EPA DOGS ALYESKA ON AIR RULES-AGAIN

High-level worry over the U.S. economy too often ignores an unfortunate fact of modern business life: Working and investing in America can get people in a lot of trouble. Unfashionable as it is to say, environmental laws-many of which create criminal liabilities-discourage work and investment. And retroactive interpretation of the rules is making matters worse.

Aug. 23, 1993

3 min read

Environmental martial law is running much of the oil industry out of the country. But parts of the industry, owing to the nature of their assets, must stay and fight. A veteran of these wars is Alyeska Pipeline Service Co., operator of the Trans-Alaska Pipeline System (TAPS). Alyeska now finds itself in a new skirmish over air quality, a matter it thought it had settled 3 years ago.

NEW EPA ALLEGATIONS

The Environmental Protection Agency has informed Alyeska that it faces stiff penalties for air quality violations dating back to 1978 at three TAPS pump stations. Alyeska thinks it has assurances that the practices in question comply with the law.

The issue centers on Alyeska's use of breakout tanks to feed crude to the topping units that produce turbine fuel for power generation. The breakout tanks vent volatile organic compounds, which are precursors of ozone, into the atmosphere. EPA says use of the breakout tanks instead of surge drums, which have vapor recovery equipment, constitutes an operational change that triggers prevention-of-significant-deterioration (PSD) regulation.

Alyeska doesn't have PSD permits for its tank operations at the three pump stations and has reason to believe it doesn't need any. EPA and the Alaska Department of Environmental Conservation (DEC) studied TAPS emissions issues for 2 years and, in June 1990, notified Alyeska of potential violations of air quality laws. They said they had evidence of four physical or operational changes for which Alyeska should have sought PSD permits. the alleged violations did not include use of breakout tanks as the primary source of feed to the pump stations' topping units.

Alyeska responded quickly. It changed some practices, applied for PSD permits, and eventually agreed to apply best available control technology in its emissions management. On July 25, 1990, EPA told Alyeska that, subject to conditions in a temporary permit from the state agency, it considered the pipeline to be operating in compliance with air quality laws with respect to violations cited in the June notice. The following September, DEC and Alyeska signed a compliance order that declared TAPS to be in complete compliance with PSD and state emissions permits requirements.

A CHANGE OF MIND

Responding to the latest EPA violations, Alyeska Pres. David Pritchard on Aug. 16 wrote a letter to EPA Administrator Carol M. Browner that declared, "Both EPA and the DEC were fully aware of how the breakout tanks at these pump stations are used when the (notices of violation) were issued and the compliance order was signed." At that time, then, neither EPA nor DEC considered tank operations at the pump stations to be violations of the PSD requirements. Now, apparently, EPA may change its mind. And the decision could cost Alyeska millions of dollars in fines.

This is not the way to promote national economic interests. If EPA does cite Alyeska with PSD violations and fine it accordingly, it will be putting business in general on notice that double jeopardy and retroactive enforcement apply in environmental issues. And it will intensify a troubling question: Why would anyone want to risk capital in such an unstable regulatory climate?