Western US governors are urging the US Environmental Protection Agency to give medium-sized refiners a break in its pending gasoline sulfur rule.
The regulation would reduce, in phases, sulfur levels in gasoline to an average 30 ppm during October 2003-December 2006, down from the current 330 ppm (OGJ, May 31, 1999, p. 34).
EPA says it plans to issue the rule by the end of the year. But that's doubtful, because it has not yet sent the full regulation to the Office of Management and Budget for review.
The American Petroleum Institute and the National Petrochemical & Refiners Association (NPRA) take a less-stringent and more-flexible approach to gasoline sulfur standards that meet the air quality needs of various regions.
Although the proposed rule would give small refiners 4 extra years to comply with the standard, apparently only about 15 will qualify.
Governors complain
The proposed rule concerns the Rocky Mountain states, where small-to-medium refiners serve many niche markets.
In a recent letter to EPA Administrator Carol Browner, the 13 Western governors said medium-sized refineries need relief, too.
"In the Rocky Mountain states, virtually no surplus refining capacity exists. Any refinery closures resulting from the implementation of the proposed sulfur regulations could reduce gasoline supplies and have a corresponding effect on prices.
"The West continues to experience population growth, and gasoline demand may soon outpace supply, resulting in the potential for short-term gasoline shortages."
The governors said that, at a minimum, EPA should revise its definition of "small refinery" in the proposed rule.
"Almost none of the refineries in the West would fall into the "small" category and would thus not be eligible for the relief outlined in the regulation," the governors wrote.
WRAP study
Last summer, the governors directed the Western Regional Air Partnership to study the issue.
WRAP, whose membership includes states, tribes, and federal agencies, reported that smaller refineries, whether owned by large or small companies, would face higher costs to install desulfurization equipment vs. large refineries and would have more problems obtaining and installing the equipment needed.
The study recommended EPA make it easier for all refineries with throughput of less than 60,000 b/d in 1998. It said EPA should allow them an average standard of 150 ppm during phase-in, a sulfur reduction credit trading program, and an extra year.
The governors say those changes would achieve 98% of the benefit of the proposed rule in the West during the phase-in period-without risking the closure of some refineries.
EPA officials have said they are considering the WRAP recommendations.
NPRA hasn't taken a position on the issue. Bob Slaughter, NPRA general counsel, said, "We think all refineries need additional flexibility to meet this rule, and larger refiners would very much like to have an additional year, too."
