Lower sulfur-in-fuel limits for distillate and residual oils, remove expired provisions and correct typographical errors.
Public hearing(s) will be held at:
2:00 p.m., Dec. 17, 2012 at Department of Environmental Conservation Region 2 Office, 1 Hunters Point Plaza, 47-40 21st St., Rm. 834, Long Island City, NY; 2:00 p.m., Dec. 18, 2012 at Department of Environmental Conservation Region 8 Office, Conference Rm., 6274 E. Avon-Lima Road (Rtes. 5 and 20), Avon, NY; and 2:00 p.m., Dec. 20, 2012 at Department of Environmental Conservation, 625 Broadway, Public Assembly Rm. 129, Albany, NY.
Interpreter Service:
Interpreter services will be made available to hearing impaired persons, at no charge, upon written request submitted within reasonable time prior to the scheduled public hearing. The written request must be addressed to the agency representative designated in the paragraph below.
Accessibility:
All public hearings have been scheduled at places reasonably accessible to persons with a mobility impairment.
Text of proposed rule:
A new Subdivision 200.1(cw) is added as follows:
(cw) Waste Oil. Used and/or reprocessed engine lubricating oil and/or any other used oil, including but not limited to, fuel oil, engine oil, gear oil, cutting oil, transmission fluid, hydraulic fluid, dielectric fluid, oil storage tank residue, animal oil, and vegetable oil, which has not subsequently been re-refined.
(Existing sections 200.2 through 200.8 remain unchanged.)
Existing section 200.9, Table 1 is amended as follows:
Regulation
Referenced Material
Availability
225-1.5(b)
40 CFR Part 60, Appendix B, July 1, 2006, Performance Specification 2, pages 639-646
*
225-1.5(b)(3)
40 CFR Part 75, July 1, 2008
*
[225-1.7(b)]
[40 CFR Part 60, Appendix B (July 1989) Performance Specification 2, pages 981-988]
[*]
(Existing section 200.10 through section 200.16 remains unchanged.)
Existing 6 NYCRR Subpart 225-1, Fuel Composition and Use - Sulfur Limitations is repealed.
A new Subpart 225-1, Fuel Composition and Use - Sulfur Limitations is added as follows:
Section 225-1.1 Definitions.
(a) To the extent that they are not inconsistent with the specific definitions in Subdivision (b) of this Section, the general definitions of Part 200 and Part 201 of this Title apply.
(b) For the purpose of this Subpart, the following definitions also apply:
(1) Fuel distributor. Any person who transports, stores, or causes the transportation or storage of distillate oil, residual oil, and/or coal at any point between a refinery/mine or importer's facility and a retail outlet or wholesale purchaser-consumer's facility.
Section 225-1.2 Sulfur-in-fuel limitations. No person will sell, offer for sale, purchase, or fire any fuel which exceeds the sulfur-in-fuel limitations of this Section, except as provided in Sections 225-1.3 or 225-1.4 of this Subpart. For the purposes of this Subpart liquid bio-fuels, other than waste oils, will be required to meet the sulfur-in-fuel standards of either number two heating oil or distillate oil.
(a) Owners and/or operators of any stationary combustion installation(s) that fire(s) coal and has a total heat input greater than 250 million Btu per hour, where an application for a permit was received by the department after March 15, 1973, and the stationary combustion installation is not located in New York City or Nassau, Rockland or Westchester Counties, are limited to the firing of coal with 0.60 pound of sulfur per million Btu gross heat content or less. If two or more emission sources are connected to a common air cleaning device and/or emission point, the total heat input for such emission point is the sum of the total heat input of all emission sources which are operated simultaneously and connected to the common air cleaning device and/or emission point; or
(b) Owners and/or operators of any stationary combustion installation that fires either solid fuels or oil are limited to the firing of solid fuels or oil with a sulfur content listed in the table below through June 30, 2014:
Area
Liquid fuel (percent sulfur by weight)
Solid fuel (pounds of sulfur per million Btu gross heat content)
Residual
Distillate*
New York City
0.30
0.20
0.2 MAX
Nassau, Rockland and Westchester Counties
0.37
0.37
0.2 MAX
Suffolk County: Towns of Babylon, Brookhaven, Huntington, Islip, and Smith Town
1.00
1.00
0.6 MAX
Erie County: City of Lackawana and South Buffalo**
1.10
1.10
1.7 MAX and 1.4 AVG***
Niagara County and remainder of Erie County
1.50
1.7 MAX and 1.4 AVG***
Remainder of State
1.50
1.50
2.5 MAX, 1.9 AVG***, and 1.7 AVG (ANNUAL)****
* Except for number two heating oil as stated in Subdivision (f) of this Section.
** South Buffalo is defined as the area in the City of Buffalo south of a line from the intersection of IR 190 and Route 5 and proceeding east along IR 190 to the city line.
*** Averages are computed for each emission source by dividing the total sulfur content by the total gross heat content of all solid fuel received during any consecutive three-month period.
**** Annual averages are computed for each emission source by dividing the total sulfur content by the total gross heat content of all solid fuel received during any consecutive 12-month period.
