Watching Government: More uncertainty for refiners

Aug. 26, 2013
US refiners who already have to deal with fluctuating crude oil prices and falling gasoline demand face additional regulatory uncertainty because of an Aug. 2 federal court settlement the US Environmental Protection Agency reached with some environmental groups.

US refiners who already have to deal with fluctuating crude oil prices and falling gasoline demand face additional regulatory uncertainty because of an Aug. 2 federal court settlement the US Environmental Protection Agency reached with some environmental groups.

EPA did not comment on the matter. OGJ obtained a copy of the settlement elsewhere.

The Environmental Integrity Project and Earthjustice sued EPA on Sept. 27, 2012, on behalf of seven Texas, California, and Louisiana community organizations for not meeting a requirement under the federal Clean Air Act's Section 112.

The provision requires that the agency either promulgate stricter emissions limits for refineries' catalytic cracking units, catalytic reforming units, sulfur recovery units, and other sources every 8 years, or determine that more requirements aren't necessary.

The Aug. 2 settlement in US District Court for the District of Columbia requires EPA to review and either propose new limits or determine they aren't needed by Feb. 14, 2014, and issue a new rule by Dec. 19 of that year if they are.

The two major trade associations that represent refiners—the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers—aren't happy with the deal.

"We see this as just another sue-and-settle agreement where a federal agency sits down with environmental groups without industry input, and agrees to put out rules," Howard J. Feldman, API's regulatory and scientific affairs director, told OGJ on Aug. 19. "Our concern is what happens if the settlement doesn't give EPA have enough time, and it tries to issue requirements without the necessary preparation."

'A lot going on'

AFPM also is concerned about the agreement's time frame, according to David Friedman, the association's vice-president of regulatory affairs. "There will be a lot going to be in that rule, a lot to comment on, and a lot to react to," he predicted.

"We also would have liked to be at the table for the settlement," Friedman added. "We're a big player. It's the second time this has happened. The first was a greenhouse gas emissions agreement in December 2010."

He said maximum available control technology under the CAA already mandates tough emissions limits for refineries. The Aug. 2 settlement involves so-called fence line issues under the residual risk rule.

"We're not concerned with EPA meeting the mandate," Feldman said. "We believe the existing rules provide an ample margin of safety. We don't think additional controls are necessary. This puts EPA on a schedule. We're saying that maybe it needs more time."

"We still don't know what this is going to look like," Friedman told OGJ. "It's hard to comment when we don't know what we're going to see."