Commonwealth of Massachusetts Executive Office of Energy &Environmental Affairs 

# Department of Environmental Protection One Winter Street Boston, MA 02108 " 617-292-5500 DEVAL L PATRICK RICHARD K . SULLIVANJR, Governor Secretary TIMOTHY P MURRAY KENNETH L . KIMMELL Lieutenant Governor Con-imiccioner



### Background Information and Technical Support Document for Proposed Amendments to 

### 310 CMR7.05

: Fuels All Districts And 310CMR7.00

: Definitions

Regulatory Authority: M .G.L. c . 111, Sections 142A through 142N February 17, 2012

This information is available in alternate format

. Call Michelle Waters-Ekanem, Diversity Director, at 617-292-6761 . TDD# 1-866-639-7622 or 1-617-674-6868 MassDEPWebsite: www .mass.gov/dep Printed on Recycled PaperTABLE OF CONTENTS

1. INTRODUCTION. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . .. .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. .. . . . . .. .3 II . BACKGROUND . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . .. . . . . . . .. . . . . . . . .. . . . . . .. . . . . . . .. . . . . . . . .. . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . .. . . . . .. .4 111. DESCRIPTIONOF PROPOSED REGULATIONS. . .. . . . . . .. .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. . . . . . . .. .g IV. IMPACTS. . . .. . . . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. . . . . .. .9 A . Economic Impacts . .. . . . . . . . .. . . . . . . . .. . . . . .. . . . . . . .. . . . . . . . .. . . . . .. .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . .. .. . . . . .. 9 B. AgriculturalImpacts. .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. . . . . . . .. . . . . . . . .. . . . . . .. . . .12 C . Impact on Massachusetts Municipalities . .. . . . . . .. .. . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . . . . . .. . . . . 12 D . Impacts on Other Programs - Air Toxics .. . . . . . .. .. . . . . .. . . . . . . .. . . . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . . . . . .. . . . . 12 E. Small Business Impact Statement . . . .. . . . . . . .. . . . . . . . .. . . . . . .. . . . . . .. . . . . . . . . . .. . . . . .. .. . . . . .. . . . . . . . .. . . . . .. . . . . 13

. .. . . . . . . .. . . . . . . .. . . . . . .. . . . . .. . . . . . V. PUBLIC PARTICIPATIONANDCOMMENT. . . . . .. .. . . . . .. . . . . . . .. . . . . . . 13 F. Stakeholder Input . . . . . . . .. . . . . . . .. . . . . . . . .. . . . . .. . . . . . . . .. . . . . . . .. . . . . . . .. . . . . .. .. . . . . . .. .. . . . . .. . . . . . . . .. . . . . . . .. . . . . .. . . 13 G . Massachusetts Environmental Policy Act . .. . . . . . . . .. . . . . . . .. . . . . .. .. . . . . . .. .. . . . . .. . . . . . . . .. . . . . . .. . . . . . .. . . 13

### I . INTRODUCTION

The Massachusetts Department of Environmental Protection (MassDEP) proposes to revise 310 CMR 7.05: Fuels All Districts and 310CMR7.00: Definitions to lower the amount of sulfur allowed in petroleum-based fuel oils combusted at stationary sources in order to reduce emissions ofsulfur dioxide (SOZ), which in turn contribute to increased formation of fine particulate matter (PM2,5) . These proposed revisions are part of Massachusetts' plan to reduce visibility-impairing pollutants that contribute to regional haze, as required by the federal Clean Air Act, and to protect public health fromthe adverse health effects of S02 and PMZ.5pollution. Section 169A of the Clean Air Act requires the U .S. Environmental Protection Agency (EPA) to address impaired visibility, also known as regional haze, in 156 national parks, forests and wilderness areas that have been federally designated as Class I areas. In 1999, EPA issued regulations known as the Regional Haze Rule, which requires states to develop State Implementation Plans to reduce haze-causing pollution to improve visibility in Class I areas.~ EPA established five regional planning organizations across the nation to coordinate regional haze efforts. Massachusetts is a member of one of these regional organizations, the Mid-Atlantic Northeast Visibility Union (MANE-VU), comprised of Mid-Atlantic and Northeast states, tribes, and federal agencies. In June 2007, the MANE-VUstates agreed to pursue several regional strategies to reduce SOZ emissions2, the main contributor to visibility impairment in the MANE-VUregion, including lowering the allowable sulfur content in distillate and residual fuel oils to specified levels. In accordance with this commitment, MassDEP included the low sulfur fuel oil strategy in its December 30, 2011 Regional Haze State Implementation Plan (SIP), available at mass. og v/dep/air/priorities/sip.htm#haze. In accordance with the Regional Haze SIP and ongoing efforts to reduce emissions of S02 and PM2 .5 in order to protect public health, MassDEPproposes to amend 310 CMR 7.05to lower sulfur content limits for stationary sources to 0 .05 percent (500parts per million or ppm) sulfur by weight for distillate oil and 1 percent (10,000 ppm) sulfur by weight for residual oils beginning July l, 2014,3 and to further lower the levels to 0 .0015 percent (15 ppm) sulfur by weight for distillate oil and 0 .5 percent (5,000 ppm) sulfur by weight for residual oils beginning July 1, 2018.

' See 40 CFR51 .300-309 Z See Statement on Controls in MANE-VUat otcair .ora/manevu/document .asp?fview=Formal%20Actions# 3 Power plants would be subject to a lower 0 .5 percent sulfur by weight for residual oils beginningJuly 1, 2014.