(c) Owners and/or operators of any stationary combustion installation that fires solid fuels are limited to the firing of solid fuel with a sulfur content listed in the table below on or after July 1, 2014:
Area
Solid fuel (pounds of sulfur per million Btu gross heat content)
New York City
0.2 MAX
Nassau, Rockland and Westchester Counties
0.2 MAX
Suffolk County: Towns of Babylon, Brookhaven, Huntington, Islip, and Smith Town
0.6 MAX
Erie and Niagara Counties
1.7 MAX, 1.4 AVG*
Remainder of State
2.5 MAX, 1.9 AVG*, and 1.7 AVG (ANNUAL)**
* Averages are computed for each emission source by dividing the total sulfur content by the total gross heat content of all solid fuel received during any consecutive three-month period.
** Annual averages are computed for each emission source by dividing the total sulfur content by the total gross heat content of all solid fuel received during any consecutive 12-month period.
(d) Owners and/or operators of any stationary combustion installation that fires residual oil are limited to the firing of residual oil with a sulfur content listed in the table below on or after July 1, 2014:
Area
Residual Oil (percent sulfur by weight)
New York City
0.30
Nassau, Rockland and Westchester Counties
0.37
(e) Owners and/or operators of any stationary combustion installation that fires residual oil are limited to the purchase of residual oil with a sulfur content listed in the table below on or after July 1, 2014, and are limited to the firing of residual oil with a sulfur content listed in the table below on or after July 1, 2016:
Area
Residual Oil (percent sulfur by weight)
Suffolk County: Towns of Babylon, Brookhaven, Huntington, Islip, and Smith Town
0.50
Erie and Niagara Counties
0.50
Remainder of State
0.50
(f) Owners and/or operators of commercial, industrial, or residential emission sources that fire number two heating oil on or after July 1, 2012 are limited to the firing of number two heating oil with 0.0015 percent sulfur by weight or less.
(g) Owners and/or operators of any stationary combustion installation that fires distillate oil are limited to the purchase of distillate oil with 0.0015 percent sulfur by weight or less on or after July 1, 2014, and are limited to the firing of distillate oil with 0.0015 percent sulfur by weight or less on or after July 1, 2016.
(h) Owners and/or operators of any stationary combustion installation that fires waste oil on or after July 1, 2014 are limited to the firing of waste oil with 0.75 percent sulfur by weight or less.
Section 225-1.3 Exceptions contingent upon fuel shortage.
(a) Upon application by a facility owner or a fuel distributor the department may issue an order granting a temporary exception from the provisions of this Subpart where it can be shown, to the department's satisfaction, that there is an insufficient supply of conforming fuel, either:
(1) of the proper type required for firing in a particular emission source; or
(2) generally throughout an area of the State.
(b) The New York State Energy Research and Development Authority must certify that there exists an insufficient supply of fuel which conforms to the standards in this Subpart before a sulfur-in-fuel exception may be granted under this Subdivision.
(c) The department may grant a sulfur-in-fuel exception contingent upon a fuel shortage for a period not longer than 45 days.
(d) The department may grant a sulfur-in-fuel exception contingent upon a fuel shortage for a period longer than 45 days, but not longer than one year, only after a public hearing is held to gather information relevant to such an exception. The applicant for the exception must publish notice of such hearings, in a form acceptable to the department, in a newspaper of general circulation in the area for which the exception is sought. The applicant will bear the cost of publication of the notice, of the hearing transcript, and for rental of space in which the hearing is conducted.
(e) The department recognizes that, pursuant to section 117 of article 5 of the Energy Law, provisions of this Subpart may be pre-empted when the Governor declares that an energy or fuel supply emergency exists or is impending.
Section 225-1.4 Variances.
(a) Fuel mixtures or equivalent emission rate variances. Fuels with sulfur content greater than that allowed by this Subpart may be fired when the facility owner can demonstrate that sulfur dioxide emissions do not exceed the value for S calculated using the following equation: S = (1.1AM + 2BT)/(M + T) where:
S = Allowable sulfur dioxide emission (in pounds per million Btu)
A = Sulfur in oil allowed by Section 225-1.2 of this Subpart (in percent by weight)
B = Average sulfur in solid fuel allowed by Section 225-1.2 of this Subpart (in pounds of sulfur per million Btu gross heat content)
M = Percent of total heat input from liquid fuel
T = Percent of total heat input from solid fuel (including coal, coke, wood, wood waste, and refuse-derived fuel)
Fuel mixtures and equivalent emission rate variances only apply to processes or stationary combustion installations. Compliance will be based on the total heat input from all fuels fired, including gaseous fuels. Any process or stationary combustion installation owner who chooses to fire a fuel mixture pursuant to this Subdivision is subject to the emission and fuel monitoring requirements of Section 225-1.5 of this Subpart.
(b) Experiments variance. Upon application, the department may issue a variance allowing the sale, offering for sale, purchase and firing of fuel having a sulfur content in excess of the limits imposed by this Subpart, where such fuel would be fired to demonstrate the performance of experimental equipment and/or process(es) for reducing sulfur compounds from an emission source.
(c) Coal and coke. In New York City and Nassau, Rockland and Westchester Counties, the commissioner will permit:
(1) the sale and the continued, but not increased, purchase and use of coal and coke for installations with a maximum operating heat input equal to or less than one million Btu per hour if coal and coke has been used continuously since December 31, 1967 and the maximum sulfur content does not exceed 0.6 pound per million Btu gross heat content; or
(2) the sale, purchase and use of coal and coke for approved conversions of existing stationary combustion installations to the use of coal, and for new coal-fired stationary combustion installations, provided that the coal conversion or new stationary combustion installations meet all applicable air quality and State Environmental Quality Review requirements.
