WASHINGTON — At least half of the country's 152 oil refineries are believed to be violating air-pollution laws, federal officials say, but with the refineries stretched near capacity, the Bush administration is debating how hard to crack down.
Refinery capacity, Vice President Dick Cheney has said, is among the issues at the center of the country's energy problems and has been a major factor in the recent surge in gasoline prices. The report released on Thursday by Mr. Cheney's energy task force orders the Environmental Protection Agency and the Justice Department to review their enforcement of the pollution laws in light of the potential to discourage refinery expansion.
The review comes despite a campaign that began two years ago and has continued under the Bush administration, in which about 30 percent of the refining industry has agreed to spend hundreds of millions of dollars to reduce illegal air pollutants from several dozen refineries. Other refining companies are in settlement talks with the administration.
But still other companies have resisted the effort to bring them into compliance with pollution standards, federal officials say. Among these are the ExxonMobil Corporation, the largest of the refinery owners. Officials of that company have argued that the E.P.A.'s interpretation of the laws has been overly strict and that uncertainty over enforcement of the pollution standards has deterred refineries from much-needed expansions.
An ExxonMobil spokeswoman, Lauren A. Kerr, said today that the company was "pleased that the administration has recognized the importance of this issue, and we look forward to seeing the results of their study."
In testimony before Congress last month, D.H. Daigle, director of Americas refining for the ExxonMobil Refining and Supply Company, urged that enforcement of the rules be suspended "to prevent enforcement policies from interfering without tangible benefit to industry's ability to meet our energy and fuel supply needs." As Mr. Cheney's task force was preparing its report, two senators, James M. Inhofe, Republican of Oklahoma, and John B. Breaux, Democrat of Louisiana, wrote to him to request that the enforcement of the rules be suspended while the environmental agency reviews their impact.
But environmentalists have warned against any weakening of enforcement, saying it is vital to keep necessary curbs on an industry that represents one of the most significant sources of air pollution.
Under a provision of the Clean Air Act known as "new source review," refineries and power plants that make changes resulting in an increase in pollutants must seek permits from the E.P.A., which require that plants offset additional emissions with cuts elsewhere. That provision, which was enacted in the late 1970's, has routinely been ignored, agency officials say, so the enforcement effort has aimed both to bring violators into compliance and to establish a road map for the future.
"Our fear is that they will waive the requirements for new source review for pollution-increasing projects at the refineries, and so you might get more production but you'll also get more pollution," said David Hawkins, a former senior E.P.A. official who now works for the Natural Resources Defense Council, an environmental advocacy group.
The latest large refinery to reach agreement with the agency is Marathon Ashland of Ohio, whose settlement was announced last Friday. In news releases, both Christie Whitman, the E.P.A. administrator, and Attorney General John Ashcroft praised the agreement as an important example of cooperative efforts by government and industry to reduce pollution.
A spokesman for Marathon Ashland, Chuck Rice, said the agreement with the government had provided a basis for more flexible regulation that would reduce emissions and allow the company to expand its operations.
Marathon Ashland "will continue to be a responsible citizen with the environment and community where they conduct business," Mr. Rice said.
On average, the companies that have agreed to install advanced air- pollution controls under the settlements will reduce their emissions of sulfur dioxide and nitrogen oxide at refineries by 70 percent, said E.P.A. officials, who spoke on condition of anonymity.
The 90-day review ordered by Mr. Cheney covers the standards on new source review for both refineries and coal-fired power plants. In the reconsideration, the E.P.A. and the Justice Department will determine whether the pollution standards have been applied too harshly. The outcome could determine whether the government drops some cases, approaches others more leniently, or even renegotiates settlements already reached.
Three power plant owners have reached settlements with the government over pollution, eight more have been served with complaints filed in federal court, and others are still being investigated. An environmental agency spokeswoman, Tina Kreisher, said today that for both the refineries and the coal-fired plants, enforcement efforts and settlement negotiations would continue while the review is under way.
But industry divided between those who have struck deals and those who have not, and those who are still being investigated clearly hoping the rules will be revised, E.P.A. officials said they did not expect much progress until the review is completed.
In a statement, Ms. Whitman said she looked forward to working with Mr. Ashcroft toward "making new source review more effective while maintaining environmental protections."
The companies that are pressing for a more lenient interpretation of the rules say the E.P.A. has been too harsh in trying to police modifications that were made long ago or that did not result in any pollution increase.
With refineries now using 96 percent of their capacity, one of the highest levels in several years, according to the American Petroleum Institute, the critics say enforcement efforts have deterred companies that might be considering expansions.
Bob Slaughter, general counsel for the National Petrochemical Refiners' Association, said the strict interpretation of the rule served as "an additional burden on the industry that prevents us from going forward with different things."
But companies like BP Corporation, which settled a dispute with the agency in January by agreeing to pay $10 million in penalties and spend $650 million in improvements to reduce air emissions from eight refineries, would presumably not be happy to see their competitors wind up with a better deal.
Over the last 25 years, only one oil refinery has been built in the United States, and more than 100 of the country's refineries (most of them small ones) have been shut down since 1980. Oil companies have kept up with rising demand for oil, gasoline and other refined products mostly by adding capacity at existing sites, but the amount of excess capacity has shrunken steadily.
With local opposition and strict environmental laws still weighing heavily against refinery construction, industry experts have said that expansions in the years ahead will be confined to upgrades of existing plants, but they have said its pace could be affected by how the environmental agency enforces the pollution laws.
Because the E.P.A. is continuing its investigations, agency officials declined to provide an estimate of how many companies might be violating pollution laws. But in addition to the roughly 30 percent who have reached settlement with the government and are no longer considered to be violating pollution laws, 25 percent are in negotiations, a sign that they may be prepared to acknowledge violating the standards, the officials said. Those companies were among the earliest singled out by the agency, which typically initiates settlement negotiations by notifying companies that they appear to be in violation of environmental laws.
Another 25 percent of the refineries are believed to be violating the law and are targets of active investigation, while the rest have not yet been approached because of a lack of resources, one E.P.A. official said.
Other federal officials said a safe assumption was that at least half of all refineries, and perhaps many more, were still operating in violation of the pollution laws.
Copyright 2001 The New York Times Company