United States Virgin Islands Proposed Ruling on Petition Pursuant to Section 325(A)(1) of the Clean Air Act

Federal RegisterJun 10, 1997

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 69

[FRL-5836-3]

United States Virgin Islands Proposed Ruling on Petition Pursuant

to Section 325(A)(1) of the Clean Air Act

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: On May 7, 1996, the Governor of the United States Virgin

Islands sent to the Environmental Protection Agency (``EPA'') a

petition for an exemption (``petition'') from certain requirements of

the Clean Air Act (the ``Act''). The

[[Page 31547]]

petition, submitted pursuant to section 325(a)(1) of the Act, requests

that the Hess Oil Virgin Islands Corp. (HOVIC)) refinery be granted an

exemption from the prohibition on basing emission limitations on

intermittent control strategies (ICS) in section 123 of the Act. Based

upon the EPA's review of the petition and supplemental information

provided by HOVIC, the EPA is proposing to conditionally approve the

petition. The conditions would require that HOVIC switch to a lower

sulfur fuel when the wind direction blows from a defined sector or when

ambient monitors measure an average SO2 concentration above a specified

level. Conditions governing when HOVIC can switch back to the higher

sulfur fuel are also included in this proposed approval. Pursuant to

section 307(d) of the Act, this proposed rule provides a description of

the basis for the petition under section 325(a)(1), the petition and

supporting documentation submitted by HOVIC, and the proposed decision

by the EPA on the petition.

DATES: Comments on this proposed rule must be submitted on or before

July 10, 1997. EPA has not scheduled a public hearing on this proposed

rule. A hearing will be held in New York, N.Y. on this petition if one

is requested on or before July 10, 1997.

ADDRESSES: Comments should be submitted in duplicate to: Steven C.

Riva, Chief, Permitting Section, Air Programs Branch Division of

Environmental Planning and Protection, U.S. Environmental Protection

Agency, Region 2 Office, 290 Broadway, 25th Floor, New York, New York

10007-1866.

Parties who wish to request a hearing should contact Steven C. Riva

at (212) 637-4074. If a hearing is scheduled, a notice will be

published in the Federal Register. Parties wishing to testify should

contact Steven C. Riva. Hearing testimony should be submitted to the

EPA Air Docket in Washington, D.C. and the Region 2 address above.

Docket: Copies of information relevant to this petition are

available for inspection in public docket A-97-08 at the Air Docket of

the EPA, room M-1500, 401 M Street SW., Washington, D.C. (202) 260-

7548, between the hours of 8:00 am to 5:00 pm Monday through Friday. A

copy of the documents contained in the docket are available at USEPA,

Region 2, Division of Environmental Planning and Protection, 25th

Floor, 290 Broadway, New York, NY (212) 637-4074, and is available

between the hours of 8:00 am to 4:00 pm Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Annamaria Colecchia, Permitting

Section, Air Programs Branch, Division of Environmental Planning and

Protection, U.S. Environmental Protection Agency, Region 2 Office, 290

Broadway, 25th Floor, New York, New York 10007-1866, Telephone: (212)

637-4016.

SUPPLEMENTARY INFORMATION:

Background

On May 7, 1996, the Governor of the United States Virgin Islands

submitted a petition to the Administrator of the EPA for an exemption

from certain requirements of the Act. The petition, submitted pursuant

to section 325(a) of the Act, requests that the HOVIC refinery, located

on the island of St. Croix, be granted an exemption from the

prohibition on basing emission limitations on ICS in section 123 of the

Act. HOVIC concurrently submitted a proposed modification to its

existing Prevention of Significant Deterioration (PSD) permit to the

EPA to: (1) increase the charge rate to the Fluid Catalytic Cracking

Unit, (2) increase the production of sulfuric acid, and (3)

redistribute and change the types of fuels processed in the refinery.

The third change, which will substantially reduce emissions of sulfur

dioxide (SO2) below the amount HOVIC is currently permitted to emit,

could cause occasional exceedances of the 24-hr National Ambient Air

Quality Standard (NAAQS) for this pollutant, north of the facility,

during those days that the wind blows onshore for a persistent length

of time. Meteorological data from the twelve months prior to the

petition predicts that these wind conditions will occur only a few

times a year.

