryspecia l circumstanc e i n

representing veryminima l —

MR . MOYER : Certainl yno t unique , bu t somewha t limited .

MR . GRAY : Earlie r I think mayb e Mr . Buckleymentione d potentia l fo r a 1. 5 percen t level .

D o yo u hav e a commen t o n that ? MR . MOYER : Tha t reall ydoesn' t d o muc h goo d fo r ou r smal l —th e smalle r refiner s sinc e mos t o f themt o ge t dow n t o a 1. 5 woul d stil l hav e t o instal l desulfurizatio n equipment .

I f you'r e going t o instal l desulfurizatio n equipmen t we' d muc hprefe r t o se e a three-yea r extensio n o n tha t requiremen t rathe r tha n some typ e o f a phase-i n o r immediat e reductio n t o some lowe r numbe r betwee n curren t level s an d .05 . I n fo r a penny , i n fo r a pound .

MR . GRAY : Wha t fractio n o f you r member s ar e i n California ?

MR . MOYER : Mor e tha n hal f o f ou r member s ar e in California .

MR . GRAY : Yo u ha d mentione d tha t Californi a had provide d specia l treatmen t fo r smal l refineries .

Hav e theybegun a proces s t o phas e tha t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.9 9

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 -* • j*'Tr^-r-ni|r"" T • i > DOCKE T NO . A-86-0 3 9 8
ou t wit hrespec t t o thei r —

MR . MOYER : No t tha t I' mawar e of . I think I' d b e —no , ther e i s a —perhap s wha t you'r e referring t o is , ther e wa s a three-yea r extensio n i n th e sout hcoas t ai r basi n i n Ventur a County , ther e wa s a three-yea r extensio n t o g o down t o th e .0 5 level , and tha t ende d a s o f January1 o f thi s year , bu t tha t —man

yo f ou r members , eve n thos e i n th e sout hcoas t ai r basi n stil l hav e a lo t o f th e ai r basi n marke t t o whic htheyca n supply . That' s a substantia l amoun t o f th e marke t availabl e t o ou r Californi a refiners .

MR . GRAY : And you'r e no t — MR . MOYER : However , I shoul d mentio n ther e i s a statewid e leve l also , state , a ne wstat e regulatio n governing bot haromatic s conten t an d sulfu r conten t t o impac t sulfu r conten t statewide . Bot ho f thos e hav e smal l refinery—trea t smal l refiner s separatel yfro mlarg e refiner s a s well . MR . GRAY : And ho wd o the ytrea t smal l refiners ?

MR . MOYER : Fo r th e smal l refiner s they hav e a permanen t highe r leve l o f aromatics . Th e larg e refiner s ar e require d t o reduc e aromati c conten t t o 1 0 percen t b yOctobe r 1 , 199 3 o r achiev e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 1p. 1
DOCKE T NO . A-86-0 3 9 9 1 some alternativ e fue l spec ; i n othe r words , sho w 2 tha t thei r emission s fromthei r fue l ar e equivalen t 3 o r bette r tha n a referenc e fuel , an d th e smal l 4 refiner s hav e a 2 0 percen t level , twic e a s much , an d 5 als o a slightl yhighe r referenc e fue l 6 specification . 7 Turning t o th e sulfu r content , the yhav e a 8 ful l yea r extensio n unti l Octobe r 1 , 199 4 t o ge t 9 t o th e .0 5 leve l i n th e Stat e o f California . 1 0 MR . GRAY : Wha t i s uniqu e abou t th e member s 1 1 outsid e o f Californi a the n tha t woul d sugges t they 1 2 nee d a n additiona l tw o years ? 1 3 MR . MOYER : Well , I' m no t sur e tha t it' s 1 4 uniqu e t o th e out-of-stat e refineries . Man y—I 1 5 think w e came up wit hsomething lik e 3 0 percen t o f 1 6 th e diese l fue l whic hi s refine d i n th e Stat e o f 1 7 Californi a goe s ou t o f th e state . Tha t mean s tha t 1 8 ou r smal l refiners , eve n i f theychoos e i n tha t yea r 1 9 t o mak e th e change s an d stil l hav e some out-of-th e 2 0 stat e marke t fo r a n additiona l coupl e o f years , 2 1 thi s proposa l woul d no t onl ypreemp t th e 2 2 CARB regulatio n whic hobviousl ycause s problem s t o 2 3 ou r Californi a member s bu t als o eliminat e th e 2 4 out-of-stat e marke t fo r Californi a refiner s an d 2 5 impac t th e east-of-the-Rockie s member s a s well . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTON(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P. 2
DOCKE T NO . A-86-0 3 10 0 1 MR . HOOVER : Actuall yI hav e a coupl e 2 question s an d a comment . I n you r statemen t yo u mak e 3 th e commen t particularl ywit hrespec t t o blending 4 diese l fue l an d je t fue l tha t there' s n o 5 requirement s o n sulfu r content ; I think that' s 6 probabl yincorrect . 7 Th e propose d regulation s appl yt o sulfu r 8 limit s t o anything that' s sold , dispensed , offere d 9 fo r sale , transporte d an d al l th e res t o f th e level s 1 0 tha t ar e containe d i n th e propose d regulation , 1 1 an

d tha t woul d includ e an yfue l tha t wa s blended . 1 2 S o th e regulation s a s propose d d o no t contai n an y 1 3 waiver , yo u migh t say , fo r blend s o f kerosen e an d 1 4 No . 2 diese l fuel . 1 5 Th e same standard s woul d b e applicabl e t o 1 6 tha t fue l a t an ypoin t i n th e distributio n chai n a s 1 7 th e reg s ar e currentl yproposed . 1 8 MR . MOYER : Le t me , i f I may , respond t o 1 9 that . That' s new s t o me . Tha t i s no t th e way 2 0 tha t I interprete d th e regulation , an d a s I 2 1 mentione d befor e tha t i s differen t fro mth e wayth e 2 2 Californi a Ai r Resource s Board looke d a t tha t issue , 2 3 an

d I don' t kno wwhethe r NPR Aaddresse d tha t issu e 2 4 wit hyo u o r not . 2 5 MR . HOOVER : I' mawar e tha t that' s ho w
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 3

DOCKET NO . A-86-0 3 10 1 1 Californi a ha s interprete d it , an d they'r e awar e 2 that' s no t ho wwe'r e interpreting i t becaus e i t 3 clearl yrequire s tha t th e fue l a t al l level s mee t 4 th e same standard . There' s n o differenc e i n term s 5 o f —i f yo u tak e a sampl e a t a retai l facilit yi t 6 ha s t o mee t th e .0 5 regardles s o f wher e i t came 7 fro

mi f it' s being sol d a s on-highwaydiese l fuel . 8 And relativ e t o some o f th e suggestion s 9 yo u mak e o n enforcemen t strategies , on e o f themi s 1 0 t o hav e th e —I gues s th e en d use r certif yho wh e 1 1 plan s t o sel l th e fuel . 1 2 I f yo u ha d tha t sor t o f system woul d yo u 1 3 stil l hav e th e refiner s remai n liabl e fo r misus e o r 1 4 misselling o f tha t fuel ? 1 5 MR . MOYER : Certainly . 1 6 MR . HOOVER : And anothe r I gues s questio n 1 7 reall yfro ma n enforcemen t standpoint , i f th e 1 8 regulation s ar e promulgate d a s they'r e proposed , 1 9 wher e ther e wa s a requiremen t tha t fue l a t al l 2 0 level s mee t th e appropriat e sulfu r standard , an d i f 2 1 a smal l refiner yexemptio n wa s mad e an d theycoul d 2 2 produc e a highe r sulfu r conten t fuel , ho wwoul d yo u 2 3 forese e EP Abeing abl e t o enforc e th e standard 2 4 nationwid e whe n I presume tha t tha t small-volume 2 5 - fue l woul d probabl yen d up commingle d a t some poin t

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 4

DOCKET NO . A-86-0 3 10 2 1 downstrea mi n term s o f th e Agenc ybeing abl e t o 2 defin e liabilit yo r t o trac e wh o mayhav e actuall y 3 violate d th e standards , particularl ysinc e yo u 4 recommen d agains t dyeing o f fuel ? 5 MR . MOYER : Well , le t m e backtrac k an d sa y 6 tha t I don' t recommen d agains t dyeing th e fue l i f 7 yo u agre e tha t —i f yo u woul d agre e tha t th e 8 independen t terminals ' positio n i s correc t an d tha t 9 yo u decid e no t t o dy e a t th e refinery . I f yo u the n 1 0 decid e t o dy e th e fuel s someplac e afte r th e refinery 1 1 yo u don' t hav e nearl yth e problemwit hdyeing . 1 2 Secondly , i f w e ge t down t o th e poin t 1 3 wher e th e onl yissu e i s enforcemen t I'l l b e happyt o 1 4 sugges t t o yo u some o f th e strategies . 1 5 Le t m e jus t tel l yo u her e briefl ytha t i t 1 6 ha s no t bee n a problem . W e woul d b e happyt o tes t 1 7 al l th e materia l tha t w e have , tel l yo u wh o ar e th e 1 8 peopl e tha t we'r e selling i t to . Whe n yo u fin d a 1 9 noncomplian t fuel , i t wil l no t b e a t al l difficul t 2 0 t o trac e bac k th e supplier s o f tha t fuel , and we' d 2 1 b e happyt o provid e batc htesting o n fuel s o r 2 2 whateve r i s necessaryt o comply . 2 3 A s I say , i f that' s th e onl yremaining 2 4 hurdle , let' s jum p o n it . 2 5 MR . HOOVER : Ar e th e fuel s produce d b y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 J 229-823 8 AN NARBO R(313 ) 995-954 5P. 5
DOCKE T NO . A-86-0 3 10 3 1 thes e smal l refiner s jus t generall yintroduce d int o 2 th e distributio n systeman d commingle d wit hth e 3 products ? 4 MR . MOYER : I suspec t not . I think you'r e 5 going t o fin d it' s sol d t o a - - sometimes , yes , 6 certainl ytha t wil l happen , bu t ofte n time s i t i s 7 sol d t o a particula r termina l operato r fo r 8 distributio n t o a particula r fue l markete r an d i s 9 no t commingle d excep t perhap s i n th e tank o f th e 1 0 truck . 1 1 MR . HOOVER : S o i t sound s lik e ther e woul d 1 2 b e th e possibilit ytha t unde r tha t scenari o yo u 1 3 coul d en d u p with , shal l w e say , area s around smal l 1 4 refinerie s wher e th e heavy-dut ydiese l engine s ther e 1 5 mayb e subjec t t o highe r sulfu r level s unde r tha t 1 6 exemptio n almos t exclusively . 1 7 MR . MOYER : I don' t kno wo f anywher e wher e 1 8 th e —eve n i n regiona l refinerie s wher e yo u migh t 1 9 fin

d a highe r level , anywher e wher e yo u woul d fin d 2 0 suc ha penetratio n tha t yo u woul d fin d mos t o f th e 2 1 diese l fue l mor e tha n highsulfu r diese l fue l 2 2 —let' s cal l i t highe r sulfu r diese l fuel . I don' t 2 3 think anywhere , eve n ou r regiona l refinerie s hav e 2 4 tha t typ e o f marke t penetration . 2 5 MR . HOOVER : Okay . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 6
DOCKE T NO . A-86-0 3 10 4 1 MR . GRAY : Woul d yo u se e i t feasibl e t o 2 during th e transitio n perio d a s yo u sugges t hav e th e 3 highe r sulfu r diese l fue l mayb e dye d a differen t 4 colo r an d intentionall ykep t segregated ? 5 Tha t woul d impos e certainl ysome 6 additiona l cost , bu t it , yo u know , i t migh t 7 facilitat e th e enforcemen t concerns . 8 MR . MOYER : I n al l candor , Charles , I 9 haven' t though t abou t that , ho wtha t woul d play . I 1 0 certainl ydon' t think a differen t colo r o f dyeing i s 1 1 going t o b e a problem , that' s fine , keeping i t 1 2 segregated . Throughth e whol e —down throughth e 1 3 whol e strea m tha t migh t b e a problem . Tha t migh t b e 1 4 a problem . 1 5 MR . GRAY : That' s th e majo r uncertainty , I 1 6 guess . The n i t reall yrelate s bac k t o th e natur e o f 1 7 th e smal l refinerie s tha t ar e mos t —tha t woul d b e 1 8 mos t impacte d an d whethe r o r not , yo u know , 1 9 realizing th e effor t t o tryt o addres s th e concern , 2 0 yo u know , whethe r o r no t tha t migh t b e on e 2 1 wayo f dealing wit hit , representing some , som e 2 2 greate r compromis e tha n jus t th e genera l 2 3 exemption , bu t — 2 4 MR . MOYER : I t beat s a sharp stic k i n th e 2 5 eye . PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P. 7
DOCKET NO . A-86-0 3 10 5 1 MR . GRAY : Mayb e yo ucoul d hav e tha t 2 furthe r pursued . 3 MR . MOYER : I'l l b e happyt o d o tha t wit h 4 m

ymembers . 5 MR . GRAY : Thank youverymuc hfo r you r 6 comment . 7 W e hav e a n importan t decisio n t o mak e I 8 think abou t now . W e hav e fiv e additiona l 9 organization s tha t hav e expresse d interes t i n 1 0 providing testimony . It' s approaching 12:30 . W e 1 1 ca n brea k no wan d come bac k an

d finis hup o r w e 1 2 migh t fin d ourselve s anothe r coupl e hour s awayfro m 1 3 lunc hi f w e sta ywit hit . 1 4 D o w e hav e a preference ? 1 5 UNIDENTIFIE D SPEAKER : Staywit hit . Kee p 1 6 going . 1 7 MR . GRAY : Doe s anyon e strongl yprefe r a 1 8 norma l lunc hbreak ? 1 9 UNIDENTIFIE D SPEAKER : Th e attentio n spa n 2 0 woul d b e improved , an ybreak . 2 1 MR . GRAY : Shoul d w e tak e a 1 5 minut e brea k 2 2 an

d come back ; i s tha t th e consensu s o f th e group ? 2 3 Let' s brea k fo r 1 5 minute s then ; i t seem s 2 4 t o b e th e broad consensus . 2 5

PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 J 229-823 8 AN NARBOR(313 ) 995-954 5P. 8
DOCKE T NO . A-86-0 3 10 6 1 ( Areces s wa s take n fro m12:2 5 t o 12:5 5 p.m. ) 2 MR . GRAY : A s soo n a s everyon e ca n tak e 3 thei r sea t we'l l begi n agai n wit hHuntwayRefining . 4 5 MR . PIATEK : Goo d morning . Mynam e i s 6 Stev e Piatek . 7 I a mth e Environmenta l Manage r o f Huntway 8 Refining Company . I' mher e representing Sunbel t 9 Refining Company , whic hHuntwayi s a genera l partne r 1 0 of . 1 1 Sunbel t i s a smal l independen t regiona l 1 2 refinerylocate d i n Coolidge , Arizona . It s facility 1 3 refine s approximatel y15,00 0 barrel s pe r day , an d i t 1 4 produce s approximatel y2,80 0 barrel s o f diese l pe r 1 5 day . 1 6 Sunbel t woul d lik e t o expres s it s suppor t 1 7 fo r th e America n Independen t Refiner s Associatio n 1 8 testimony . 1 9 I hav e prepare d writte n comment s whic hI 2 0 hav e passe d ou t today . However , I' d lik e t o focu s 2 1 m

yora l testimon

yo n on e aspec t o f th e EPA' s 2 2 regulatoryanalysis . Tha t aspec t deal s wit htopping 2 3 facilities . Sunbel t i s suc ha facility . 2 4 I n EPA' s regulatoryanalysi s yo u assume 2 5 tha t al l refinerie s i n th e topping categorywoul d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 J 229-823 8 AN NARBO R(313 ) 995-954 5. 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 10 7

hav e t o ente r th e off-highwaydiese l market . Thi s alternativ e i s no t practica l fo r man yregiona l facilitie s o r refiners , particularl ythos e i n th e wes t wher e ther e i s a smal l off-highwaymarket .

Becaus e o f ou r locatio n Sunbel t mus t — need s acces s t o th e highwaymarke t i n orde r t o sel l it s products .

W e ar e hoping t o instal l th e necessary equipmen t t o mee t th e sulfu r standard . However , w e canno t d o i t unde r th e propose d regulatory framework .

W e reques t tha t yo u strongl yconside r th e three-yea r complianc e extensio n a s requeste d b y AIRA . Thank you .

MR . GRAY : Okay . Tha t wa s a quic k summary . MR . PIATEK : I figure d yo u didn' t wan t t o hea r al l o f i t again .

MR . GRAY : Okay . Ho wlarg e i s you r refinery ?

MR . PIATEK : 15,00 0 barrels . W e hav e thre e refineries , tw o i n Californi a fro mwhic hw e sel l ou r distillat e t o major s fo r reprocessing , an d a n Arizon a facility , an d du e t o it s locatio n w e hav e t o us e th e highwaymarket . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5 P. 9 -rn |P.1 0
DOCKE T NO . A-86-0 3 10 8 1 MR . GRAY : Al l thre e o f th e refinerie s ar e 2 abou t th e same size ? 3 MR . PIATEK : 10,00 0 and 15,00 0 barrel s a 4 day . They'r e principall yasphal t facilities . 5 MR . GRAY : D o yo u se e an yothe r option s 6 availabl e i n a situatio n suc ha s your s othe r tha n 7 th e on e you'v e recommended , whic hi s t o allo wyo u 8 fo r a three-yea r perio d t o continu e t o pu t high 9 sulfu r diese l fue l int o on-highwaydiese l 1 0 markets ? 1 1 MR . PIATEK : A s w e wer e talking a littl e 1 2 bi t earlie r today , I haven' t though t throughth e 1 3 process , bu t we'l l b e exploring thos e option s an d 1 4 seeing i f ther e ar e an yothe r option s othe r tha n 1 5 possibl yindexing mayb e depending o n th e locatio n o r 1 6 th e diese l marke t share , bu t that' s a possibility . 1 7 Sayth e refinerypenetratio n o r independen t refinery 1 8 penetratio n i s 1 0 percent . Mayb e yo u coul d inde xi t 1 9 i t depending upo n th e amoun t o f highsulfu r diese l 2 0 entering tha t loca l market . 2 1 MR . GRAY : What' s th e outle t fo r you r 2 2 distillat e now ? 2 3 MR . PIATEK : A t th e Californi a facilitie s 2 4 w e sel l bac k t o majo r refinerie s fo r reprocessing . 2 5 Th e Arizon a facilit ybasicall ysell s t o termina l

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5P.1 1

DOCKE T NO . A-86-0 3 10 9 1 companie s an d theyredistribut e it . 2 MR . GRAY : S o a s fa r a s — 3 MR . PIATEK : N o retai l outlet s ourselves . 4 MR . GRAY : You r anticipatio n i s tha t th e 5 terminal s jus t mi xi t wit hothe r distillates ? 6 MR . PIATEK : Tha t woul d b e m yguess , yes , 7 currently . 8 MR . GRAY : W e hav e n o furthe r questions . 9 Thank you . 1 0 Nex t woul d b e Frontier . 1 1 1 2 MR . KRAMER : Myname i s Jef f Kramer . 1 3 I' mPresiden t an d Chie f Executiv e Office r 1 4 o f Frontie r Refining Company . 1 5 MR . GRAY : Mr . Kramer , d o yo u hav e an y 1 6 copie s o f you r — 1 7 MR . KRAMER : No , I' msorry , I don't . Wit h 1 8 th e time constraint s an d al l I di d m

ycomment s o n 1 9 th e plane , an d I hav e n o notes . I wouldn' t eve n 2 0 mind having copie s o f wha t I' msaying also . It' s 2 1 alway s goo d t o know . I apologiz e fo r that . 2 2 Also , w e definitel ywil l b e submitting 2 3 writte n comments , verydefinitely . 2 4 Frontier' s sol e asse t i s a 38,00 0 barre l a 2 5 dayrefinerylocate d i n Cheyenne , Wyoming , although

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.1 2
DOCKE T NO . A-86-0 3 11 0 1 th e compan yi s headquartere d i n Denve r and w e marke t 2 i n th e Rockies , northeas t Colorad o and a goo d par t 3 o f Wyoming , southeas t an d par t o f wester n Nebraska . 4 W e ar e trul ya n independen t refine r i n 5 th e definitio n o f th e word , smal l and independent , 6 independen t particularl yi n th e sens e tha t no t onl y 7 d o w e no t hav e an ycrud e oil , w e als o d o no t hav e 8 an

yservic e stations . S o we'r e on e o f th e remaining 9 independen t refiner s lef t i n th e country . 1 0 W e typicall yrun around 32

- o r 33,00 0 1 1 barrel s a dayo f crud e oil , and approximatel y11

- t o 1 2 12,00 0 barrel s a dayo f th e outpu t i s diesel , s o i t 1 3 i s a n extremel yimportan t produc t fo r us . 1 4 W e don' t hav e exac t figures , bu t 1 5 approximatel y2 5 t o 3 0 percen t o f ou r outpu t goe s a s 1 6 railroad diesel , abou t 1 0 percen t t o th e 1 7 agricultura l marke t an d th e balanc e i s highway 1 8 diesel . 1 9 W e hav e absolutel yn o heatin g oi l marke t 2 0 whatsoeve r i n th e Rockies . Natura l ga s i s th e 2 1 primarysourc e fo r heat , an d coa l i s somewha t 2 2 secondary , bu t othe r tha n perhap s i n mos t extreme 2 3 weathe r condition s ther e i s n o heatin g oi l marke t i n 2 4 th e Rockies . 2 5 W e als o d o run a heav yproportio n o f sou r
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.1 3

• \ 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 * DOCKE T NO . A-86-0 3 11 1

crude . Approximatel y7 5 percen t o r s o o f ou r inpu t i s sou r crud e an

d almos t al l o f i t i s produce d i n th e Stat e o f Wyoming , s o agai n w e hav e tie s t o th e independen t producer s i n Wyoming . Agrea t dea l o f th e sou r crud e i s typicall yshippe d east , an d i n thi s particula r cas e becaus e o f ou r —w e ar e a n independen t refineryi n th e are a w e typicall yd o bu y fro mindependen t producer s there . T o giv e a littl e mor e background , too , ther e ar e severa l othe r independen t refiner s i n th e Rockies . Ther e ar e a coupl e o f other s o f varying sizes . Some o f ou r customer s interestingl ylik e buying fro

mu s jus t becaus e w e ar e on e o f th e few independen t refiner s tha t ar e left .

