Opinion ID: 771458
Heading Depth: 2
Heading Rank: 1

Heading: Subpart J & Affected Facilities in Petroleum Refineries

Text: 33 As detailed above, each New Source Performance Standard promulgated under the Clean Air Act applies to specific affected facilities, and each New Source Performance Standard explicitly sets forth and defines the affected facility or affected facilities to which it applies. Consistent with this regulatory framework, Subpart J states in relevant part: 34 The provisions of this subpart are applicable to the following affected facilities in petroleum refineries: fluid catalytic cracking unit catalyst regenerators, fuel gas combustion devices, and all Claus sulfur recovery plants except Claus plants of 20 long tons per day (LTD) or less. The Claus sulfur recovery plant need not be physically located within the boundaries of a petroleum refinery to be an affected facility, provided it processes gases produced within a petroleum refinery. 35 See 40 C.F.R. S 60.100(a) (1999) (emphasis added). 36 In determining that the stationary gas turbines located at Motiva's Repowering Project are fuel gas combustion devices subject to regulation under Subpart J, the EPA concluded that the turbines are affected facilities as defined by 40 C.F.R. S 60.100(a). However, as 40 C.F.R. S 60.100(a) expressly indicates, Subpart J does not apply to all fuel gas combustion devices, but rather applies only to fuel gas combustion devices located in petroleum refineries. Thus, the key question, upon which the outcome of this petition hinges, is: Are the stationary gas turbines here in a petroleum refinery? 37 Subpart J defines a petroleum refinery as any facility engaged in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, lubricants, or other products through distillation of petroleum or through redistillation, cracking or reforming of unfinished petroleum derivatives. 40 C.F.R. S 60.101(a) (1999). While the EPA readily concedes that the Repowering Project and the larger electrical power plant complex, in which the Repowering Project is located, are not a petroleum refinery, 12 the EPA nonetheless contends that the Repowering Project's two stationary gas turbines are in a petroleum refinery and are subject to regulation under Subpart J. 38 In originally determining that the stationary gas turbines are subject to regulation under Subpart J, the EPA stated: 39 Star's [Repowering] Project is located adjacent to the remainder of the refinery and is under common ownership and control; therefore, it is considered part of the refinery. Further evidence that the [Repowering] Project is integrated into refinery operations is that the [Repowering] Project will supply most of the refinery's steam and all power requirements, has the ability to combust other fuel gas from the refinery, and . . . will help Star manage its solid waste from the refinery. Because the [Repowering] Project is part of the refinery, fuel gas combustion devices associated with the [Repowering] Project are in a refinery and fuel gas generated at the [Repowering] Project is generated at a refinery. 40 NSPS Subpart J Applicability Determination for the Star Enterprise Petroleum Refinery in Delaware City, Delaware, Memorandum Dated July 21, 1998 (Star Applicability Determination). In short, the EPA concluded and now contends that because Motiva's Repowering Project is located adjacent to a [petroleum] refinery [that] is under common ownership and control, it should be considered part of the [adjacent] refinery, and thus that the stationary gas turbines at issue in this case, turbines that are an integral part of the Repowering Project, are in a petroleum refinery. 41 This reasoning alone cannot, however, provide the basis for concluding that the Repowering Project's stationary gas turbines are subject to regulation under Subpart J. Indeed, were the EPA's reasoning sufficient to establish that the Repowering Project is part of Motiva's adjacent petroleum refinery, it would also be sufficient to establish that any independent, free-standing facility owned by Motiva and built on land adjacent to Motiva's petroleum refinery is part of Motiva's petroleum refinery. For example, EPA's reasoning would also be sufficient to establish that a McDonald's restaurant, owned by Motiva and built on land adjacent to Motiva's petroleum refinery for the convenience of refinery workers, is part of Motiva's adjacent petroleum refinery. Under this interpretation, the EPA would be able to regulate, under Subpart J, fuel gas combustion devices inside the McDonald's. Even though these fuel gas combustion devices would not be located in a petroleum refinery, such devices would be subject to regulation under Subpart J under the EPA's interpretation because they would be treated as affected facilities in [a] petroleum refinery[ ]. 42 Were we to accept the EPA's reasoning (assuming common ownership and control), any fuel gas combustion device located in a facility adjacent to Motiva's petroleum refinery would be subject to regulation under Subpart J because such devices would be treated, inappropriately, as affected facilities in [a] petroleum refinery[ ]. This conclusion is untenable. 43 As detailed above, it is undisputed that Motiva's Repowering Project is a cogeneration facility that will gasify petroleum coke and combust the resulting synthesis gas to generate electricity and steam. Moreover, even though Motiva's Repowering Project is adjacent to a petroleum refinery that Motiva owns, the Repowering Project is located in a free-standing building, an electric power plant complex that is physically separate and distinct from Motiva's petroleum refinery. Neither the Repowering Project nor the electric power plant complex in which the Repowering Project is to be constructed and operated is a petroleum refinery. We therefore fail to understand how the EPA concluded and now contends that the Repowering Project's stationery gas turbines are themselves in a petroleum refinery. Furthermore, if these turbines are not in a petroleum refinery, they are not affected facilities and thus are not subject to regulation under Subpart J. 44 The EPA also argues that the Repowering Project will be an integral part of the refinery's operations and for that reason the stationary gas turbines at issue are in a petroleum refinery. The EPA asserts that: 45 [The Repowering Project] will take low value material from the refinery, i.e., petroleum coke, convert it into a different low value material, i.e., a combustible gas, burn the gas in a combustion turbine, and use the steam and electricity produced by the turbine to provide energy for other refinery processes. The [Repowering] Project is thus a integral part of the refinery's operations both because it is part of the refinery's process of manufacturing usable products from crude oil and because it uses refinery products to provide a valuable input, i.e. energy [in the form of electricity and steam] to the refinery's operation. 