The petition proposes to prevent these potential exceedances from

occurring by reducing the sulfur content of the fuel processed during

those time periods. Since this constitutes an ICS based on atmospheric

conditions, reliance upon which in an implementation plan is

specifically prohibited by the Act, the petition requested an exemption

from this requirement through provisions available under section 325 of

the Act. Granting HOVIC's petition will make it possible for EPA to

consider, in a separate action, HOVIC's request for a PSD permit

modification. EPA is not entertaining HOVIC's PSD permit modification

request in this action.

Section 325(a) provides, in part, that upon petition of the

Governor of the Virgin Islands, the Administrator of the EPA is

authorized to exempt any persons or source or class of persons or

sources in such territory from any requirement under the Clean Air Act

other than section 112 or any requirement under section 110 or Part D

of Subchapter I necessary to attain or maintain a national ambient air

quality standard.

Description of Petition and Supporting Documents

The petition consists of a seventeen page narrative and eighteen

supporting exhibits. The narrative portion of the petition is organized

into sections that describe: (1) The unique meteorological conditions

of the Virgin Islands, and in particular, HOVIC's location on St.

Croix, (2) the planned permit modification and control options

available at the HOVIC facility, (3) the fuel-switching control

strategy proposed by HOVIC, and (4) the regulatory and statutory basis

for granting the exemption. The supporting exhibits in the petition

include, among other things, existing meteorological monitoring audits,

modeling methodology, NAAQS compliance demonstration and legal

references. Under separate cover, HOVIC submitted an air quality

analysis as part of the complete permit modification request. Other

documentation later submitted by HOVIC in support of this petition

included: (1) Incremental cost analysis; (2) liquid fuel usage; (3) SO2

emissions by unit; (4) analysis of PSD increment consumption; and (5)

additional information on the air quality modeling.

Criteria for Approval

As amended, section 325(a) provides the criteria for approving a

request for an exemption from requirements of the Act and states, in

part, that:

Upon petition by the governor of Guam, American Samoa, the

Virgin Islands, or the Commonwealth of the Northern Mariana Islands,

the Administrator is authorized to exempt any person or source or

class of persons or sources in such territory from any requirement

under this Act other than Section 112 or any requirement under

Section 110 or Part D necessary to attain or maintain a national

primary ambient air quality standard. Such exemptions may be granted

if the Administrator finds that compliance with such requirement is

not feasible or is unreasonable due to unique geographical,

meteorological, or economic factors of such territory or such other

local factors as the Administrator deems significant.

HOVIC's proposed modification involves only SO2 emissions and

approvals governed by section 110 of the Act and involves no

requirements under section 112. On the basis of the language cited

above, the first prerequisite to granting an exemption in this case

under section 325(a)(1) is that

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such an exemption may not be granted from any section 110 requirement

necessary to attain or maintain a national primary ambient air quality

standard. The second prerequisite to granting such a petition is that

the Administrator must find the exempted requirement to be not feasible

or unreasonable due to unique geographical, meteorological, or economic

factors or such other local factors as the Administrator deems

significant.

EPA Evaluation and Proposed Action

The EPA believes that the petition meets the first prerequisite.

That is, as a statutory matter, the prohibition against SIPs relying

upon ICS, contained in section 123, is not a requirement under section

110 necessary to attain or maintain the NAAQS. Moreover, the modeling

analysis presented demonstrates that the proposal will not adversely

affect either attaining or maintaining a NAAQS. However, more complex

issues arise in determining whether the proposal meets the second test.

The petition does not claim that adherence to the prohibition in

section 123 is not feasible. Rather, EPA has been asked to determine

whether, given the local conditions, compliance with the prohibition is

unreasonable.

The petition bases its argument on the unreasonableness of

compliance with the prohibition against SIP reliance upon the use of

ICS given the unique meteorology and geography of the United States

Virgin Islands. A principle reason for Congress' enactment of section

123 was to prevent export of air pollution from one population area to

another. HOVIC argues that the prohibition against ICS was based on the

experience of sources operating on the United States mainland, which

given the Virgin Islands' unique wind patterns and isolation, are not

relevant to HOVIC's circumstances. HOVIC claims that given these

circumstances, it is ``unreasonable'' to require it to undertake a more

expensive control option, the use of a lower sulfur fuel on a continual

basis, in order to comply with the prohibition.

