ti.S. ENVIRONMENTAL PROTECTION AGENCY. REGION IX, SAN FRANCISCO. CA 94111

                                             JEFFERSON:   (415) 556-6266
                                                  DOSS:   (415) 556-6695

     FOR IMMEDIATE RELEASE

     EPA ISSUES AUTHORITY TO CONSTRUCT TO MACARIO INDEPENDENT REFINERY
                L^y^
          San Fraipcisco^-^y The U.S.  Environmental Protection  Agncy
     today announced it^iias issued  a strongly conditioned ."Authority
     to  Construct"  to the Macario Independent Refinery Company for
     the construction of a clean fuels refinery in northern  San Diego
     County,  south  of the City of Carlsbad.

          As  required by the Federal Clean Air Act,  EPA is respon-
     sible for reviewing all potential new sources of air pollution
     where State or local governments have failed to do so.   After
     completion of  the extensive air quality analysis and considera-
     tion of  all issues raised by the public it was  determined that
     the refinery will not interfere with or prevent attainment or
     maintenance of health-based air quality standards or cause the
     air quality to be significantly deteriorated as defined by EPA
     regulations for the Prevention of Significant Deterioration.

          However the Authority to  Construct is subject to a
     number of conditions with which Macario must comply.  Among
     the conditions is a restriction on fuel usage which requires
     Macario  to operate the refinery on fuels with a sulfur  content
     of  less  than or equal to 0.05  percent sulfur, which is  at
     least 10 times cleaner than ordinarily  required by the  local
     air pollution  control district.  The condition has been im-
     posed to minimize any possible adverse  effects that sulfur
     dioxide  (SO2)  in combination with other pollutants might
     have on  vegetation in the area.

          Another condition requires Macario to obtain assurances
     from the Public Utilities Commission and/or other governmental
     agencies on the allocation of  the synthetic natural gas to be
     produced, _ prior to beginning construction of the facility. The
     intended allocation of synthetic natural gas must be sufficient
     to  assure that a certain volume of Macario-produced gas will be
     burned in the  San Diego Air Basin in addition to that which
     would normally be used in the  area.   The additional gas burned
     in^the^area will  reduce overall air pollution emissions
     sufficiently to offset the hydrocarbon  emissions from the
     refinery.

   EPA
   909/R
   75-011

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                             -2-
     Natural gas curtailment for industrial users and
conversion to fuel oil is expected to increase pollution
in the entire San Diego Air Basin.  If clean-burning fuels
are not available, the San Diego area may have to burn high
sulfur fuels, or severely cutback the level of energy use.
Production of synthetic natural gas and its subsequent use
in the San Diego area will result in a reduction of that
expected level of air pollution.

     Macario Independent Refinery Company on October 14, 1974,
submitted an initial application to EPA for permission to
construct the refinery, which would produce low sulfur oil
and clean-burning refinery manufactured fuel gas.  In May of
this year, EPA announced its tentative decision to approve the
refinery.

     There was much local concern expressed about construction
of the refinery and its potential impacts.  A public hearing
was held on August 23, 1975, in Carlsbad to obtain additional
information regarding air quality impacts before a final
decision was made by EPA on the application.

     EPA considered and evaluated all of the issues raised
at the public hearing and summarized several key responses
on the attached fact sheet.  A detail response to each of the
issues is available for public review at:

     Environmental Protection Agency, Region IX
     100 California Street                      \/
     San Francisco, California

     Environmental Protection Agency
     Los Angeles Contact Office
     Federal Building
     300 North Los Angeles Street
     Los Angeles, California

     San Diego Air Pollution Control District
     9150 Chesapeake Drive
     San Diego, California

     Carlsbad City Library
     1250 Elm Street
     Carlsbad, California
                                         November 28, 19 7 b

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                              """" J "~



                      INFORMATION SHEET


EPA'S DECISION TO APPROVE CONSTRUCTION OF THE MACARIO REFINERY
                 CARLSBAD,  SMI DIEGO  COUNTY
Project

Macario Independent Refinery Company has been issued an
Authority to Construct a new refinery  to produce low
sulfur fuel oil and synthetic natural  gas from imported
crude oil.

Legislation:

The Federal Clean Air Act of 1970  required EPA to establish
National Ambient Air Quality Standards setting limits on
allowable levels of air pollutants in  order to protect public
health and welfare from harmful levels of air pollution.  The
Act also required the states to develop and submit a plan for
the attainment and maintenance of  both the primary and secondary
standards.

Background;

When portions of the State's plan  were found deficient, EPA
was required by the Act to promulgate  specific requirements
as a substitute regulation for the disapproved portions of
the plan.  Such Federal regulations for the review of new
sources of air pollution (new plants,  factories, refineries,
etc.), to determine if the new source  will prevent or inter-
fere with the attainment or maintenance of the air quality
standards in an area, were promulgated on May 14, 1973.  When
the State adopts an approvable regulation in this area, the
responsibility to perform reviews  will shift to  the  State and
local agencies.  This regulation making process  is currently
underway in California.

