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NPRA to EPA: Sulfur Proposal Is a Recipe for Risk;
It Goes Too Far Too Fast

Philadelphia, PA, June 9, 1999 — The National Petrochemical & Refiners Association's (NPRA) President, Urvan R. Sternfels, warned EPA today that its gasoline sulfur proposal could lead to gasoline supply problems and refinery closures if necessary changes are not made. "The EPA proposal in its current form is a recipe for risk," Sternfels said. "We expect capacity to decrease as a result of the proposal, while the uniformly low national sulfur standards will further eliminate flexibility for operating refineries. If you do not amend the proposal from its current form, we fear that adverse consequences will result: fewer refineries, less certainty of supply and unpredictable market movements. We must have changes in the gasoline sulfur proposal. It goes too far too fast."

NPRA restated its preference for the industry proposal to reduce gasoline in sulfur jointly advocated by NPRA and the American Petroleum Institute (API). "A phased, regional approach would be more balanced and cost effective than the EPA proposal. Phasing and recognition of differing air quality needs in certain parts of the country would go a long way towards easing our concerns about the severe impact of this rulemaking," Sternfels continued.

The NPRA strongly criticized the timeframe for sulfur reduction in the EPA proposal: "The short timeframe available before the fall 2003 effective date is very unrealistic. The entire industry cannot meet the strict 30 ppm average sulfur requirement in EPA's timeframe."

Acknowledging that the EPA contends that its banking and trading program softens the impact of the short period for coming into compliance with the standards, Sternfels said that refiners nevertheless obtain little or no flexibility from the current banking and trading proposal. "The combined interim caps and averages and the short period to generate early credits are so restrictive that our members do not receive any meaningful relief," Sternfels said.

NPRA urged EPA to change its proposal to allow time for necessary refinery maintenance and turnarounds, as well as unforeseen outages. "We need to build permanent flexibility into the proposal to allow for refinery outages and standard maintenance; relief from the caps will also be necessary," NPRA said. Citing the added strain of strict new sulfur rules on the historically high levels of capacity utilization in the refining industry, Sternfels urged "The proposal must be changed to reflect the fact that equipment cannot be run permanently at full capacity." He added that recent gasoline market fluctuations in California indicate what could happen on a national scale if EPA does not make its proposal more realistic.

NPRA expressed its willingness to work with EPA to cure the deficiencies of the current proposal, including efforts to construct a fast-track mechanism for approval of permits which refiners will need to comply with the regulations in their eventual form. The EPA proposal concedes that timely securing of permits is crucial to enable refiners to comply with the regulation, but offers no effective mechanism such as NPRA advocates to streamline the application and review process.

"NPRA agrees that reducing gasoline sulfur levels is important," Sternfels said. "However, recent EPA reversals in federal court indicate that gasoline sulfur isn't the first issue on which the Agency seeks to go too far, too fast. When it comes to a final gasoline sulfur rule, Let's do it right the first time."

"NPRA cannot look at the current gasoline sulfur proposal in isolation from the upcoming diesel sulfur regulation and the threat of federal and state restrictions on MTBE usage. The combined impact of these fuel-related issues is such that we cannot assure the EPA or other federal policymakers that adverse consequences will not occur in the form of refinery shutdowns and supply problems," Sternfels concluded.

Sternfels presented NPRA's testimony at an EPA hearing on the gasoline sulfur proposal which was held in Philadelphia, Pennsylvania. The proposal was published in the Federal Register on May 13, 1999.

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