3

### II . BACKGROUND

Fuel Oil Combustion and Emissions The combustion ofpetroleum-based fuel oils emits various pollutants, including SO2, particulate matter (PM), nitrogen oxides (NO,), metals, carbon dioxide (C02) and other pollutants. Collectively, these pollutants have direct health impacts and contribute to the formation of regional haze, ozone and fine particulate matter, acid deposition and nitrification ofwater bodies, and the build-up of greenhouse gasses in the atmosphere. The most common petroleum-based fuel oils combusted by stationary sources are distillate (Numbers I and 2) and residual oils (Numbers 4, 5 and 6) . Sources that burn fuel oil include power plants that produce electricity, commercial and industrial businesses, institutions, and residential homes. Distillate fuel oils usually contain less than 3,000parts per million (ppm) or 0 .3 percent sulfur by weight before desulfurization, and are used mainly in domestic and commercial applications for heating and hot water. Residual fuel oils contain up to 25,000 ppm (2.5 percent by weight) sulfur and are used mainly in power plant, industrial, and large commercial applications. The MANE-VUregion, especially the Northeast and uppermid-Atlantic, is heavily reliant on distillate oil for heating and hot water in the residential and commercial sectors. Distillate oil also is used in the industrial and electric power sectors. According to Energy Information Administration estimates, over 5 billion gallons of distillate oil was used in the region in 2009. Massachusetts wasthe second largest user ofdistillate oil in the region after New York, using an estimated 723 million gallons in 2009. The heavier residual oils are used by power plants and in the industrial and commercial sectors, although use of residual oils has been dropping significantly due in part to the lower price of natural gas. In these sectors Massachusetts used 105 million gallons in 2009, down from205 million gallons in 2008. SOZ emissions are generated during the combustion of fuel oil fromthe oxidation ofsulfur contained in the oil . The amount of uncontrolled SOZ emissions is almost entirely dependent on the sulfur content of the fuel . On average, more than 95% of the sulfur in fuel oil is converted to SO2. S02 is the primary pollutant emitted in the MANE-VU region that causes regional haze. Reducing sulfur in fuel oil is one of the largest steps MassDEPcan take to reduce SOZ emissions in the Commonwealth. In 2008,4 stationary sources burning distillate and residual fuel oils emitted an estimated 45,000 tons of S02, which represents 46% of all SOZ emissions in the state. The proposed regulation, when fully implemented, would reduce those S02 emissions to approximately 5,000tons per year, assuming the same amount of fuel oil burned.s Distillate oil

4 2008 is the most recent year for which MassDEPhas compiled acomprehensive air emissions inventory. 5 MassDEPexpects that there will be even further reductions in SOZ emissions since there has been an overall decline in theamount of fuel oil burned in recent years as sources have switched to lower sulfur or less expensive fuels, such as natural gas, particularly for electricity generation. 4alone contributed nearly 30,000 tons of SOZ emissions in 2008; the proposed regulations would

reduce this amount to less than 1,000tons in 2018. Regional Haze The proposed regulations are a key component of the Massachusetts plan for reducing regional haze. Regional haze is pollution that impairs visibility over a large geographic region, and affects many of the nation's national parks, forests, and wilderness areas. The primary cause of regional haze is the scattering and absorption of light by fine particles. Fine particle air pollution (i .e., PMz,s) also adversely impacts human health, especially the respiratory and cardiovascular systems of people at increased risk, including children, the elderly, and people with heart or respiratory conditions. Reducing fine particles in the atmosphere is an effective method of improving visibility and protecting public health. The fine particles that cause haze may either be emitted directly or formed fromemissions of precursors. Sulfate, which is formed fromS02emissions, is the dominant contributor to fine particle pollution and the principle cause ofvisibility impairment across the MANE-VU region. Sulfate typically accounts for over 70percent of estimated particle-induced light extinction at MANE-VU Class'l sites.6 In the eastern U

.S., the average visual range has decreased from 106miles (under natural conditions) to 24 - 44 miles today. Examples of impaired visibility in Massachusetts, including the Boston skyline, can be seen at: http://www .mass. og v/dep/air/aq/acLhaze.htm . Section 169A of the Clean Air Act and EPA's Regional Haze Rule (40 CFR51 Subpart P) require states to make reasonable progress towards the restoration and maintenance of natural visibility in Class I areas (national parks and wilderness areas) in 10-year increments, reaching the goal by 2064. Although Massachusetts has no Class I areas, emissions fromMassachusetts sources contribute to visibility degradation in Class I areas in several other states . These include Lye Brook Wilderness Area (Vermont), Great GulfWilderness Area (New Hampshire), Presidential Range-Dry River Wilderness Area (New Hampshire), Acadia National Park (Maine), Moosehorn Wildlife Refuge (Maine), and Roosevelt Campobello International Park (Maine/Canada) .7 All states are required to submit a Regional Haze State Implementation Plan (SIP) to EPA that demonstrates progress towards the restoration and maintenance of natural visibility in Class I areas. The MANE-VUstates committed to propose several regional strategies to reduce haze at MANE-VU Class I areas in their SIPs, including implementation of a low sulfur fuel strategy. MassDEP included the low sulfur fuel oil strategy in its Regional Haze SIPand now proposes to adopt these regulations to implement that strategy. While the MANE-VU low sulfur fuel strategy calls for the sulfur content of residual oil to be lowered to 0