Section 225-1.5 Emissions and fuel monitoring.
(a) The provisions of this section apply to owners of stationary combustion installations:
(1) with a total heat input greater than 250 million Btu per hour. If two or more emission sources are exhausted through a common emission point, the total heat input for such an emission point is either the sum of the maximum operating heat inputs of all emission sources which are operated simultaneously and exhausted through the common emission point, or the maximum operating heat input of any individual emission source operated independently and connected to the common emission point, whichever is greater;
(2) which are equipped with approved sulfur dioxide control equipment; or
(3) which are subject to a sulfur dioxide equivalent emissions rate for a fuel mixture pursuant to Subdivision 225-1.4(a) of this Subpart.
(b) Instruments for continuously monitoring and recording sulfur compound emissions (expressed as sulfur dioxide) must be installed and operated at all times that the stationary combustion installation is in service. Such instruments must be operated in accordance with manufacturer's instructions, must satisfy the criteria in "performance specification 2", appendix B, part 60 of title 40 of the Code of Federal Regulations (see Table 1, Section 200.9 of this Title), and must be acceptable to the department. Exceptions to these requirements are:
(1) stationary combustion installations where gaseous fuel is the only fuel fired; or
(2) stationary combustion installations, not including any equipped with sulfur dioxide control equipment, whose fuel is subjected to representative sampling and sulfur analysis conducted in a manner approved by the department; or
(3) stationary combustion installations required to use the continuous monitoring specifications under 40 CFR part 75 (see Table 1, Section 200.9 of this Title).
(c) Measurements must be made daily of the rate of each fuel fired. The gross heat content and ash content of each fuel fired must be determined at least once each week. In the case of stationary combustion installations producing electricity for sale, the average electrical output and the hourly generation rate must also be measured.
Section 225-1.6 Reports, sampling, and analysis.
(a) The department will require fuel analyses, information on the quantity of fuel received, fired or sold, and results of stack sampling, stack monitoring, and other procedures to ensure compliance with the provisions of this Subpart.
(b)(1) Any person who sells oil and/or coal must retain, for at least five years, records containing the following information:
(i) fuel analyses and data on the quantities of all oil and coal received; and
(ii) the names of all purchasers, fuel analyses, and data on the quantities of all oil and coal sold.
(2) Such fuel analyses must contain, as a minimum:
(i) data on the sulfur content, ash content, specific gravity, and heating value of residual oil;
(ii) data on the sulfur content, specific gravity, and heating value of distillate oil; and
(iii) data on the sulfur content, ash content, and heating value of coal.
(c) Sampling, compositing, and analysis of fuel samples must be done in accordance with methods acceptable to the department.
(d) Facility owners or fuel distributors required to maintain and retain records pursuant to this Subpart must make such records available for inspection by the department.
(e) Data collected pursuant to this Subpart must be tabulated and summarized in a form acceptable to the department, and must be retained for at least five years. The owner of a Title V facility must furnish to the department such records and summaries, on a semiannual calendar basis, within 30 days after the end of the semiannual period. All other facility owners or distributors must submit these records and summaries upon request of the department.
(f) Facility owners subject to this Subpart must submit a written report of the fuel sulfur content exceeding the applicable sulfur-in-fuel limitation, measured emissions exceeding the applicable sulfur-in-fuel limitation, measured emissions exceeding the applicable equivalent emission rate, and the nature and cause of such exceedances if known, for each calendar quarter, within 30 days after the end of any quarterly period in which an exceedances takes place.
Section 225-1.7 Severability.
Each provision of this Part shall be deemed severable, and in the event that any provision of this Part is held to be invalid, the remainder of this Part shall continue in full force and effect.
Text of proposed rule and any required statements and analyses may be obtained from:
Michael Jennings, NYSDEC, Division of Air Resources, 625 Broadway, Albany, NY 12233-3254, (518) 402-8403, email: 225sulfur@gw.dec.state.ny.us
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
December 28, 2012.
Additional matter required by statute:
Pursuant to Article 8 of the State Environmental Quality Review Act, a Short Environmental Assessment Form, a Negative Declaration and a Coastal Assessment Form have been prepared and are on file.
Summary of Regulatory Impact Statement
INTRODUCTION
The New York State Department of Environmental Conservation (Department) is proposing to revise 6 NYCRR Subpart 225-1, "Fuel Composition and Use - Sulfur Limitations" and 6 NYCRR Part 200, "General Provisions." Subpart 225-1 imposes limits on the sulfur content of distillate oil, residual oil, and coal fired in stationary sources. The Department is proposing these changes to both implement a statutory requirement and meet our obligations to reduce air pollution. The revisions to Subpart 225-1 will be a component of the State Implementation Plan (SIP) for New York State (NYS) directed at attainment of the particulate matter less than or equal to 2.5 microns in diameter (PM-2.5) national ambient air quality standard (NAAQS), the sulfur dioxide (SO) NAAQS and the Department's obligations under the regional haze SIP submitted to U.S. Environmental Protection Agency (EPA) on March 15, 2010. This is a requirement flowing from the State's obligations under the Clean Air Act. This is not a mandate on local governments. It applies to any entity that owns or operates a subject stationary source. This proposal will not regulate transportation fuel.
