EPA to propose rules giving refiners more flexibility to meet fuel specs

By the OGJ Online Staff

WASHINGTON, DC, Oct. 24 -- The US Environmental Protection Agency Wednesday said it wants to give refiners more flexibility to meet federal clean fuel programs.

In an Oct. 24 letter to President George W. Bush, EPA Administrator Christine Todd Whitman said her agency would propose rules that may help the nation's gasoline delivery network run more efficiently.

"EPA is prepared to act quickly on a set of administrative and regulatory actions to provide new flexibility to refiners in advance of next year's spring transition season, particularly in the Midwest," said Whitman. "We are committed to protecting our environment while ensuring our nation's energy security."

EPA said the regulations would ensure terminals are able to transition from winter to summer grade fuels more gradually. The agency said offering more lead times could help avoid temporary fuel shortages that, in the past, have been associated with localized spikes in gasoline prices. The agency cautioned, however, that its action was not a panacea.

"While many factors contributed to the gasoline price spikes this year, we want to ensure that using summer blend fuel is not a contributor to price hikes," Whitman said.

"If there is a disruption, such as a pipeline break or refinery fire, it can be difficult to provide gasoline supplies because of constraints created by these boutique fuel requirements. In addition, fuel providers are concerned that recently enacted state laws that ban the use of MTBE (methyl tertiary butyl ether) in future years may proliferate the number of boutique fuels and present new challenges to this country's fuel production and distribution system."

The agency also said it will allow fuel producers more flexibility in meeting fuel specifications than they currently have for their initial transition to summer fuel. EPA also will propose to simplify certain RFG accounting and reporting requirements.

One area likely to generate a lot of public interest will be on whether the agency should maintain an oxygenate standard in RFG. Currently RFG must contain at least 2 wt % oxygen; typically that means either fuel ethanol or MTBE. If MTBE is banned in more states, some refiners say more fuel shortages could occur because ethanol supplies may not be reliable. Ethanol suppliers say they can meet the RFG market, which is about 30% of total US gasoline demand.

Another controversial topic will be the volatility of RFG. Some automakers want the agency to decrease the allowable minimum Reid vapor pressure (rvp) for RFG at the refinery gate to 6.0 psi from 6.4 psi. Under the emissions model used to measure RFG performance, the lower valid range limit is 6.4 psi.

This lower limit helps prevent problems associated with lower rvp gasoline. Refiners say lowering the rvp would further limit their blendstock choices and could mean supply shortages.

EPA's report is in response to the president's National Energy Policy report, issued May 17, which called on the agency to study whether clean fuels should be simplified. Industry has asked EPA to reduce the number of local or "boutique" fuels because suppliers find the current system cumbersome. Environmental groups are worried that streamlining the RFG program may mean fewer cars use the cleaner burning fuels and air pollution could increase.

EPA said in the near future it plans to seek public comment on ways to retool the RFG program. The RFG program was created in the early 1990s to reduce urban smog in the nation's largest cities.