.5% in 2018, in order to obtain emissions reductions "as expeditiously as practicable," as required by the CAAto meet other regional haze requirements, the proposed regulations require powerplants to burn 0 .5% residual oil by July 1, 2014. This should not be 6 Contributions to Regional Haze in the Northeast and Mid-Atlantic United States. NESCAUM, 2006. ' Ibid.difficult to comply with since 0 .5% residual oil is readily available and is being used by many facilities and some power plants in Massachusetts. In addition, other states, such as Connecticut, currently require that residual oil contain no more than 0 .3% sulfur, further demonstrating the feasibility of requiring 0 .5%for power plants in Massachusetts in 2014. National Ambient Air Quality Standards The proposed regulations will help ensure that Massachusetts maintains compliance with the National Ambient Air Quality Standards set by EPA, in particular the new standard for SOZ established in 2010and the forthcoming standards for PM2 .5expected in 2013. Pursuant to the Clean Air Act, EPAperiodically updates health-based National Ambient Air Quality Standards (NAAQS) for six criteria pollutants: ozone; nitrogen dioxide; particulate matter ; carbon monoxide; sulfur dioxide; and lead. These pollutants harmhuman health and the environment and cause property damage. EPAestablishes primary standards to protect human health and secondary standards to protectpublic welfare, including protection against decreased visibility, damage to animals, crops, vegetation, and buildings. In 2010, EPArevised the primary standard for SOZ by establishing a new 1-hour standard at a level of 75 parts per billion (ppb) . EPA left in place the secondary standard, which is a 3-hour average at a level of 500ppb. In June 2011, Massachusetts recommended to EPA that Massachusetts be designated as "unclassified" for the new S02 standard since Massachusetts does not yet have all the information needed to recommend either attainment or nonattainment (which will require modeling of SOZ emissions fromlarge sources) . Reducing the sulfur content in fuel oil will reduce SOZ emissions, helping to ensure Massachusetts meets the new SOZ 1-hour standard. The current prima7 and secondary standards for PM2 .5 are an annual standard of 15 micrograms per cubic meter (pg/m), and a 24-hour standard of 35 pg/m3. EPA is in the process of updating these standards and is considering proposing lower PM2 .5standards. Massachusetts currently meets the existing PM2

.5 standards, but experiences one or twodays eachyear that exceed the 24-hour standard. Therefore, to protect public health andto avoid a nonattainment designation under any new lower standards, it is important for Massachusetts to reduce PM2 .5pollution. The proposed regulations would contribute to the lowering of PM2 .5 concentrations, since SOZ emissions are a key contributor to PM2,5pollution. State Actions to Implement Regional Low Sulfur Fuel Oil Strategy MassDEP's proposed regulations are part of a regional strategy to lower the sulfur content of fuel oils. The MANE-VUstates recognized early on that the only effective way to achieve the benefits of lower sulfur oil was for the states to act together in a coordinated fashion. In addition, the petroleumindustry has advocated that states should have regionally consistent requirements with sufficient lead time in order to avoid heating oil market disruptions. Several MANE-VU states already have promulgated regulations or enacted legislation to lower the sulfur content of fuel oil in accordance with the 2007 MANE-VU commitment. Below is a summary of final andproposed state actions.In April 2010, Maine enacted legislation that requires the sulfur content ofNo. 2heating oil to meet 50 ppm

by January 1, 2014 and 15 ppm by January 1, 2018, and requires the sulfur content of residual oil to meet 0.5%by January 1, 2018.8 In May 2010, Connecticut enacted legislation that requires the sulfur content ofNo. 2 distillate to meet 50 ppm by July 1, 2011 and 15 ppm by July 1, 2014; however, Connecticut's law

will not take effect until New York, Rhode Island and Massachusetts have similar requirements in place.9 Connecticut already limits the sulfur content of residual oil statewide to 0 .3% . In July 2010, New

York enacted legislation that requires the sulfur content ofNo. 2 home heating oil to meet 15 ppm by July 1, 2012.'° New York is developing regulations to lower the sulfur content of residual oil statewide. In addition, New York City enacted Local Law

43 to lower the sulfur content of No. 4residual oil to 1,500ppm, and in April 2011 enacted legislation phasing out No. 6 residual oil by 2015 and eventually requiring all boilers to burn fuels that meet the, equivalent emissions of burning 15 ppm No. 2 oil or natural gas.I 1 In September 2010, New Jersey promulgated regulationslZthat require the sulfur content ofNo. 2 distillate (and lighter grades) to meet 500ppm by July 1, 2014 and 15 ppm by July 1, 2016. The regulations also require the sulfur contentofNo. 4 residual oil to meet 0 .25%and No. 6 residual oil to meet 0.5%(or lower) by July 1, 2014. In April 2011, New Jersey proposed to allow refiners ofdistillate oil an extension of the July 1, 2014 deadline for up to one year to meet the sulfur in fuel limit of 500 parts per million (ppm) in a limited circumstance - where a refinery has a repair and maintenance shut-down (referred to as a "turn-around") scheduled within one year after July 1, 2014.13 The proposal does not affect the July 1, 2016deadline for producing 15 ppm distillate oil for New Jersey. In September 2010, Pennsylvania proposed regulations14 that would require No. 2home heating oil to meet 15 ppm by May 1, 2012. The proposed regulations also would require No. 4 heating oil to meet 0.25%and No. 6 residual oil to meet 0.5%by May 1, 2012. In October 2011, Vermont promulgated regulations15 that require the sulfur content of No. 2 distillate (and lighter grades) to meet 0 .05%by weight (500 ppm) by July 1, 2014 and 0 .0015%by weight (15 ppm) by July 1, 2018, and require the sulfur content of No. 4 residual oil to meet 0

.25%by weight and No. 5 and 6 residual oils (and heavier oils) to meet 0 .5%by weight by July 1, 2018 . $ http://www

.mainelegislature.or .~/leeis/statutes/38/title38sec603-A .html 9 http ://wwwheatingoil com/blog/ct-governor-siens-low-sulfur-and-biodiesel-heating-oil-mandates-into-law-0614/ '° http ://wwwheatingoil com/blog/gov-paterson-signs-ny-low-sulfur-heating-oil-mandate-into-law-0721/ " http ://wwwnvtimes com/2011/04/22/nvregion/new- o-city-bans-dirtiest-heatinp,-oils-atbuildin s.ghtml? r=1&scp=1&sq=Citv%201ssues%20Rule%20to%20Ban%20Dirtiest%200ils%20at%20Buildings& st=cse '2 www .n' .t gov/dep/aqm/ 1997ado .p htrnl '3 http://www

.nj,gov/dep/rules/notices/04041 lb.html '4 http://www

.pabulletin.com/secure/data/vo140/40-39/1834.html 'S httv://www

.anr .state.vt .us/air/htm/Pror)osedAmendments .htm#sulfurlimitThe remaining MANE-VU states (District of Columbia, Delaware, Maryland, Rhode Island, and