The revisions to Part 200 incorporate references to federal rules and add a definition for "waste oil". The revisions to Subpart 225-1 primarily include the lowering of the sulfur-in-fuel limits for all distillate and residual oils sold, purchased, and/or used in portable (not including non-road engines) or stationary sources in New York State. These revisions will also include the removal of "out-of-date" sulfur-in-fuel tables, expired source specific variances, and the correction of typographical errors. In addition, the Department is removing the variance for emission sources with a maximum operating heat input greater than one million Btu per hour (mmBtu/hr) heat input rate that fire coal and coke in New York City, Nassau, Rockland, and Westchester Counties.
STATUTORY AUTHORITY
The following Sections of the Environmental Conservation Law (ECL) allow the Department to promulgate and implement the proposed regulation: Section 1-0101, Section 3-0301, Section 19-0103, Section 19-0105, Section 19-0301, Section 19-0303, Section 19-0305, Section 19-0325, Section 71-2103, and Section 71-2105.
LEGISLATIVE OBJECTIVES
Article 19 of the ECL was adopted for the purpose of safeguarding the air resources of New York from pollution. To facilitate this purpose, the Legislature bestowed specific powers and duties on the Department including the power to formulate, adopt, promulgate, amend, and repeal regulations for preventing, controlling or prohibiting air pollution. This authority also specifically includes promulgating rules and regulations for preventing, controlling or prohibiting air pollution in such areas of the State as shall or may be affected by air pollution, and provisions establishing areas of the State and prescribing for such areas (1) the degree of air pollution or air contamination that may be permitted therein, and (2) the extent to which air contaminants may be emitted to the air by any air contamination source. In addition, this authority also includes the preparation of a general comprehensive plan for the control or abatement of existing air pollution and for the control or prevention of any new air pollution recognizing various requirements for different areas of the State. The legislative objectives underlying the above statutes are directed toward protection of the environment and public health. The proposed rulemaking will further the goals of the above referenced statutes by reducing air pollution, specifically SO emissions, a criteria pollutant and a precursor to PM-2.5 which in turn is a precursor to visibility-impairing haze from the majority of oil firing stationary sources throughout New York. These reductions will reduce the health impacts of said pollutants by providing cleaner air.
NEEDS AND BENEFITS
Regional haze refers to the presence of light-inhibiting pollutants in the atmosphere. These particles and gases scatter or absorb light to cause a net effect referred to as "light extinction." This scattering and absorbing occurs across the sight path of an observer, thus leading to a hazy condition. Emissions of pollutants such as SO, PM-10, and PM-2.5 are the primary contributors to visibility problems. These pollutants lend themselves to being transported great distances once they enter the atmosphere. Accordingly, sources contribute to visibility impairment in Class I areas far downwind of their locations, thereby necessitating a regional approach to solving the haze issue.
There are many environmental benefits inherent in the reductions of PM and SO that do not explicitly relate to visibility improvement. These reductions will lead to advances in health protection as well. Although downwind rural and urban areas within NYS were not specifically targeted through the Regional Haze Rule, these areas can expect to benefit from improved air quality. In addition to experiencing improved visibility, forested areas such as the Adirondack Park will benefit from reduced PM acid deposition impacts, which are described below. These environmental impacts could also be expected to translate into economic benefits from increased public use of a cleaner and visibly healthier park.
Elevated PM levels are of concern for the New York City metropolitan area, which has been designated as non-attainment for the annual and 24-hour PM-2.5 NAAQS. PM consists of microscopic solid or liquid particles, and is the major cause of the regional haze issue. PM can be emitted directly from stationary sources, or comprised of nitrate and sulfate particles formed through reactions involving NO and SO in the atmosphere. These particles are small enough to be inhaled into the lungs, and can even enter the bloodstream. Ongoing scientific studies show that particulate inhalation, similarly to ozone, leads to health problems such as coughing, difficulty breathing, aggravated asthma, and a higher likeliness for other respiratory disorders. Studies have also shown that elevations in PM concentrations are associated with such cardiovascular threats as irregular heartbeat and non-fatal heart attacks. Increased PM exposure may even cause premature death in those with existing heart or lung disease.
The proposed changes to Subpart 225-1 are intended to reduce the emission of SOx that are the precursors of PM below the present levels. Existing regulations and emission control programs have been successful in the past at reducing these emissions. Regulatory efforts such as the Acid Rain program, past state and federal fuel sulfur limitations for stationary and mobile sources, and efforts like the Clean Air Interstate Rule have had a significant effect on air quality and health. The proposed sulfur-in-fuel limits in this rule are expected to further reduce monitored values of SOx, and to enable and maintain attainment of the NAAQS.
