Senate Bill S7579A

                                 BILL NUMBER:  S7579

 TITLE OF BILL :
An act to amend the environmental conservation law, in relation to
requiring a reduction in sulfur for all heating oil used in the state


 PURPOSE OF THE BILL :
To bring about a reduction in the sulfur content of home heating oil
sold in New York to not more than 500 ppm (parts per million) by July
1, 2014 and to determine the feasibility of additional reductions in
sulfur content thereafter.

 SUMMARY OF SPECIFIC PROVISIONS :
Adds a new section 19-0325 to the Environmental Conservation Law to do
the following:

(1) Require that
2 heating oil sold in New York State after July 1, 2014 contain a
sulfur content that does not exceed 500 ppm.

(2) Instruct the Commissioner of DEC, in collaboration with the
Director of NYSERDA, to undertake a study to determine the need and
cost-effectiveness of further reductions in the sulfur content of home
heating oil and report to the Governor and the Legislature.

              

(3) Provide the Governor with the authority to suspend the
applicability of this legislation for a period of 14 days if he
determines that there is not adequate supply of low sulfur heating oil
due to extreme cold or a declared state of emergency in this or
another state.

 JUSTIFICATION :
It is important that New York adopt a mandate to reduce the sulfur
content of home heating oil. Currently, the sulfur content of most
heating oil is anywhere from 2000 - 2500 ppm. A reduction to 500 ppm
will reduce sulfur oxide emissions by 75-80 percent -- a level lower
than the European Union specification, and among the lowest heating
oil sulfur contents in the world. This translates to a reduction of
over 13,000 tons a year and $12 million a year in Sulfur Oxide
Emission Reduction Credits.  Additionally, this bill would also bring
about significant reductions in the sulfate residue that fouls furnace
walls. A recent study by NYSERDA indicated that consumers could save
up to $200 million per year by extending the interval between furnace
cleanings made possible by switching to 500 ppm heating oil.

Most importantly, however, this bill brings about these important
sulfur reductions in a manner that will not result in a potentially
disastrous disruption in supply of this necessary and precious
commodity.

U.S. East Coat and Gulf Coast refineries supply close to 80% of the
New York and New Jersey heating oil market, with the remainder from
Canada and the Virgin Islands. Other incremental traditional suppliers
to the East Coast (Russian and Venezuela) have essentially abandoned
this market with the implementation of Federal ultra low sulfur diesel
standards. Currently, refineries are in the final stages of compliance
with the Federal EPA diesel sulfur reduction program for both on-road
diesel engines and off-road diesel equipment. The Federal government
provided five year's advance notice to refineries to rationally
accommodate the necessary infrastructure investments and
time-consuming transition involved in executing a major fuel quality
change for the on-road and off-road sectors.  Engineering evaluations
show that installation of even more processing capacity to adopt a low
sulfur standard for heating oil will take not less than four years.
The federal permitting process alone will take almost two years.
Failure to provide sufficient lead time for the adoption of the new
standard carries a significant risk for shortfalls in supply, even
under the best of circumstances. A recent study estimated that the
anticipated shortfall would result in an increase in the price of
heating oil and diesel fuel by 20 to 30 cents a gallon -- costing New
York consumers as much as $1 billion -- and that is assuming a mild
winter. Consumers could pay up to 60 cents more for heating oil and
diesel fuel during a winter cold snap.

This measure strikes the proper balance of setting New York on a
timetable to reduce the sulfur content of home heating oil while
assuring that supplies of both the heating oil and transportation
diesel will be available during the transition, thereby protecting New
York consumers from wild and unpredictable spikes in the cost of these
necessary commodities.

 PRIOR LEGISLATIVE HISTORY :
New Bill.

 FISCAL IMPLICATIONS :
Potential fiscal implications to State and local governments would be
limited to any incremental costs associated with the commodity costs
of low sulfur diesel utilized to heat their respective facilities
beginning in the winter of 2014.

 EFFECTIVE DATE :
This act shall take effect immediately.