New Hampshire) are in various stages of developing proposals to implement the low sulfur oil strategy. These state actions have begun to change the distillate fuel oil market, and eventually will lead it toward a single 15 ppm product for heating oil and vehicle diesel fuel . This market shift will improve distribution efficiencies since terminals, pipelines, and trucks will no longer have to carry separate distillate fuels. For example, Buckeye Pipeline has announced that itwill phaseout high sulfur No. 2 heating oil deliveries on its systemto comply with the new requirements.16 To implement the change, Buckeye will ship a single ultra-low sulfur fuel that can be used for heating or transportation. In addition, the Northeast Home Heating Oil Reserve sold its existing stock of higher sulfur home heating oil and replaced it with cleaner burning ultra-low sulfur (e.g., 15 ppm) distillate home heating oil to meet the new state requirements.17 

### III . DESCRIPTIONOF PROPOSED REGULATIONS The proposed revisions to 310 CMR7.05 establish lower sulfur limits for distillate and residual oil in two phases, the first with a July 1, 2014 start date, and a second requirement beginning July 1, 2018, as shown in Table l . These limits apply to all source sectors, including power plants, industrial, commercial, and institutional boilers, and residences. The proposed regulations allow

any existing on-site stocks of higher sulfur fuel oil to be burned past the applicable compliance dates. The sulfur content limits for coal in 310 CMR7.05 would not be changed, but would be clearly distinguished fromthe fuel oil limits. The proposed regulations eliminate existing exceptions that allow facilities to obtain approval fromMassDEPto burn higher sulfur residual oil . Any existing approval that MassDEP has issued allowing a facility to burn higher sulfur fuel oil would remain in effect until July 1, 2014; beginning July 1, 2014, the facility would need to comply with the lower sulfur limits. However, the proposed regulations retain the ability for a facility to burn higher sulfur fuel oil under a MassDEPapproval if the resultant emissions would be no greater than the emissions that would result fromburning the lower sulfur fuel . The proposed revisions eliminate the requirement for distributors offuel oils to register with MassDEPand eliminate the requirement for suppliers offuel oil and coal to annually submit to MassDEPlists of customers that use certain amounts of oil, coal, and natural gas. MassDEP believes that these requirements are unnecessary due to the availability offossil fuel market data and because MassDEPtracks similar information through its Air Source Registration reporting program . The proposed revisions also correct grammatical and typographical errors, including in the 310 CMR7.00 definition of "Sulfur in Fuel ."

'6 http ://oilspot2.dtnenergy.com/e artic1e002018966.cfm?x=b1 1,Qw " http;//www

.fossil .energy.Qov/programs/reserves/heatingoil/ 8Table 1 : Proposed Low Sulfur Oil Limits Fuel Oil Date % Sulfur in Fuel % Reduction in SOZ Emissions from current Max

. limits Distillate current limit 0 .3% 3,000 m Jul 1, 2014 0 .05%(500 m 83% Jul 1, 2018 0 .0015% 15 m 99.5% Residual current limit 0 .5% - 2.2% depending on area Jul 1, 2014 1% ; 0 .5%at power p

lants 55%-77% July 1, 2018 0 .5% 77% The fuel sulfur limits in 310 CMR7.05 are regulated by Air Pollution Control District (APCD) . The proposed sulfur limits for fuel oils shown in Table 1 would apply statewide in all APCDs with one exception. The Berkshire APCDhas a 1974 legislative exemption allowing sources in this district to burn up to 2.2%sulfur residual oil .1$ Therefore, the proposed revisions do not require lower sulfur residual oil in the Berkshire APCDdue to the existing law . Legislative action would be needed in order for MassDEPto apply the lower sulfur residual oil limits for this district. Despite this legislative exemption, MassDEPexpects that the majority of residual oil burned in the Berkshire APCDwill have a reduced sulfur content because the suppliers in Massachusetts, and in the surrounding states, will need to supply lower sulfur residual oil for sale in other APCDs and states. 

### IV. IMPACTS

A . Economic Impacts MassDEP believes that the proposed revisions to 310 CMR7.05 are cost-effective and will not result in economic hardship to residential consumers who use distillate heating oil to heat their homes or to businesses and power plants that use distillate or residual fuel oil . Domestic oil refiners have made the capital investments required to produce lower sulfur distillate fuels to comply with EPA's national ultra-low sulfur transportation diesel fuel requirements. As a result of state actions to implement the MANE-VU low sulfur fuel strategy, refiners are making further upgrades to produce ultra-lowsulfur home heating oil . Thus, the market is shifting to the lower sulfur levels MassDEP is proposing to adopt. Furthermore, the use of lower sulfur distillate fuels can provide an economic benefit to consumers in the formof reduced maintenance costs and increased heating efficiency. For residual oil, sufficient supplies of lower sulfur oils (e.g., 0 .5% sulfur content) are readily available and already are being used by many Massachusetts facilities. Even lower sulfur content residual oil (i .e., 0 .3%) already is required in Connecticut and areas in other states. Anumber of reports (see below) analyzed the potential costs of the MANE-VU low sulfur fuel strategy. While the costs ofthe low sulfur oil strategy will vary depending on market conditions, they are reasonable when compared to the costs of controlling other sources of S02- " Chapter 353 ofthe Acts of 1974.Importantly, a January 2008 Public Health Benefits study prepared by NESCAUM19shows that

the low sulfur fuel strategy will result in billions of dollars in public health benefits for the region. Controlling the fuel-sulfur content ofdistillate oil to 500,ppmleads to health benefits of almost $3.4 billion in MANE-VUand controlling the fuel-sulfur content to 15 ppm could lead to an additional $431 million in benefits, bringing the total benefits to $3.7 billion, which corresponds to more than $20,000of benefit per ton of SOz removed based on expected SOZ emissions reductions. No. 2 Distillate Fuel Oil No. 2 distillate heating oil and highway diesel fuel oil are essentially the same refinery-produced liquid. In Massachusetts, heating/hot water in homes and businesses accounts for about 63%of distillate fuel oil consumption. In comparison, transportation diesel accounts for about 36% .2° Beginning in 2006, the permissible level of sulfur in highway diesel fuel (ultra-lowsulfur diesel, or ULSD) was lowered to 15 ppm . Priorto that, highway low sulfur diesel fuel was refined to contain 500ppm