Stakeholder Meetings
The Department held two stakeholder meetings to discuss its proposed revisions to Subpart 225-1. The first stakeholder meeting was held on June 24, 2010 and the second on November 21, 2011. The Department solicited comments on the proposed rule from the stakeholders. Both stakeholder meetings consisted of attendees from the regulated community (oil manufacturers, oil distributors, and end users) to be affected by the proposed regulation, consultants (both technical and legal), and interested environmental groups. There were two primary concerns raised at the stakeholder meetings. The first involved timing because of the statute. Stakeholders were concerned that the Department would be unable to promulgate a regulation prior to the compliance date contained in the statute. The second also concerned compliance dates. Stakeholders were concerned about phase in of compliance dates for the remainder of distillate oil. Many subject facilities use distillate as back up fuel and fire it very infrequently. These facilities requested time to be able to use and/or blend down their reserve fuel. Based upon these comments the Department proposed a phased in compliance approach. While the July 1, 2012 compliance date for number 2 heating oil is in statute and therefore may not be changed by regulation, the regulation requires a July 1, 2014 compliance date for the purchase of complying oil and a July 1, 2016 compliance date for the firing of these oils.
COSTS
Costs to Regulated Parties and Consumers:
Stationary sources subject to the Subpart 225-1 provisions may incur increased fuel oil costs associated with this proposed regulation. There are several factors that may affect fuel oil prices. These factors include but are not limited to fuel availability, price of crude oil, production costs, storage costs, increase in taxes on oil, overall demand based on weather conditions, and natural gas availability and price. The refining process used to produce lower sulfur content oils (less than 500ppm sulfur content oils) is different from the refining process currently used to manufacture oil with a sulfur content greater than 500 ppm. There will be an initial cost to the oil manufacturers associated with conversion of the current refining process to the new refining process. Therefore, the Department anticipates that production costs will increase. However, based on all of the above listed factors there may or may not be an increase in oil prices (there is the possibility that oil prices could decrease). Setting aside the other factors, the Department conducted a cost analysis based solely upon the increase in production costs and availability of oil to the consumer.
The Department evaluated the availability and production cost of distillate oil with sulfur-by-weight specifications of 500 ppm (low sulfur distillate oil) in 2014 and 15 ppm (ultra-low sulfur distillate oil) in 2018 for the northeast U.S. that corresponds to the MANE-VU Region. The Department based this analysis on currently available refinery studies conducted for the National Oil Heat Research Alliance (NORA) and American Petroleum Institute (API), Energy Information Agency (EIA) data, and a public health benefits study conducted by Northeast States for Coordinated Air Use Management (NESCAUM). The NORA report concludes that as the demand for low and ultra-low sulfur distillate oil increases, the sources of supply and refining capacity for low and ultra-low sulfur distillate oil will be reconfigured for greater production capability. The API report projects that sufficient supplies of low sulfur distillate oil will be available to meet the demand that will be generated from the implementation of a low sulfur distillate oil standard in 2010 for New York State. The NESCAUM report determined overall health care savings from the implementation of both low and ultra-low sulfur distillate oil standards. (Public Health Benefits of Reducing Ground-level Ozone and Fine Particle Matter in the Northeast U.S., A Benefits Mapping and Analysis Program (BENMAP) Study, NESCAUM, January 15, 2008). The Department also conducted a cost analysis based on information from this report in addition to the NORA and API reports and EIA data. Additionally, the Department considered the study conducted by the New York State Energy Research and Development Authority (NYSERDA) and Brookhaven National Laboratories (Low sulfur Home Heating Oil Demonstration Project Summary Report, Energy Research Center, Inc., and Brookhaven National Laboratories, BNL-74956-2005-IR, June 2005 (NYSERDA Report)). The NYSERDA report finds overall savings to consumers in terms of reduced heating equipment service and maintenance costs from using low sulfur distillate oil.
In addition to the above referenced report NYSERDA publishes a weekly "Heating Fuels Report". This report contains the cost difference and oil stock pile figures for both high sulfur and 15 ppm oil. NYSERDA has published this report for about 15 years. NYSERDA also published a report in January 2011 titled "Patterns and Trends - New York State Energy Profiles: 1995-2009"1. These reports show some important trends. First, the amount of number 2 heating oil used in New York State has been steadily decreasing since 2005 after its peak usage from 2000 through 2005. The report shows that the amount of number 2 heating oil used between 2005 and 2009 dropped by 40 percent. Preliminary number 2 heating oil use data from 2010 and 2011 show the trend of lower oil usage in the Northeast has continued. Second, price trends show that the difference between 15 ppm and high sulfur oil was as low as a penny per gallon prior to the shutdown of several oil refineries in the Northeast between October 2011 and April 2012. Since the shutdown of these refineries the price difference between 15 ppm and high sulfur oil has once again risen to approximately five cents per gallon.
Costs to State and Local Governments:
State and local governments may incur increased fuel oil costs associated with this proposed regulation because they are required by Section 19-0325 of Chapter 203 of the ECL to purchase and fire 15 ppm sulfur content number 2 heating oil. However, no new recordkeeping, reporting, or other requirements will be imposed on state and local governments based on this proposed rule-making. Based on the Department's permitting data, there are 50 State and local government facilities that have Title V permits and 75 State and local government facilities that have state facility permits (please note that some of these facilities fire both distillate and residual oil and that the facilities that fire residual oil that reside in New York City, Nassau, Rockland, and Westchester counties will not be affected by the proposed sulfur-in-fuel standards). Using the cost per gallon figures from the above reports in combination with the fuel use data and fuel use assumptions, the Department was able to estimate the cost or cost range increase for the State and local government facilities. The four State and local government facilities with Title V permits that fire residual oil will incur an average fuel cost increase of 14,000 dollars per year per facility. The 48 State and local government facilities with Title V permits that fire distillate oil will incur a fuel cost increase of between 21,000 to 24,000 dollars per year per facility. The 24 State and local government facilities with state facility permits that fire residual oil will incur an average fuel cost increase of 1,200 dollars per year per facility. The 56 State and local government facilities with state facility permits that fire distillate oil will incur a fuel cost increase of between 9,000 to 10,000 dollars per year per facility. The projected fuel cost increases will be partially offset by the gain in efficiency and lower maintenance costs that are directly attributable from the use of lower sulfur fuels.