W e hav e probabl ytake n o n th e rol e a s th e premie r ethano l blende r i n th e Denve r are a i n particula r partl ybecaus e o f th e mandate , o f course , bu t it' s eve n tru e o n mor e o f a year-round basi s a s well . It' s no t reall ya progra mw e promote d pe r s e becaus e quit e frankl yI hav e mixe d emotion s abou t th e AD Msubsid

yan d th e — th e ethano l progra mi n genera l becaus e i t certainl yhurt s refiners , i t take s outpu t awa

yfro mrefiners , bu t o n th e othe r hand becaus e w e ar e a tru e independen t w e mus t

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5 : '!' "DOCKE T NO . A-86-0 3 11 2

1 suppl ywha t ou r customer s want , an d the yd o 2 definitel yge t some savings , an d I think th e qualit y 3 o f th e blending operatio n i s good . 4 S o a s a resul t w e ar e i n th e marke t 5 supplying customer s an d w e indee d ar e th e premie r 6 blender , an d hav e bee n recognize d b yth e Governo r 7 fo r that . 8 T o giv e a littl e othe r background o f th e 9 company , I'v e onl ybee n wit hFrontie r a coupl e o f 1 0 years . W e hav e goo d unit s a t th e refinery . W e 1 1 hav e a lo t o f diversit yo f unit s whic hw e hav e t o 1 2 hav e fo r upgrading th e sou r crud e an d turning i t 1 3 int o finishe d product . 1 4 We'r e catching up , though , becaus e th e 1 5 plan t ha d severa l year s o f neglec t wher e ther e wa s 1 6 no t a lo t o f capita l pu t int o it , s o w e ar e i n a 1 7 veryintensive capita l progra mrigh t no wwher e 1 8 we'r e trying t o upgrad e ou r facilitie s t o mor e 1 9 moder n standards . 2 0 Tha t include s environmentally . We'r e unde r 2 1 consen t decre e tha t wa s actuall yforme d i n on e o f 2 2 th e change s o f ownershi p abou t four o r fiv e year s 2 3 ago , an d we'r e making veryseriou s progres s i n tha t 2 4 consen t decre e ove r thes e las t fewyear s becaus e w e 2 5 d o tak e ou r environmenta l responsibilitie s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTON(313 1 229-823 8 AN NARBO R(313 ) 995-954 5P.1 5
DOCKE T NO . A-86-0 3 11 3 1 seriously . Veryseriously . 2 S o w e hav e a fairl yintensiv e capita l 3 program , i s reall yth e mai n thing . 4 M ymai n poin t fo r bein g her e todayan d 5 wanting t o commen t i s tha t indee d th e impac t o f 6 environmenta l regulation s suc ha s th e .0 5 sulfu r 7 hav e go t a verymajo r impac t o n smal l refiner s i n 8 general , an d I think tha t it' s something tha t ha s t o 9 b e somehowrecognize d i n th e regulations , an d indee d 1 0 ther e i s some precedence , a s wa s discusse d 1 1 previously , fo r certai n type s o f specia l treatment . 1 2 W e a s a boar d i n directio n o f th e compan y 1 3 conside r ourselve s t o b e veryenvironmentall y 1 4 conscious , bu t we'r e als o a financially-oriente d 1 5 boar d a s well , an d seriou s financia l burden s an d 1 6 seriou s additiona l capita l requirement s definitel y 1 7 wil l hav e a n impac t o n wha t w e ultimatel yd o a t th e 1 8 plant . 1 9 We'v e had a n extensiv e stud ydone , an

d i t 2 0 indicate s tha t we'r e talking lik e around a 1 6 t o 2 0 2 1 millio n dolla r projec t fo r th e additiona l 2 2 hydrotreating an d fo r —it' s no t jus t th e 2 3 hydrotreating , unfortunately , it' s als o th e 2 4 associate d infrastructure , becaus e we'r e talking a s 2 5 wel l abou t a sulfu r plan t tha t woul d b e require d a s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.1 6
DOCKE T NO . A-86-0 3 11 4 1 par t o f it . 2 And yo u pu t al l tha t togethe r and yo u 3 loo k an

d compar e i t t o th e stud ytha t wa s done , th e 4 Sobotk a report , i t seem s t o pu t —yo u know , it' s 5 totall you t o f line . I mean , th e cos t recoveryfo r 6 instanc e tha t i s reflecte d i n th e Sobotk a repor t 7 provide s a totall yinadequat e retur n fo r us . 8 I f th e assumption s ar e accurat e abou t th e 9 wayth e pric e wil l change , w e hav e a projec t tha t i s 1 0 reall yno t financeable , particularl yi n ligh t o f th e 1 1 othe r aspect s o f ou r capita l program tha t we'r e 1 2 doing . It' s definitel ya sub-rat e o f return . 1 3 I can' t sa ytha t th e plan t woul d clos e 1 4 certainly , becaus e I think we'v e don e a lo t o f 1 5 thing s an d w e d o hav e a goo d nich e i n tha t area . 1 6 O n th e othe r sid e o f th e coin , i f yo u hav e 1 7 an

ykind o f a financially-oriente d boar d the yhav e 1 8 t o reall yalway s b e considering thei r alternatives , 1 9 an

d additiona l environmenta l burden s tha t ar e 2 0 disproportionat e t o smal l refiner s definitel ytak e 2 1 thei r tol l i n time . 2 2 Economicall yth e cos t o f constructio n o f 2 3 anything thes e day s i s going throughth e roof , an d 2 4 t o argu e tha t a refineryo f 38,00 0 barrel-a-day 2 5 capacity , whic heve n i s bigge r tha n a lo t o f smalle r
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.1 7
DOCKE T NO . A-86-0 3 11 5 1 ones , doe s no t suffe r mor e economicall yfroma larg e 2 cos t projec t lik e tha t i s jus t totall ymissin g th e 3 point . 4 On e o f th e othe r concern s tha t I ha d fro m 5 th e natur e o f th e repor t i s tha t w e ar e indee d a 6 regiona l refinery . W e d o no t reall yhav e an yothe r 7 alternative s t o th e highwaydiese l market . W e ar e 8 a n importan t supplie r o f diese l i n th e area . Th e 9 railroad diese l marke t i s extremel ycompetitiv e an d 1 0 potentiall ywil l become eve n mores o becaus e o f 1 1 th e .0 5 reg , an d I think tha t tha t pose s problems . 1 2 It' s difficul t t o sa yi f yo u coul d reall y 1 3 coun t o n tha t marke t a t all , an d beyond tha t w e hav e 1 4 n o alternative s excep t t o shi p ou r diese l t o very 1 5 fa r places , an d ther e agai n you'r e talking abou t th e 1 6 economi c an d competitiv e viabilit yo f th e plant . 1 7 On e othe r sid e impact , too , I suppose , i s 1 8 i t ha s th e long-ter meffec t o f backing ou t sou r 1 9 crud e fro m Wyoming , too . I mean , w e coul d probabl y 2 0 come close r t o th e reg s b yrunning mor e sweet , bu t 2 1 tha t als o ha s an economi c impac t o n th e are a becaus e 2 2 th e sour crud e i s th e lifebloo d o f th e independen t 2 3 producer s i n Wyoming . 2 4 Ther e wa s als o a commen t made , yo u know , 2 5 where , o n th e sulfur , wha t woul d b e ou r
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5. 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 11 6

recommendation , woul d i t b e fo r a n extensio n o f tim e o r fo r th e amoun t o f sulfur . W e mayhav e a bi t
o f a uniqu e situation . W e d o hav e hydrotreating facilitie s now , an

d a s a resul t o f tha t i t i s conceivabl e tha t something lik e a permanen t .1 5 sulfu r o r something migh t giv e u s a significan t
amoun t o f relief , becaus e w e mayb e abl e t o avoi d

—no t all , I' msure , bu t a t leas t a goo d portio n o f tha t 1 6 t o 2 0 millio n dolla r capita l expenditure .

S o tha t maypu t u s i n a uniqu e situatio n relativ e t o othe r smal l refiners . T o b e honest , I hav e no t looke d a t tha t a s a n alternativ e becaus e thi s i s th e firs t tha t I though t tha t tha t migh t
eve n b e a possibilit ytoday , bu t w e hav e a consulting fir

mtha t w e us e a lo t and w e woul d certainl ywan t t o hav e them , yo u know , run some additiona l studie s fo r u s t o se e i f tha t migh t fit .

Beyon d that , certainl yan d clearl ya n extensio n o f time woul d certainl yb e a plus , there' s
n o question , becaus e i t wil l giv e u s th e tim e t o tak e car e of , yo u know , th e othe r thing s tha t we'r e trying t o d o an

d wil l definitel yhel p u s t o reserv e cas hflo

wfo r th e ultimat e capita l expenditur e tha t wil l b e needed .

I d o hav e a fewsummarycomments , too , PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 n

i' • " " ' --.t^W 1 * T"'"" '

' ' --TT-7T.---..TP - • " " -IT- - - •

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 " p r''"' , T . '•—".' • ' - - .I-T - • "< • • --*»»»<^ff| i iip? ! •-•-•-- - • - j-^- - •,- - r . . DOCKE T NO . A-86-0 3 11 7 tha t wer e basicall yonl ypar t o f ou r writte n comment s tha t wer e drafte d up before , an d I think the yd o summariz e ou r situatio n well .

Fo r one , I think overall , I think definitel yth e EPAha s underestimate d th e impac t o f th e proposa l o n smal l refiners . I n particular , there' s a commen t abou t relying o n a n analysi s tha t i s going t o b e the , quote , initia l basi s fo r revie w o n th e impac t o f smal l refiners .

Secondly , tha t repor t doe s acknowledg e tha t th e entir e topping subcategoryrefiner s wil l b e drive n fro

mth e diese l market , and I think tha t doe s hav e definit e economi c consequences .

EPAals o acknowledge s tha t a certai n numbe r o f smal l refiner s i n hydrotreating an d -cracking dat a categorie s wil l b e drive n fromth e diese l market .

I think tha t i s a rea l impact , a rea l
consume r impac t du e t o th e competitiv e natur e o f independen t refiners .

Also , ther e i s n o dat a tha t reall y support s a conclusio n tha t i t woul d b e eas yt o fin d alternat e off-highwaymarket s fo r th e diese l products , an

d i n particula r a s well , n o consideratio n o f wher e tha t produc t mayhav e t o go , PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 P.1 9 " nDOCKE T NO . A-86-0 3 11 8

1 an

d that' s extremel yimportan t fo r an yrefinerytha t 2 i s counting o n a third o f th e barre l winding up i n 3 th e diese l market . 4 And als o I think tha t th e genera l 5 assumptio n tha t th e cos t pe r gallo n o f sulfu r 6 remova l i s th e same fo r th e industrya s a whol e i s 7 jus t wrong , it' s jus t no t a n accurat e statement . 8 Ther e ar e definitel ysignifican t 9 differences , a s prove n b ysome o f th e othe r studies . 1 0 I d o wan t t o iterat e a s wel l th e AIR A 1 1 commen t tha t ther e i s certainl ya lo t o f lega l 1 2 justificatio n fo r separat e regulatorytreatmen t a s a 1 3 resul t o f th e problem s o f smal l refiners . 1 4 On e certainl yi s th e Regulatory 1 5 Flexibilit yAc t whic hactuall ymandate s specia l 1 6 consideratio n an d documentatio n o f th e impac t o f 1 7 regulation s o n smal l entitie s suc ha s smal l 1 8 refiners , an d als o th e Clea n Ai r Ac t itsel f ha s a 1 9 historyo f specia l consideratio n fo r th e need s o f 2 0 smal l refiners . 2 1 Certainl yCaliforni a an d CAR B hav e 2 2 implemente d specia l provision s wit hsmal l refiner s 2 3 wit hth e regulatio n o f sulfu r remova l an d diese l a s 2 4 well , an d ther e ar e a lo t o f regulatoryprogram s 2 5 tha t hav e show n specia l concer n fo r smal l refiner s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.2 1
DOCKE T NO . A-86-0 3 11 9 1 i n general . 2 Als o th e othe r importan t point , an d 3 hopefull ythi s i s something w e ca n wor k toward s 4 trying t o figur e ou t th e wayt o come up wit ha 5 logica l compromise , i s tha t hopefull yth e EP Aca n 6 achiev e th e objective s o f th e propose d regulatio n 7 withou t imposing substantia l impact s o n smal l 8 refiners . 9 Th e EPAshoul d hav e some availabl e option s 1 0 tha t woul d minimiz e th e impac t o n smal l refiner s 1 1 i n achieving thos e objectives . Th e on e logicall y 1 2 . woul d b e certainl yth e lead tim e question , th e 1 3 othe r migh t b e a possibl e highe r sulfu r limi t tha t 1 4 migh t b e acceptable , an d I shoul d dar e t o eve n 1 5 mentio n thi s on e but , yo u know , i t i s eve n 1 6 conceivabl e tha t ther e coul d b e a bankin g an d a 1 7 trading o f sulfu r right s concept , too . 1 8 I' mno t i n an yway , shap e o r for m i n favo r 1 9 o f additiona l regulatorymesse s lik e tha t becaus e I 2 0 think tha t it' s something tha t everyon e shoul d 2 1 probabl ystrive t o avoi d i f possible , bu t i f i t came 2 2 t o tha t i t migh t hav e some meri t an d certainl y 2 3 migh t b e bette r tha n th e othe r alternatives . 2 4 Thank you . 2 5 MR . GRAY : Wha t i s th e sulfu r leve l o f th e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5--J7T—.

- r ^ ^ •

-T DOCKE T NO . A-86-0 3 12 0 1 distillat e diese l fue l tha t you'r e producing now ? 2 MR . KRAMER : W e g o t o th e . 5 limit . 3 MR . GRAY : S o it' s up agains t th e .5 ? 4 MR . KRAMER : Yes , tha t i s quit e frequentl y 5 ou r limit , yo u know , i n th e plan t a t th e moment . 6 MR . GRAY : S o yo u d o hav e som e 7 hydrotreating capacity . I s tha t on-strea man d — 8 MR . KRAMER : Tha t i s on-stream , and 9 fortunatel yw e di d jus t complet e a n expansio n wit h 1 0 i t tha t pu t u s i n bette r position . 1 1 MR . GRAY : Yo u mentione d th e .15 . 1 2 Ho wwoul d yo u — i f yo u hav e tha t capacit y 1 3 being utilize d no wan d you'r e frequentl ybumping 1 4 agains t th e . 5 percent , woul d yo u hav e t o increas e 1 5 th e severit yo r add mor e capacit yo r bot ht o achiev e 1 6 th e lowe r level ? 1 7 MR . KRAMER : I think we' d hav e t o primaril y 1 8 increas e th e capacity , bu t tha t migh t b e a lo t les s 1 9 expensiv e tha n th e othe r alternatives , considerabl y 2 0 so , becaus e w e mayb e abl e t o d o tha t muc hmor e 2 1 economicall ytha n going ou t an d jus t building 2 2 anothe r unit , whic hi s probabl ywha t i t woul d tak e 2 3 i f w e had t o g o t o .0 5 acros s th e board . 2 4 MR . GRAY : S o capacit ymean s severity ? 2 5 MR . KRAMER : Well , severit ywoul d probabl y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 12 1

1 b e als o increased , too . I t woul d definitel yb e a 2 toughe r operation , bu t w e think tha t th e .15 , agai n 3 it' s hitting m e col d and perhap s I ca n mak e some 4 mor e comment s o n tha t i n tim e fo r th e actua l commen t 5 perio d t o se e i f tha t woul d b e practical , bu t I — 6 m

yfeeling i s tha t tha t woul d probabl yb e o f quit e a 7 bi t o f hel p i n ou r case . 8 I can' t i n al l honest ysaytha t acros s 9 th e boar d fo r othe r smal l refiners , though . 1 0 MR . GRAY : Yo u sai d you r principa l marke t 1 1 off-highwayno wi s th e railroad industry , I believe . 1 2 MR . KRAMER : Yes . 1 3 MR . GRAY : Al l right . D o the yhav e a 1 4 maximu

mrequiremen t fo r thos e engine s fo r sulfur ? 1 5 MR . KRAMER : I think it' s sor t o f a 1 6 self-impose d one . I think it' s —the yca n run 1 7 lik e .75 , bu t I think some o f themrun les s an d I 1 8 understand some run more , s o i t jus t depend s o n th e 1 9 particula r company . 2 0 MR . GRAY : D o yo u forese e tha t the ymay 2 1 relaxtha t eve n furthe r a s th e competitio n fo r o r 2 2 availabilit yo f loca l highsulfu r decreases ? 2 3 MR . KRAMER : I t woul d certainl yb e tempting 2 4 fo r them , bu t I think theyhav e thei r ow n engin e 2 5 requirement s an d suggestion s so , yo u know , naturall y
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5P.2 4
DOCKE T NO . A-86-0 3 12 2

• 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 we'v e talke d t o themabou t i t fro mtim e t o tim e an

d theydon' t seemt o b e willing t o budge . I n fact , primaril yit' s almos t al l a t . 5 sulfur . There' s onl yon e railroad I kno wtha t use s th e highe r sulfu r an

d — MR . GRAY : There' s th e concer n abou t increase d wea r characteristic s o f th e —

MR . KRAMER : I think that' s ou r mai n concern . questions .

MR . GRAY : I gues s w e hav e n o furthe r

Thank you . MR . KRAMER : Thank you . MR . GRAY : Nex t i s —I think it' s Princeto n Gamma-Tech .

