October 02, 2015

What to Know About the EPA Final Petroleum Refinery Emissions Standards Rule

On September 29, 2015, EPA issued a final rule to regulate emissions from petroleum refineries in the United States. The rule requires monitoring for specific compounds that are emitted as part of the refining process of crude oil into industrial and consumer goods such as gasoline, diesel, kerosene and many other refined products. The rule will also virtually eliminate flaring of combustible byproducts that have no commercial use. The intent of the rule is to provide reductions in emissions of compounds that have adverse environmental effects and to protect surrounding communities from high levels of exposure to potentially harmful compounds. When fully implemented in 2018, EPA estimates reductions of 5,200 tons per year of toxic air pollutants, 50,000 tons per year of volatile organic compounds, and the equivalent of 660,000 tons per year of CO2 by eliminating more potent greenhouse gases from the atmosphere; all at a cost estimated by EPA to be approximately $283 million.

EPA engaged extensively with stakeholders and the communities that surround refineries as part of the rulemaking process. After years of analysis, EPA determined that the 6.1 million people residing within a three-mile radius of one of the 142 refineries affected by this rule are largely part of a minority population and overwhelmingly poorer than the national average. EPA hopes to see a 15-20 percent reduction in cancer rates among these communities by limiting their exposure to the fumes released by these facilities.

To monitor this output, the rule requires the installation of sensors along the perimeter of the refinery to continuously monitor the air for benzene, a common emission from "fugitive sources" such as leaking equipment and wastewater treatment. The rule also adds reduction restraints to storage tanks and delayed coking units, many of which were not previously regulated. Furthermore, a significant reduction in both flaring and discharges from pressure relief systems are part of the process changes prescribed in the rulemaking. EPA predicts that the health and environmental benefits will be significant enough to justify the costs of the new standard.

As with any new regulation, compliance costs must be carefully considered along with intended benefits to ensure the proper economic balance. If costs become too burdensome, refining facilities that can no longer remain competitive will be closed, creating potential market shortfalls in the product they deliver. Combined with the loss of jobs these sites provide, the damage done to a local economy could be significant.

As with any change, the new rule brings opportunities as well as challenges, especially since there are many pieces to the energy-regulatory relationship currently in motion. Keeping a close eye on the policy landscape is essential to anyone with interests in the refinery sector and the surrounding communities.

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