Industry urges EPA to take second look at marine, train diesel rules

By OGJ editors
WASHINGTON, DC, Apr. 2 -- Industry trade associations representing most, although not all refiners, want the US Environmental Protection Agency to rethink an EPA draft plan to limit the sulfur content of locomotive and marine diesel to 15 ppm in 2010.

"Our industry has an obligation to consumers and the nation to oppose changes that would needlessly add to supply volatility and economic stress," the American Petroleum Institute said Tuesday. "For this reason, we have raised concerns that the second stage of reductions in diesel fuel sulfur for farm and construction equipment being considered for 2010 not be extended to the locomotive and marine market until those engines are also required to use such advanced after-treatment devices."

EPA is expected to release a final nonroad diesel rule aimed at farm and construction equipment this month; a separate rulemaking still must occur for train and boat fuel.

API and the National Petrochemical & Refiners Association stressed that they still support what they called "dramatic reductions" in diesel fuel sulfur for farm and construction equipment to 15 ppm. "NPRA continues to support the agency's proposal that would employ a phased, two-step approach of nonroad diesel sulfur limits beginning in 2007 that will reduce sulfur levels by 90%, with final reductions in 2010 for construction and farm equipment," said NPRA Pres. Bob Slaughter.

"The implementation date for nonroad diesel fuel should be set so as to have the least impact on implementation of the highway diesel fuel regulation and place the least strain on the suppliers and distributors of diesel fuel. EPA's proposal represents the absolute earliest date that refiners can possibly comply," he added.

Environmental groups and local air quality officials are urging EPA, in the name of public health, to preserve the 2010 timeframe for marine and train fuel.

"High air pollution recently monitored at train stations shows that taking a train may be hazardous to your health," said Frank O'Donnell of Clean Air Trust. "We need to clean up train fuel immediately to start bringing pollution levels down. The oil companies once again are crying wolf."

Similarly, local air quality officials see the nonroad diesel rule as an important tool to toward achieving federal air quality standards.

"EPA has a huge opportunity to develop a very good nonroad rule; the states' measure of EPA's success will be whether the agency sets a 15 ppm fuels requirement on locomotive and marine engines by 2010, and commits to a rulemaking to set engine standards soon thereafter," said Bill Becker of the State and Territorial Air Pollution Program Administrators/Association of Local Air Pollution Control Officials.

But industry rejects the argument that extending the locomotive and marine rule beyond 2010 would have much of an impact on mobile source pollution.

"States must be in compliance with NAAQS [National Ambient Air Quality Standards] by 2007. We find it difficult to understand how implementation of a 15 ppm requirement for locomotive and marine diesel fuel in 2010 will assist them in this effort," Slaughter said.

Gasoline sulfur program
In a related action, Sen. Jeff Bingaman (D-NM), ranking member of the Senate Energy and Natural Resources Committee, called on the White House Mar. 24 to have EPA fine-tune the current gasoline sulfur regulation to ease price pressures on consumers.

Bingaman noted that over the next 2 years, gasoline sulfur levels will drop to 30 ppm from today's 120 ppm. The current rule rewards companies that achieve early reductions in their operations' baseline level of sulfur to generate sulfur credits for use in 2005. An additional level of special credits called "allotments" reward companies that made significant capital investments in low sulfur fuels.

Bingaman argued the rule does not have a reliable system for independent fuel importers to participate if markets are tight and the number of allotments they need to buy (to stay in compliance) are not available.

"I recommend that the administration revise this rule to allow independent importers to carry a small deficit balance in case they are unable to buy enough allotments," he said.

"By doing so, we will facilitate the ability to move more gasoline that is currently on the world market to US consumers this summer, without compromising environmental protections," he suggested.

He further said that if unexpected significant refinery or pipeline disruptions occur, or if gasoline prices rise to levels that cause significant economic harm, that EPA be prepared to issue an emergency rule allowing the use of the sulfur credits for 2005 in this year instead.

"This additional flexibility in the use of sulfur credits would not result in any greater emission of sulfur dioxide over the 2-year period of 2004-05, but would add to the ability to bring more gasoline into the United States so that consumers are not paying more than they should."

Neither EPA nor the White House has responded yet to Bingaman's suggestion although the agency has been considering a similar request from some refiners over the past 2 months.

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