sulfur (low

sulfur diesel) . Consequently, refineries have already made the capital investments required for the production of low sulfur diesel and ULSDfuel oil . Based on U .S. Energy Information Administration (EIA) data for the week of March 18, 2011 domestic production of ULSDfuel oil accounted for about 85% ofall distillate oil in the United States. Due to these refinery investments, requiring additional use of low sulfur fuel in the heating oil sector should result in minimal impact on the price and availability of lower sulfur distillate heating oil, especially given the lead times in the proposed revisions (2014 and 2018) for achieving the required levels. In December 2005, the Northeast States for Coordinated Air Use Management (NESCAUM) published a report entitled "Low Sulfur Heating Oil in the Northeast States : An Overview of Benefits, Costs, and Implementation Issues," which noted that the incremental cost of low sulfur (500 ppm) highway diesel fuel historically had averaged about 1 .5 cents per gallon more than the cost of heating oil . However, the report went on to state that any increased cost in producing low sulfur home heating oil would be more than offset by the avoided maintenance costs resulting fromthe reduced rate of equipment fouling when using low sulfur oi1 .21 In July 2007, MANE-VU published a report entitled "Assessment of Reasonable Progress for Regional Haze in MANE-VU Class I Areas: Methodology for Source Selection, Evaluation of Control Options and Four Factor Analysis," which estimated that on average low sulfur distillate oil would be expected to cost 0.8 cents per gallon more than regular heating oi1 .z2 AMarch 2008 study by Hart Energy Consulting for the National Oilheat Research Alliance estimated that the cost ofproducing 15 ppm heating oil could be as high as 8 .9 cents per gallon more than regular heating oil, but could be less than 5 cents per gallon for refineries that have existing desulfurization facilities that could be revamped to produce 15 ppm product.23 Note that " Public Health Benefits of Reducing Ground-level Ozone and Fine Particle Matter in the Northeast U .S., A Benefits Mapping and Analysis Program(BenMAP) Study. NESCAUM, January 15, 2008 2° U .S. Energy Information Administration, 2009. 21 Low Sulfur HeatingOil in the Northeast States: An OverviewofBenefits, Costs, and Implementation Issues. NESCAUM, December 2005. 22 Assessment of Reasonable Progress for Regional Haze in MANE-VUClass I Areas. MACTEC, July 2007. 23 Northeast Heating Oil Assessment, Hart Energy Consulting, March 2008. 10these are estimated costs to refiners and do not necessary translate to prices ultimately paid by

consumers, which are influenced by factors in addition to the cost of reducing the sulfur content in crude oil . An April 2010study prepared for the National Oilheat Research Alliance24 evaluated the potential for suppliers to bring 15 ppm sulfur content heating oil into widespread use in the Northeast by 2018. While the study acknowledges that additional refining capacity is needed to meet the increased demand in 2018 and beyond, it concludes that, given appropriate advance notice, the refining industry can supply the necessary fuels with minimal market disruptions and price impacts. In the short-term, excess production capacity of ULSDexists in the region and could be shifted to the home heating market . In the longer term, the transition to ULSDin the transportation sector, combined with clear signals fromregulatory agencies that similar requirements will be widespread for heating oil in the coming years, will support a move toward greater availability of 15 ppm sulfur content heating oil . The study projects a volume-weighted average wintertime wholesale price differential between ULSD and higher sulfur heating oil of 1-3 cents per gallon, suggesting that the incremental cost of providing 15 ppmsulfur content heating oil will not be significant compared to normal price fluctuations. The study also notes that the incremental cost to consumers will be more than offset by cost savings associated with lower maintenance costs and higher fuel efficiency. For example, a typical consumer who uses 800 gallons of fuel per year would spend an additional $24 per year if per-gallon fuel costs increased by $0.03. However, the same consumer could expect to save approximately $50 per year in avoided maintenance costs (cleaner fuel reduces the frequency with which equipment must be serviced) and another $48 in avoided fuel costs from higher efficiency. This is because existing equipment ~enerally operates more efficiently with lower sulfur fuels (by 1-2%per year between services2 ), so less fuel is required to produce the same amount of heat . In addition, lower sulfur fuel oils will enable the use of more efficient, condensing heating equipment . The current cost of condensing heating units is expensive due to the need for stainless steel parts for protection from sulfuric acid, which forms fromthe sulfur in fuel oil . Ifthe sulfur in fuel is reduced, then manufacturers will be able to use less expensive steel . This will in turn reduce the costs of these very efficient appliances. More efficient and less costly furnaces/boilers could encourage more residential users to replace inefficient, older units . Residual Fuel Oil The sulfur content of residual fuel oils burned by power plants and other large sources also can be cost-effectively reduced. Residual oil is a byproduct ofthe refining process, and is produced in several grades that can be blended to meet a specified fuel sulfur content limit. In April 2011, MANE-VUpublished an Addendum 26 to its 2007 "Assessment of Reasonable Progress" Report that evaluated residual oil . The report averaged monthly price averages to compute annual prices and price differentials in cents per gallon for the years 2006 - 2009. Forthese years in the Northeast, lower sulfur No. 6residual oil (< 1%) ranged from8.9 to 12.9 cents per gallon more Z° Ultra-lowSulfur Diesel Fuel/Heating Oil Market Study, Kevin J. Lindemer, LLC, prepared for the National Oilheat Research Alliance, April 2010 ( http://www .nora-oilheat .or site20/uploads/Iowsstudv .pdfJ. 25 Low Sulfur Home Heating Oil Demonstration Project Summary Report, Energy Research Center, Inc ., and Brookhaven National Laboratories, BNL-74956-2005-IR, June 2005. 26 http://otcair.org/manevu/Document.asp?fview=Reports# 11than higher sulfur No. 6 residual oil (> I%) . The additional expense would be at least partially