MR . PIOREK : Goo d afternoon . Mr . Chairman , m

ynam e i s Sta n Piorek . I' m wit hPrinceto n Gamma-Tec hi n Ne wJersey , i n Princeton . I a

mheading thei r Application s an d Developmen t i n X-ra yIndustria l Products . M yexperienc e i n X-ra yapplication s i s abou t 2 0 year s long now , an d th e reaso n I cam e up her e i s th e fac t tha t th e regulatio n o r propose d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 12 3

1 regulatio n specifie s th e method , ho wt o analyz e fo r 2 sulfu r conten t o f diese l fuel , and i t say s tha t i t 3 wil l us e th e metho d whic hha s bee n approve d b yASTM , 4 goo d severa l year s ago , an d i n particula r tha t 5 metho d specifie s tha t w e hav e t o us e wavelengt h 6 dispersiv e method . 7 I don' t kno wtha t everybod yrealize s tha t 8 tha t i s quit e a costl yequipment , wavelengt h 9 dispersiv e spectrometer . Especiall ytha t wil l refe r 1 0 t o smalle r refineries , an d I think dow

n th e road 1 1 whe n requirement s fo r analysi s wil l b e enforce d th e 1 2 smalle r o r furthe r dow n th e road i n th e chai n o f 1 3 analysi s fo r tha t particula r item wil l b e quit e a 1 4 majo r point . 1 5 I think tha t righ t no ww e hav e enough 1 6 technologica l advancemen t whic hlend s t o th e 1 7 manufactur e o f energ ydispersiv e equipmen t whic h 1 8 ca n easil ymee t requirement s o f ASTMmethod . 1 9 Unfortunately , ASTMmetho d jus t doesn' t 2 0 specif yth e instrument , X-ra yinstrument , i t jus t 2 1 specifie s wavelengt hdispersiv e an d doesn' t allo win 2 2 it s wording fo r an yothe r instrument . 2 3 I woul d think tha t i t woul d b e worthwhil e 2 4 fo r EPAt o conside r a wayo f avoiding committing 2 5 ourselve s totall yt o wavelengt hdispersiv e method . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.2 6 r DOCKE T NO . A-86-0 3 12 4 1 I' d sa

ytha t wavelengt hdispersiv e equipmen t o n 2 averag e woul d run t o pu t i t i n th e laboratorya t 3 leas t 80,000-and-u p dollar s investment , wherea s 4 energ

ydispersiv e equipmen t whic hca n mee t easil y 5 th e requirement s o f ASTMmetho d ca n b e bough t fo r 6 18,00 0 t o $22,000 . 7 Ther e ar e severa l manufacturer s o f thi s 8 equipmen t o n th e market , an d prett ymuc hal l o f them 9 woul d provid e performanc e whic hwoul d mee t ASTM 1 0 specifications . 1 1 Therefor e I think tha t befor e th e fina l 1 2 wor d i s sai d o n thi s regulatio n tha t w e coul d 1 3 somehowdevis e a wayo f allowing fo r energy 1 4 dispersiv e equipmen t t o b e use d a s well . 1 5 I a msaying this , o f course , from th e 1 6 poin t o f m ycompany , wh o manufacturer s equipmen t a s 1 7 such , bu t I think tha t a differenc e i n pric e an d 1 8 als o technologica l advancemen t i n th e meantim e 1 9 justifie s th e statement , m ystatemen t als o a s being 2 0 quit e objective , no t jus t onl ysubjective , s o t o 2 1 speak . 2 2 An d I' d lik e t o mayb e revers e a littl e bi t 2 3 th e tabl e an d as k Mr . Hoove r ho ww e woul d expec t to , 2 4 yo u know , t o enforc e .0 5 percen t down t o th e very 2 5 las t level ? Ho wwoul d i t b e i n a practice ?
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Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5/ . 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 12 5 MR . HOOVER : Yo u mea n i n term s o f whethe r
w e woul d loo k a t .0 5 a s th e cu t limit ?

MR . PIOREK : A t ho wman ypoint s o n th e road fro mth e momen t fue l i s mad e unti l it' s burned ? MR . HOOVER : Okay . Th e wayth e regulation s ar e currentl yproposed , i t coul d b e enforce d a t an y leve l i n th e distributio n chai n starting fro mth e refineryo r importe r termina l down t o a wholesal e purchaser , consume r o r a retailer , an d tha t approac h i s basicall yidentica l t o wha t we'r e using i n ou r curren t Volatilit yProgra man d als o quit e simila r t o . wha t i s use d i n th e Analyti c Gasolin e Program .

S o wha t EPAwoul d b e likel yt o d o woul d b e t o tak e sample s o f fue l a t al l point s i n th e distributio n chai n an d hav e thos e sample s analyze d fo r complianc e wit hth e requirements .

Clearly , th e testing methodologie s tha t w e usuall yus e fo r enforcemen t purpose s ar e thos e whic har e define d i n th e Federa l Register .

Considering ho wman ysample s w e take , whethe r there' s an

ysor t o f screening tes t tha t coul d b e used , fo r instanc e ther e mayb e a screening methodolog

ytha t yo u coul d run sample s throughan d fin d one s tha t nee d furthe r testing according —fo r enforcemen t purpose s t o th e ASTMmethodologythat' s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 1DOCKE T NO . A-86-0 3 12 6

1 propose d the n tha t woul d b e likel yt o occur . 2 I n al l likelihoo d th e sample s tha t wil l b e 3 obtaine d fo r th e enforcemen t programwil l probabl y 4 b e obtaine d eithe r b yEPApersonne l themselve s o r 5 contractor s operating unde r EP Aguidance , and agai n 6 tha t i s currentl yho wth e progra mworks , and fo r ou r 7 Volatilit yProgra m fo r instanc e al l o f th e sample s 8 wer e obtaine d around th e country , an d I forge t th e 9 exac t number , I' m no t sur e I' mawar e o f i t yet , bu t 1 0 I think w e di d ove r 3,00 0 inspection s and I think w e 1 1 probabl ytoo k 6

- o r 7,00 0 sample s a s probabl ya n 1 2 approximation . 1 3 Al l o f thos e sample s wer e sen t her e t o 1 4 thi s facilit yfo r testing . S o al l th e testing , n o 1 5 matte r wher e th e sampl e i s collecte d i n th e country , 1 6 wa s analyze d here , an d I suspec t tha t thi s program 1 7 wil l probabl ywor k i n a simila r nature . 1 8 Sinc e it' s a t a minimu mfou r year s off , w e 1 9 obviousl yhav e some time t o se e i f thing s chang e o r 2 0 i f there' s some othe r wayt o d o that , bu t a t thi s 2 1 poin t I woul d think tha t woul d b e th e genera l 2 2 approac hw e woul d take . 2 3 It' s no t unusua l whe n w e propos e 2 4 regulation s o r eve n adop t regulation s fo r sampling 2 5 fo r enforcemen t purpose s tha t w e amen d thos e
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.2 9
DOCKE T NO . A-86-0 3 12 7 1 regulation s o n testing methodology . 2 Thi s ha s occurre d wit hth e lead i n 3 gasoline . W e use d X-ra yand atomi c absorptio n an d 4 als o promulgate d regulation s t o automat e th e X-ra y 5 methodology , an d s o it' s no t inconceivabl e tha t eve n 6 i f regulation s wer e promulgate d wit hon e specifi c 7 sor t i t doe s no t preclud e having a differen t se t o f 8 regulation s o r a n amendmen t don e t o chang e what' s a n 9 acceptabl e methodology . 1 0 Othe r way s o f handling tha t conceivabl y 1 1 includ e looking a t th e feasibilit yo f some 1 2 languag e i n th e regulation s abou t thi s methodology 1 3 o r an

yothe r methodolog

ywhic hth e administrato r 1 4 mayconside r t o b e equivalen t o r thing s lik e that . 1 5 S o w e d o no t usuall ypromulgat e a testing 1 6 methodolog yan d the n maintai n tha t i t i s foreve r 1 7 cas t i n concret e an d th e onl yway . I think w e lik e 1 8 t o kee p attune d t o change s i n technologyan d cos t 1 9 efficiencyan d s o fort ha s well . 2 0 MR . PIOREK : Thank yo u fo r you r 2 1 explanation . I understand , o f course , tha t thi s i s 2 2 wha t the Agencydoe s fo r itself , bu t I think tha t 2 3 peopl e wh o dea l wit ha product , theywoul d d o thi s 2 4 kin

d o f tes t o n thei r own . I' m looking a t thi s 2 5 point , fro mthi s poin t o f view . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 12 8

1 MR . HOOVER : Yes . Let' s assume tha t th e 2 propose d regulation s containe d th e ASTMmethodology 3 an

d that' s wha t th e Agenc ywoul d us e fo r actua l 4 enforcemen t purposes , an d 2 7 smal l refinerie s o r 5 larg e refinerie s o r whateve r th e facilitie s mayb e 6 woul d us e let' s sa yth e typ e o f equipmen t you'r e 7 proposing . 8 I f theywer e t o us e tha t typ e o f equipmen t 9 i n a qualit ycontro l progra m and i n term s o f thei r 1 0 oversigh t an d the n w e foun

d a violatio n tha t wa s 1 1 enforcement-base d I think you'r e reall ygetting a t 1 2 ho wwoul d w e vie wthei r result s i f i t wa s don e o n 1 3 eguipmen t tha t wa s no t wha t wa s specificall y 1 4 prescribe d i n th e regulatio n i n term s of , woul d w e 1 5 bring enforcemen t action . 1 6 Th e propose d regulation s hav e defense s 1 7 buil t int o themi n term s o f a part yestablishing 1 8 tha t they'r e no t liable , and par t o f tha t i s a n 1 9 oversigh t testing program , an d I think wha t w e woul d 2 0 likel yd o woul d b e t o loo k a t ho wcompanie s wer e 2 1 testing , wha t typ e o f equipmen t theywer e using , 2 2 wha t thei r correlatio n factor s were , wha t th e 2 3 qualit yassuranc e program s wer e i n fac t o n thos e 2 4 instrument s befor e w e woul d decid e tha t righ t 2 5 offhan

d w e woul d say , no , yo u can' t us e tha t becaus e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5P.3 1 DOCKET NO . A-86-0 3 12 9 1 it' s no t th e same equipment . 2 Withholding judgmen t righ t no wo n giving 3 yo u a fina l answe r thos e ar e th e type s o f issue s 4 tha t whe n w e ge t t o th e enforcemen t standpoin t 5 generall yeithe r ge t brough t up afte r becaus e nobod y 6 though t o f i t up front , o r i f w e loo k a t i t up fron t 7 w e generall ydiscus s i t and tryt o com e t o a 8 polic ydecisio n o n wha t make s sense , and I think 9 that' s th e bul k o f enforcement , i s t o ge t th e 1 0 industr yt o comply , an

d I think th e Agenc ylike s t o 1 1 b e reasonabl e i n term s o f ho wi t doe s that . 1 2 S o it' s possibl e tha t th e industrycoul d 1 3 us e a devic e tha t i s no t identica l t o tha t containe d 1 4 i n th e ASTMwhic hw e wil l us e fo r enforcemen t 1 5 purposes , bu t on e tha t maygiv e equivalen t 1 6 performanc e an d us e tha t a s a qualit ycontro l too l 1 7 a t thei r level . 1 8 I think th e ASTMmethodologythat' s 1 9 propose d reall yonl yapplie s t o ou r enforcemen t 2 0 cases . Pruden t companie s maysay , well , I wan t t o 2 1 us e the same equipmen t tha t theydo . Bu t i f ther e 2 2 i s equipmen t ou t ther e tha t perform s basicall ya t 2 3 th e identica l leve l o f guality , the n tha t mayb e 2 4 acceptabl e i n term s o f supporting a defens e o f a n 2 5 enforcemen t cas e reall yhinge d o n that . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 13 0

1 Ou r experienc e i n th e pas t I.thin k ha s 2 probabl ybee n tha t no t to o man ycase s reall yge t 3 down t o whethe r m ytes t result s ar e differen t fro m 4 you r tes t results . 5 Tha t mayno t b e th e cas e wit hvolatility , 6 bu t I kno wwit hrespec t t o lead i n gasolin e i t t o m y 7 awarenes s neve r reall ybecame a n issue . 8 MR . PIOREK : Woul d i t b e possibl e t o 9 sponso r o r t o authoriz e kind o f a stud ywhic hwoul d 1 0 sho wup th e outcome o f it , o r compar e bot hmethods ? 1 1 Woul d th e Agenc yconside r that ? 1 2 MR . HOOVER : I think probabl yth e bes t 1 3 thing t o d o i s t o loo k a t th e separat e issu e o f 1 4 testing technology , whic hi s reall yI think wha t 1 5 you r are a o f interes t is , i s t o ge t i n touc hwit hu s 1 6 separatel youtsid e o f thi s hearing an d the n w e ca n 1 7 discus s wha t woul d b e a n appropriat e approac ht o 1 8 tak e t o handl e that . 1 9 MR . PIOREK : Thank you . 2 0 UNIDENTIFIE D SPEAKER : John Charsi n (ph ) 2 1 fro

mth e Penzoi l Program . 2 2 Ther e i s a n ASTMmetho d accorde d t o '9 4 2 3 whic hi s a specifi c metho d fo r sulfu r analysi s o f 2 4 petroleu m product s tha t actuall ywoul d mee t th e .0 5 2 5 percen t specification . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 " ^ T " " ' - „,, , . - y.. T ,. „ flr .,. . - • , DOCKE T NO . A-86-0 3 13 1 MR . HOOVER : Okay . UNIDENTIFIE D SPEAKER : I don' t kno wi f you'r e awar e o f i t o r not .

MR . HOOVER : Sinc e we'r e a n enforcemen t offic e —an

d literall ythat's.primaril ywha t w e do , w e actuall ysu e yo u folks , a s some o f yo u mayb e aware , w e don' t ordinaril yge t rea l involve d i n th e technica l details , an d w e d o tend t o rel yo n th e staf f her e i n Ann Arbo r an d dea l wit hCaliforni a Ai r Resource s Board , s o th e ASTMmethodologie s we'v e probabl yselecte d hav e stemme d fro mthos e sources . I kno wfo r th e sulfu r ther e wer e a numbe r o f methodologie s tha t wer e availabl e t o us e and th e on e tha t w e propose d wa s th e on e tha t wa s recommended , s o w e ca n loo k a t tha t and see .

MR . PIOREK : Thank yo u verymuch . MR . GRAY : Nex t w e hav e th e Ai r Pollutio n Contro l Divisio n o f th e Colorad o Departmen t o f Health .

MR . L

AMOTTE : Goo d afternoon . I' mMaci e LaMott e o f th e Ai r Pollutio n Contro l Divisio n o f th e Colorad o Departmen t o f Health . M

yobjectiv e i n attending thi s hearing i s
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5 P.3 3

• iDOCKE T NO . A-86-0 3 13 2



### 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 t o presen t some genera l suppor t fo r th e EPA' s

propose d rulemaking o n diese l fue l quality .

I woul d als o lik e t o expres s some concern s
w e hav e wit hth e proposa l a s i t exist s a t thi s time .

M yinpu t int o thi s hearing wil l chiefl y consis t o f tw o letter s fro mofficial s i n th e Stat e o f Colorado . On e i s th e Governor , Governo r Ro y Romer , an

d th e othe r perso n i s Mr . BradleyBeckham , Directo r o f th e Ai r Pollutio n Contro l Divisio n o f th e Colorad o Departmen t o f Health .

A s man yo f yo u ar e aware , th e Stat e o f Colorad o ha s bee n veryaggressiv e i n th e are a o f controlling an

d decreasing th e pollutant s fromal l
sources . Th e emission s fro mmobil e source s suc ha s automobiles , truck s an d buse s hav e garnere d considerabl e attention . Man ystudie s an

d program s hav e bee n institute d i n orde r t o addres s th e reductio n o f emission s fro mthos e sources . A t thi s time I' d lik e t o presen t t o th e hearing th e content s o f th e tw o letters . I'l l begi n wit hthe firs t letter , whic hi s fro mth e Governor , Governo r RoyRomer .

Colorad o strongl ysupport s th e Environmenta l Protectio n Agency' s proposa l t o
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.3 5 DOCKE T NO . A-86-0 3 13 3 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 regulat e th e qualit yo f diese l fuel s i n th e Unite d

States . W e urg e EPAt o se t feasibl e bu t stringen t standard s fo r th e sulfu r an d aromatic s conten t
o f thes e fuels .

Diese l emissio n ar e a significan t problem along th e Fron t Rang e o f Colorado . Th e 1987-8 8 Metr o Denve r Brow

n Cloud Study , a one-and-a-hal f millio n dolla r effor t whic hI organize d i n cooperatio n wit hColorad o busines s interest s an d environmenta l group s an d academi c institution s suggeste d tha t diese l emission s a t time s wer e responsibl e fo r up t o 2 5 percen t o f ou r winte r visibilit yproblems .

I n 198 7 I als o appointe d th e Blu e Ribbo n Diese l Tas k Forc e t o fin d way s t o reduc e diese l emission s i n Colorado .

W e ar e implementing th e recommendation s o f tha t tas k force , including a mandatorydiese l inspectio n an

d maintenanc e program , establishmen t o f
a heavy-dut yhigh-altitud e emission s laboratory , tighte r enforcemen t o f opacit yan d idling law s an

d alternativ e fuel s demonstrations .

Amajo r recommendatio n o f thi s tas k forc e wa s tha t eithe r th e stat e o r federa l governmen t
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5DOCKE T NO . A-86-0 3 13 4

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 establis hstringen t diese l fue l qualit ystandards . I a m prepare d t o recommend tha t Colorad o establis hit s ow

n standards . However , I believ e federa l standard s ar e preferabl e becaus e the ywoul d b e mor e cost-effectiv e an d les s disruptiv e t o th e regiona l economy .

I , therefore , strongl ysuppor t th e EPA' s effort s t o establis hnationa l fue l qualit y standards .Specifically , I endors e m ytas k forc e recommendatio n o f a diese l fue l sulfu r conten t o f .0 5 percen t b

yweight . Diese l fue l i n Colorad o average s .2 9 percen t sulfu r b

yweight , s o suc ha standard woul d b e o f grea t assistance .

I als o urg e EPAt o establis ha s stringen t
a standard a s i s feasibl e fo r aromatic s i n thes e fuels . Finall yI agre e wit hm ytas k forc e tha t thes e standard s shoul d b e cost-effectiv e and allo w industr ysufficien t time fo r implementation . Colorad o an

d th e natio n hav e mad e grea t progres s i hreducing ai r pollutio n becaus e o f th e effort s o f automobil e manufacturers , industries , utilitie s an

d al l level s o f government . Throughour
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Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 13 5

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 oxygenate d fuel s progra mColorad o ha s show n tha t th e fuel s industryals o ca n hel p improv e ai r quality .

Therefore , Colorad o strongl yendorse s EPA' s effort s t o establis hnationa l diese l fue l qualit ystandards .

I hav e aske d Mr . Brad Beckham , Directo r o f th e Ai r Pollutio n Contro l Divisio n o f th e Colorad o Departmen t o f Healt ht o provid e yo u wit hmor e detaile d comment s o n EPA' s proposal .

I appreciat e you r attentio n t o ou r concerns . Sincerely , RoyRomer , Governor .

A t thi s tim e I' d lik e t o read th e lette r fromMr . Brad Beckha mt o th e hearing , an d befor e I begi n I wil l mak e some comment s tha t ther e ar e some reference s her e t o off-road diese l fuel . I think thi s wa s don e i n looking t o th e possibilit ytha t tha t sor t o f equipmen t coul d become a dumping ground fo r lesse r qualit yfue l tha n no wexists .

A s Directo r o f th e Ai r Pollutio n Contro l Division , Colorad o Departmen t o f Health , and o n behal f o f th e divisio n I wholeheartedl ysuppor t th e EPA' s effort s t o regulat e diese l fue l quality .

Du e t o thei r significan t contributio n t o th e emissio n o f harmfu l pollutant s fromdiese l

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Y& ASSOCIATE S BRIGHTON(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.3 8
DOCKE T NO . A-86-0 3 13 6 1 vehicle s th e sulfu r an d aromatic s conten t o f diese l 2 fue l mus t b e controlle d throughth e establishmen t o f 3 th e mos t stringen t standard s feasibl e a t th e 4 nationa l level . 5 Th e issu e o f diese l emissio n continue s t o 6 gai n prominenc e afte r man yyear s o f relativ e 7 obscurit yfro mstringen t control s and regulations . 8 Th e emphasi s o n controlling exhaus t emission s ha s 9 bee n largel ydirecte d towar d gasolin e fue l vehicles . 1 0 Recen t revelation s o f th e harmfu l 1 1 consequence s o f th e increase d ambien t level s o f 1 2 sulfu r oxides , nitroge n oxide s an d particulate s 1 3 whic hcome fro mdiese l exhaus t ha s cause d concer n 1 4 an

d interes t i n controlling thes e emissions . 1 5 Althoughth e increasingl ystringen t EPA 1 6 certificatio n standard s fo r ne wdiesel s wil l provid e 1 7 emission s reductio n benefit s i n th e future , theyd o 1 8 no t addres s excessiv e pollutant s tha t ar e being 1 9 emitte d fro m th e curren t populatio n o f diese l 2 0 vehicle s whic hwil l continu e i n futur e years . 2 1 Stat e an d loca l publi c information , 2 2 vehicl e maintenanc e an d emission s inspectio n 2 3 program s wit hstrong enforcemen t ar e effectiv e mean s 2 4 o f control , bu t a n equall yimportan t effectiv e 2 5 strateg ywhic himpact s al l diese l vehicle s equall y
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.3 9
DOCKE T NO . A-86-0 3 13 7 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 wit himmediat e emission s benefit s i s a regulatio n o f

diese l fue l quality .