HOVIC's interpretation of unreasonable--that without the use of an

ICS, HOVIC would accrue higher production costs it could otherwise

avoid--is not consistent with the rationale given for previous

exemption decisions made by the Agency under section 325. In previous

decisions, petitioners were able to demonstrate significant adverse

impacts to both the source, in terms of significant additional emission

controls, and to the community, which would bear the burden of those

costs and/or a potentially severe energy emergency. These decisions

pointed to the severe impact to the affected community that would

result from not granting the exemption. There is no overriding public

welfare concern presented in this petition. The cost of compliance with

the ICS prohibition would fall entirely to HOVIC, and no argument has

been presented that this cost would entail a severe burden to HOVIC.

The decision to incur these costs is also entirely within the

discretion of HOVIC. Thus, this argument does not itself show that

compliance with the prohibition is unreasonable or infeasible. Given

that sources located in geographic areas not subject to section 325

cannot avail themselves of this exemption, HOVIC should not be entitled

to an exemption merely on the basis that it is located in the Virgin

Islands and desires to save on costs. Rather, the statute requires a

showing of infeasibility or unreasonableness due to unique factors.

However, there are several factors which support granting the

exemption sought in the petition. These factors provide a strong basis

for approving the exemption request in a manner that is consistent with

prior Agency interpretations of the term ``unreasonable'' in section

325. First, since the modeling done in support of this request

demonstrates an exceedance of the 24 hour SO2 NAAQS in the northern

impact area under the proposed 1% sulfur in fuel scenario, it is

possible that the exceedances may already occur under HOVIC's present

permit conditions of 1.5%. EPA believes that the proposed ICS would

provide a remedy to this potential existing air quality concern, and

that more stringent continuous controls may not be a necessary remedy

in this case. Second, the EPA believes that the proposed ICS provides

safeguards to ensure that exceedances will not occur in the future. The

proposed ICS requires the incorporation of several provisions,

including the installation of ambient monitors in the northern impact

zone. These ambient monitors provide not only additional air quality

monitoring but they serve as a mechanism for triggering the sulfur

reduction strategy. This mechanism is in addition to the condition

requiring a reduction in sulfur in fuel based upon a shift in wind

direction. EPA believes that these two mechanisms will ensure that the

NAAQS standard will be protected. Third, the use of ICS is compatible

with the relief that section 325 was designed to provide. The

legislative history of section 325 explicitly addresses the problem of

sources having to adhere to all control requirements of the Act in

areas where this does not result in an air quality benefit. See, e.g.,

129 Cong. Rec. S16486-88 (daily ed. Nov. 17, 1983) (statements of Sen.

Stafford and Sen. Matsunaga); 129 Cong. Rec. 26926 (daily ed. Oct. 3,

1983) (statement of Rep. Lagomarsino). EPA believes that approving the

use of ICS would be an appropriate exemption under section 325 in

certain circumstances. Indeed, the EPA has already approved such an

exemption, in March 1993, for the Island of Guam. See 58 FR 13570 (Mar.

12, 1993), 58 FR 43042 (Aug. 12, 1993)

For these reasons, the EPA is proposing to exempt HOVIC from the

prohibition against the use of ICS for its modification, subject to the

following conditions. These conditions must be included as basic

requirements in any PSD permit modification entertained by EPA. In

addition, the exemption proposed today by EPA is also based upon the

premise that HOVIC must comply with any other PSD permit conditions

deemed necessary by EPA to ensure that these basic requirements are

met. It should be noted that today's action does not represent a

proposed or final PSD permit. Any proposed determination on PSD will

undergo a separate notice and comment procedure. The basic requirements

are as follows:

The protocol to be followed for the ICS shall be set forth in

the revised Prevention of Significant Deterioration Permit

anticipated to be issued to HOVIC; and will include as a minimum,

the following conditions. HOVIC will comply with the details of

these requirements as contained in the specific conditions of the

anticipated PSD permit:1

\1\ The conditions will be specified in detail in the permit.