offset by reduced maintenance costs with the use of lower sulfur oil . Low sulfur oil is cleaner burning and emits less particulate matter than higher sulfur oil ; this reduces the rate offouling of heating units substantially and permits longer time intervals between cleanings. The decreased deposits also would enable a more efficient transfer of heat, thereby reducing fuel use. Thus, there are potential costs savings for switching to lower sulfur residual oil . Reducing the sulfur content of residual fuel is a cost-effective SOZ reduction strategy; a simple calculation using a price differential of $0.089 - $0.129 suggests that a 78% reduction in SOZ emissions (by converting from2.2 percent to 0 .5 percent sulfur residual oil) is achievable at an approximate cost of $800 - $1,100 perton of SOZ removed. This cost per ton removal compares favorably to the costs of other pollution controls typically required by environmental agencies and is well within the range considered to be cost-effective. 

### B . Agricultural Impacts Pursuant to Massachusetts General Law, Chapter 30A, Section 18, state agencies must evaluate the impact of proposed programs on agriculture within the Commonwealth. The proposed revisions will require that all distillate and residual oil burned in Massachusetts, including by agricultural users, meet lower sulfur content limits. Therefore, agricultural users offuel oil may incur a slight increase in the cost of fuel ; however, these costs would be offset by reduced boiler maintenance costs and increased boiler efficiency as described under Economic Impacts. Due to reduced SOZ emissions that will result fromthe proposed amendments, agricultural crop production in Massachusetts could improve due to less acid deposition, which is partly caused by S02emissions. 

### C . Impact on Massachusetts Municipalities The proposed revisions will require that all distillate and residual oil burned in Massachusetts, including by municipalities, meet lower sulfur content limits. Therefore, municipalities may incura slight increase in the cost offuel ; however, these costs would be offset by reduced boiler maintenance costs and increased boiler efficiency as described under Economic Impacts. In addition, some Massachusetts municipalities operate electric generating units (EGUs) that burn fuel oil and thus may incur some additional fuel costs. However, ownership and operation of a power plant, which some municipalities voluntarily undertake, is not a mandated municipal service. Therefore, costs associated with operation of a power plant would not be considered mandated costs subject to the restrictions of Proposition 2 %z (Town of Norfolk v . Department of Environmental Quality Engineering, 407 Mass 233 (1990)) . 

### D . Impacts on Other Programs - Air Toxics Airtoxics are a group of chemical air contaminants that are associated with significant environmental impacts or adverse health effects such as cancer, reproductive effects and birth defects. The federal Clean Air Act requires EPAto promulgate source-specific controls based on Maximum

Achievable Control Technologies (MACT) to address air toxics. MassDEP implements major source MACT standards as EPApromulgates them . In addition, MassDEPcontrols air toxics through other air quality programs and reduces the use of toxics through its Toxics Use Reduction 12Program . The proposed amendments will decrease air toxics emissions by requiring cleaner fuel oil to be burned and by increasing the efficiency of combustion equipment. 

### E. Small Business Impact Statement Small businesses that purchase distillate oil for heating are likely to experience slightly higher pergallon prices for oil as a result ofthis regulation. However, as discussed above in Section IV.A Economic Impacts, these costs would be offset by reduced boiler maintenance costs and increased boiler efficiency. In addition, some compliance costs to small fuel distributors and suppliers may be reduced due to the elimination of requirements for registration and filing of customer lists. 

### V . PUBLIC PARTICIPATIONANDCOMMENT F . Stakeholder Input Between 2004 and 2010, MassDEPparticipated in several stakeholder meetings coordinated by NESCAUM

and MANE-VU to solicit input on how to effectively implement a regional low sulfur heating oil strategy. Attendees included representatives ofstate environmental agencies, representatives fromthe heating oil industry (including retail distributors, wholesalers and refiners), environmental groups, EPA, NESCAUM, MANE-VUand the Ozone Transport Commission. In addition, the proposed low sulfur fuel strategy and commitment to propose these amendments were included in MassDEP's January 2011 draft Regional Haze SIP, which went through notice and public hearing. MassDEPreceived comments on its draft Regional Haze SIP fromthe Massachusetts Oilheat Association that were very supportive and fromthe Massachusetts PetroleumCouncil, which had one minor technical comment, and the requested change was made. 

### G . Massachusetts Environmental Policy Act The proposed regulations are exempt fromthe "Regulations Governing the Preparation of Environmental Impact Reports," 301 CMR11 .00, in that no MEPA reviewthreshold set forth in 310CMR11 .03 is met or exceeded. In addition, these proposed regulations do not reduce standards for environmental protection, nor do they reduce opportunities for public participation in reviewprocesses or public access to information generated or provided in accordance with the regulations. (See MEPA reviewthreshold pertaining to promulgation of regulations at 301 CMR 11 .03(12) .) M .G.L. Chapter 30Arequires MassDEPto give public notice and provide an opportunity to review the proposed amendments to 310 CMR7.05 and 310 CMR7.00, including the background document and any technical information, at least 21 days priorto holding a public hearing. Since the proposed regulation is in response to federal law and will be submittedto EPAas part of MassDEP's Regional Haze SIP, formal notice will be issued 30days before the public hearing. The hearing will be held in accordance with the procedures of M .G.L. Chapter 30A

. The public hearing notice and proposed amendments are available on MassDEP's website at: www .mass.gov/dep/public/publiche.htm . 13If there are any questions regarding this document, please contact Glenn Keith, 617-292-5874,

Glenn.Keithna,state.ma.us, at MassDEP's Boston Office.Proposed Amendments February 17, 2012