46 Star Applicability Determination. While much of the above is accurate, the Repowering Project is neither part of the adjacent petroleum refinery nor necessary to the refinery's operations. Indeed, as the EPA concedes, Motiva could as easily have chosen to power its refinery by purchasing electricity from the local electric company's commercial grid. 13 47 If we were to follow the EPA's reasoning that the Repowering Project is part of Motiva's adjacent petroleum refinery, we would also be required to conclude that any building that is located on land adjacent to Motiva's petroleum refinery and has a mutually beneficial relationship with the petroleum refinery -- be it to provide food to the workers or energy to the machinery-- is part of the petroleum refinery. Following this reasoning, the EPA would be able to regulate facilities within any such building as if they were located in the petroleum refinery. 48 The EPA acknowledges that the term petroleum refinery is clearly defined in Subpart J as any facility engaged in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, lubricants, or other products through distillation of petroleum or through redistillation, cracking or reforming of unfinished petroleum derivatives. 40 C.F.R. S 60.101(a). Moreover, the EPA concedes that Motiva's Repowering Project is a cogeneration facility that generates only electricity and steam and that the Repowering Project resides in a separate, free-standing electric power plant complex. The EPA also concedes that none of the processes described in the definition of petroleum refinery set forth in S 60.101(a) takes place as a part of the Repowering Project or even within the building in which the Repowering Project resides. Nonetheless, the EPA contends that a broad definition of petroleum refinery to include operations essential to its purpose is consistent with the language of Subpart J. Using this broad definition, the EPA concluded: 49 The Star [petroleum] refinery is engaged in the processes described in the NSPS Subpart J definition of petroleum refinery. The [Repowering] Project is an integral part of the refinery. It gasifies coke generated by refinery process units, producing synthesis gas, combusts the synthesis gas and is also capable of combusting other types of refinery fuel gas. The sulfur compounds (mainly H2S) stripped during the gasification process will be sent to the modified Claus sulfur recovery plant. The steam and most of the electricity produced by the project will be routed back to other refinery process units. 50 Star Applicability Determination. The EPA's reasoning is flawed because the Repowering Project is not essential to the operation of Motiva's petroleum refinery. Were the Repowering Project essential to the operation of the refinery, the EPA might be able to convince us that the Repowering Project was part of Motiva's petroleum refinery and that the stationary gas turbines located in the Repowering Project are in a petroleum refinery. However, as mentioned above, Motiva does not need electricity from the Repowering Project to power its refinery. Motiva could just as easily purchase electricity from the local power company. Nor is the Repowering Project necessary for coke disposal. Rather than using the petroleum coke, produced in its refinery, to power the turbines at issue here, Motiva could ship the coke off-site for use at other industrial facilities or for disposal. Indeed, because Motiva's petroleum refinery operated for many years prior to the conception of the Repowering Project, it is hard to understand how the EPA concludes that the Repowering Project is essential to the operation of the adjacent petroleum refinery. 14 Moreover, the EPA's claim that[i]f the current power plant did not exist, Star would not be able to operate the refinery at its current capacity is also inaccurate for the reasons articulated above. Presumably, the only limitations on refinery capacity would be limitations on available power and available raw materials. The Repowering Project in no way affects the availability of raw materials, and although the Repowering Project would supply power to Motiva's petroleum refinery, Motiva could just easily purchase that power (and any additional power needed) from a commercial supplier . 51 Finally, in support of its initial determination, the EPA contends that: 52 The coke gasification project is not a stand-alone facility. . . . In Star's case, the refinery in its current form could not operate without the current power plant or without the planned Project, and it is not likely that the current power plant or planned Project would exist (they certainly would not exist in their current or planned form) without the remainder of the refinery. 53 Star Applicability Determination. For the same reasons detailed above, this argument is unpersuasive. Put simply, the Repowering Project is a stand-alone facility and could operate absent the existence of Motiva's petroleum refinery by obtaining petroleum coke from another commercial supplier (rather than Motiva's adjacent petroleum refinery) and selling all of the steam and electricity produced by the Repowering Project to commercial customers such as Delmarva. 54 While it is undisputed that a mutually beneficial relationship exists between Motiva's Repowering Project and Motiva's petroleum refinery, the EPA's determination that the stationary gas turbines at Motiva's Repowering Project are subject to regulation under Subpart J is not only plainly erroneous but also inconsistent with the language of Subpart J itself. In short, the EPA's determination that the stationary gas turbines at Motiva's Repowering Project are affected facilities subject to regulation under Subpart J ignores the requirement that regulated turbines be located in a petroleum refinery. 55