However, for clarity, the following specifications are assumed for

purposes of this proposal:

--The wind direction will be monitored by a meteorological tower

on HOVIC property, approved by EPA, and will be collected and

reported as 1-hour averages, starting on the hour. If the average

wind direction for a given hour is from within the designated

sector, the wind will be deemed to have flowed from within the

sector for that hour. Each ``day'' or ``block period'', for these

purposes will start at midnight and end the following midnight.

--The SO2 concentrations will be measured by ambient monitors

installed for the purposes of this ICS by instruments near HOVIC

property approved by EPA. The data will be collected according to

EPA approved ``SLAMS'' procedures, but will, for these purposes, be

averaged by the hour, starting on the hour.

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(1) The switch to a lower sulfur fuel (0.5%) will take place when:

(a) The winds blow from a 45 degree sector defined as 143 to 187

degrees inclusive, where zero degrees is due north, for at least 6

consecutive hours during a 24-hour block period or any 12

[[Page 31549]]

non-consecutive hours during a 24-hour block period. Or:

(b) one of HOVIC's ICS monitors measures an average ambient SO2

concentration that is 75% of the 24-hour NAAQS during any rolling 24-

hour average. (75% of the 24-hour NAAQS = 274 ug/m3 or 0.105 ppm).

(2) The switch back to the higher sulfur fuel (1.0%) may occur

under one of the following three conditions:

(a) If the ICS was triggered by (1)(a) above, the switch back may

occur when the winds blow outside the sector listed in (1)(a) for at

least 3 consecutive hours following the period during which the winds

were blowing inside the sector. Or:

(b) If the ICS was triggered by (1)(b) above, the switch back may

occur after all of HOVIC's ICS ambient monitors measure a 24-hour

average concentration which is less than 75% of the NAAQS for at least

one 24-hour block period following any occurrence when the monitor

measured the concentration which was 75% of the NAAQS. Or:

switch back may occur when both of the conditions in (2) (a) and (b)

are met.

(3) The protocol may be modified by EPA to protect against

exceedances of the sulfur dioxide NAAQS.

(4) In the event that there is an exceedance of the NAAQS, HOVIC

will report the exceedance to EPA and recommend corrective action as

well as amendments to the protocol to ensure the protection of the

NAAQS.

Other conditions of this exemption under section 325 of the Act are

set forth as follows:

(5) HOVIC must comply with all fuel switching requirements,

contained in HOVIC's PSD permit.

(6) This exemption shall take effect only in the event that a final

PSD permit modification becomes effective.

(7) The Administrator may terminate the exemption through

rulemaking procedures upon determining that HOVIC's use of the ICS is

causing or contributing to an exceedance of the NAAQS.

Administrative Requirements

Regulatory Flexibility

The Regulatory Flexibility Act, (RFA) generally requires an agency

to conduct a regulatory flexibility analysis of any rule subject to

notice an comment rulemaking requirements unless the agency certifies

that the rule will not have a significant economic impact on a

substantial matter of small entities. Small entities include small

businesses, small not-for-profit enterprises and small governmental

jurisdictions. This proposed rule would not have a significant impact

on a substantial number of small entities because the proposed

rulemaking will apply only to the Hess Oil Virgin Islands refinery on

St. Croix, U.S. Virgin Islands. This facility is not a small entity,

and the action granting the petition will relieve the source from

restrictions that would otherwise apply. Therefore, the Administrator

certifies that this action will not have a significant economic impact

on a substantial number of small entities.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, EPA

generally must prepare a written statement, including a cost benefit

analysis, for proposed and final rules with ``Federal mandates'' that

may result in expenditures to State, local, and Tribal governments, in

the aggregate, of $100 million or more in any one year. Before

promulgating an EPA rule for which a written statement is needed,

section 205 of the UMRA generally requires EPA to identify and consider

a reasonable number of regulatory alternatives and adopt the least

costly, most cost-effective or least burdensome alternative that

achieves the objectives of the rule. The provisions of section 205 do

not apply when they are inconsistent with applicable law. Under section

204 of the UMRA, EPA generally must develop a process to permit elected

officials of State, local and Tribal governments (or their designated

employees with authority to act on their behalf) to provide meaningful

and timely input in the development of regulatory proposals containing

significant Federal intergovernmental mandates. These consultation

requirements build upon those of Executive Order 12875 (``Enhancing the

Intergovernmental Partnership''). Before EPA establishes any regulatory

requirements that may significantly or uniquely affect small

governments, including Tribal governments, it must have developed under

section 203 of the UMRA a small government agency plan. The plan must

provide for notifying potentially affected small governments, enabling

officials of affected small governments to have meaningful and timely

input in the development of EPA regulatory proposals with significant

Federal intergovernmental mandates, and informing, educating, and

advising small governments on compliance with the regulatory

requirements.

