EPA’s Draft Gas Distribution Rule – What’s in store for the Industry?

On June 10th EPA published its Proposed Rule in the Federal Register entitled: National Emission Standards for Hazardous Air Pollutants: Gasoline Distribution Technology Review and Standards of Performance for Bulk Gasoline Terminals Review.  These proposed rules are a generational change to the industry.  That said there are many stakeholder groups involved, and it will get very interesting as many commenters will be challenging EPA’s positions.  Extensions to the 60 day comment period have already been requested from various stakeholder groups, but word on the street is that EPA does not plan to extend the timeline.

This comes at a time when the cost of gasoline is at record levels.  The cost of implementation by EPA’s own admission is significant and industry says their estimates for cost of implementation are significantly under-estimated.  If the rule is implemented as proposed, the free market would undoubtedly pass that on to the consumer who will see their gas pump prices sky rocket once again.

On a somewhat related note, on June 30, 2022, the Supreme Court ruled in favor of West Virginia vs EPA which works toward limiting EPA’s power to create pseudo-laws through regulations.  This new proposed Gas Distribution Rule could potentially be affected by the precedence of this ruling.

Enough on polity!  So, what exactly is in this new proposed rule?  In short you could say a tremendous amount and to cover it all, you would have to regurgitate the rule.  So, following is a quick summary of some major tenants of the proposed rule and their potential impact to terminals, refineries and breakout stations.

There are currently three Gas Distribution subparts that have varying applicability:  NESHAP Subpart BBBBBB (6B) – for area sources; NESHAP Subpart R – for major sources; and NSPS Subpart XX (XXa is proposed).

The requirements for the revised/new subparts are very detailed with many varying levels of applicability based on the type of facility, throughput volume and many other factors.  To provide a “40,000-foot view” of the impact of the proposed rule, we will cover just a few of the “big ticket” items being proposed. Keep in mind if these changes are promulgated, most will allow for a 3-year window to upgrade to the revised standard.

Loading Racks and Performance Requirements:

A facility’s potential to emit (PTE) is what charts the path of permitting and compliance.  The loading racks have very significant PTE particularly with regard to loading gasoline which is very volatile.  Loading racks have control devices that keep those emissions to manageable levels and they must demonstrate compliance in that area through performance standards in milligrams per liter (mg/l).  The EPA’s proposed rule will tighten those standards significantly.  For example:

  • Minor/area source new loading racks – 1 mg/L standard. This limit is very impractical and lower than anticipated.  Stakeholders were concerned that EPA may drop it to 10 mg/l and this is an order of magnitude less.  Reconstruction or modification of loading racks will have to comply with 10 mg/L.
  • Existing major source – 10 mg/L standard
  • Existing minor/area source – 35 mg/L standard

EPA admits that this proposed rule is more stringent and is not cost-effective; however, they make a major plea to solicit comments to justify doing it anyway due to how many people live close to these facilities, and in particular minorities and those of lower education or socioeconomics.

Control Devices Demonstrating Continuous Compliance

Vapor Recovery Units (VRU) are considered the gold standard in controlling volatile emissions.  They are costly; however, they recover gasoline from the vapors which are sent back to the terminal for wholesale distribution.  They also have very high emission control factors (98-99% removal).

Proposed Standards:

  • Major Source Rack –demonstrated continually as 5,500 ppm as propane on three-hour rolling average.
  • Minor Source Rack –demonstrated continually as 19,200 ppm as propane on three-hour rolling average.

 

Vapor Combustion Units (VCU) are most widely used particularly at terminals with lower throughput.  They function using combustion as the name implies.  Gasoline combusts at very low temperatures and traditionally continuous compliance has been demonstrated simply by the presence of a flame.

Proposed Standards:

  • Major Source Loading Racks – must demonstrate continuous compliance using temperature monitoring – this is very controversial.  Stakeholder groups state there is no parametric data available which demonstrates that temperature is a reliable parameter to indicate combustion efficiency.
  • Minor Source Loading Rack – must demonstrate continuous compliance as either temperature monitoring. Same controversy.

