United States Air and Radiation EPA420-F-97-012 Environmental Protection March 1997 Agency Office of Mobile Sources SEPA Regulatory Announcement An Overview of the Baseline Adjustment Final Rulemaking The Environmental Protection Agency (EPA) recently promulgated the Baseline Adjustment Final Rulemaking. This rule modifies the baseline adjustment provisions of the December 1993 final reformulated gasoline (RFC) and anti-dumping regulations. Specifically, this rule provides relief in the form of baseline adjustments for refiners who meet certain criteria and who would experience extreme economic burden without such relief. In spite of these adjustments, the environmental impact of this rule is negligible. Such negligible environmental impact is commonly referred to as de minimis in the regulations. Background Under the Clean Air Act as amended in 199O, EPA promulgated "anti- dumping" regulations for conventional gasoline (gasoline not certified as reformulated gasoline). These regulations state that conventional gaso- line cannot be more polluting than it was in 1990. The anti-dumping regulations also include provisions for the develop- ment of individual refinery "baselines." Specifically, an individual refinery baseline is the set of fuel parameter values and emissions values which represent the quality and quantity of a refiner's 1990 gasoline. A refiner's individual baseline is the reference point against which changes in post-1994 gasoline composition are compared. Additionally, the regulations include provisions that allow a refiner to obtain an adjusted baseline under certain limited circumstances. t Printed on Recycled Paper ------- The The baseline adjustment rule contains modified requirements for obtaining one baseline adjustment and specifies the requirements of two new baseline adjust- ments. First, the rule modifies requirements for refiners who produced a specific type of jet fuel in 1990. Second, the rule provides a baseline adjust- ment for certain refiners who used ex- tremely sweet crude oil (crude oil relatively low in sulfur) in the production of gasoline in 1990, and for whom such crude oil is no longer available. Finally, this rule establishes a baseline adjustment for refineries that have ex- tremely low baseline values for both sulfur and olefins. JP-4 Adjustment In 1990, certain refiners produced JP-4 jet fuel under contract with the U.S. Depart- ment of Defense. Now, however, this fuel is being phased out by the Defense Depart- ment. To compensate for this change in product demand, most producers of JP-4 are transferring the feedstocks for JP-4 production to gasoline production. These feedstocks must be upgraded to be used in gasoline. This upgrade, which boosts the octane of the feedstocks, causes a subse- quent increase in a refiner's toxic emissions relative to its individual baseline. For certain refiners who produced signifi- cant quantities of JP-4 in 1990, the burden of complying (via refinery chances or other measures) with an individual baseline, given the increased toxics emissions, is severe, and could cause them to cease operations. The JP-4 baseline adjustment reduces the regulatory burden of the anti-dumping program for those refiners who produced JP-4 jet fuel in 1990 and who meet certain criteria. These criteria have been modified from the original rule to allow more pro- ducers of JP-4 to qualify for an adjustment. Low Sulfur Crude Adjustment Since 1990, a few refiners, particularly those in certain Rocky Mountain states, have experienced dramatic increases in the sulfur content of the crude oil available to them. Such increases generally lead to increases in gasoline sulfur content which, in turn, result in increased vehicle emis- sions. For these refiners, compliance with their individual baselines, in the face of increasing crude sulfur levels, could be economically devastating. The low sulfur crude baseline adjustment reduces the regulatory burden of the anti- dumping program for those refiners who have very low baseline sulfur levels and whose access to alternative crude supplies is geographically limited. Other criteria specified in the rule must also be met to ensure that only economically distressed refineries receive the adjustment and that the environmental impact of allowing the adjustments is de minimis. ------- Low Sulfur Low Olefins Adjustment A few refiners have extremely low baseline levels of both sulfur and olefins. Low levels of these fuel parameters can cause compli- ance difficulties for these refiners since both fuel parameters affect oxides of nitrogen (NOx) emissions. Although other refiners may be able to offset emissions increases from one parameter by changing other parameters, refiners with low levels of multiple fuel parameters, such as sulfur and olefins, have very limited maneuver- ability. Compliance with the anti-dumping require- ments depends on specific fuel parameter test results. For very low baseline values of fuel components, errors in lab analysis, sample contamination, or equipment accuracy can incorrectly result in measured fuel parameter values which are greater than the baseline values. Such results could hinder a refiner's compliance with the annual-averaged limits on sulfur and olefin values for both the RFG and antidumping programs. The low sulfur and low olefins baseline adjustment reduces the regulatory burden of the antidumping program for those refiners who have very low baseline values for both sulfur and olefins. Qualifying refiners will have more maneuverability about their baselines and more flexibility in regard to the annual averaging of fuel parameters. EPA expects a negligible environmental impact from allowing baseline adjustments under the criteria of this rule because only a few refiners are expected to qualify for the adjustments (about 16) and the amount of gasoline they produce is small (less than 3 percent of annual U.S. production). Estimates made using the Complex Model (a mathematical compliance model) show less than a 0.1 percent increase in NOx emissions, and less than a 1 percent in- crease in exhaust toxics emissions due to these baseline adjustments. For For further information on this rulemaking, please contact Christine Brunner at: U.S. EPA Office of Mobile Sources 2000 Traverwood Dr. Ann Arbor, MI 48105 734.2 14-4287 Additional documents on this final rule and RFG are available electronically from the EPA Internet server at: http://www.epa.gov/OMS/fuels.htm ------- |