EPA has determined that this proposed rule does not contain a

Federal mandate that may result in expenditures of $100 million or more

for State, local and tribal governments, in the aggregate, or the

private sector in any one year. This is because this proposed rule is

essentially ``deregulatory'' in nature, relieving, subject to

conditions, the sole regulated entity of restrictions that would

otherwise apply. This proposed rule should result in resource savings

to the Hess Oil Virgin Islands refinery that would not likely be

obtained in the absence of today's proposed rule. Thus, today's

proposed rule is not subject to the requirements of sections 202, 204

and 205 of the UMRA. With respect to section 203 of the UMRA, EPA has

determined that this rule contains no regulatory requirements that

might significantly or uniquely affect small governments. As previously

stated, EPA believes the rule will reduce the regulatory burden on the

regulated community, without imposing additional significant or unique

burdens on the Virgin Islands to implement today's proposed rule.

Executive Order 12866

This action has been classified as a Table 3 action by the

Administrator under the procedures published in the Federal Register on

January 19, 1989 (54 FR 2214-2225), as revised by a July 10, 1995

memorandum from Mary Nichols, Assistant Administrator for Air and

Radiation. The Office of Management and Budget (OMB) has exempted this

regulatory action from E.O. 12866 review.

List of Subjects in 40 CFR Part 69:

Environmental protection, Air pollution control.

Dated: May 30, 1997.

Carol M. Browner,

Administrator.

For the reasons stated in the preamble, the Environmental

Protection Agency proposes to amend 40 CFR part 69 as set forth below:

PART 69--[AMENDED]

1. The authority citation for part 69 continues to read as follows:

Authority: Sec. 325(b), Clean Air Act, as amended (42 U.S.C.

7625-1).

2. Subpart D is added consisting of Sec. 69.41 to read as follows:

[[Page 31550]]

Subpart D--The U.S. Virgin Islands

Sec. 69.41 New exemptions.

(a) Pursuant to section 325(a) of the Clean Air Act and a petition

submitted by the Governor of the Virgin Islands, the Administrator

conditionally exempts certain units from certain CAA requirements.

(b) An exemption of the prohibition, under section 123 of the Clean

Air Act, on reliance upon the use of ICS of fuel switching in an

implementation plan is granted for the Hess Oil Virgin Islands (HOVIC)

refinery on St. Croix with the following conditions:

(1) The switch to a lower sulfur fuel (0.5%) will take place when:

(i) The winds blow from a 45 degree sector defined as 143 to 187

degrees inclusive, where zero degrees is due north, for at least 6

consecutive hours during a 24-hour block period or any 12 non-

consecutive hours during a 24 hour block period, or:

(ii) One of HOVIC's ICS monitors measures an average ambient SO2

concentration that is 75% of the 24-hour NAAQS during any rolling 24-

hour average. (75% of the 24-hour NAAQS = 274 ug/m3 or 0.105 ppm).

(2) The switch back to the higher sulfur fuel (1.0%) may occur

under one of the following three conditions:

(i) If the ICS was triggered by paragraph (b)(1)(i) of this

section, the switch back may occur when the winds blow outside the

sector listed in paragraph (b)(1)(i) of this section for at least 3

consecutive hours following the period during which the winds were

blowing inside the sector, or

(ii) If the ICS was triggered by paragraph (b)(1)(ii) of this

section, the switch back may occur after all of HOVIC's ICS ambient

monitors measure a 24-hour average concentration which is less than 75%

of the NAAQS for at least one 24-hour block period following any

occurrence when the monitor measured the concentration which was 75% of

the NAAQS, or

(iii) If the ICS was triggered by both paragraph (b)(1)(i) and

paragraph (b)(1)(ii) of this section, the switch back may occur when

both of the conditions in paragraph (b)(2)(i) of this section and

paragraph (b)(2)(ii) of this section.