MEDIA RELEASE

Gov. Linda Lingle has announced that U.S. Environmental Protection Agency (EPA) has agreed to make changes to proposed rules on emission standards for liquid fired process heaters and boilers that reflect the unique circumstances of Hawaii’s two island-based oil refineries.

The EPA will create a regulatory subcategory that will appropriately reflect the industrial variations of Hawaii’s refineries that would otherwise make it economically unfeasible to comply with the proposed emission standards.

The EPA’s decision came after Lingle wrote to EPA Administrator Lisa Jackson informing her of the potential adverse impact the proposed standards for controlling hazardous air emissions from industrial, commercial and institutional boilers and process heaters (Boilers NESHAP) could have on Hawaii, including the potential loss of refining capacity in the islands.

“I appreciate the EPA’s willingness to work collaboratively with my Administration to ensure proposed emission standards do not adversely impact the oil refining operations in our state, while still protecting our air quality,” Lingle said.

“You raise important concerns about the impact that the standards could have on Hawaii’s two refineries, and by extension, the State’s economy and the Pacific Command,” said Jackson in her Oct. 25 response. “Your letter effectively summarizes the primary ways in which the situation of the Tesoro and Chevron refineries in Hawaii differs from that of refineries located on the mainland of the United States.”

Specifically, Lingle pointed out Hawaii does not have access to natural gas which the refineries could switch to as their fuel source to meet the draft emission standards in the EPA’s proposed rules.

In addition, because synthetic gas is produced by a single gas company in Hawaii using the by-products of the two oil refineries and must be liquefied and transported to the neighbor islands, the cost of synthetic gas is considerably more expensive than natural gas.

The governor’s letter also outlined how forcing Hawaii refineries to install elaborate control and monitoring systems to meet the proposed emission standards would cost millions of dollars that the refineries would not be able to afford based on the small size of the Hawaii market and the fiscal conditions of the two facilities.

The proposed EPA rules would force the parent companies of the two refineries to make investments that are not economically feasible and would put them at a competitive disadvantage.

As a result, it would not be unreasonable for one or both of the parent companies to cease refining operations in Hawaii.

Lingle pointed out to Jackson that requiring Hawaii refineries to comply with the proposed standards would have no measurable impact on improving air quality because Hawaii already complies with EPA ambient air standards.

Furthermore, the Hawaii Clean Energy Initiative that the Lingle-Aiona Administration and the U.S. Department of Energy have been pursuing to reduce dependence on fossil fuels will provide the type of fundamental shift in emissions EPA is seeking.

Jackson informed Lingle the U.S. District Court has agreed to the EPA’s request for a one-month postponement, until Jan. 16, 2011, as the deadline for issuing the final Boiler NESHAP rules.