Amend 310CMR7.00 : DEFINITIONS as follows: SULFUR IN FUEL - for the purpose of 310 CMR7.05, sulfur in fuel is as follows: (a) Oil 2 .2%sulfur content = 1% sulfur content 0 .5%sulfur content (b) Coal 1 .57%sulfur content 1 .21 pounds ofsulfur per million Btu heat release potential 0 .55 pounds ofsulfur per million Btu heat release potential 0 .28 pounds ofsulfur per million Btu heat release potential 1 .21 pounds ofsulfur per million Btu heat release potential (assuming 13,000 Btu per pound) 0 .72%sulfur content 0 .36%sulfur content 0 .55 pounds ofsulfur per million Btu heat release potential (assuming 13,000 Btu per pound) 0 .28 pounds ofsulfur per million Btu heat release potential (assuming 13,000 Btu per pound) Amend 310 CMR7.05: U Fuels All Districts as follows: 7.05: U Fuels All Districts (1) Sulfur Content of Fuels. (except natural gas) (a) Maximum

Sulfur Content of Fuel . 1 . No person owning, leasing or controlling the operation of a fossil fuel utilization facility shall cause, suffer, allow

or permit the burning therein of any li uid fossil fuel having a sulfur content in excess of that listed in 310 CMR 7.05(1)(a)1 .: Table 1 and in accordance with the timelines listed in 310 CMR7.05(1)(a)1 . Table 1 , except as provided in 310 CMR 7.05(1)(b) . 2 . On and after July 1 2014, no person owning, leasing or controlling the operation of an indirect heat exchanger with an energy input capacity equal to or greater than 250 MMBtu per hour providing steam

to a steam-electric generator that produces electrical energy for sale shall cause suffer, allow

or permit the burning therein of any residual fuel oil having a sulfur content in excess of 0

.28 pounds per million Btu heat release potential (i .e., 0 .5%sulfur content by weight), except as provided in 310CMR 7.05(1)(b) . TAT

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-1-0-°76Proposed Amendments February 17, 2012 310 CMR7.050)(a) 1 . Table 1 : Sulfur Content Lim it of Li quid Fossil Fuel Maximum

Sulfur Content ofFuel (parts per million, ppm ; or heat release Sulfur Content District/Area Fuel potential, lb./MMBtu) Equivalent by Weight Applicability

Date tatewide Distillate Oil 3,000ppm 0 .3% Prior to July 1,

2014 ,Statewide Distillate Oil 500Rpm 0.05% July l, 2014 through June 30, 2018 S tatewide Distillate Oil 15 ppm 0 .0015% July 1, 2018 B erkshire APCD Residual Oil 1 .21 lb./MMBtu 2.2% June 23, 1975 ities and Towns of Residual Oil 0 .28 lb ./MMBtu 0.5% October 1, 1970 rlin ton Belmont B oston, Brookline ambrid e Chelsea verett Malden edford Newton omerville Waltham E nd W atertown errimack Valley Residual Oil 1 .21 lb./MMBtu 2.2% Prior to July 1, PCD except Ci ty of 2014 Lawrence and Towns of ndover North Andover, and Methuen errimack Vall ey APCD Residual Oil 0 .55 lb./MMBtu 1 .0% July 1, 2014 through June 30, 2018 emainder ofState, Residual Oil 0 .55 lb./MMBtu 1 .0% Prior to July l, including City of 2018 awrence and Towns of ndover North Andover, , E nd Methuen ' tatewide excep

t Residual Oil 0 .28 lb./MMBtu 0 .5% July l, 2018 erkshire APCDProposed Amendments February 17, 2012

310CMR7.05( l )(a 1 . Table 2: Sulfur Content Limit of Solid Fossil Fuel Maximum

Sulfur Content of Fuel ' (heat release Sulfur Content , District/Area Fuel potential, lb./MMBtu) Equivalent by Weight erkshire APCD and Coal 1 .21 Ib ./MMBtu 1 .57% erri mack Valley PCD exce t City of awrence and Towns of ndover North ndover and Methuen ities and T

owns of Coal 0 .28 Ib./MMBtu 0 .36% rlin2ton, Belmont,

I oston, Brookline, ~!mbridge, Chelsea, verett, Malden, edford, Newton omerville, Waltham, nd Watertown emai der of State, Coal 0 .55 Ib./MMBtu 0 .72% i cludin2 Citv of Lawrence and Towns of ndover North ndover and Methuen

