[Federal Register Volume 62, Number 111 (Tuesday, June 10, 1997)]
[Proposed Rules]
[Pages 31546-31550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15091]


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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

[[Page 31548]]

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:
    (c) If the ICS was triggered by both (1)(a) and (b) above, the 
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.
    (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.
    (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 
significantly causing or contributing to an exceedance of the NAAQS.

[FR Doc. 97-15091 Filed 6-9-97; 8:45 am]
BILLING CODE 6560-50-M