Costs to the Regulating Agency:
The Department will face some initial administrative costs associated with the application review and permitting of the new sulfur-in-fuel limits. No additional monitoring, recordkeeping, or reporting requirements are being proposed under this rule-making. Therefore, no additional costs will be incurred by the regulating agency based on these factors.
LOCAL GOVERNMENT MANDATES
This is not a mandate on local governments. Local governments have no additional compliance obligations as compared to other subject entities. Also, no additional monitoring, recordkeeping, reporting, or other requirements will be imposed on local governments under this rulemaking.
PAPERWORK
The proposed changes to Subpart 225-1 will create no additional paperwork for the facilities subject to the requirements of this rule.
DUPLICATION
The proposed revisions to Subpart 225-1 do not duplicate, overlap, or conflict with any other State or federal requirements.
ALTERNATIVES
The Department evaluated the following alternatives:
(1) Take no action: This alternative could prevent New York State from complying with its obligations under the CAA. If the Department does not implement this regulation, it would not be able to meet its obligations to achieve attainment in the PM-2.5 non-attainment areas throughout New York State. Also, without the promulgation of Subpart 225-1, the State would not be reducing its regional haze impacts in the northeast. The reduction in sulfur-in-fuel limitations will directly result in reductions of SO, PM-10, and PM-2.5. Reductions of these air contaminants will definitively aid New York in meeting both its attainment goals for PM-2.5 and reduce the State's regional haze impact. Therefore, the "Take no action" alternative has been rejected.
(2) Partial implementation of sulfur-in-fuel standards: The Department could revise Subpart 225-1 to only include the sulfur-in-fuel requirements of Section 19-0325 of the ECL for number 2 heating oil. These revisions would also correct any existing typographical errors and update the regulation to match the permitting nomenclature of Part 201. During the June 24, 2010 stakeholder meeting for Subpart 225-1 the oil manufacturers and distributors expressed concerns that the Department would create added burdens by only including the provisions in ECL Section 19-0325. The oil manufacturers stated that they would need to reconstruct their facilities to be able to manufacture the 15 ppm sulfur content distillate oil. They stated that the manufacturing process was different for distillate oil that has a sulfur content of less than 500 ppm than for distillate oil that has a sulfur content of greater than or equal to 500 ppm. They expressed that the reconstruction was fine as long as they could totally commit and not have to divide their manufacturing between several fuel sulfur contents (which would entail maintenance of multiple processes and equipment). The oil distributors expressed concerns that a partial implementation would require them to maintain multiple fuel oil storage tanks which could result in cross contamination problems. Therefore, based on the stakeholder concerns the "Partial implementation of sulfur-in-fuel standards" alternative has been rejected.
FEDERAL STANDARDS
The proposed revisions to Subpart 225-1 do not exceed any minimum federal standards. The proposed reductions will lower the standards to the point where they would be equivalent to the sulfur-in-fuel standards of both 40 CFR 60 NSPS and 40 CFR 63 National Emission Standards for Hazardous Air Pollutants.
COMPLIANCE SCHEDULE
The Department proposes to promulgate the revisions to Subpart 225-1 by January 2013. The provisions of this rule will take effect based on a phased approach. The initial compliance date is proposed for July 1, 2012 for emission sources that fire number 2 heating oil for residential, commercial, or industrial heating applications. The secondary compliance dates are July 1, 2014 for all remaining distillate oil fired sources and the purchase of compliant residual oil in New York State and July 1, 2016 for the firing of compliant residual oil in New York State.
1 This report can be found at: http://www.nyserda.ny.gov/~/media/Files/Publications/Energy-Analysis/1995_2009_patterns_trends_rpt.ashx?sc_database=web
Regulatory Flexibility Analysis
EFFECT OF RULE ON SMALL BUSINESSES AND LOCAL GOVERMENTS
The Department proposes to change Subpart 225-1. The proposed rulemaking will apply statewide. Small businesses are those that are independently owned, located within New York State, and that employ 100 or fewer persons. The proposed changes to the subpart 225-1 requirements flow from the State's obligations under the federal Clean Air Act. Therefore, the proposed revisions do not constitute a mandate on local governments. The Subpart 225-1 requirements apply equally to every stationary source that fires oil in New York State. The proposed changes to Subpart 225-1 will not affect small businesses or local governments differently from any other source subject to this rule.
COMPLIANCE REQUIREMENTS
The proposed rule will lower sulfur-in-fuel limits for distillate oil, residual oil, and waste oil. However, no changes will be made in the monitoring, recordkeeping, or reporting requirements in the current version of Subpart 225-1. Therefore, no new compliance requirements will be incurred by small businesses or local governments subject to the provisions of the proposed rule.