Th e Colorad o Departmen t o f Healt hAi r Pollutio n Contro l Divisio n ha s reviewe d th e NPRMRegulatio n o f Fuel s an d Fue l Additives ; Fue l Qualit yRegulation s fo r HighwayDiese l Fue l Sol d i n 199 3 an d Late r Calenda r Years , a s publishe d i n th e Federa l Registe r Augus t 24th , 1989 .

Th e Divisio n woul d lik e t o offe r th e following comments :

Enthusiasti c suppor t fo r th e .0 5 percen t sulfu r b

yweigh t standar d fo r on-highway vehicles . Als o concer n fo r th e omissio n o f a sulfu r standard fo r diese l fue l consume d bynon-highway vehicles . Recen t studie s investigating th e emission s contribution s o f non-highwayvehicle s demonstrat e tha t thes e contribution s ar e substantia l an d woul d sugges t tha t thos e vehicle s woul d als o shar e i n th e benefit s tha t lowe r sulfu r diese l fue l woul d offer .

Proposal : Establis ha cap o n th e maximu m sulfu r conten t o f non-highwaydiese l fue l a t a leve l equa l t o th e curren t averag e sulfu r conten t o f on-highwaydiese l fuel . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 0
DOCKET NO . A-86-0 3 13 8 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 I n lie u o f a cap , a standar d o f .3 0

percen t sulfu r b

yweigh t shoul d b e implemente d fo r non-highwayvehicles .

Thi s actio n woul d thwar t th e strong possibilit ytha t sulfu r level s o f non-highwaydiese l fue l woul d increas e beyond averag e levels .

Arevie wo f th e Stat e o f California' s prio r experienc e wit hfue l regulation s demonstrat e thi s i s a genuin e concern .

Als o concer n fo r th e lac k o f a stringent , effectiv e an

d meaningfu l aromati c standard . Proposal : Establishmen t o f a n aromati c standard tha t i s a t leas t equa l t o th e aromati c standard tha t th e Stat e o f Californi a ha s propose d fo r smal l refiners .

A s you'r e aware , th e Stat e o f Californi a ha s complete d a n in-dept hstud yo f th e aromatic s conten t influenc e upo n exhaus t emissio n issu e an d ha s base d o n tha t stud yestablishe d a stringen t aromatic s limit : 1 0 percen t aromatic s b yvolum e fo r larg e refiner s an

d a varianc e o f 2 0 percen t aromatic s b

yvolume fo r smal l refiners . Concer n fo r th e minimu mcetan e approac ht o aromatic s control .

Diese l fue l wit ha 4 0 cetan e inde xi s
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 1
DOCKE T NO . A-86-0 3 13 9 1 belo wo r a t th e veryleas t equa l t o th e minimu m 2 cetan e specification s se t fort hb yth e America n 3 Societ yfo r Testing an d Material s fo r diese l fue l 4 No . 2 . 5 Currentl yther e i s commercia l diese l fue l 6 bein g sol d wit ha cetan e significantl yabov e 40 , ye t 7 th e aromatic s conten t measure s approximatel y4 0 8 percen t b yvolume . 9 Thi s serve s t o poin t ou t ther e ar e flaw s 1 0 i n th e cetan e approac ht o insuring lowaromati c 1 1 content . 1 2 I f th e EPAi s persisten t i n th e minimu m 1 3 cetan e approac ht o contro l aromatics , th e EPAshoul d 1 4 se t a minimu mcetan e o f 50 , inde xo f 5 0 t o b e o f an y 1 5 value . 1 6 Concer n tha t th e propose d lowe r sulfur , 1 7 .1 0 percen t weigh t diese l certificatio n fue l fo r th e 1 8 199 1 vehicl e mode l yea r wil l weake n th e emissio n 1 9 reductio n benefit s o f th e 199 1 heavy-dut ydiese l 2 0 certificatio n standards . 2 1 Certifying engine s o n fue l whic hi s no t 2 2 readil yan d commerciall yavailabl e woul d appea r t o 2 3 b e largel ydevoi d o f an yimmediat e in-servic e 2 4 emission s reductio n benefits . 2 5 However , whe n consideratio n i s give n t o th e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 14 0

1 phase-i n complexitie s o f lowsulfu r diese l fuel , 2 stringen t certificatio n standard s an d th e strong 3 possibilit yo f particulat e trap adaptation , th e 4 .1 0 sulfu r weigh t certificatio n fue l maywel l 5 represen t th e bes t approach . 6 I n summary , th e EPAi s t o b e commende d fo r 7 proposing diese l fue l regulations , bu t w e firml y 8 believ e tha t certai n provision s o f th e propose d 9 regulatio n shoul d b e revisite d an d revise d i n orde r 1 0 tha t th e mos t stringent , effectiv e fue l regulation s 1 1 ar e adopted . 1 2 I respectfull yas k tha t yo u conside r th e 1 3 comment s tha t ar e containe d herein . 1 4 Sincerely , BradleyJ . Beckham , Director , 1 5 Ai r Pollutio n Contro l Division , Colorad o Departmen t 1 6 o f Health . 1 7 Tha t i s th e exten t o f m ypresentation . 1 8 MR . GRAY : Thank you . 1 9 I' msur e you'r e awar e tha t curren t Agenc y 2 0 authorit ydoesn' t allowregulatio n o f off-highway— 2 1 MR . L AMOTTE : Yes , th e Clea n Ai r Act . 2 2 MR . GRAY : Clean Ai r Ac t amendment s may 2 3 chang e that , bu t a t leas t currentl yw e couldn' t 2 4 respon

d t o tha t proposa l eve n i f w e wer e s o incline d 2 5 unde r existing constraints . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.4 3

DOCKE T NO . A-86-0 3 14 1 1 Th e aromatic s standard tha t yo u proposed , 2 a s yo u als o kno wth e principa l reaso n fo r proposing 3 thes e particula r diese l fue l qualit ystandard s 4 addresse d th e feasibilit yo f diese l engin e 5 manufacturer s t o compl ywit hi hparticula r 199 4 6 standards , an d whil e aromatic s contro l i s projecte d 7 t o reduc e particulat e emission s fromexisting diese l 8 engine s an d coul d hav e some beneficia l toxi c aspect s 9 a s well , th e diese l engin e industrysuggeste d tha t 1 0 th e 4 0 cetan e indexwa s sufficien t i n term s o f fue l 1 1 qualit yt o allowthemt o compl ywit hth e '9 4 an d 1 2 late r standard . 1 3 S o th e conclusio n wa s i f the yar e willing 1 4 t o b e hel d accountabl e t o end-us e performanc e a t 1 5 tha t leve l wit htha t qualit ydiese l fue l the n th e 1 6 principa l purpos e o f th e regulatio n woul d hav e bee n 1 7 served , an d th e furthe r questio n o f additiona l fue l 1 8 change s t o impac t existing engine s tha t ar e toxi c 1 9 eve n thoughtreate d wasn' t th e principa l focu s o f 2 0 th e activity , an d probabl ya t thi s stag e wil l hav e 2 1 t o b e considere d i n some subsequen t rulemaking 2 2 simpl ybecaus e o f ho wfa r along w e ar e i n th e 2 3 process , o f course , wit hhaving alread ypropose d a 2 4 specifi c program . 2 5 Eve n thoughyo u expresse d anothe r concer n
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Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.4 4

DOCKE T NO . A-86-0 3 14 2 1 abou t th e 199 1 certificatio n fuel , i t seeme d lik e 2 yo u said , however , it' s — 3 MR . L AMOTTE : W e realiz e ther e ar e 4 compromises , bu t a n idea l situatio n —whe n thos e 5 standard s wer e promulgated , a t tha t time th e 6 certificatio n fue l wa s probabl y.23 , whic hi s kind 7 o f th e norm . 8 Well , theyremaine d i n effec t bu t they'r e 9 give n th e benefi t o f using a highe r qualit yfuel , s o 1 0 i n essenc e yo u migh t sa yi t wa s watere d down 1 1 slightly . 1 2 MR . GRAY : Ther e ar e definitel ytw o 1 3 perspective s o n that . I think probabl yth e industr y 1 4 perspectiv e wa s during th e rulemaking activit yi n 1 5 th e earl y'80' s theysuggeste d tha t th e feasibilit y 1 6 o f th e standard coul d i n fac t —woul d likel yb e 1 7 impacte d b yth e sulfu r leve l o f th e fuel , s o there' s 1 8 a t leas t tw o side s o f tha t issue , an d you'r e right , 1 9 thi s particula r leve l wa s a resul t o f some 2 0 compromis e perspectiv e i n trying t o reac ha 2 1 reasonabl e resolutio n o f th e transitio n period . 2 2 MR . L AMOTTE : W e realiz e it' s necessaryt o 2 3 hav e availabl e a lowe r sulfu r fue l s o tha t th e 2 4 manufactur e an d developmen t o f trap s wil l become , 2 5 yo u know , insured . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKET NO . A-86-0 3 14 3 MR . GRAY : D o yo u hav e an yquestions ? Thank yo u verymuc hfo r coming . W e appreciat e you r being here .

I s a representativ e fromth e Petroleu m Marketer s Associatio n tha t w e wer e waiting o n her e yet ? MS . HASKINS : I' mhere .

MR . GRAY : Okay . D o yo u wan t t o g o now ? Actuall ywe'v e ha d on e othe r perso n tha t woul d lik e t o testify , s o I ca n eithe r le t yo u g o now , o r i f yo u stil l wan t t o b e las t that' s —

MS . HASKINS : I'l l g o ahead . Goo d afternoon . I jus t wan t t o mak e on e correction . I can' t hel p bu t sa

ysomething . Th e firs t lin e i n her e —m

yname i s Ver a Haskins , bu t a s o f yesterday I' mth e Vic e Presiden t o f m ycompan

yrathe r tha n Genera l Manager , s o I can' t hel p bu t mak e tha t correction .

MR . ANDERSON : Congratulations . MS . HASKINS : W e ar e a moto r an d heating fuel s marketing compan ylocate d i n Frazer , Pennsylvania , a suburbo f Philadelphia .

I' mher e todayrepresenting th e Petroleu m
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 P.4 5P.4 6

DOCKE T NO . A-86-0 3 14 4 1 Marketer s Associatio n o f America , PMAA , a federatio n 2 o f 4 3 stat e an d regiona l trad e association s 3 representing mor e tha n te n thousand independen t 4 petroleu m marketer s throughou t th e Unite d States . 5 Thes e marketer s sel l approximatel y5 0 6 percen t o f th e gasoline , 7 5 percen t o f th e hom e 7 heating oi l an d 6 0 percen t o f th e diese l fuel s sol d 8 i n thi s countryannually . 9 8 9 percen t o f PMA Amembe r companie s ar e 1 0 classifie d a s smal l businesse s unde r Smal l Busines s 1 1 Administration-siz e standards . 1 2 PMA Aappreciate s thi s opportunit yt o 1 3 expres s it s view s o n th e Environmenta l Protectio n 1 4 Agency' s proposa l t o lowe r th e sulfu r conten t an d 1 5 cap aromatic s i n on-highwaydiese l fuel . 1 6 Ou r comment s todaywil l focu s o n th e 1 7 impac t o f thi s proposa l o n independen t petroleu m 1 8 marketers . 1 9 Fo r th e mos t par t petroleu mmarketer s 2 0 operat e famil ybusinesses . Man ycompanie s hav e bee n 2 1 i n busines s fo r 5 0 year s o r mor e an d ar e i n thei r 2 2 second , third an d eve n fourt hgeneratio n o f famil y 2 3 leadership . 2 4 A s a result , ther e i s a strong sens e o f 2 5 continuit yamong petroleu mmarketer s an

d a desir e t o
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Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5'" ' 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 14 5

perpetuat e a soun

d social , economi c an d ecologica l environmen t i n whic htheyan d thei r heir s wil l b e abl e t o operat e wel l int o th e future .

Fo r thi s reason , PMA Adoe s no t oppos e th e inten t o f EPA' s proposa l t o lowe r th e sulfu r leve l
o f on-highwaydiese l fuel .

W e understand tha t curren t sulfu r level s i n diese l fue l wil l preven t heavy-dut ydiese l manufacturer s fro

mmeeting EPA' s 199 4 particulat e emission s standard s fo r heavy-dut ydiese l engines .

W e ar e encourage d b yEPA' s projecte d benefit s resulting fro mth e ne wfue l specificatio n o n engin e wear , ai r qualit yan d healt heffects . Whil e w e suppor t th e inten t o f EPA' s proposal , PMA

Awoul d g o furthe r b yrequiring a singl e sulfu r conten t fo r al l distillat e fuels , no t jus t moto r vehicl e diese l fuel . Suc ha singl e standard shoul d b e implemente d i n a timefram e tha t i s adequat e t o avoi d an ysuppl yavailabilit y problem s fo r diese l fue l o r hom e heating oil .

I wil l discus s i n furthe r detai l ou r rational e fo r requiring a singl e sulfu r conten t diese l i n a moment .

PMA Ai s strongl yconcerned , however , wit h th e tota l lac k o f analysi s i n EPA' s proposa l o f th e
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2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 14 6

impact s o f th e lowsulfu r fue l requiremen t o n independen t petroleu mmarketers . Sinc e PMA

Abelieve s tha t thes e impact s ar e likel yt o b e significan t an dwil l alte r th e overal l
cos t benefi t analysi s o f the proposal , w e believ e EPAmus t tak e step s t o reevaluat e th e tru e economi c an d environmenta l benefit s o f th e propose d rulemaking .

I t shoul d als o analyz e th e overal l cost-effectivenes s o f reducing th e sulfu r conten t o f diese l fue l fo r al l uses .

AlthoughEPAadmit s i t di d no t stud yth e impac t o f th e proposa l o n marketers , an d i n spit e o f request s t o d o s o b yPMA Aan d th e Smal l Busines s Administratio n i t ha s informe d PMA Ai t doe s no t pla n t o conduc t a ful l stud yo f th e impact s unles s i t i s convince d b

yth e en

d o f th e commen t perio d tha t th e proposa l ha s a potentia l t o hav e significan t economi c impac t downstrea mfro mbul k terminals . T o mee t thi s burde n o f proof , PMA Ai s i n th e proces s o f conducting a survey . Th e result s wil l b e incorporate d int o ou r writte n comments .

A s a prelud e t o wha t thes e result s may showw e ar e attaching a s appendice s t o thi s testimon y a serie s o f cas e studie s evaluating th e impac t o f

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 T ]

,P.4 9

DOCKE T NO . A-86-0 3 14 7 1 th e propose d rul e o n fiv e individua l marketing 2 companies . 3 PMA Ahope s thes e studie s wil l convinc e EPA 4 tha t i t shoul d b e collecting dat a o f it s ow n o n th e 5 impac t o f it s proposa l o n th e nonrefining industry . 6 Turning no wt o th e impact s o f th e proposa l 7 o n th e petroleu m marketers , PMA

Abelieve s tha t by 8 creating a tw o diese l fue l systemthi s proposa l wil l 9 resul t i n significan t increase d storage , 1 0 transportatio n an d marketing costs , disruption s i n 1 1 suppl yan d i n man

ycase s a reductio n i n availabilit y 1 2 o f products . 1 3 Th e cost s an d los s o f busines s occasione d 1 4 b

ysuc ha progra

m wil l principall yfal l o n th e back s 1 5 o f loca l independen t marketer s tha t currentl yserve 1 6 ove r 6 0 percen t o f th e tota l distillat e market . 1 7 W e ar e par t o f th e petroleu mindustry , 1 8 thoughno t considere d t o b e i n th e report . 1 9 A s bul k storers , transporter s an d 2 0 distributor s o f bot hon - an d off-highwaydiese l 2 1 fuels , th e independen t petroleu mmarketer s PMA

A 2 2 represent s ar e extremel yconcerne d abou t a propose d 2 3 rul e tha t wil l requir e th e separat e storag e an d 2 4 distributio n o f on - an d off-highwaydistillat e 2 5 fuels . PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 14 8 Man ymarketers , particularl ythos e operating i n rura l areas , commonl ystor e on - and off-highwaydiese l fuel s an d distillat e burne r fuel s i n th e same bul k storag e tanks .

I f a tw o fue l systemi s carrie d out , bul k plan t operator s wil l nee d t o hav e segregate d storag e fo r on-highwayfue l i f they'r e t o continu e t o marke t bot hcategorie s o f diese l fuel .

Mos t o f th e bul k plant s tha t ar e currentl y operate d b

ymarketer s todayd o no t hav e separat e storag e capacit yt o carrythes e tw o categorie s o f fuel . I n addition , constructio n o f additiona l capacit ypose s majo r problems .

I n man ycases , th e lan

d i s simpl yno t availabl e fo r additiona l tanks . I n others , permit s mayb e impossibl e t o obtai n du e t o stat e an d loca l governmen t restrictio n whic hprohibit s th e constructio n o f additiona l storage .

Finally , th e economic s o f additiona l tankag e almos t certainl ywil l no t warran t th e investment .

PMA Acurrentl yi s i n th e proces s o f acquiring cos t estimate s o n ne wtankage , ne wlines , valves , fittings , pump s an d trucks . However , i t i s quit e clea r fro mtalking t o
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/ 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 14 9

marketer s an

d reading throughth e attache d cas e studie s tha t acquiring ne wequipmen t o r retrofitting existing equipmen t i s a n expensiv e propositio n an d
on e tha t wil l onl yb e chose n a s a las t resort .

I n addition , marketer s wh o choos e t o add t o storag e wil l nee d t o facto r i n th e cos t o f having anothe r produc t tie d up i n inventory . I t ca n b e assume d tha t wit heveryadditiona l tank a n additiona l inventor yo f approximatel y5 0 percen t o f th e tank' s capacit ywil l b e required . Th e cos t o f thi s produc t inventor ywil l dramaticall yaffec t no t onl yth e marketer' s cas hflowbu t als o hi s overal l cost s o f doing business .

Marketer s wil l als o b e face d wit hhighe r distributio n cost s becaus e theywil l n o longe r b e abl e t o maximiz e th e us e o f thei r deliveryeguipmen t
an d personnel .

Segregate d transportatio n wil l mea n mor e part-load deliveries , mor e mile s travele d becaus e some route s wil l hav e t o b e retraced , an d mor e time spen t making deliverie s an d i n handling undelivere d products . PMA

Ai s als o concerne d tha t afte r a deliveryo f a dy e produc t i s mad e th e tank truc k wil l i n man

ycase s stil l contai n abou t 2 0 gallon s o f

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Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5 P.5 1.,-..-.... .

•

~s' _. - . , . .

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 • '•- • ' - ~ "- ' *" " '• ' DOCKE T NO . A-86-0 3 15 0 dy e product . PMA

Aha s learne d tha t t o remov e thes e gallon s fro

mth e truc k woul d b e quit e costly . Althoughthi s amoun t o f produc t mayno t b e enought o contaminat e a subsequen t load o f nondye d fue l i n a transpor t vehicl e o f 8,00 0 gallo n capacit y i t mayb e enought o affec t a subsequen t load i n a tankwago n normall yhaving capacit yo f les s tha n 3,50 0 gallons .

Thi s mean s tha t marketer s wil l nee d t o us e separat e truck s t o transpor t eac hcategoryo f diese l t o preven t contaminatio n o f th e lowe r sulfu r product . Th e cos t o f a two-truc k systemwil l b e substantial . T o preven t thi s fro mhappening , EPA shoul d conside r establishing a dilutio n facto r fo r testing th e ne wfuel , and/o r allo wa n acceptabl e amoun t o f dy e i n th e on-highwayfuel .