 

Cargo Tank Vapor Tightness

Cargo Tanks are currently required to be pressure tested for area/minor sources (NESHAP Subpart 6B and NSPS Subpart XX) as well as for major sources (NESHAP Subpart R).  For area/minor sources that pressure standard is currently 3 inches of water column (in-wc) for tanker compartment capacity.  For major sources it ranges from 0.5 in-wc for compartments > 2,500 gallons to 2.5 in-wc for small compartments (<999 gallons).

The proposed rule will tighten this down considerably and unify the same standard for minor and major sources.  The proposed pressure standard ranges from 0.20 to 1.0 in-wc.  This is particularly more stringent for minor sources and will impact petroleum marketers (jobbers).  I suspect there will be considerable industry comment regarding this proposed change.

Gasoline Storage Vessels (i.e., Tanks)

The most significant changes proposed for tanks are the floating roofs:

  • For minor/area sources and major sources: external floating roofs (EFRs) are required to meet NSPS Subpart Kb fitting requirements and internal floating roofs (IFRs) will require annual lower explosive limit (LEL) monitoring.  The proposed rule did not specify what will constitute “LEL monitoring” but EPA does have current standard operating protocol (SOP) for IFRs.
  • The roof fitting updates must be done at first degassing, three years after the standard is finalized or 10 years, whichever occurs first.

The general consensus among stakeholders is that, this will not be cost effective and comments should reflect that accordingly.  In the event of not meeting LEL requirements for the IFR, the proposed rule would allow for a 3-year period to upgrade the floating roof accordingly (ie – replacing aluminum, bolted decks that don’t pass).

Equipment Leaks (currently doing AVO only at terminals)

The NESHAP Subpart 6B and the NSPS Subpart XX both have leak detection and repair (LDAR) provisions for gasoline facilities to conduct monitoring for equipment leaks.  However, the majority (but not all) required only sight, sound, smell (audio, visual and olfactory (AVO)) inspections.

The proposed revision to 6B will require annual instrument-based (Method 21) inspections and the new proposed Subpart XXa will require quarterly instrument-based inspections for pumps, valves and connectors with a leak being defined as a measurement greater than 10,000 ppm.  This will be in addition to the monthly AVOs currently required.

If promulgated, this will be a significant and costly change to the gasoline terminal industry.  Not because it will identify leaks, but the cost of implementation of this monitoring will be a significant burden with very little benefit, if any, to the environment.  All components will have to be identified, tagged and monitored which will be burdensome to say the least.  Further to that point, EPA has proposed to include connectors meaning the component count will double and likely triple the sum of the count of pumps and valves.

It appears that most of the stakeholders are of the opinion that occurrence of leaks above 10,000 are very rare and that AVO inspections are more than sufficient to identify those leaks.  In fact, analyses have been presented that show that AVO will be more effective than instrument monitoring at identifying leaks to be repaired, if the measured threshold for a leak is 10,000 ppm.

The other option proposed by EPA in lieu of Method 21 monitoring is optical gas imaging (OGI) surveys.

The draft rule proposed does allow for a grace period of 3 years to go to these programs.

Miscellaneous Others

The rule proposes to require routine reporting to be submitted electronically through CDX using the Compliance Emissions Data Reporting Interface (CEDRI) and like the others changes there is a 3-year grace period to switch to this reporting requirement.

The final pages of the proposed rule are full of what percent non-white and poor live within 5 km and 50 km of these facilities (See Table 18).  Executive Order 12898 is referenced in the proposed rule which directs EPA to “identify the populations of concern who are most likely to experience unequal burdens from environmental harms; specifically, minority populations, low-income populations, and indigenous peoples”.  This seems to plainly state the case that environmental justice is a major underlying driver for the rule change.

Concluding Thoughts

Summarizing the proposed changes succinctly for Subpart 6B, R and XX/XXa is near impossible.  It impacts both minor and major sources as well as existing and new sources in many different ways.  So, this is an attempt to provide examples of some major impacts that the proposed rule changes would create.

EPA is accepting comments through August 9, 2022. Be sure to identify any submitted comments by Docket ID No. EPA–HQ– OAR–2020–0371. See the Federal Register publication for details on how to submit comments.

I have spent countless hours on conference calls with stakeholders on the topics mentioned here and many more.  If you have any related questions regarding the proposed rule please feel free to reach out to me at 205-240-9883 or via email: zane.hood@ppmco.com.


Zane Hood, P.E.

Principal

Birmingham Office

(205) 240-9883