PROFESSIONAL SERVICES
The proposed rule will lower sulfur-in-fuel limits for distillate oil, residual oil, and waste oil. No changes will be made in the monitoring, recordkeeping, or reporting requirements in the current version of Subpart 225-1. Facilities subject to this rule are simply required to purchase compliant fuels. Therefore, the Department does not expect small businesses or local governments will need to hire additional professional services to comply with the provisions of the proposed rule.
COSTS
Stationary sources subject to the Subpart 225-1 provisions may incur increased fuel oil costs associated with this proposed regulation. There are several factors that may affect fuel oil prices. These factors include but are not limited to fuel availability, price of crude oil, production costs, storage costs, increase in taxes on oil, overall demand based on weather conditions, and natural gas availability and price. The refining process used to produce lower sulfur content oils (less than 500ppm sulfur content oils) is different from the refining process currently used to manufacture oil with a sulfur content greater than 500 ppm. There will be an initial cost to the oil manufacturers associated with conversion of the current refining process to the new refining process. Therefore, the Department anticipates that production costs will increase. However, based on all of the above listed factors there may or may not be an increase in oil prices (there is the possibility that oil prices could decrease). Setting aside the other factors, the Department conducted a cost analysis based solely upon the increase in production costs and availability of oil to the consumer.
Local governments may incur increased fuel oil costs associated with this proposed regulation. However, no new monitoring, recordkeeping, reporting, or other requirements will be imposed on local governments based on this proposed rule-making. Based on the Department's permitting data, there are 50 State and local government facilities that have Title V permits and 75 State and local government facilities that have state facility permits (please note that some of these facilities fire both distillate and residual oil and that the facilities that fire residual oil that reside in New York City, Nassau, Rockland, and Westchester counties will not be affected by the proposed sulfur-in-fuel standards). The four State and local government facilities with Title V permits that fire residual oil may incur an average fuel cost increase of 14,000 dollars per year per facility. The 48 State and local government facilities with Title V permits that fire distillate oil may incur a fuel cost increase of between 21,000 to 24,000 dollars per year per facility. The 24 State and local government facilities with state facility permits that fire residual oil may incur an average fuel cost increase of 1,200 dollars per year per facility. The 56 State and local government facilities with state facility permits that fire distillate oil may incur a fuel cost increase of between 9,000 to 10,000 dollars per year per facility. Any projected fuel cost increases will be partially offset by the gain in efficiency and lower maintenance costs that are directly attributable from the use of lower sulfur fuels.
ECONOMIC AND TECHNOLOGICAL FEASIBILITY
For distillate oil, the Department used information from the NORA, API, NESCAUM reports and EIA data to determine the costs and benefits of implementing the proposed low and ultra-low sulfur distillate oil standards including appropriate compliance dates. The average amount of distillate oil consumed in New York between 2004 and 2008 was 1.73 billion gallons per year. The majority of the distillate oil fired during this time period was considered to be high sulfur distillate oil (approximately 95 percent). Approximately 95 percent of the distillate oil used in New York State was considered, by the Department, to be high sulfur distillate oil. Therefore, the Department has calculated that New York State would achieve a SO emission reduction of 45,591 tons per year from the implementation of the ultra-low sulfur distillate oil standard in 2014.
The cost to manufacture the projected 1.73 billion gallons per year of high sulfur distillate oil to ultra-low sulfur distillate oil is estimated to between 173 million dollars and 197.2 million dollars. This is based on cost estimates of 10.0 to 11.4 cents per gallon for manufacturing high sulfur distillate oil to ultra-low sulfur distillate oil. This corresponds to a cost of between 3,795.00 and 4,326.00 dollars per ton of SO emission reductions, based on the total SO emission reductions stated above.
For residual oil, lowering the allowable sulfur content of residual oil to 0.5 percent (5,000 ppm) would affect all of New York State except for New York City, Nassau, Rockland, and Westchester counties. The average amount of residual oil consumed in New York between 2004 and 2008 was 1.39 billion gallons per year. The Department has calculated that New York State would achieve a SO emission reduction of 52,220 tons per year from the implementation of the 0.50 sulfur content residual oil standard in 2014.
The historical average price difference from August 30, 2004 to July 27, 2007 of residual fuel oil with sulfur-by-weight contents between 0.5 and 1.0 percent was 5.05 cents per gallon. Using this estimated price difference, the total economic impact of the proposed 2014 standard for New York State consumers on the affected 696.6 million gallons per year of residual oil is 35.2 million dollars. This corresponds to 674 dollars per ton SO removed as a result of the proposed decrease in sulfur content in residual oil.
MINIMIZING ADVERSE IMPACTS
The Department does not expect any particular adverse impacts on small businesses and local governments throughout New York State. Subpart 225-1 is a statewide regulation. Its requirements are the same for all facilities. The Department does not anticipate small businesses or local governments to be impacted differently than other sources subject to the proposed changes to Subpart 225-1.
SMALL BUSINESS AND LOCAL GOVERNMENT PARTICIPATION
During the drafting of Subpart 225-1, the Department held stakeholder meetings on June 24, 2010 and November 21, 2011. The meetings were held to give representatives from the oil companies, oil distributors, and end users (which included the small business and local government stakeholders), an opportunity to meet with Department staff and discuss various issues during the rulemaking process. Finally, the Department will hold public hearings on Subpart 225-1 throughout New York State and will notify small business and local government representatives of this proposed rulemaking.