A s EPAi s aware , mos t refinerie s an d mos t marketer s wil l fin

d tha t th e cos t o f adding storag e o r segregate d transportatio n wil l b e s o uneconomica l tha t theywil l choos e t o discontinu e handling a product . EPAi s unde r th e assumptio n tha t thi s specializing b

ymarketer s i s a simpl e an d acceptabl e proposition . Le t m e assur e yo u i t i s not . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 P.5 2P.5 3

••- • •-y.p- - -- i DOCKE T NO . A-86-0 3 15 1 1 AlthoughPMA Adoe s no t hav e dat a t o 2 presen t t o EPAa t thi s time w e ar e sur e tha t th e 3 los t sale s occasione d b ythi s propositio n wil l b e 4 significant . I n some case s marketer s hav e reporte d 5 th e los s o f sale s t o b e a s muc ha s 2 5 percen t o f a 6 marketer' s annua l ne t profits . 7 EPAfurthe r assume s tha t marketer s wil l b e 8 abl e t o pic k up th e volume s tha t the ylos e fro m 9 discontinue d sale s b ysimpl yincreasing sale s o f 1 0 othe r products . 1 1 Thi s i s a naiv e and simplisti c assumption . 1 2 I n al l likelihoo d onl ylarg e termina l operator s 1 3 capabl e o f storing a n additiona l grad e o f distillat e 1 4 withou t additiona l cos t wil l b e abl e t o pic k up los t 1 5 volume s o f othe r marketers . 1 6 Ther e wil l b e a shifting o f marke t shar e 1 7 fromsmal l independen t marketer s t o larg e refine r 1 8 operate d an d independen t terminals . 1 9 Th e creatio n o f a two-fue l systemwil l i n 2 0 some case s limi t produc t availability . 2 1 T o th e exten t tha t th e extr a tankag e 2 2 require d fo r segregate d produc t storag e require s 2 3 extr a minimu m working inventories , thi s produc t 2 4 volume wil l no t b e availabl e i n area s wher e i t i s 2 5 mos t needed . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.5 4

*

-r' 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 15 2 I n time s o f tigh t supply , produc t availabilit ycoul d b e eve n mor e adversel yaffected . Shifting o f heating oi l t o b e use d a s diese l fue l a s demand varie s woul d n o longe r b e possibl e and th e revers e woul d probabl yno t b e practica l depending o n th e cos t o f th e lowsulfu r fuel .

I n addition , i f marketer s discontinu e certai n sale s i t i s th e consume r wh o wil l los e some freedomo f choic e i n th e marketplac e an d wh o mayb e severel yinconvenienced . I n som e case s i t mean s tha t nonpriorit ycustomer s woul d los e thei r presen t
sourc e o f supply .

Eve n i f a ne wsourc e o f suppl yi s obtaine d i t coul d necessitat e longe r hauls , highe r price s fo r th e customer , an

d o f cours e los s o f busines s fo r th e forme r supplier .

I f th e rul e i s promulgate d a s proposed , PMA Awoul d suppor t strong enforcemen t b yEPAo f th e lowsulfu r on-highwaydiese l requirement . Suc h enforcement , however , shoul d no t b e base d o n method s tha t ar e unenforceabl e o r whic hplac e unfai r economi c burden s o n independen t petroleu mmarketers . PMA Aoppose s EPA' s adoptio n o f th e liabilit yan

d enforcemen t provision s o f it s RVP an d lead regulation s o n thi s proposal . Unlik e th e
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5 ''H IDOCKE T NO . A-86-0 3 15 3

1 leade d an d unleade d fue l an

d RV P situations , EPAi s 2 proposing t o dy e th e unregulate d fuel . Thi s 3 provide s EPAwit hautomati c evidenc e o f 4 noncomplianc e whic hi t doe s no t hav e i n th e othe r 5 tw o enforcemen t systems . 6 Vicariou s liabilit yplace s undu e burde n o n 7 th e whol e distributio n system . Marketers , carrier s 8 an

d refiner s mayfin

d tha t the ywil l hav e t o spend 9 enormou s amount s o f tim e and mone ydefending 1 0 themselve s agains t spuriou s claim s tha t the ywer e 1 1 th e one s tha t contaminate d o r markete d a 1 2 nonconforming fuel . 1 3 Therefore , PMA Abelieve s eac hentit ymus t 1 4 b e charge d wit ha violatio n base d o n probabl e caus e 1 5 tha t th e entit yha s committe d a violation . 1 6 I n addition , PMA Astrongl yoppose s th e 1 7 adoptio n b yEPAo f some kind o f oversigh t programa s 1 8 par t o f a defens e t o a n allege d violation . 1 9 A s th e RV P progra mha s alread

yshown , 2 0 oversigh t program s ar e extremel ycostl yventure s an d 2 1 ar e no t necessaryi f dyeing i s impose d and th e 2 2 proposa l i s amende d t o requir e refiner s t o tes t 2 3 thei r produc t an d certif ysulfu r and cetan e level s 2 4 o n thei r invoices . 2 5 Testing th e sulfu r conten t and cetan e
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1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 ' '" " 'T ' ' r w ~" " ' DOCKE T NO . A-86-0 3 15 4 inde xo f diese l fue l i s a n eve n mor e sophisticate d
an d expensiv e laboratorytesting procedur e tha n RVP testing , whic hi s currentl ycreating numerou s problems .

EPAadmit s i n it s Preambl e tha t thi s complicate d testing procedur e make s fiel d complianc e testing impossible , ye t EPArequire s distributor s an d reseller s t o provid e EPAwit hevidenc e o f a n oversigh t progra

mt o defend themselve s agains t a n allege d violation .

There' s simpl yn o justificatio n fo r thi s requiremen t an

d i t shoul d b e eliminated . I n conclusion , PMA

Abelieve s tha t th e impact s o f th e proposa l o n independen t petroleu m marketer s wil l b e significan t an d mus t b e considere d b yEPAi n it s overal l cos t benefi t analysi s o f th e lowsulfu r diese l fuel .

EPAconducte d severa l studie s o f th e cos t
o f th e proposa l t o th e refining industry . W e ar e asking tha t on e stud yb e don e o n th e cos t o f th e proposa l t o th e marketing an d retai l segmen t o f th e industry . Finally , i n ligh t o f th e fac t tha t EPAmay ge t additiona l authorit yt o regulat e off-highway diese l fue l an

d possibl yhom e heating oi l a s a
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 ' nV 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 15 5

resul t o f th e passag e o f th e Clea n Ai r Ac t amendment s thi s year , PMA Abelieve s EPAshoul d conside r postponing actio n o n thi s rulemaking unti l passag e o f thes e amendment s ha s take n place . I t woul d obviousl yb e mor e cost-effectiv e and bette r fo r bot hth e econom yan d th e industryt o regulat e th e entir e distillat e poo l al l a t onc e tha n t o d o i t i n a piecemea l fashion .

A s EPAi s aware , PMA Asupport s th e reductio n o f th e sulfu r conten t no t onl yo f moto r vehicl e diese l fue l bu t als o o f diese l fue l use d fo r othe r purpose s including hom e heating oil .

PMA Abelieve s th e reductio n i n sulfu r conten t i n home heating oi l ca n hav e significan t benefit s no t onl yfro ma n environmenta l standpoin t bu t als o i n th e usefu l lif e o f th e furnace s an d burners . PMA

Adoes , therefore , suppor t a singl e sulfu r conten t fo r al l distillat e pools , no t jus t moto r vehicl e diese l fuels . However , suc ha singl e standard shoul d b e implemente d i n a sufficien t timeframe s o a s t o avoi d an ysuppl yavailabilit y problem s fo r diese l fue l o r hom e heating oil .

Th e benefit s o f suc ha n approac har e numerous . Overal l sulfu r emission s woul d b e reduce d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5 " (P.5 8

DOCKE T NO . A-86-0 3 15 6 1 fo r al l distillat e fuels . Diese l engine s a s wel l 2 a s heating oi l furnace s an dburner s woul d hav e a 3 longe r usefu l life , an d dyeing and segregate d 4 storag e woul d b e avoided . 5 Maintaining a singl e lo w sulfu r distillat e 6 fue l woul d dea l wit heac ho f thes e problems . 7 Thank yo u fo r th e opportunit yt o testif y 8 today , an d i f ther e ar e an

yquestion s yo u hav e I' d 9 . b e gla d t o tryt o answe r them . 1 0 MR . GRAY : Thank you . 1 1 A s I' msur e you'r e aware , th e principa l 1 2 motivatio n fo r thi s particula r rulemaking wa s t o 1 3 insur e th e feasibilit yan d enforceabilit yo f 199 4 1 4 on-highwaydiese l engin e standards . 1 5 A s we'v e hear d todaytha t industryi s very 1 6 muc hdepending o n th e availabilit yo f lo wsulfu r 1 7 fue l t o allowcomplianc e i n 1994 , s o I sugges t t o 1 8 delayth e implementatio n o f lowsulfu r fue l fo r 1 9 thos e engine s i n effec t woul d rais e question s abou t 2 0 th e implementatio n ability , enforceabilit yo f th e 2 1 highwayvehicl e standards , s o w e woul d potentiall y 2 2 b e foregoing a verysignifican t environmenta l 2 3 benefi t tha t we'r e no wanticipating . 2 4 S o ho wwoul d yo u respond froma n 2 5 environmenta l perspective ?
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.5 9

DOCKE T NO . A-86-0 3 15 7 1 Ho wwoul d th e merit s o f tha t b e abl e t o b e 2 rationalized , th e availabilit yo f tha t lowsulfu r 3 fuel ? 4 MS . HASKINS : Well , I think o n th e othe r 5 sid e o f tha t coi n th e impac t o n ou r segmen t o f th e 6 industryha s go t t o b e looke d at . There' s a 7 tremendou s amoun t o f financia l burde n that' s going 8 t o b e place d o n us . I t coul d hav e significan t 9 effec t o n th e economy . 1 0 I think tha t whe n we'r e dealing i n term s 1 1 o f 10-day , 30-day , 60-da ytimeframes , th e majo r oi l 1 2 companie s wer e give n a n opportunit yand extensiv e 1 3 tim e fo r studie s t o b e done . I think it' s necessary 1 4 tha t thos e same opportunitie s b e give n t o u s an d 1 5 tha t a stud yb e don e o n tha t impact . 1 6 O n th e environmenta l sid e o f it , I hav e n o 1 7 problemwit hth e nee d fo r thi s i n th e lowering o f 1 8 sulfu r content . I think mayb e ou r positio n mayeve n 1 9 b e a littl e stronge r tha n th e EPA' s i n th e 2 0 consideratio n o f across-the-boar d lowering o f sulfur 2 1 content . 2 2 It' s bee n sai d numerou s time s todaytha t 2 3 th e jurisdictio n doe s no t li e wit hyou . We'r e awar e 2 4 o f that . 2 5 Al l we'r e asking fo r i s a delayfo r tw o
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.6 0
DOCKE T NO . A-86-0 3 15 8 1 purposes : a n opportunit yt o se e wha t happen s wit h 2 th e amendment s t o th e Clea n Ai r Act , and a t th e same 3 tim e a n opportunit yfo r a n impac t stud yt o b e don e 4 o n ou r industry ; thos e tw o thing s t o happen . I 5 think they'r e bot hequall yimportant . 6 I don' t think w e ca n affor d t o g o int o a 7 regulatio n whic hi s don e i n a piecemea l for man d w e 8 tur n around an d hav e t o mak e majo r changes . 9 MR . GRAY : Yo u indicate d tha t yo u ha d 1 0 attache d some cas e studie s o f —i s tha t something 1 1 stil l being pu t together ? Becaus e it' s no t attache d 1 2 t o wha t yo u hande d ou t t o us . 1 3 MR . ANDERSON : Yes , i t is . 1 4 MS . HASKINS : Everybody' s bu t yours , maybe . 1 5 I hav e a complet e se t here . 1 6 MR . ANDERSON : Th e one s yo u jus t gav e u s 1 7 wer e no t complet e sets . 1 8 MS . HASKINS : I hav e anothe r on e here . 1 9 MR . GRAY : Okay . 2 0 MS . HASKINS : Sorry . 2 1 MR . GRAY : Coul d yo u giv e u s a basi c fee l 2 2 fo r wha t kin d o f impac t you'r e concerne d about ? 2 3 MS . HASKINS : Th e fiv e studie s tha t ar e 2 4 attache d g o int o particula r cas e studie s o f 2 5 individuals , an d theyvarysomewha t depending upo n
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 15 9

th e typ e o f operatio n tha t theyhave .

I ca n spea k fo r m

yown business , and m y area' s no t technica l an d i t i s no t scientifi c a s a lo t o f wha t you'v e hear d today . I' ma n operation s an d distributio n expert , and that' s wher e m yarea s o f concer n are .

Ou r deliverie s ar e mad e i n size s a s lowa s 15 0 gallon s al l th e wayup t o a ful l truckload . W e ar e i n a majo r metropolitan are a o n on e sid e o f u s an d w e hav e a rura l are a t o th e wes t o f us , s o w e hav e bot htype s o f markets .

W e delive r thre e type s o f produc t al l i n on e truck . Currentl ywe'r e delivering hom e heating oi l possibl yt o th e building t o hea t i t fo r a constructio n company , he' s go t a tank wher e he' s go t on-highwayan

d he' s go t anothe r tank tha t he' s using off-highway . S o we'r e filling al l thre e o f thos e tank s a t on e time . I t wil l no wnecessitat e u s t o sen d tw o truck s out . Whe n yo u ge t int o th e storag e area , it' s no t uncommo n fo r a compan yt o hav e —a s a n example , a compan

ythat' s veryclos e t o us , h e ha s on e singl e million-gallo n tank . Al l o f hi s No . 2 produc t i s store d i n that . He' s i n a n are a wher e n o tank installation s whatsoeve r ar e allowed , none . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5 P.6 1P.6 2
DOCKE T NO . A-86-0 3 16 0 1 Th e closes t tha t he' s going t o b e abl e t o 2 ge t a tank t o hi s busines s wil l b e 50-plu s mile s 3 away , s o he' s going t o hav e t o dedicat e tha t millio n 4 gallon s o f storag e t o a produc t an d he' s going t o 5 hav e t o sacrific e a par t o f hi s business . 6 I' mtrying —yo u ca n g o veryspecifi c o n 7 this . Bu t thos e ar e tw o ke yarea s actuall yi n th e 8 deliveryproces s an d i n th e storag e process . 9 MR . GRAY : Mayb e I ca n pursu e th e storag e 1 0 an

d come bac k t o deliveryan d bette r understand it . 1 1 I n storage , ar e thes e companie s companie s 1 2 tha t onl ysell"distillate ? 1 3 MS . HASKINS : No . Ou r companie s 1 4 ar e involve d i n al l area s o f bul k products , 1 5 gasoline , kerosene . 1 6 MR . GRAY : S o the n there' s usuall ymor e 1 7 tha n on e tank , s o it' s a questio n o f priorit yfo r 1 8 th e tankage ? 1 9 MS . HASKINS : W e hav e tw o differen t type s 2 0 o f companies . W e hav e companie s withi n ou r 2 1 associatio n tha t d o no t stor e produc t tha t pul l 2 2 directl yfro m th e termina l an

d delive r t o th e 2 3 location . The n w e hav e customer s tha t onl ystor e 2 4 distillat e an d pul l al l o f thei r gasolin e fro m 2 5 th e terminals . S o yo u coul d hav e an ycombinatio n o f
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.6 3

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 16 1

that . Storag e o f gasolin e i n some area s i s getting mor e difficul t and fo r tha t reaso n th e requirement s aren' t a s tigh t o n distillate , a s yo u mayfin d storag e o f distillat e bu t n o gasolin e storag e a t a particula r location . S o yo u mayonl y hav e on e tank strictl ya distillat e tank , possibl ya kerosen e tank .

MR . GRAY : S o th e impac t i s going t o b e veryspecifi c t o th e natur e o f th e compan ya s i t relate s t o th e storag e issue ?

MS . HASKINS : Tha t i s on e o f th e reason s it' s bee n a littl e mor e difficul t fo r u s t o gathe r information , becaus e yo u don' t hav e a n identica l scenari o acros s th e boar d wit hal l marketers .

Eac hon e o f u s i s uniqu e i n th e methodolog

ytha t w e us e an

d th e waytha t w e store . S o impac t i s —impact s vary , thoughI can' t think
o f a scenari o tha t woul d no t impac t unles s yo u wer e strictl ya gasolin e distributor .

MR . GRAY : Certainly . Woul d yo u conside r you r companie s t o b e supplie d principall yb ylarg e refiner s o r b

ysmal l refiners , o r jus t a mix ? MS . HASKINS : Ar e yo u talking abou t th e petroleu

mmarketer s o r mysel f specifically ?
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 -TT J1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 16 2 MR . GRAY : Eithe r one . I' mjus t trying t o ge t some ide a o f —

MS . HASKINS : I don' t think I ca n answe r tha t question . I woul d b e gla d t o includ e tha t informatio n i n ou r writtencomments . A s fa r a s th e entir e natio n goe s I can' t answe r that .

Ou r compan

yi s supplie d b

y1 2 differen t companie s i n th e Philadelphi a area , an d tha t goe s th e ful l gamu t fro

mth e majo r oi l compan ydown t o smal l refiners . We'r e supplie d b yanyon e that' s locate d i n th e Philadelphi a area .

MR . GRAY : S o d o yo u conside r yoursel f a n independen t petroleu mmarketer ? I mean , I' mtrying t o ge t some idea , becaus e you r associatio n —

MS . HASKINS : We'r e th e gu y—I gues s th e bes t wayt o pu t i t is , we'r e i n betwee n —th e word termina l ha s bee n use d her e severa l time s today , yo u know , an

d ther e need s t o b e some definitio n o f some o f thes e term s becaus e I think everyon e use s them differently .

W e normall yoperat e smalle r bul k termina l operation s wher e we'r e pulling wit hou r ow n trucks , loading ou r ow

n an d delivering t o th e custome r o n location , th e mos t commo n scenario , rathe r tha n someon e pulling t o the n g o int o a bul k terminal . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 J 229-823 8 AN NARBOR(313 ) 995-954 5 P.6 4*

•

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 . T T". T - •• - • M- - T r i r ' -r - , - ,j; , *••••

- -T - DOCKE T NO . A-86-0 3 16 3 We'r e the one downstrea m fro m the terminal , bul ktermina l dow nt o the custome r location . W

e dre w a diagra

m o f thi s whenwe wer e u p her e meetin

gbefor e an

di t woul dprobabl y do u s good , becaus e peopl e are havin gtroubl e graspin

g this , wha t al l th

e different level s are . MR . GRAY : Ar e yo

uindependent marketers , i s wha t I' m

really tryin gt o — inothe r words , do yo u marke t fo r majo r —I mean , woul d yo ub e a Chevro n compan

yo r — MS . HASKINS : No . I n th e area o f distillat e fue l w e delive r n o brande d product . MR . GRAY : Bu t woul d yo u delive r t o lik e a Chevro n statio n o r d o yo u jus t delive r t o independents , i s wha t I' mtrying t o —

MS . HASKINS : Ou r diese l fue l i s purchase d fro mu s b yanyone . Tha t coul d possibl yb e a majo r oi l company , a majo r oi l company' s station , bu t understand , no t a majo r oi l company-owne d station , bu t yo u sai d a Chevro n statio n an d tha t coul d b e owne d b

ysevera l differen t people ; i t coul d b e directl yowne d b yChevro n o r i t coul d b e owne d b y a dealer .

MR . GRAY : On e o f th e mai n concern s yo u
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5 •i- >• - ' 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKET NO . A-86-0 3 16 4

seemt o hav e i s tha t ther e coul d b e a shifting o f th e marke t shar e fro msmal l independen t marketers , I assume th e grou ptha t yo u represent , that' s wha t I' m—t o larg e refinery-operate d an d independen t terminals .

I' mtrying t o bette r understand ho wth e relationshi p i s establishe d ther e betwee n a larg e refinery-operate d terminal , whic hi s wher e yo u think th e busines s wil l go , fro mth e smal l independen t marketers , an

d — MS . HASKINS : It' s a possibility . I mean , i t i s on e o f th e question s tha t w e ask .

