Overshadowed by Ozone? EPA’s New Petroleum Refinery Emissions Rule

On Oct. 1, the Environmental Protection Agency (EPA) issued revised National Ambient Air Quality Standards (NAAQS) for ground-level ozone, setting a new, lower limit of 70 parts per billion (ppb). The new ozone rule, while certainly the most controversial, was only one of several rules that EPA issued last week in a flurry of activity. On Sept. 29, EPA announced a final rule updating standards that control toxic air emissions from petroleum refineries, after being sued by environmental groups from Louisiana, Texas and California for missing a 2010 deadline to do so. The rule clarifies and strengthens two existing standards: MACT 1, the National Emissions Standards for Hazardous Air Pollutants for Petroleum Refineries; and MACT 2, National Emission Standards for Hazardous Air Pollutants for Petroleum Refineries Catalytic Cracking Units, Catalytic Reforming Units and Sulphur Recovery Units.

While the ozone rules grabbed the headlines, the petroleum refinery standards have major implications worth unpacking.

The petroleum refining process can generally be understood as the distillation of crude oil into a variety of gases that can then be processed to create a range of products. The most well-known of these is gasoline, but petrochemical products also provide raw materials for plastics, computers, medicines and even the fiberglass essential to producing modern wind turbines. Yet there are at least 11 different points throughout the process where the heating, transport and storage of petroleum and its byproducts can generate emissions of hazardous air pollutants (HAPs) like benzene, toluene, xylene and volatile organic compounds (VOCs). These emissions are regulated under the National Emissions Standards for Hazardous Air Pollutants (NESHAP), which require that the Maximum Available Control Technologies (MACT) are employed. Under the 1990 Clean Air Act, Section 112(d)(6), EPA is required to review MACT standards under NESHAP, which were last updated for petroleum refineries in 2002.

Industry has protested the most recent updates, citing voluntary industry monitoring data showing that previous regulations and voluntary measures have already reduced emissions to what are considered by EPA as “acceptable ranges”. Although EPA data has supported industry’s numbers on reductions, EPA has argued that the previous standard was based on a measure of chronic pollution risk and doesn’t capture spikes in emissions that could be harmful. Under the Clean Air Act, EPA is required to assess post-MACT 1 and 2 residual risks and take additional steps, as necessary, to protect public health.

According to EPA, an estimated 6.1 million people live within three miles of a petroleum refinery. EPA pointed to demographic information collected during the process that shows that fenceline communities are low-income and minority at twice the rate of the general population, injecting elements of environmental justice to the conversation surrounding the new standards. EPA projects the rule will decrease the risk of cancer related to refinery activities for 1.4 million people to less than 1 in a million, a 15-20% reduction.

While critical of the final rule, industry has acknowledged that EPA made “substantial improvements” over the proposal. The final rule addresses:

a. Flaring operations
b. Air quality monitoring around refineries (called fenceline monitoring)
c. Adding new standards for delayed cokers
d. Revising the definition of storage vessels to expand those covered by prior regulations.

There are two components of this regulation that stand out:

1. This is the first time that fenceline monitoring has been required. Refineries will be required to encircle their facilities with benzene monitors. Environmentalists had hoped that the final rule would require real time monitoring. Instead, EPA opted to allow facilities to collect periodic data, requiring refiners to investigate whenever the limits are exceeded. Also of note, EPA moved up the compliance timeline from three years in the proposal to two in the final rule.
2. The standards for flaring operations are intended to “virtually eliminate” smoking flare and upset, or accidental, emissions events. In addition to requiring a minimum of three prevention measures being installed, the rule will necessitate continuous monitoring of flares and pressure release devices place a hard limit of no more than three events in three years per device or flare. It also requires that all release events are analyzed. The flaring rules are significant not only because they are responsible for the lion’s share of the rule’s emissions reductions (3900 tons per year, or tpy, of HAPs and 33,000 tpy of VOCs) but also because of EPA’s decision, in line with industry’s comments on the proposal, to improve existing flaring operations rather than move forward with the more drastic changes EPA initially proposed. Under the proposal, EPA would have banned releases from atmospheric relief valves and broadened of the applicability of the flare limits which, it was argued, would require the construction of hundreds of new flare systems. In addition to the cost of these new systems, flaring is undesirable as it can release significant amounts of CO2 into the atmosphere.

The emissions reductions that EPA projects from this rule (reductions estimates in parentheses) include:

• Hazardous Air Pollutants or HAPs like benzene, toluene, and xylene (5200 tpy)
• Volatile organic compounds or VOCs (50,000 tpy)
• The rule also estimates a CO2 reduction co-benefit of 660,000 tpy

In the end, EPA’s changes to the proposal contributed substantially to industry’s projected cost reductions, down from $20 billion for the proposed rule to $1 billion for the final. In response to the final rule, American Petroleum Institute’s Downstream Group Director Bob Greco implored EPA to consider the “impacts of new regulations and added costs to delivering affordable energy to U.S. consumers.” EPA and industry estimates vary significantly, with EPA projecting the costs of implementation at $283 million – which they assert will have negligible effects on consumers.

We will be tracking this issue closely, so be sure to check back here for updates. For additional information on the types of crude oil that refineries are using, see David Rosner’s work.