CURE PERIOD OR AMELIORATIVE ACTION
The Department is not including a cure period in this rulemaking. The purpose of this regulation is to provide timely emissions reductions, delaying enforcement of the regulation adversely affects such emissions reductions. In addition, there is a statutory mandate under ECL 19-0325 requiring the sulfur-in-fuel limit of #2 heating oil to be 15 ppm. The statute also includes a specific compliance date of July 1, 2012.
Rural Area Flexibility Analysis
TYPES AND ESTIMATED NUMBERS OF RURAL AREAS AFFECTED
The proposed rule (6 NYCRR Subpart 225-1) is not expected to have a substantial adverse impact on rural areas in New York State. The proposed rulemaking will apply statewide and thus all stationary sources that fire oil in New York State will be equally affected.
Rural areas are defined as rural counties in New York State that have populations of less than 200,000 people, towns in non-rural counties where the population densities are less than 150 people per square mile, and villages within those towns.
COMPLIANCE REQUIREMENTS
The proposed rule will lower sulfur-in-fuel limits for distillate oil, residual oil, and waste oil. However, no changes will be made in the monitoring, recordkeeping, or reporting requirements in the current version of Subpart 225-1. Therefore, no new compliance requirements will be incurred by stationary sources subject to the provisions of the proposed rule.
COSTS
Stationary sources subject to the Subpart 225-1 provisions may incur increased fuel oil costs associated with this proposed regulation. There are several factors that may affect fuel oil prices. These factors include but are not limited to fuel availability, price of crude oil, production costs, storage costs, increase in taxes on oil, overall demand based on weather conditions, and natural gas availability and price. The refining process used to produce lower sulfur content oils (less than 500ppm sulfur content oils) is different from the refining process currently used to manufacture oil with a sulfur content greater than 500 ppm. There will be an initial cost to the oil manufacturers associated with conversion of the current refining process to the new refining process. Therefore, the Department anticipates that production costs will increase. However, based on all of the above listed factors there may or may not be an increase in oil prices (there is the possibility that oil prices could decrease). Setting aside the other factors, the Department conducted a cost analysis based solely upon the increase in production costs and availability of oil to the consumer.
MINIMIZING ADVERSE IMPACT
The Department does not expect any adverse impacts on rural areas. There will be positive environmental impacts from the regulation in rural areas. Rural areas should witness improved visibility with an associated decrease in airborne particulate matter and acid deposition.
Subpart 225-1 is a statewide regulation. Its requirements are the same for all facilities, and rural areas are impacted no differently than other areas in the state.
RURAL AREA PARTICIPATION
During the drafting of Subpart 225-1, the Department held stakeholder meetings on June 24, 2010 and November 21, 2011. The meetings were held to give representatives from the oil companies, oil distributors, and end users (which include the rural-area stakeholders as well as industry), an opportunity to meet with Department staff and discuss various issues during the rulemaking process. Finally, the Department will hold public hearings on Subpart 225-1 in upstate and other rural areas and will notify interested parties of this proposed rulemaking.
Job Impact Statement
NATURE OF IMPACT
The changes to Subpart 225-1 entail the lowering of the sulfur-in-fuel limits for all distillate and residual oils sold, purchased, and/or used in portable (not including non-road engines) or stationary sources in New York State which will reduce emissions of air pollution. These revisions will also include the lowering of the sulfur-in-fuel limit for waste oil, the removal of "out-of-date" sulfur-in-fuel tables, expired source specific variances, coal and coke variance for emission sources that fire coal and coke greater than one million Btu per hour in New York City, Nassau, Rockland, and Westchester Counties (based on the Department's permitting database there are no emission sources in these areas that are subject to this provision - therefore, this specific variance is no longer necessary), and the correction of typographical areas. These proposed changes to Subpart 225-1 are not anticipated to have an adverse impact on employment opportunities in the State.
CATEGORIES AND NUMBERS OF JOBS OR EMPLOYMENT OPPORTUNITIES AFFECTED
The promulgation of Subpart 225-1 is not anticipated to have any long-term effects on the number of current jobs or future employment opportunities throughout New York State.
The reductions in visibility-impairing pollutants resulting from the implementation of Subpart 225-1 could result in a positive impact on the tourism industry, particularly for the Adirondack and Catskill Parks. Aside from the mitigation of haze in these areas and across New York State, improvements in acid deposition will be seen, keeping trees and waterways in good condition, thus allowing state parks to remain healthy and attractive places to visit. Increased tourism could create additional job opportunities throughout the State.
REGIONS OF ADVERSE IMPACT
The proposed Subpart 225-1 is a statewide regulation. This regulation is not expected to have an adverse impact on jobs or employment opportunities in New York State. It does not impact any region or area of the state disproportionately in terms of jobs or employment opportunities.
MINIMIZING ADVERSE IMPACT
The Department does not expect any adverse impacts on jobs in New York State based on the proposed changes to Subpart 225-1. Subpart 225-1 is a statewide regulation. Its requirements are the same for all facilities, and will not impact job opportunities in the State.
SELF-EMPLOYMENT OPPORTUNITIES
There are no anticipated adverse impacts towards self-employment opportunities associated with the proposed Subpart 225-1 regulation.