Righ t no wwe'r e dealing i n a lo t o f suppositions ; what' s going t o happe n t o th e marketplace , what' s going t o happe n a s fa r a s suppl y o f th e product , th e pric e o f th e product . There' s a lo t o f if s here .

I mean , i f w e ha d a crysta l bal l and coul d
sa yfo r sur e i t woul d b e a lo t easie r t o answe r th e questions . It' s a concern tha t w e hav e tha t ther e wil l b e a n entryint o th e marketplac e wher e lowe r sulfu r produc t coul d b e controlle d and th e availabilit yo f i t controlled , whic hi s a problem tha t w e ar e no t dealing wit hcurrently . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 P.6 6DOCKE T NO . A-86-0 3 16 5

1 I understand bac k i n th e '70' s whe n th e 2 Philadelphi a an d Ne wJerse yarea s lowere d thei r 3 sulfu r conten t ther e wa s a problemi n tha t area , an d 4 that' s a concer n tha t w e hav e now , tha t tha t coul d 5 happe n again . 6 MR . GRAY : Le t m e trythi s understanding a 7 littl e bi t differently . 8 MS . HASKINS : I' msorry . 9 MR . GRAY : Wha t I' mreall ytrying t o driv e 1 0 a t wit hthi s questio n is , i s you r independenc e 1 1 somehowrelate d t o independen t o r smal l refiners ? 1 2 Becaus e that' s anothe r — 1 3 MS . HASKINS : No , there' s n o relationshi p 1 4 betwee n th e two . 1 5 MR . GRAY : You'r e no t normally , o r 1 6 th e majorit yo f you r wor k i s no t t o reall ymarke t 1 7 th e produc t o f smal l refiners ? 1 8 MS . HASKINS : Yo u kno wwha t I think woul d 1 9 b e bes t an d —I think i t woul d come bette r i n a 2 0 writte n explanatio n o f tha t include d i n ou r 2 1 comments . I think w e coul d addres s i t bette r tha n 2 2 m e trying t o explai n it . 2 3 MR . GRAY : I think we'r e jus t abou t there . 2 4 I think yo u wer e saying tha t whil e yo u d o 2 5 marke t fro mindependen t smal l refiner s — PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5DOCKE T NO . A-86-0 3 16 6

1 MS . HASKINS : W e bu you r produc t — 2 MR . GRAY : Yo u bu yyou r produc t fro

m 3 whomeve r yo u ca n ge t th e lowest-price d produc t from , 4 i s wha t I' mreall yhearing , an d tha t doesn' t 5 necessaril yalway s mea n smal l o r larg e companies , 6 there' s a mix ? 7 MS . HASKINS : No , no , no , i t coul d b e - - 8 MR . GRAY : You'r e totall yindependent ? 9 MS . HASKINS : W e ar e totall yindependen t i n 1 0 th e are a — 1 1 MR . GRAY : From refineries ? 1 2 MS . HASKINS : — i n th e are a o f diese l fuel , 1 3 MR . GRAY : Okay , an d s o i n tha t contex t i t 1 4 seem s t o reall yb e principall ya n issu e o f — 1 5 MS . HASKINS : I t mayno t staytha t way , 1 6 though . 1 7 MR . GRAY : Okay . Yo u maytak e ove r some 1 8 smal l refineries , o r vice-versa ? 1 9 MS . HASKINS : No , th e potentia l i s ther e 2 0 tha t i t i s possibl e tha t diese l fue l woul d becom e a 2 1 produc t tha t had t o b e pulle d b ybrand , whic hi t i s 2 2 currentl ynot . Tha t possibilit yi s there . I t doe s 2 3 no t exis t toda yi n ou r marketplace , an d I' mno t 2 4 awar e o f al l o f th e majo r oi l companie s an d ho wthey 2 5 function . Al l I ca n discus s ar e th e one s tha t I
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5• \ 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 16 7

dea l with , bu t tha t possibilit yi s there .

MR . GRAY : Okay . MS . HASKINS : I didn' t mea n t o confus e yo u a t th e en

d jus t a s yo u wer e beginning t o understand . MR . GRAY : Wit hth e basi c structur e i t
seem s lik e you r principa l concer n woul d focu s around storag e capacit yt o handl e distillat e i n mor e tha n on e classification . We'v e ha d some discussio n today o f possibl ya —forgive me , bu t ye t anothe r diese l fue l o r distillat e classificatio n t o handl e some o f th e smal l refineryconcerns , an d the n a suggestio n o f mayb e some highe r sulfu r on-highwayfue l fo r a limite d perio d t o minimiz e th e impac t o n smal l refiner s wh o ar e smal l busines s peopl e a s well .

That' s on e o f th e othe r majo r issue s tha t
seem s t o b e surfacing .

MS . HASKINS : I woul d hop e a n impac t stud y o n ou r industr

ywoul d b e don e befor e a consideratio n o f anything lik e tha t woul d b e done .

MR . GRAY : S o I gues s th e mai n poin t i s whethe r it' s tw o o r three . Th e basi c concer n i s tha t yo u fee l tha t yo u woul d b e disadvantage d compare d t o othe r marketer s i n having t o —

MS . HASKINS : No , no , no , no . Ou r primary concer n i s it' s going t o cos t u s a tremendou s amoun t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 P.6 9 " " *P.7 0

~" N 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 -,--• • • — •*" ! "TT" i • - ' • - -*r - . • iy.* DOCKE T NO . A-86-0 3 16 8
o f mone yove r an

d abov e wha t we'r e spending todayt o d o business .

Ou r companie s ar e no t bi g companies . Understand tha t w e ar e no t multi-million-dolla r companies . Alo t o f u s ar e smal l independen t marketers , jus t a s w e say .

W e ar e going t o hav e t o sacrific e a par t
o f ou r busines s becaus e o f ou r inabilit yt o stor e dua l product . Thos e o f u s tha t ca n stor e dua l produc t ar e going t o the n tak e o n a majo r expense , whic hi s going t o b e verydifficul t fo r u s t o bear .

O r competitiv e abilit yi s no t th e ke y concer n righ t now . I t i s a questio n only , something tha t need s t o b e considered .

Ther e ar e going t o b e muc hlarge r faction s tha t wil l b e abl e t o handl e thi s muc hbetter . Speaking jus t i n ou r industr yI think th e concern s ar e whethe r we'r e going t o sacrific e par t o f th e profit s o f ou r company , an d a s I sai d a littl e whil e ag o thos e number s hav e bee n running a s higha s 2 5 percen t i n ou r discussion s wit hpeople .

We' d lik e th e opportunit yt o ge t tha t dat a specificall yfo r yo u s o yo u hav e number s t o loo k at , s o yo u can —an

d thes e five cas e studie s giv e yo u a genera l ide a o f th e kind o f dat a we'r e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 16 9

beginning t o gather , bu t w e nee d th e tim e t o d o that . MR . GRAY : You'r e competing wit hlarge r companie s tha t yo u think wil l hav e th e capacit yt o add o r hav e th e abilit yt o add th e additiona l storag e capacit ymor e easil ytha n yo u fo r mor e products ?

MS . HASKINS : No , and I fee l uncomfortabl e i n a discussio n lik e this . W e hav e fairl ystric t requirement s i n ou r are a o f discussion s o n competitio n an

d pricing an

d s o forth . I reall y don' t fee l rea l comfortabl e wit hthi s conversation . I reall ywoul d lik e t p addres s i t i n writing , wher e I d o fee l mor e comfortable .

MR . GRAY : Okay . MS . HASKINS : I f yo u hav e n o objectio n t o that . MR . GRAY : I' mjus t trying t o bette r understand wher e yo u fel t —

MS . HASKINS : I understand that , bu t I woul d fee l mor e comfortabl e i n a writte n commen t o n that . We'r e getting int o a n are a tha t I jus t don' t fee l rea l goo d abou t talking about .

MS . HASKINS : I f yo u wil l a s yo u pu t thos e comment s togethe r tryt o hel p u s understand , becaus e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 P.7 1DOCKE T NO . A-86-0 3 17 0

1 i f it' s a n additiona l cos t an d everyon e bear s i t 2 tha t wil l b e competing wit hyou , the n th e —yo u 3 know , you r customer s wil l cove r th e cost , yo u wil l 4 recove r th e increase d cos t associate d wit htw o 5 deliverytruck s o r compartmente d deliverytruck s o r 6 mor e tankag e a t you r terminal , and s o on e o f th e ke y 7 aspect s woul d b e i f some o f you r membe r companie s 8 ar e disadvantage d compare d t o a bi g compan yo r a 9 majo r terminal , o r giv e u s some fee l fo r wh yyo u 1 0 fee l tha t yo u woul d no t b e abl e t o recove r th e 1 1 cos t o f a n investmen t tha t yo u woul d nee d i n orde r 1 2 t o retai n tha t 2 0 percen t o f you r busines s tha t 1 3 you'r e fearfu l yo u woul d lose . 1 4 MS . HASKINS : I d o understand , an d w e wil l 1 5 d o that . I' m sorrytha t I' mpassing o n tha t fo r 1 6 righ t now , bu t I woul d fee l bette r abou t that . 1 7 MR . GRAY : Al l right . Verygood . 1 8 MR . ANDERSON : I jus t hav e on e questio n 1 9 that' s o n a slightl ydifferen t topic . 2 0 On e o f th e thing s yo u talke d abou t wa s the 2 1 enforcemen t aspect s an d th e dyeing requirement s an d 2 2 you r belie f tha t wouldn' t necessaril ynee d t o g o 2 3 throughth e whol e enforcemen t program , an d yo u sai d 2 4 th e refiner s shoul d hav e t o certif yth e cetan e an d 2 5 th e sulfu r indexan d suc ho n thes e invoices . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.7 3

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 * .•-,-.---., . - , --.---»-., . - . , - r „ w-., . . -.-.- - . • --.„ . DOCKE T NO . A-86-0 3 17 1 I woul d tak e tha t t o mea n tha t yo u think tha t th e refineryi s th e on e tha t ough t t o d o th e dyeing also ?

MS . HASKINS : Yes , I think i t shoul d be . That' s a persona l commen t fro mme . O n behal f o f PMAA , theywoul d hav e t o stat e thei r positio n afte r we'v e talke d abou t that , and I' d lik e t o delaythat , bu t fo r ou r company , tha t woul d b e a muc hbette r procedure .

MR . ANDERSON : Okay . MR . HOOVER : I kno won e o f you r concern s o n th e deliverywa s th e dua l truc k systeman d s o forth , an d yo u als o sa

ytha t yo u delive r a lo t o f gasolin e an d tha t yo u generall yhav e tw o o r thre e o r fou r differen t product s an d us e compartmentalize d trucks . Wouldn' t th e same b e applicabl e t o distillates ?

MS . HASKINS : Bu t I' d hav e t o bu ythos e ne w trucks . I don' t currentl yhav e compartmentalize d truck s fo r distillat e fo r No . 2 delivery . M y fleet' s in goo d shap e no wan d I woul d hop e t o think tha t I didn' t hav e t o bu ymor e truck s jus t s o I ca n hav e compartmentalize d trucks . 2 5 year s fro mno w it' s a littl e bi t different , bu t tha t initia l expens e mayb e something tha t som e o f u s won' t b e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 * iP.7 4

DOCKE T NO . A-86-0 3 17 2 1 abl e t o incur . 2 MR . HOOVER : On e thing I woul d lik e t o 3 make , it' s a commen t o n something yo u say . Yo u sa y 4 —an

d thi s i s o n th e enforcemen t provision : Unlik e 5 th e leaded-unleade d fue l an d RV P situations , EPAi s 6 proposing t o dy e th e unregulate d fuel . Thi s 7 provide s EPAwit hautomati c evidenc e o f 8 noncomplianc e whic hi t doe s no t hav e i n th e othe r 9 tw o enforcemen t systems . 1 0 Basically , that' s basicall yno t correct . 1 1 Th e fac t tha t th e fue l i s dye d o r undye d say s 1 2 nothing abou t complianc e o f tha t fue l wit hth e 1 3 standard . It' s merel yther e t o mak e th e 1 4 determinatio n o f wha t wil l b e considere d on-highway 1 5 diese l fuel . 1 6 Yo u mayhav e diese l fue l tha t ha s dy e i n 1 7 it , tha t i f yo u teste d i t i t woul d no t excee d th e 1 8 standard s an d woul d no t b e i n violation , an d 1 9 likewis e yo u mayhav e diese l fue l that' s sol d a s 2 0 on-highwaydiese l fue l tha t ha s n o dy e i n i t 2 1 whatsoeve r tha t ha s neve r bee n adde d anywher e i n th e 2 2 chai n tha t exceed s th e standards . 2 3 S o th e presenc e o r absenc e o f dy e i s no t 2 4 a n absolut e automati c complianc e mechanism . 2 5 MS . HASKINS : Isn' t tha t th e purpos e o f th e
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P.7 5

DOCKE T NO . A-86-0 3 17 3 1 dye , though ? 2 MR . HOOVER : Th e purpos e i s t o segregat e 3 ou t int o wha t yo u conside r t o b e on-highwaydiese l 4 fue l an

d other . That' s th e problem , i s tha t w e hav e 5 t o segregat e dow n t o th e portio n tha t w e ca n 6 regulate . 7 MS . HASKINS : I mean , i f — 8 MR . HOOVER : Th e purpos e i s t o ensur e tha t 9 ther e i s a n impetu s o n th e industryt o segregat e th e 1 0 tw o an

d t o mak e i t visibl e t o al l segment s o f th e 1 1 industryan d th e users , whethe r th e fue l tha t 1 2 they'r e getting i s i n fac t lowsulfu r appropriat e 1 3 cetan e indexdiese l fuel . It' s no t a n automati c 1 4 indicator . 1 5 Clearly , i f th e dy e i s adde d somewher e 1 6 becaus e theydetermin e thi s i s going t o b e use d 1 7 off-highway , tha t doesn' t guarante e tha t al l clea r 1 8 diese l fue l i s going t o mee t th e standards . 1 9 MS . HASKINS : I' mcurrentl ydistributing 2 0 four grade s o f gasolin e an d I a mabl e t o trac k whic h 2 1 i s which . S o i f th e sol e purpos e o f dy e i s fo r ou r 2 2 sake , yo u don' t hav e t o d o it . 2 3 MR . GRAY : Th e mai n poin t i s tha t i f th e 2 4 distillat e i s dyed , the n whethe r i t ha s highe r o r 2 5 lowe r tha n th e nondye d fue l become s a non-issu e fro m
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5DOCKE T NO . A-86-0 3 17 4

1 a n enforceabilit ystandpoint . 2 Yo u know , ou r enforcemen t folk s won' t 3 reall yworryabou t tha t unles s someon e dispense s a 4 dye d fue l int o a n on-highwayvehicle . The n tha t 5 perso n become s responsibl e fo r a prohibite d ac t and , 6 yo u know , an d the n b

yseeing a dye d fue l g o int o 7 tha t vehicl e the n th e enforcemen t cas e wil l b e 8 fairl ystraightforward . The ycan' t b e expecte d t o 9 kno wi f it' s clea r it s sulfu r o r it s cetan e inde x 1 0 value , bu t theyca n clearl yb e hel d responsibl e fo r 1 1 dispensing o f a dye d fuel . 1 2 And s o th e rea l focu s i s t o tryt o ensur e 1 3 tha t a highsulfu r fue l wouldn' t fin d it s wayint o 1 4 a n on-road diese l engine , especiall yi n '9 4 an d 1 5 late r engine s whic hmayhav e problem s actuall y 1 6 using a highsulfu r fuel . 1 7 S o w e hav e t o bot hhav e a mean s o f 1 8 insuring tha t peopl e don' t dispens e th e wron g fuel , 1 9 an

d tha t become s verytrick yunles s w e ge t int o 2 0 nozzle s lik e w e di d wit hleade d versu s leaded , 2 1 becaus e th e owne r coul d onl yb e —o r th e servic e 2 2 statio n coul d onl yb e hel d accountabl e fo r 2 3 dispensing th e fue l base d upo n nozzle s an d 2 4 mechanica l restrictions . 2 5 Th e dy e i n effec t ha s th e same benefit . I
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.7 7

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 17 5

think Stev e wa s onl ysaying tha t i f it' s —i t ha s t o b e clea r t o b e pu t i n th e trucks , bu t — on-highwaytrucks , bu t tha t isn' t enough . The n tha t clea r fue l ha s t o als o mee t th e specification s fo r a n on-highwayfuel , an d i f it' s foun

d i n a truc k the n w e hav e t o fin d ou t where , wh o wa s responsibl e fo r th e highsulfu r leve l and , yo u know , i f a markete r blende d —well , supposedl yi f th e dy e a s yo u recommend i s pu t i n a t th e refineryleve l tha t wil l lesse n th e chance s tha t competitiv e pressure s wil l forc e someon e t o tak e a nondye d hom e heating oi l an d mi xi t wit ha nondye d on-road fue l and marke t i t a s a n on-road fuel , bu t that' s —yo u probabl yhear d earlie r some o f th e termina l an d refining peopl e wer e concerne d abou t adding dye s a t th e refinery , s o that' s anothe r issu e w e hav e t o struggl e with .

MS . HASKINS : I think it' s extremel y importan t tha t a certificatio n come fro mth e refinery . Otherwise , it' s virtuall y—i t woul d b e a n overwhelming projec t fo r u s t o polic e tha t fro m tha t poin t on . W e hav e t o hav e some typ e o f certificatio n tha t wha t we'r e pulling ou t o f tha t termina l meet s th e specifications . Otherwise , we' d b e testing everyload tha t w e picke d up , i s th e onl y
.PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5 l$P.7 8

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 ? 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 17 6

wayw e coul d b e sure , an d I think that' s very , very importan t here .

MR . HOOVER : I think th e refinerie s probabl yca n provid e whateve r typ e o f certificatio n the ydeemappropriat e t o yo u froma n enforcemen t standpoin t wit hth e experienc e w e ha d wit hth e leaded-unleade d gasolin e scenari o wher e th e pric e differentia l a t th e variou s level s i n th e distributio n chai n wa s no t anywher e nearl ya s larg e a s wha t you'r e looking a t her e wit hth e heating oi l t o on-highwaydiese l fue l i n term s o f th e taxe s an d th e cos t betwee n th e highan d lo wsulfu r processing . There' s going t o b e suc ha n economi c incentiv e t o commingl e an d switc htha t w e believ e tha t yo u reall ynee d something tha t make s i t a s visibl e a s possibl e t o al l level s o f th e chai n tha t that' s no t occurring , an d tha t include s righ t dow n t o th e trucke r wh o i s going t o b e putting fue l i n there . H e doesn' t kno wi f h e ha s higho r low sulfu r fue l o r heating oi l o r whatever , bu t i f h e look s in an

d say s it' s purpl e o r blu e o r some othe r colo r than wha t h e know s i t shoul d be , the n h e mayrepor t tha t he' s gotte n fue l a t such-and-suc ha statio n tha t i s i n violation . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5P.7 9

DOCKE T NO . A-86-0 3 17 7 1 And some o f you r comment s g o t o a workabl e 2 enforcemen t scenario . Fortunatel ywe'v e ha d 1 5 3 year s o f experienc e wit hgasolin e an d a lo t o f 4 what' s i n th e proposa l i s base d o n tha t experienc e 5 i n term s o f wha t doe s wor k an d wha t jus t doesn' t 6 work , an d als o wha t provide s a n incentiv e fo r th e 7 industrya t al l level s t o comply . 8 MS . HASKINS : Wer e yo u no t expecting cos t 9 differential s o n RVP tha t di d no t actuall y 1 0 materialize ? 1 1 I mean , yo u know , th e actua l difference s 1 2 tha t wer e expecte d t o happe n di d no t materializ e i n 1 3 ou r market . 1 4 MR . GRAY : I think sinc e al l th e gasoline s 1 5 ha d t o mee t th e volatilit yw e wouldn' t se e i n a 1 6 give n marke t a cos t differentia l fro mon e gasolin e 1 7 t o th e other . 1 8 On e o f th e issue s was , yo u know , woul d w e 1 9 se e a northeas t stat e highe r cos t tha n th e res t o f 2 0 th e countrybecaus e o f th e highe r volatilit yi n th e 2 1 summe r o f '89 ? 2 2 Ther e wer e a lo t o f strang e thing s 2 3 happening wit hgasolin e price s beginning i n March . 2 4 Theywen t u p veryrapidly , theyoscillated , actuall y 2 5 ha d gon e dow n an d mayb e gon e bac k up again , s o it' s
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Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.8 0

DOCKE T NO . A-86-0 3 17 8 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 going t o b e verydifficul t i n thos e majo r shift s t o

establis ha direc t answe r t o you r question .

