Speeches/Testimony

Statement of the National Petrochemical & Refiners Association
before the Environmental Protection Agency concerning RMRR Reconsideration
August 2, 2004

I am Dan Hunter of ConocoPhillips, which is headquartered in Houston Texas. I am the Chair of NPRA's Environmental Committee and Manager of Regulatory Issues for ConocoPhillips. ConocoPhillips has13 domestic refineries and numerous other major stationary sources, which makes the Routine Maintenance Repair & Replacement Exclusion rule very important to our company.

I am here today representing the position and views of the National Petrochemical & Refiners Association (NPRA).

NPRA is a national trade association which members comprise more than 450 companies, including virtually all US petroleum refiners and petrochemical manufacturers.

NPRA Position on NSR Reform

NPRA supports EPA's final rules on NSR Reform. Among the benefits of NSR reform and the Routine Maintenance Repair & Replacement Exclusion will be increased supplies of cleaner transportation fuels, resulting in significant environmental benefits that the public, our industry, and policymakers desire. Greater clarity, certainty, and operational flexibility provided through the Equipment Replacement Provisions will enable industry to make the infrastructure improvements needed to maintain reliable, safe operations while meeting the growing demand for cleaner fuels without environmental degradation.

NPRA Comments

NPRA's comments support EPA's rulemaking process, specifically: 1) EPA has the legal authority to finalize the Equipment Replacement Provisions of the RMRR rule, 2) EPA did provide sufficient notice to the public allowing them to comment on EPA's legal justification and 3) EPA's technical analysis supports a 20 percent threshold for reconstruction. In addition to our remarks today, NPRA will file written comments on Reconsideration of the final rule.

EPA's Routine Maintenance Repair & Replacement Exclusion proposal provided a legal foundation for the rule. In our comments on the proposed rule, we supplemented the Agency's legal foundation with additional legal analysis in support of the proposed rule that was based on the Clean Air Act and the subsequent Court decisions. We believe that the resulting legal documentation strongly supports EPA's authority and decision.

One of the purposes of the Administrative Procedures Act is to allow various stakeholders to provide comments in favor of or in opposition to a proposed rule. Historically, stakeholders have rarely found any difficulty identifying issues with which to challenge EPA's rules, ranging from the most detailed technical issue to broad policies. Given this history, it is hard to believe that those arguing that they did not have the opportunity to comment on the legal basis of the rule overlooked in the December 31, 2002 proposal in the Section "How This Preamble Is Organized" a major heading titled "Legal Basis For Recommended Approaches." NPRA and numerous others not only located this section but also provided comments to EPA on the legal basis for the RMRR rulemaking.

I would like to make 3 points concerning the issue of whether the 20% threshold for reconstruction is arbitrary and capricious and lacks sufficient record.

First, in preparing the Regulatory Impact Analysis for this rule, EPA conducted a detailed analysis of the routine maintenance costs of the petroleum refining industry and 5 other industries outside the electric generating sector. The study looked at a typical refinery profile of equipment replacement and maintenance activities that might be affected by ERP, the associated emissions, and the costs. The results of this analysis along with the others formed the basis for the selection of the 20% threshold. NPRA independently conducted a survey of its members to verify EPA's study. The results of the NPRA survey supported EPA's analysis.

It is difficult to understand how analysis buttressed by six detailed industry studies and computer modeling of the electric power industry can be considered arbitrary and capricious and lacking record.

Second, bright lines such as provided by the 20% threshold do not lead to emissions increases; in fact they have just the opposite effect. With my 30 years of experience at refineries, I can say that providing certainty with a bright line for ERP activities enables operators to more easily identify projects that automatically qualify as RMRR, making timely efficiency and reliability improvements that would previously not be undertaken. This timely attention is likely to result in reduction of emissions. EPA's study indicates the ERP provision would likely have no effect on emissions.

Third, as EPA stated in this Reconsideration of the final rule, the use of a bright line percentage for building permits is common practice in cities and counties throughout the U.S. It is used as a means of determining whether a building modification should be defined as new construction and subject to the building codes covering new construction or not. We believe applying that same principle is appropriate in the application of these rules. We will provide more information on this subject in our comments.

In summary, NPRA

Supports the final rules on NSR Reform
Believes EPA has the legal authority to make the proposed rule changes
Believes that sufficient notice of the proposed changes has been provided
Believes that EPA's technical analysis supports the 20% threshold for reconstruction