• U.S. Environmental Protection Agency Updates Clean Air Act Standards for Flares and Process Heaters at Petroleum Refineries
  • October 5, 2012 | Authors: Colleen P. Doyle; Michael S. McDonough; Brian Moskal; Clara Maria Poffenberger; Rick R. Rothman
  • Law Firms: Bingham McCutchen LLP - Los Angeles Office ; Bingham McCutchen LLP - Washington Office ; Bingham McCutchen LLP - Los Angeles Office
  • On Sept. 12, 2012, the U.S. Environmental Protection Agency (“EPA”) issued a final rule under the New Source Performance Standards (“NSPS”) of the Clean Air Act governing newly constructed, reconstructed or modified flares and process heaters at petroleum refineries. EPA asserts that these new regulations reduce emissions of sulfur dioxide (“SO2”), nitrogen oxides (“NOx”) and volatile organic compounds (“VOCs”); provide industry with greater compliance flexibility; and allow companies to make routine operational changes without triggering new requirements. EPA has also indicated it believes the new rule will result in fewer cases of respiratory illness, heart attacks and premature deaths, providing a purported $320 million to $610 million in annual health benefits. EPA further claims the final rule will require $460 million in capital costs for flares but will result in $79 million per year in costs savings.

    Background

    On June 24, 2008, EPA promulgated amendments to the petroleum refinery NSPS (Subpart J - 40 C.F.R. § 60.100 et seq.) and a new NSPS for petroleum refinery process units constructed, reconstructed or modified after May 14, 2007 (Subpart Ja - 40 C.F.R. § 60.100a et seq.). EPA subsequently received three petitions for reconsideration of those final rules from industry and environmental groups. The petitions for review filed by industry groups raised issues, including the definitions of a flare and modifications for flares, sulfur emission limits for fuel gas combustion as they relate to flares, flare flow limits, total reduced sulfur and flow monitoring requirements for flares, and the NOx limit for process heaters. Environmental groups requested that EPA also promulgate standards for carbon dioxide and methane.

    On Sept. 26, 2008, EPA granted reconsideration and stayed the effectiveness of the rules applicable to petroleum refinery process heaters and flares. On Dec. 22, 2008, EPA addressed the issues raised in the petitions for reconsideration by proposing amendments and technical corrections to certain provisions for these refinery units. With this recent action, EPA finalized those amendments and technical corrections and lifted the September 2008 stay.

    The Amended Flare and Process Heater Rule

    The Sept. 12, 2012, NSPS amendments apply to process heaters constructed, reconstructed or modified after May 14, 2007, and flares constructed, reconstructed or modified after June 24, 2008.

    The NSPS amendments include the following provisions:

    • A new provision in 40 C.F.R. Part 60, Subpart J, allowing affected sources under Subpart J the option of complying with Subpart J or instead following the requirements in Subpart Ja. See 40 C.F.R. § 60.100. EPA justified this by determining that the provisions of Subpart Ja are at least as stringent as those in Subpart J.

    • Definition of a flare changed to categorize flares as a separate “affected facility” instead of a type of fuel gas-combustion device

    • New concentration-based emission limits and alternative heating-value based limits for NOx emitted from process heaters

    • A site-specific compliance option for process heaters that have difficulty meeting the NOx emission standards, which requires case-by-case approval

    • An alternative compliance option for flares located in the South Coast Air Quality Management District or Bay Area Air Quality Management District of California

    • Use of a 30-day rolling average for NOx emissions (instead of a 24-hour rolling average)

    • Clarification of types of changes to flares that do not trigger a modification

    • Elimination of the 60 parts-per-million-by-volume hydrogen-sulfide long-term concentration limit for flares

    • Enlargement of the compliance deadline for requirements for modified flares from one to three years

    • Elimination of system-wide flow limits for flares and any flare-flow monitoring under certain intermittent or emergency conditions

    • Less burdensome monitoring requirements for infrequently used flares

    The new rule does not establish emission limits for methane and carbon dioxide as requested by environmental groups.

    Impact and Outlook

    Although EPA amended this rule to create new avenues to compliance for petroleum refineries, those amendments also entail added complexity and, for some facilities, added cost. Comments from industry groups indicated that regulated facilities remain concerned about the costs of complying with the rule. The American Petroleum Institute (“API”), for example, asserted that compliance costs remain too high in relation to the air quality benefits EPA claims to have achieved (see Amendments to Refinery Flare & Process Heater Rules, Business & Legal Resources (June 5, 2012), available at http://enviro.blr.com/environmental-news/air/NSPS-new-source-performance-standards/Amendments-to-Refinery-Flare-Process-Heater-Rules/). API’s director of regulatory and scientific affairs, Howard Feldman, stated that “EPA’s rules will be tremendously costly without providing any significant environmental benefit,” characterizing the new rule as part of a “tsunami of new EPA air regulations for refineries,” but adding that “[n]otwithstanding the higher costs, we understand the EPA has made positive changes to the rule in line with comments [API] submitted during the rulemaking process.” (See API Says New Flaring, Process Heat Rules Costly to Industry, The Oilspot News (June 4, 2012), available at http://oilspot2.dtnenergy.com/e-article002445687.cfm?x=b11,0,w).

    Given the complexity of this rule, companies subject to it should carefully evaluate its applicability to any flares or process heaters constructed, reconstructed, or modified after the effective dates indicated above. This final rule will become effective on Nov. 13, 2012. Under the Clean Air Act, any party that wants to seek judicial review of the rule must commence litigation in the U.S. Court of Appeals for the District of Columbia Circuit before that date.