Bu t w e wouldn' t hav e expecte d withi n a give n marke t ther e t o b e a differenc e associate d wit hRVP .

MS . HASKINS : I wa s thinking o f market s tha t cam e up agains t eac hothe r wher e th e standard s vary . MR . GRAY : Ther e shoul d hav e bee n a cen t o r so , bu t I' mno t sur e i f we'l l b e abl e t o statisticall ydetermin e tha t wit hth e fluctuatio n tha t occurre d thi s pas t summer .

MR . HOOVER : There' s n o ta xdifference , though , betwee n th e gas .

MS . HASKINS : Bu t that' s no t a concer n o f EPA's , i s it ? Th e taxe s don' t —I mean , tha t i s a n IR S question , no t a n EPAproblem .

MR . HOOVER : That' s correct , bu t i f tha t incentive lead s t o fue l switching that' s wher e th e environmenta l concer n is . Th e caus e i s no t relevan t bu t th e reactio n o f i t is . Tha t ha s t o b e a concern . MR . GRAY : Fo r th e distillate .

MR . HOOVER : Right . I wa s wondering i f a t
an ypoin t i n you r systemd o yo u handl e an ydye d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.8 1

DOCKE T NO . A-86-0 3 17 9 1 product s already , say , fo r instanc e aviatio n 2 gasoline ? 3 MS . HASKINS : N o —I' msorry . I' m 4 answering tha t questio n fo r myself . I can' t answe r 5 that . I d o kno wther e ar e dye d product s o n th e 6 marke t fro msome o f th e majo r oi l companies . I 7 reall ydon' t kno wspecific s o n that . I kno wther e 8 ar e suc hthings . I don' t handl e anything lik e that . 9 MR . GRAY : Thank yo u verymuch . 1 0 W e wil l loo k forward t o reading an d trying 1 1 t o bette r understand thi s comple xissue . 1 2 MS . HASKINS : I apologiz e fo r passing o n 1 3 that . 1 4 MR . GRAY : I understand th e reasons . 1 5 MS . HASKINS : W e wil l answe r and addres s 1 6 that . 1 7 MR . GRAY : W e hav e on e othe r organizatio n 1 8 that' s requeste d a n opportunit yt o appea r t o 1 9 testify , an d that' s th e Empir e Stat e Petroleu m 2 0 Association . I assume that' s Ne wYor k State . 2 1 2 2 MR . LYNCH : Goo d assumption . 2 3 M yname i s Rober t D . Lynch . 2 4 I' mExecutiv e Vic e Presiden t o f Empir e 2 5 Stat e Petroleu mAssociation , o r ESPA . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.8 2
DOCKE T NO . A-86-0 3 18 0 1 It' s a statewid e trad e associatio n 2 representing 45 0 independen t moto r fue l and heating 3 oi l distributor s i n Ne wYor k State . 4 Independen t marketer s ar e responsibl e fo r 5 th e storag e an d distributio n o f mor e tha n 5 0 percen t 6 o f th e moto r fue l an d 8 0 percen t o f th e heating 7 fuel s i n tha t state . Approximatel y7 5 percen t o f 8 ou r 45 0 member s ar e i n bot hmoto r fue l and th e 9 heating oi l businesses . 1 0 Heating oi l consumptio n i n Ne wYor k i s 5 0 1 1 percen t greate r tha n i n th e nex t larges t use r state . 1 2 Almos t al l ESPAmember s ar e classifie d a s 1 3 smal l businesse s according t o th e Federa l Smal l 1 4 Busines s Administratio n criteria . Mos t o f ou r 1 5 member s marke t diese l fue l fo r bot hon-highwayan d 1 6 off-highwayuses . Veryfew , i f any , maintai n 1 7 segregate d storag e an d deliverysystem s fo r thes e 1 8 tw o products , whic hi n mos t respect s ar e identical . 1 9 Fo r thes e reason s independen t fue l 2 0 marketer s ar e veryconcerne d tha t the yi n thei r 2 1 representativ e organization s wer e no t consulte d ove r 2 2 th e three

- o r four-yea r perio d abou t th e 2 3 appropriatenes s o f EPA' s diese l qualit yproposa l 2 4 tha t woul d divid e th e traditiona l No . 2 distillat e 2 5 poo l i n two , requir e th e segregatio n o f off-highway
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.8 3

DOCKE T NO . A-86-0 3 18 1 1 us e b

ydyeing o f fue l a t th e refineryand imposing 2 complianc e monitoring an d penaltie s o n th e 3 distributo r secto r o f th e industry . 4 I n othe r words , nobod ycoul d fin

d u s unti l 5 i t came t o complianc e an d monitoring , and al l o f a 6 sudde n the yha d ou r name , date , seria l numbe r and 7 th e whol e bit . 8 Ou r member s woul d b e significantl yand 9 adversel yaffecte d b ythes e regulation s and believ e 1 0 tha t th e regulation s hav e bee n promulgate d withou t a 1 1 seriou s analysi s o f thei r effect s o n independen t 1 2 marketers . 1 3 EPAshoul d asses s thes e effect s an d 1 4 explor e alternative s wit hles s impac t o n marketers , 1 5 competitio n an d consumers . 1 6 No wfo r thos e o f yo u wh o ar e trying t o 1 7 followm e I' mgoing t o jum p forward a littl e bi t 1 8 becaus e some o f th e remark s I'v e mad e i n th e nex t 1 9 severa l page s ar e supportiv e o f th e remark s you'v e 2 0 jus t heard fro mPetroleu

mMarketer s Associatio n o f 2 1 America . 2 2 Bu t I woul d lik e t o ad d tha t th e propose d 2 3 regulatio n woul d plac e smalle r oi l marketer s a t 2 4 a competitiv e disadvantag e wit hmajo r refinery 2 5 companies . Some marketer s woul d b e force d t o
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 18 2

abando n th e on - o r off-highwaydiese l fue l business , an d a fewother s woul d leav e th e heating oi l business . Th e numbe r o f competitor s i n some area s coul d declin e significantly .

I n man yrura l area s including muc ho f upstat e Ne wYor k ther e ar e onl ya fewmarketer s tha t servic e larg e regions .

W e hav e on e i n particula r tha t w e hav e querie d befor e coming here . The yhav e 1 9 bul k plants . 1 7 o f themcanno t expand a t al l becaus e o f loca l environmenta l limitations .

S o thos e o f yo u wh o think tha t onc e yo u hav e manage d t o refin e a certai n produc t and someho w throughsome trickle-dow n effec t tha t it' s automaticall ygoing t o reac hth e marketplace , that' s no t so . That' s go t t o come down throughu s becaus e we'r e th e one s tha t ar e delivering al l o f tha t produc t there , an

d whe n theyhav e —

whe n w e hav e someon e wit h1 9 bul k plants , 1 7 o f whic hcan' t ad d storag e an

d EPA' s answe r is , well , that' s easy , yo u giv e u p on e o f th e othe r product s tha t you'r e selling —I think yo u use d th e termspecializatio n

—that' s a euphemism .

Tha t mean s ge t ou t o f th e business , an d

w e don' t think tha t yo u ca n d o that . W e don' t think

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 TP.8 5

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 18 3

yo u ca n d o i t certainl ywithou t a study .

I shoul d add righ t here , w e ar e no t oppose d t o improve d fue l quality . W e wan t it , too .

I n you r proposa l w e ar e treate d wit h benign neglect . W e ar e treate d a s a dumpin g ground . A s a sink . That' s unacceptable .

No wI'l l jum

p forward t o mentio n a coupl e thing s tha t ar e o f concer n t o u s tha t mayb e haven' t bee n mentione d yet .

EPAha s no t examine d whic hdomesti c an d foreign supplier s woul d produc e lo wsulfu r diese l fue l o r woul d continu e producing th e highe r sulfu r fue l fo r off-road use . Tha t jus t seem s t o be , well , they'l l d o that . They'l l mak e thei r choices .

No t s o simple . No t s o simpl e a t all , fo r th e reaso n tha t I mentione d before . W e hav e thos e markets . W e serve thos e markets . And i f w e canno t manag e th e systemtha t you'r e proposing i n isolation , the n you r whol e programisn' t goin g anywher e excep t i n majo r urba n area s wher e th e majo r oi l companie s reside . The yar e i n al l you r majo r urban areas . S o i f you' d lik e t o tak e tha t a s you r program , you'r e hom e free .

Bu t th e minut e yo u ge t ou t o f th e metropolita n area s the n yo u — that' s busines s tha t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 '•nP.8 6
DOCKE T NO . A-86-0 3 18 4 1 theydon' t wan t o r don' t nee d o r i s to o difficul t 2 fo r themt o manag e o r i s no t profitabl e enough . And 3 tha t i s wh yw e exis t an

d that' s wher e w e exist , 4 mostl ywher e theydon' t wan t th e business . 5 No wit' s bee n mentione d tha t EPAreviewe d 6 thre e pipeline s i n 1987 . It' s a shame w e didn' t 7 kno wabou t tha t unti l thre e week s ago , bu t yo u 8 reviewe d th e thre e pipeline s i n 198 7 an d implie d 9 ther e migh t b e some downstrea mdifficulties . 1 0 Bu t EPAdi d no t evaluat e th e capabilit yo f 1 1 latera l pipelines . Thos e ar e thos e littl e finger s 1 2 tha t come of f th e end s o f th e pipeline . Thes e 1 3 essentia l loca l arterie s hav e alread ybee n 1 4 confronte d wit hsubstantia l storag e an d shipping 1 5 limitation s a s a resul t o f EPA' s Rei d Vapo r Pressur e 1 6 rules . 1 7 Tha t shoul d b e know n t o EPA , an

d i t shoul d 1 8 no wb e obviou s tha t significan t specificatio n 1 9 change s ar e usefu l onl yi f th e product s ca n ge t t o 2 0 th e en

d users . And latera l pipelin e shipmen t 2 1 capabilit yt o smal l loca l terminals , inlan d 2 2 terminal s i s a keyquestio n ye t t o b e explored , le t 2 3 alon e answered . 2 4 Th e Ne wYor k Mercantil e Exchange , NYME X 2 5 some cal l it , provide s a petroleu mfuture s marke t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5J 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 ""' " DOCKE T NO . A-86-0 3 18 5 covering th e No . 2 distillat e fue l fo r th e purpos e
o f pric e discoveryan d ris k managemen t fo r traders , blenders , utilities , industria l user s an d shipping companies .

Fue l specification s ar e critica l i n maintaining th e integrit yo f th e future s prices . They'r e reflecting marke t valu e fo r a commodit yi n worldwid e trade .

ESPAbelieve s EPAmus t contac t NYME X befor e proceeding wit hthi s proposal .

I talke d t o them . The yhaven' t hear d a wor d fro

myou . EPAmus t examin e th e impac t o f it s segregate d fue l mandat e o n stat e emergenc yplanning .

Ne wYor k ha s a n extensiv e bu t fragil e networ k o f dee p wate r petroleu mterminals , pipelin e laterals , barg e transport , bul k plant s an d trucks . Mos t facilitie s ar e mature , an d environmenta l pressure s ar e leading t o consolidations .

Therefore , Ne wYork' s Stat e EnergyOffic e mus t b e advise d a s t o th e additiona l demand s tha t EPA' s two-poo l proposa l woul d requir e whic hmigh t disrup t in-plac e emergencypetroleu msuppl yplans . Th e Federa l Departmen t o f Energ yha s bee n pursuing program s t o conserv e fue l us e by
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 "•r cDOCKE T NO . A-86-0 3 18 6

1 increasing th e efficiencyo f heating equipment . 2 Importan t stride s hav e bee n mad e unde r th e 3 technica l guidanc e o f Brookhave n Nationa l 4 Laboratory , o r BNL a s it' s called . However , man y 5 equipmen t manufacturer s insis t tha t unles s sulfu r 6 an

d aromatic s i n distillat e ar e reduce d ther e canno t 7 b e furthe r progres s o n particulat e emission s o r an y 8 lessening i n S0 2 contribution s t o aci d rain . 9 Doe s tha t soun d familiar ? I t should , 1 0 becaus e that' s wha t yo u hav e i n you r Preambl e abou t 1 1 wher e th e truc k manufacturer s cam e from . 1 2 Bu t they'r e no t th e onl yone s tha t us e 1 3 distillat e fuel , an d i n fac t there' s mor e distillat e 1 4 fue l use d fo r othe r purpose s tha n ther e i s fo r that , 1 5 an

d theyhav e thes e emissio n problem s an d the yhav e 1 6 face d thes e barrier s no t being abl e t o procee d an y 1 7 furthe r becaus e o f sulfu r an d aromatics . 1 8 Wha t ha s EPAdon e t o loo k a t tha t 1 9 situatio n whic hals o require s seriou s attention ? 2 0 I n addition , EPA' s declaratio n tha t th e 2 1 existing distillat e poo l mayengende r advers e healt h 2 2 effect s raise s veryseriou s concern s fo r 1 3 millio n 2 3 spac e heating consumers , no t including th e million s 2 4 o f off-road diese l users . 2 5 Yo u sayth e stuf f coul d caus e cancer . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.8 9

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 18 7

It' s strongl yimplied . No t quite , but , yo u know , ' it' s anothe r goo d reaso n wh ythi s need s t o b e done . W e don' t disagree , bu t i f you'r e going t o sa ytha t th e distillat e poo l that' s lef t i s no t improved , i s going t o carrythes e advers e healt h effects , you'r e terribl ynegligen t i n you r responsibilitie s o f deciding , I' mplaying th e almighty , we'r e going t o sav e thi s par t o f th e produc t poo l an

d th e res t o f it , tha t wil l g o down th e tubes . I don' t think so . I don' t think that' s a goo d jo bo f evaluatio n o n you r part .

Therefore , it' s imperativ e tha t EP Acontac t heating equipmen t manufacturer s an d Brookhave n Nationa l Laboratoryprogra mdirector s abou t th e substantia l implication s o f EPA' s healt h determination s an

d possibl e aggravatio n du e t o EPA' s two-poo l scenario .

No wi t als o appear s t o u s there' s no t bee n a n adequat e analysi s o n th e rol e o f ker o i n EPA' s dua l distillat e poo l proposal . Verylo wsulfu r ker o i s alread

ysegregated , thoughi n relativel ysmal l volumes . Ker o ha s verywid e applicatio n a s a straigh t produc t us e an d als o a s a heating fue l an d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 "rP.9 0
DOCKE T NO . A-86-0 3 18 8 1 als o a s a moto r fuel , i t i s bot ha substitut e an d a 2 supplementa l fuel , an d exposur e t o complianc e 3 regulation s mus t b e clearl yunderstoo d and defined , 4 no t jus t lef t hanging ou t ther e i n never-neve r land . 5 EPAdi d no t evaluat e alternative s t o th e 6 .0 5 standard . EPAmus t examin e whethe r anothe r 7 standard i s appropriat e and cost-efficient . 8 Energ yan d Resourc e Consultants , on e o f 9 you r contractors , wa s commissione d t o conside r th e 1 0 effect s o f diese l fue l qualit yo n engin e emissions , 1 1 durabilit yan d performance . Thi s stud yexamine d th e 1 2 effect s o f .0 5 diese l fue l bu t state d tha t i t shoul d 1 3 b e clearl ynote d tha t n o optimizatio n studie s wer e 1 4 carrie d ou t i n choosing thi s particula r sulfu r leve l 1 5 an

d tha t suc hstudie s certainl yshoul d b e don e 1 6 befor e an ysuc hregulatio n i s promulgated . 1 7 EPAdoe s no t disclos e an ytechnica l o r 1 8 economi c basi s fo r th e .0 5 b yweigh t fue l standard . 1 9 However , EPAacknowledge s tha t smalle r amount s o f 2 0 sulfu r remova l can b e obtained , quote , very 2 1 inexpensively , clos e quote . 2 2 I t i s entirel ypossibl e tha t a n 2 3 intermediat e standard o f .1 5 o r .1 0 woul d provid e 2 4 muc hwide r availabilit yo f a technicall yacceptabl e 2 5 fuel . PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.9 1

DOCKE T NO . A-86-0 3 18 9 1 Thi s analysi s mus t b e complete d t o 2 determin e whethe r .0 5 i s appropriat e an d necessary . 3 EP Aha s no t probabl yconsidere d th e 4 effect s o f dyein g o f off-highwa yfuel . W e jus t 5 listene d t o a discussio n bac k an d fort habou t that . 6 Rather , EP Aclaim s tha t th e diese l fue l industr y 7 suggeste d tha t off-highwa ydiese l fue l b e dye d an d 8 th e Agenc yfoun d th e industr ysuggestio n t o b e a 9 practica l one . 1 0 Well , we'r e th e diese l fue l industry . Yo u 1 1 neve r contacte d us . W e didn' t giv e yo u tha t idea . 1 2 Yo u know , wh o gav e yo u tha t idea ? Somebod ywa y 1 3 upstrea mfro mus . Somebod ytha t thought , hey , 1 4 there' s a goo d idea , thro wtha t on e out . Probabl y 1 5 somebodytha t doesn' t kno wanythin g abou t marketin g 1 6 o r anythin g abou t distribution . 1 7 N o estimate s hav e bee n mad e abou t wha t th e 1 8 dy e wil l cost . Whateve r i t is , we'l l pa yit , a s 1 9 you'v e pointe d out . I t wil l b e passe d righ t alon g 2 0 through . 2 1 Ther e ar e logistica l difficultie s relatin g 2 2 t o th e poin t i n th e distributio n tea mtha t th e dy e 2 3 shoul d b e added . I'v e listene d her e toda ytha t th e 2 4 refiner yi s th e onl yplac e yo u ca n trus t i t wil l b e 2 5 al l th e way . That' s fine .
PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 ANNARBO R(313 ) 995-954 5P.9 2
DOCKE T NO . A-86-0 3 19 0 1 No wwha t d o yo u d o whe n th e fue l come s i n 2 th e Ne wYor k harbo r fro moverseas ? Doe s tha t mea n 3 it' s dye d an d brough t in ? W e can' t mov e ship s 4 around tha t way . 5 Hav e yo u peopl e eve r recognize d wha t 6 happen s i n th e wintertime i n th e pea k period s whe n 7 yo u si t ther e praying fo r a shi p o r anothe r 8 delivery ? And her e yo u ar e talking abou t mucking up 9 th e whol e thing wit hthes e ideas . 1 0 Wha t ar e w e going t o d o wit hregar d t o 1 1 tracing s o f thi s produc t i f w e wer e t o tr yt o clea n 1 2 ou t ou r truck s i n betwee n time ? 1 3 Yo u hav e t o understand thes e truck s don' t 1 4 jus t si t around . It' s no t economi c t o hav e truck s 1 5 sitting around . Yo u run th e wheel s of f them . 1 6 And i f they'r e no t compartmentalize d o r i f 1 7 —eve n i f yo u buil d manifold s int o them , wha t i t 1 8 cost s an d al l that , ho wmuc ho f thi s dy e i s lef t i n 1 9 th e line s tha t woul d mak e yo u subjec t t o compliance ? 2 0 Roadsid e checks . Ou r livelihoo d exist s on 2 1 quic k dispatch , n o loitering , no t hangin g around ; 2 2 certainl yno t hanging around whil e ou r truck s ar e 2 3 stoppe d t o hav e somebod ythis , tha t and th e othe r 2 4 thing t o fin d ou t whethe r yo u hav e a trac e o f this . 2 5 W e hav e t o examin e that , an d thi s i s lef t ove r fro m
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.9 3

DOCKE T NO . A-86-0 3 19 1 1 a prio r load o f a dye d product , an d no wI' mmoving 2 th e othe r produc t an dthere' s som e o f thi s i n it . 3 And everybod yca nsa yal l yo u want , oh , 4 we'r e no t going t o be tha t way , we'r e no t tha t way , 5 we'r e no t ogres , w e don' t d o thing s lik e that , yo u 6 know , trus t us . 7 Well , we'v e don e tha t o n RVP , we've don e 8 tha t o n leade d an d unleaded , and I've go t new s fo r 9 you , ther e i s on e bi g load o f harassmen t tha t goe s 1 0 o n ou t ther e wit hpeopl e trying t o mak e thei r quota s 1 1 an

d trying t o showtha t they'r e o n th e bal l and 1 2 doing a goo d job . 1 3 And s o we' d sugges t i f yo u wan t t o hav e 1 4 tha t monitoring an d tha t complianc e d o i t way 1 5 upstrea man d the n yo u hav e ou r tota l support . Bu t 1 6 whe n everybod yi n th e industryagree s tha t i t wil l 1 7 b e dow

n o n us , we'r e no t happywit hsom e o f th e 1 8 condition s tha t ar e pose d fo r us . 1 9 I hear d a ma n si t her e befor e and say , 2 0 well , $80,00 0 fo r a testing set-u p fo r sulfur , bu t 2 1 yo u can ge t a buy , ge t on e fo r 18,000 . 2 2 Whe n you'r e talking refinerie s o r majo r 2 3 oi l companie s o r majo r terminal s tha t maymak e some 2 4 sense , bu t it' s idiocywhe n you'r e talking abou t 2 5 a t th e distributio n level . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBO R(313 ) 995-954 5P.9 4
DOCKE T NO . A-86-0 3 19 2 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 W e sugges t EPAshoul d promulgat e a ne w

propose d segregatio n tha t take s int o accoun t al l th e effect s o n downstrea mmarkets . Fo r th e reason s discusse d abov e EPAshoul d issu e a modifie d proposa l tha t considers , th e effect s o f diese l qualit yregulation s o n al l parties , including downstrea mmarketer s and off-highway consumers .

