HollyFrontier 2014 Annual Report Download - page 26

Table of Content
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Our operations and many of the products we manufacture are subject to certain requirements of the Federal Clean Air Act (“CAA”)
as well as related state and local laws and regulations. Certain CAA regulatory programs applicable to our refineries require capital
expenditures for the installation of certain air pollution control devices. Additionally, the EPA has the authority under the CAA to
modify the formulation of the refined transportation fuel products we manufacture in order to limit the emissions associated with
their final use. In addition, in 2014, the EPA published a proposed rule that proposes amendments to two refinery standards already
in effect: the National Emission Standards for Hazardous Air Pollutants (“NESHAP”) from Petroleum Refineries and the NESHAP
for Petroleum Refineries: Catalytic Cracking Units, Catalytic Reforming Units and Sulfur Recovery Units. The proposed rule
would also amend emission requirements under the existing Petroleum Refinery New Source Performance Standard. Collectively,
these proposed amendments would, among other things, require monitoring of air concentrations of benzene around the fenceline
perimeter of refineries to assure that emissions are controlled and these results would be available to the public. The proposed
amendments could also require upgraded emission controls for storage tanks and flares. These new proposals, as well as subsequent
rulemaking under the CAA or similar laws, or new agency interpretations of existing laws and regulations, may necessitate
additional expenditures in future years.
Also, we are subject to the EPA's Control of Hazardous Air Pollutants from Mobile Sources (“MSAT2”) regulations that impose
reductions in the benzene content of our produced gasoline. Our refineries currently purchase a portion of their benzene credits
to meet these requirements. If economically justified, we could implement additional benzene reduction projects to eliminate the
need to purchase benzene credits.
The Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 prescribe certain percentages of renewable
fuels (e.g., ethanol and biofuels) that, where required, must be blended into our produced gasoline and diesel. Additional changes
in fuel standards, called Tier 3 standards, to reduce vehicle emissions were finalized in 2014. These new requirements, other
requirements of the CAA, and other presently existing or future environmental regulations may cause us to make substantial capital
expenditures and purchase credits at significant cost to enable our refineries to produce products that meet applicable requirements.
Further regulatory requirements have emerged from concerns over the potential climate impacts of certain "greenhouse gases"
such as carbon dioxide and methane. In response to a statutory directive, the EPA has promulgated rules requiring the reporting
of greenhouse gas emissions. In 2010, the EPA promulgated regulations applying construction and operating permit requirements
under the CAA's Prevention of Significant Deterioration and Title V programs to sources with potential greenhouse gas emissions
above certain threshold levels. The EPA has also announced its intention to issue a New Source Performance Standard directly
regulating greenhouse gas emissions from refineries, although recent statements from EPA Administrator McCarthy indicate that
issuance of such Performance Standard is not imminent. Proposals both expanding and limiting the EPA's authority in this area
continue to be considered in Congress. Litigation challenging the EPA's authority over greenhouse gas emissions also is pending
in federal court.
Our operations are also subject to the Federal Clean Water Act (“CWA”), the Federal Safe Drinking Water Act (“SDWA”) and
comparable state and local requirements. The CWA, the SDWA and analogous laws prohibit any discharge into surface waters,
ground waters, injection wells and publicly-owned treatment works except in conformance with legal authorization, such as pre-
treatment permits and National Pollutant Discharge Elimination System (“NPDES”) permits, issued by federal, state and local
governmental agencies. NPDES permits and analogous water discharge permits are valid for a maximum of five years and must
be renewed. In 2014, the EPA, in conjunction with the Army Corps of Engineers, issued a proposed rule to define 'waters of the
U.S.,' which could expand the regulatory reach of the existing clean water regulations. Finalizing this proposed rule, along with
other regulatory activities the EPA is discussing, may necessitate additional expenditures in future years.
We generate wastes that may be subject to the Resource Conservation and Recovery Act and comparable state and local
requirements. The EPA and various state agencies have limited the approved methods of disposal for certain hazardous and non-
hazardous wastes. The EPA is currently working on several rulemakings that could impact how our refineries manage various
waste streams. While these rulemakings are still in development, it does not appear that these rules will significantly impact our
refineries.