te-bey-~~Proposed Amendments February 17, 2012

DepaAmefft: 1 Any ,person with an existing, approval issued by the Department that allows the burning of fossil fuel oil with a sulfur content in excess of the limits in 310 CMR 7 05(l)(a)1 . Table 1 may burn such fuel in compliance with the Department's approval until July 1 2014 Beginning on July 1 2014 such person shall comply with the fuel oil sulfur content limits in 310CMR 7.05(1)(a)l . Table l, except as provided in 310 CMR 7.05(1)(b)2. or 310 CMR7.05(1)(W . 2 Any person owning, or controlling the operation of a fossil fuel utilization t facility may burn any existing stock of fossil fuel oil at the facility, but shall not accep delivery offuel with a sulfur content in excess of the limits in 310 CMR7.05(1)(a)1 . Table 1 on or after the applicable date(s) in 310 CMR7.05(1)(a)1 . Table l, except as provided in 310 CMR 7.05(l)(b)3. 3. The sulfur content limits in 310 CMR7.05(1)(a) 1 . Table 1 and Table 2 shall not apply to a facility whose owneror operator has applied for and received approval fromthe Department of a plan whereby use of a higher- su'fo~ fuel with a sulfur content in excess ofthe limits in 310 CMR 7.05(1)(a)l . Table 1 and Table 2 would cause no greater emissions of sulfur compounds into the ambient air than if keweqhe applicable sulfur content fuel in 310 CMR7.05(1)(a)1 . Table 1 and Table 2 were used. The plan must be approved by the Department, in writing, and any conditions attached to the Department's approval must be agreed to by the applicant, in writing.Proposed Amendments February 17, 2012 4_ . Approval granted under the provisions of 310CMR7.05(1)(b)-1 .-,-2: or 3. may be revoked by the Department for cause orwhen in its opinion revocation is necessary to prevent or abate a condition ofair pollution. (2) U Use of Residual Fuel Oil or Hazardous Waste Fuel . No person owning, leasing or controlling an individual fuel utilization emission unit rated by the Department as having an energy input capacity of less than 3,000,000 Btu per hour shall cause, suffer, allow or permit the burning of any residual fuel oil or hazardous waste fuel therein. (3) Ash Content ofFuels (except natural gas) . (a) No person shall cause, suffer, allowor permit the burning in the Commonwealth of any solid or solid/liquid mixture fossil fuel containing an ash content in excess of 4% by dry weight, except as provided in 310 CMR7.05(3)(b) and (c) . (b) In CM, MV, and SM, fossil fuel utilization facilities having an energy input capacity rated by the Department of 250,000,000or greater Btu per hour, may burn solid or solid/liquid mixture fossil fuel with an ash content in excess of 9% by dry weight, provided that : 1 . An application is made to the Department in writing to use such fuel and any information as the Department may require is submitted; 2 . The Department determines that the use of such fuel would not cause other applicable air pollution control regulations or ambient air quality standards to be violated; and 3. The use of such fuel has been approved, in writing, by the Department and the conditions of approval have been agreed to by the applicant, in writing. Such conditions of approval may include the installation, operation and maintenance of ambient air monitoring equipment by the applicant, in a manner specified by the Department . (c) In MB, Band PV, all fossil fuel utilization facilities may burn solid or solid/liquid mixture fossil fuel with an ash content in excess of 9%by dry weight, provided that : 1 . An application is made to the Department in writing to use such fuel and any information as the Department may require is submitted; 2 . The Department determines that the use of such fuel would not cause other applicable air pollution control regulations or ambient air quality standards to be violated; and 3. The use of such fuel has been approved, in writing, by the Department and the conditions of approval have been agreed to by the applicant, in writing. Such conditions of approval may include the installation, operation and maintenance of ambient air monitoring equipment by the applicant, in a manner specified by the Department . (4) Fuel Additives. No person owning, leasing or controlling a fuel utilization facility shall cause, suffer, allow

or permit the use therein of any fuel additive except in accordance with the manufacturer's recommended specifications. (5) Fuel Suppliers. (a) No person shall ship or deliver in intrastate commerce to any person for burning or reshipment for burning, any fuels with a sulfur content in excess of those specified in 310 CMR 7.05(1)(a)1 . or except that such shipment may be provided when_ 1 . ttUse of such fuel has been approved by the Department in writing=s 2 . sSuch approval has been verified by the shipper; andProposed Amendments February 17, 2012 3. fRecord of such shipment will shall be retained for twoyears and the record shall be made available to the Department for its reviewand inspection during customary business hours. (sb) Any person supplying in intrastate commerce for burning or for reshipment for burning, fuel oil of a grade No. 2 or greater or coal shall keep and maintain records showing the quantities ofthe fuels handled and analyses showing the Btu value, sulfur content, nitrogen content (required only for residual fuel oils), viscosity, and ash content of said fuels and make such records available to the Department for its reviewand inspection during customary business hours.

, (ec) Any person supplying residual fuel oil in intrastate commerce shall provide certification of the nitrogen content of the oil to #isits customers: as determined by the applicable ASTM methods D3228

-and D4629 or any other method approved by the Department and EPA . (¬ d) Shippers and distributors of fossil fuels shall provide evidence, to the satisfaction of customer-users, of the ash content of fuels supplied. (6) All fuel analyses to be performed by or for distributors, suppliers or users of fuels, for purposes of 310 CMR 7.00, shall be performed in are accordance with the applicable ASTM method or any other method approved by the Department and EPA

. (7) No person owning, leasing, or controlling the operation of a fossil fuel utilization facility shall cause, suffer, allow, or permit the burning therein of any quantity, batch, or lot of used oil fuel unless: (a) that quantity, batch, or lot of used oil fuel was generated and mixed at the site ofsaid fossil fuel utilization facility by the person owning, leasing, or controlling the operation of said fossil fuel utilization facility in compliance with 310 CMR 30.201, or (b) both of the following requirements are met: 1 . said quantity, batch, or lot of used oil fuel was mixed in compliance with 310 CMR 30.201 ;2 and 2 . the person owning, leasing, or controlling the operation ofthe fossil fuel utilization facility complied with 310CMR 30.250. (8) Except as provided in 310 CMR 7.05(9), no person owning, leasing, or controlling the operation of a fossil fuel utilization facility shall cause, suffer, allow, or permit the burning therein of any used oil fuel that does not meet the specifications set forth in Table 310CMR 7.05(8) Table 3. TABLE-310 CMR7.05(8) Table 3:Proposed Amendments February 17, 2012 STANDARDS FORUSED OIL FUEL Constituent/Property Sulfur Total Halogens PCBs Higher Heating Value Flash Point Lead ** Arsenic ** Cadmium

** Chromium** Allowable As allowed pursuant to 310 CMR 7.05(1) for residual fuel oil 4000 ppm

or less Less than 50 ppm* 120,000 or more Btu per gallon 100°F or more Less than 100ppm 5 ppm or less 2 ppm or less 10 ppm or less * The burning of PCBs in concentrations of 50 or more parts permillion is prohibited unless done in compliance with 310CMR 30.000. ** Does not apply to any facility equipped with air pollution control equipment that the Department determines, in writing;_ (1) is Best Available Control Technology (BACT) and (2) reduces emissions to a level equal to or less than would be emitted if a used oil fuel meeting the standard set forth in 310CMR 7.05(8) : Table 3 were to be burned in compliance with 310 CMR7.00in a facility without BACT. (9) 310CMR7.05(8) shall not apply to the burning of used oil fuel in a used oil fuel fired space heater provided that the requirements set forth in 310 CMR7.04(9), 310 CMR7.05(7)(a), and 310 CMR 30.250 are complied with.