Man yimportan t factor s hav e bee n ignore d
an d mus t b e addresse d befor e EPAimplement s diese l fue l qualit yregulations .

I f afte r EPAproperl yassesse s al l th e impact s an

d cost s o f diese l fue l qualit ystandard s an d find s tha t suc hstandard s ar e necessary , ESPA recommend s a singl e standard b e recommende d fo r al l No . 2 fuels .

I t i s ESPA' s vie wtha t th e combine d cost s associate d wit hregulating onl yon-road fue l coul d b e greate r tha n th e combine d cos t o f regulating al l No . 2 fuel .

I n addition , th e environmenta l benefi t o f
a singl e lowe r sulfu r standard coul d b e substantial , becaus e i t woul d b e acros s th e entir e distillat e us e horizon . ESPArecognize s thi s alternativ e coul d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5' 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 19 3

increas e th e cos t o f al l No . 2 distillate , bu t becaus e i t woul d reduc e th e problem s and cost s associate d wit hdua l storag e and deliverysystem s i t
mayno t increas e th e ultimat e pric e t o th e consumer .

Further , th e lowsulfu r standar d fo r heating oi l woul d reduc e maintenanc e fo r furnace s an d boiler s jus t a s th e proposa l say s tha t i t wil l d o fo r truc k manufacturer s o r fo r truc k users ; exac t
same situation .

Asingl e standard woul d als o maintai n competitio n withi n th e industrybecaus e marketer s withou t dua l fue l storag e an d deliverysystem s coul d continu e t o sel l bot hproducts .

And finally , thi s woul d alleviat e th e rea l
concern s w e hav e regarding th e possibl e suppl y disruption s o r eve n shortages .

And tha t complete s m ycomments , an

d I' d b e glad t o answe r an

yquestion s i f I could . MR . GRAY : Thank yo u fo r sharing you r view s wit hus . Ar e yo u a membe r o f th e PMAA ?

MR . LYNCH : W e ar e on e —ou r organizatio n o f 45 0 member s i s on e o f 4 0 organization s tha t ar e member s o f PMAA , 4 0 simila r organization s t o m y own . PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5 P.9 51

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 19 4 MR . GRAY : S o membershi p i n th e Petroleu m Marketer s Associatio n o f Americ a i s mad e up no t
o f individua l companie s a s muc ha s i t i s group s suc ha s yours ?

MR . LYNCH : Stat e an d regiona l organizations , correct , whicha s I sayw e ar e i n differen t states , fro mdifferen t region s and , therefore , hav e some o f the perspective s tha t I hear d yo u trea t earlier , wher e th e peopl e sa yi n th e south , i n th e west , well , w e don' t hav e an yheating oi l t o dum

p thi s stuff , wha t ar e w e going t o do ? Well , I' mfrom

th e northeast , an

d I fea r fo r wha t you'r e going t o do , becaus e we'v e go t lot s o f heating oil , an

d s o tha t coul d loo k lik e a very attractiv e plac e t o dum p product , an

d w e ar e no t looking , w e ar e no t looking t o sav e a penny , we'r e no t looking t o sav e money , w e ar e looking t o improve th e fue l an

d t o enjoyth e environmenta l benefit s tha t hav e bee n suggested .

And particularl ysinc e yo u hav e no w identifie d fo r th e worl d an d ou r competitio n i n th e natura l ga s busines s an d i n th e electri c busines s an d i n the sola r busines s tha t oil' s no t onl yba d becaus e oil' s bad anywayan d it' s oversea s s o it' s twic e a s bad , controlle d byOPE C s o thre e time s a s
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5 P.9 6DOCKET NO . A-86-0 3 .„, r . 19 5 1 bad , bu t no wth e dam n stuf f cause s cancer . 2 Who' s th e authority ? Ou r competitors ? 3 No . EPA . Thank s a bunch . 4 S o no wwe'r e going t o b e i n tha t lifeboa t 5 tha t yo u guy s ar e creating . We'r e goin g t o ge t 6 cleane d up , too . That' s a must . 7 MR . GRAY : Le t m e tryt o respond a littl e 8 bit , i f you' d like . 9 Firs t o f all , yo u know , th e carcinogeni c 1 0 characte r o f th e fue l i s i n th e combustio n products , 1 1 an

d th e combustio n product s ar e differen t betwee n 1 2 hom e heating furnaces , wher e it' s continuou s 1 3 combustion , an d th e heterogeneou s combustio n 1 4 characteristic s o f a diese l engine . 1 5 MR . LYNCH : Woul d yo u explai n tha t t o me ? 1 6 I'v

e bee n i n th e busines s 3 9 year s an d kno w 1 7 something abou t it . S o I' mdelighte d t o hea r tha t 1 8 thi s i s different . 1 9 MR . GRAY : Well , th e diese l combustio n 2 0 proces s require s a distillat e wit ha certai n cetan e 2 1 numbe r s o tha t i t wil l automaticall yignit e a t th e 2 2 temperature s associate d wit hth e compressio n rati o 2 3 o f a diese l engine , s o tha t wit ha highcompressio n 2 4 engin e th e temperatur e o f th e gas , incoming ai r 2 5 charg e i s heate d during compression , and the n whe n
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5P.9 8
DOCKET NO . A-86-0 3 js-p-- » J I Tjr. T .i r 19 6 1 th e fue l i s injecte d i f i t ha s a highenoughcetan e 2 value , whic hi s a measur e o f it s tendenc yt o 3 auto-ignite , combustio n wil l occu r i n a 4 nonhomogeneous , a heterogeneou s fashion . 5 I t doesn' t bur n wit ha flame acros s th e 6 chambe r lik e a gasolin e engin e does . I t burn s i n 7 isolate d location s a s eac ho f th e littl e droplet s 8 ca n auto-ignite . 9 S o th e potentia l fo r differen t combustio n 1 0 product s certainl yexist s whe n you'r e comparing a 1 1 diese l engin e combustio n proces s t o a hom e heating 1 2 furnace , whic hi s a continuou s combustio n proces s 1 3 whic hca n produc e mor e complet e combustion , i f yo u 1 4 will . 1 5 S o i n assessing th e toxi c natur e o f th e 1 6 emissio n product s on e ha s t o loo k a t th e combustio n 1 7 products , that' s th e firs t point , an d thi s 1 8 particula r rulemaking focuse s o n th e particulat e 1 9 levels , an d a s yo u mentione d acknowledge s th e 2 0 concer n abou t th e toxi c natur e o f th e diese l 2 1 particulate s whic hthi s rulemaking wil l hel p 2 2 facilitat e th e reductio n of . I t doesn' t reall y 2 3 addres s th e issu e o f th e carcinogeni c characte r o f 2 4 hom e heating oil . That' s on e point . 2 5 Th e second poin t i s tha t i n a sens e a s I
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTON(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5P.9 9

-• '"M "

1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 . —.. , .„.-,.„„ r „ . „,,.., . . . . r „ , ,.. r „, r T ,. . . . . ,,.. , ^ DOCKE T NO . A-86-0 3 19 7 understand you r associatio n an d eve n th e PMAA' s representation , i s i t principall yhom e heating oi l distillat e producers , tha t yo u don' t reall ysuppl y natura l ga s o r perhap s no t eve n LPG , whic hwoul d b e anothe r competitor ?

MR . LYNCH : Correct . Bot hways , bot hways . MR . GRAY : Bot har e correct ? MR . LYNCH : W e d o an d w e don't . I n rura l communitie s that' s markete d a s well .

MR . GRAY : Some o f you r member s migh t marke t LPG ?

MR . LYNCH : Correct . MR . GRAY : Bu t no t natura l gas ? MR . LYNCH : No t unles s yo u hav e a monopol y franchise . Theydon' t giv e thos e ou t to o readily .

MR . GRAY : Right , t o you r members . S o th e pric e a t whic hyo u receiv e you r produc t ha s a majo r effec t o n you r busines s an d th e competitio n wit hth e othe r form s o f heating fuel , electricity , natura l gas , fo r example , i n you r area , an d s o thi s concep t
o f dumping reall ymean s making availabl e t o you r marke t a lower-price d produc t t o i n effec t potentiall yallowyo u t o compet e wit hothe r product s tha t you'r e no wi n competitio n with .

I' mcuriou s a s t o wh yyo u don' t se e tha t

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 1 229-823 8 AN NARBOR(313 ) 995-954 5p. 1

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T HO . A-86-0 3 19 8

a s a n attractiv e feature .

MR . LYNCH : And I' mamaze d tha t yo u think tha t I spen t 50 0 buck s t o tak e thi s airplan e ou t here , spen

d a dayher e and tel l yo u we'v e go t t o hav e on e singl e fue l product , whe n dum ba s I am , I' m no t realizing tha t I coul d sav e a penny-and-a-hal f
o r tw o cent s a gallo n mayb e i f I jus t shu t up an d le t thi s al l happen .

Aren' t yo u impresse d wit hth e fac t tha t I' mno t impresse d wit hthat ?

MR . GRAY : Well , I' mconfused , I'l l admit . MR . LYNCH : Well , i f yo u refe r t o m e firs t th e name o f th e stud ywhic hI ca n rel yo n t o fen d of f ou r utilit ycompetition , ho wt o mak e d o wit h tha t four o r five page s o f healt heffect s o n us , bu t wha t stud

yi s i t yo u wer e referring t o tha t indicate s tha t th e healt heffect s o n diese l combustio n ar e differen t fro mtha t i n open-flame combustion ?

MR . GRAY : Well , fo r someon e that' s bee n working i n th e are a fo r quit e awhil e I don' t think tha t a specifi c stud yha s investigate d tha t becaus e o f the fundamenta l difference s i n th e combustio n characteristics .

MR . LYNCH : Right . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 rP. 2

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 : - , - j-• • • , . • - ryn, p . •• • DOCKE T NO . A-86-0 3 19 9 MR . GRAY : Bu t certainl yw e coul d provid e informatio n t o yo u o n th e studie s tha t hav e bee n don e o n specifi c combustio n product s o f diese l engine s an

d hel p yo u identif ythos e studie s tha t hav e looke d a t distillat e continuou s combustio n processes .

MR . LYNCH : W e woul d appreciat e that , becaus e tha t doe s no t —that' s no t ou r informatio n a t all . Ou r informatio n i s sulfu r in , sulfu r out .

I n th e northeas t w e ar e blame d byth e Canadian s fo r al l o f thei r dea d forest s becaus e o f aci d rain .

MR . GRAY : Bu t tha t is , agreeably , a differen t issue .

MR . LYNCH : I though t I mentioned , an d i f I didn't , I shoul d have , a n additiona l issue , correct , on e tha t ha s no t bee n examine d either , bu t
ou r contributions , ou r manufacturer s o f equipmen t hav e sai d tha t there' s n o waytha t the yca n furthe r reduc e th e contribution s t o aci d rain , S0 2 unles s sulfu r i s reduced , sulfu r i n an d sulfu r out . Nowwit hregard t o th e toxicity , I' mno t going t o argu e th e othe r sid e o f tha t equation , bu t i f EPAha s report s tha t suppor t you r statement s t o
m e earlier , I' d appreciat e seeing them . PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 } 229-823 8 AN NARBOR(313 ) 995-954 5 f iP. 3
DOCKE T NO . A-86-0 3 20 0 1 I woul d i n conclusio n sa ythi s onc e again , 2 t o repeat : W e wan t a bette r fuel , too . W e thin k 3 tha t a prope r investigatio n woul d hav e show n tha t a 4 singl e highe r qualit yfue l ha s mor e benefi t t o th e 5 environmen t an d les s impac t o n th e tota l industr y 6 an d tota l cost s tha n you r proposal , an d w e thin k 7 tha t tha t lac k o f investigatio n i n thi s are a need s 8 t o b e correcte d befor e a fina l rul e i s promulgated . 9 Than k you . 1 0 MR . GRAY : I gues s w e hav e n o furthe r 1 1 questions . 1 2 Than k yo u ver ymuc hagain . 1 3 Las t chance . Woul d anyon e els e lik e t o 1 4 mak e a statement ? 1 5 Yes , sir . 1 6 1 7 MR . SHEPHERD : There' s jus t tw o points , 1 8 an d they'r e rea l brie f becaus e I haven' t — 1 9 MR . ANDERSON : Identif yyoursel f fo r th e 2 0 record . 2 1 MR . SHEPHERD : Richar d Shepher d wit h 2 2 Buckey e Pipeline . 2 3 Th e firs t poin t i s cetan e index . AST M 2 4 specificall ystate s tha t th e D97 6 i s no t t o b e use d 25 a s a refere e metho d fo r th e cetan e number .
PATRICI AMURRA Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 ANNARBO R(313 ) 995-9545- 1

2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 DOCKE T NO . A-86-0 3 20 1 EP A o nthe other han

dha s initially proposedi t t o be no t onl y the refere e metho d fo r th e cetane numbe r bu t a s a metho dfo r insuring complianc e withthe aromati c cap .

I n th e pas t I'v

e not.foun

d—I' m

i n th e qualit ycontro l field , area . I have no t foun d a goo d correlatio n betweencetane inde xan daromati c content inal l diese l fuels , an dno t eve n a goo d correlatio n betwee n cetan e inde xand cetan e numbe r betwee n al l diese l fuels .

I woul d submi t prio r t o a fina l decisio n o n usin g th e cetan e inde xtha t som e additiona l inpu t i s probabl yrequired , th e leas t o f whic hi s mayb e a discussio n wit hASTMa s t o th e reason s wh yi t i s no t
a refere e metho d fo r cetan e number , and I think you'l l find , a s wa s pointe d ou t earlie r today , tha t

—an d th e gentlema n fro mCaliforni a tha t ha s tha t smal l refinery , he' s no t alone . Thi s occur s throughou t th e Unite d State s i n term s o f cetan e additive s an

d you r differen t paraffini c an d naphtheni c crud e slates .

Cetan e indexi s probabl y—o r shoul d no t b e use d a s a refere e method .

No . 2 , w e ge t int o th e claus e o f presumptiv e liabilit ythroughou t th e distributio n
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5 P. 4P. 5
DOCKE T NO . A-86-0 3 20 2 1 chain . I f EPAwoul d mandat e —and there' s bee n 2 some excellen t point s mad e regarding storag e and th e 3 handling requirement s downstream , bu t i f EPAwer e t o 4 mandat e th e dyeing o f off-highwaydiese l tha t almos t 5 eliminate s th e potentia l fo r contaminatio n o r 6 intentiona l blending downstream . 7 Th e presumptiv e liabilit ycome s directl y 8 fro

m th e volatilit yregulation s and i t i s vali d i n 9 tha t particula r regulation . Ther e ca n b e blending 1 0 o f gasoline s anywher e along th e distributio n chai n 1 1 and no t easil yrecognizabl e o r easil ydiscernibl e 1 2 visuall yunles s testing i s don e o n —wit hth e 1 3 propose d dyeing , an d o f off-highwaydiese l tha t i s 1 4 no t th e situation . 1 5 I f ther e i s dye d diese l i n you r systemyo u 1 6 assume i t t o b e off-highwayan d no t complying wit h 1 7 sulfur , an d i f i t i s foun

d t o b e contraryt o tha t 1 8 the n yo u automaticall yhav e a violatio n i f it' s no t 1 9 labeled . 2 0 Well , i f it' s labele d a s of f —a s 2 1 on-highwayan d it' s dye d the n yo u ha d bette r tes t i t 2 2 t o verif ytha t i n fac t i t doe s mee t th e sulfur . 2 3 I f i t i s dye d an d labele d off-highwaythe n 2 4 yo u don' t hav e a problem . It' s onl yi f it' s labele d 2 5 on-highwayan d it' s dye d yo u hav e a problemand tha t
PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 } 229-823 8 AN NARBO R(313 ) 995-954 5P. 6
DOCKE T NO . A-86-0 3 20 3 1 woul d instigat e some sor t o f testing . I f it' s clea r 2 diese l you'r e going t o initiall yassume tha t it' s i n 3 compliance . 4 I f EPAfind s tha t it' s not , sulfu r i s no t 5 th e same qualit yspe c — o r quality

proble m a s yo u 6 hav e wit hvolatility . Sulfu r indiese l i s goin g t o 7 b e th e same amoun t o f sulfur today , tomorrow , next 8 wee k or next month . Volatility i s not . 9 Yo u hav e a goo d accountabilit ytrail , 1 0 audi t accountabilit ytrai l throughal l —al l th e 1 1 pipeline s carryit , al l companies , al l th e marketer s 1 2 carryit , th e pipeline s carryi t an d refinerie s 1 3 carryit . 1 4 I f downstrea m i n some clea r diese l yo u 1 5 fin

d tha t it' s of f spe c tha t audi t trai l ca n b e 1 6 verifie d throughyou r retaine d samples . 1 7 That' s a muc hbette r proposa l tha n saying 1 8 fo r —forcing u s an d downstrea

mmarketer s t o g o 1 9 int o th e oversigh t program s tha t we'v e ha d t o 2 0 initiat e wit hth e gasoline . Th e situation s ar e 2 1 different . 2 2 Thos e ar e m ytw o points . 2 3 MR . GRAY : Thank you . 2 4 Anyon e else ? 2 5 Well , w e appreciat e you r patience , an d

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBO R(313 ) 995-954 5P. 7
DOCKE T NO . A-86-0 3 20 4 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 ther e ar e a fewrestaurant s i n th e area . I think I

kno wwher e mos t peopl e ar e going .

Pleas e b e reminde d tha t w e ar e expecting comment s withi n 3 0 days , and w e woul d appreciat e a s muc hattentio n toward s constructiv e suggestion s a s t o ho ww e migh t hopefull ymak e progres s i n alleviating some o f th e concern s we'v e hear d expresse d todaya s w e mov e towar d a fina l regulation .

Thank yo u agai n fo r coming and participating .
(Th e Proceeding s wer e conclude d a t 3:0 5 p.m. )

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 J 229-823 8 AN NARBO R(313 ) 995-954 5P. 8 DOCKE T NO . A-86-0 3 20 5 CERTIFICAT E

STAT E O F MICHIGA

N COUNTYO F LIVINGSTO N ) ) SS : )

I , SUSA NSECORD PERRISH , Certifie d Shorthand Reporter , a NotaryPublic , hereb ycertif ytha t I recorde d i n Proceeding s ha d i n th e above-entitle d matte r o n th e dat e hereinbefor e se t forth , an d tha t th e foregoing is/a-«fcrue , correc t an

d complet e transcrip t o f (sa)Ld Proceeding? *

SUSA NSECORD PERRISH , CSR-252 8

NotaryPublic , Wayn e County , Michiga n Mycommissio n expires : 5/22/9 0 Dated : Thi s 18t hdayo f October , 1989 .

PATRICI AMURRA

Y& ASSOCIATE S BRIGHTO N(313 ) 229-823 8 AN NARBOR(313 ) 995-954 5