Under Federal regulations, if analysis of available  informa-
tion indicates that a new source will interfere  with or prevent
the attainment or maintenance of an ambient  air  quality
standard, EPA will not approve its construction  and  it  cannot
be built.  If, however, analysis of the available information
indicates that attainment or maintenance  of  the  standards
will not be interfered with or prevented, then EPA must permit
construction.  EPA cannot disapprove construction on the basis
of land use, aesthetics, or other community  concerns which
are decided by local levels of governments.

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Local Air Pollution Control Districts (APCD's)  may set
emission limits on the amount of air pollutants allowable
from a specific source or industry.  APCD's may set stricter
emission requirements than the National Standards.

Project Analysis:

EPA analysis of the proposed Macario plant, dated May 7, 1975,
indicates that the projected emissions from the plant will be:

                                               (Tons/Day)

                Sulfur      Carbon     Hydro    Nitrogen
Particulates    Dioxide    Monoxide    Carbon   Dioxide

     0.2         7.4         0.4        1.3      4.7

However, EPA estimates that the availability of clean fuels
from the Macario refinery for use in the San Diego Air Basin
will lead to the following reduction in expected air pollutant
levels throughout the Basin:

                                               (Tons/Day)

                Sulfur      Carbon     Hydro    Nitrogen
Particulates    Dioxide    Monoxide    Carbon   Dioxide

    2.79         10.12       0.26       2.25     10.8

Therefore, based on the area-wide consideration of the effect of
the Macario refinery on air quality, the availability and use
of the refinery products may be expected to produce a substantial
decrease in overall pollution levels.  The only basin wide net
increase is in carbon monoxide  (CO).  Information from the State
Air Resources Board and San Diego Air Pollution Control.District
indicate that even with this increase, San Diego will be able to
attain and maintain the health-based standard for CO.

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                            —5~
Summary of EPA's Response to Major Issues Raised Through, the
              Public Participation Process


Following is a summary of EPA's response to several of the roajor
issues raised at the public hearing held at Carlsbad on August 23,
1975.  For additional information the complete decision document
is available for public review at:

     Environmental Protection Agency, Region IX
     100 California Street
     San Francisco  California

     Environmental Protection Agency
     Los Angeles Contact Office
     Federal Building
     300 North Los Angeles Street
     Los Angeles, California

     San Diego Air Pollution Control District
     9150 Chesapeake Drive
     San Diego, California

     Carlsbad City Library
     1250 Elm Street
     Carlsbad, California

Issue:   What, if any, synergistic effects will sulfur dioxide
(S°2) when combined with other pollutants have on the agricul-
tural industry in the area.

EPA Response:  Some studies have shown that SC>2 in combination
with other pollutants may cause injury to vegetation at  lower
levels than if vegetation we're exposed to S02 alone.

In order to minimize this potential effect, EPA has placed
a condition on the Authority to Construct which will limit  the
sulfur content of any fuel used in processing operations within
the Macario facility to less than or equal to 0.05 percent
sulfur.  This will reduce the SO2 emissions at the refinery by
approximately a factor of 9 times less than the emissions as
originally proposed by the Macario Independent Refinery  Company.

Issue:   Will the construction of the Macario Refinery  attract
other heavy industry to the area.

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                            -6-
EPA Response;  If any other heavy industry, such as a
refinery, Is proposed in the vicinity of the Macario Refinery,
it too would be subject to the Nex<7 Source Review and Prevention
of Significant Deterioration Regulations.  Before an Authority
to Construct could be issued it would have to be shown to the
satisfaction of the Administrator that the source x
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        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY^
                           REGION IX                   1 4 4 4 i
                      100 CALIFORNIA STREET
                   SAN FRANCISCO. CALIFORNIA 94111

                                              NOY2 81975

                                        PEA 4-4-10
                                        SD  75-1
Macario Independent Refinery Co.
5850 Avenida Encinas
Carlsbad  CA  92008

Attn:  Mr. L. Bruce Bean,
       Manager

Dear Mr. Bean:

     In accordance with provisions of the Clean Air Act, as
amended (42 U.S.C. 1857 et seq.), the Environmental Protection
Agency has reviewed the application submitted by the Macario
Independent Refinery Company to construct a 100,000 bbls/d
fuel oil refinery in the vicinity of Carlsbad, California.

     A request for public comment regarding EPA's proposed
action on .the above application was issued on May 7, 1975.
Due to the intense public interest that was evident after
consideration of the public comments, a public hearing was
held on August 23, 1975.  The hearing was followed by an
additional 30 day public comment period.  After the consi-
deration of the expressed view of all interested persons,
including State and local agencies and pertinent Federal
statutes and regulations, the enclosed Authority to Con-
struct/Modify a Stationary Source is issued for the facility
described above.  This action constitutes certain changes
from the proposed action set forth and offered for public
comment due to comments received during the public hearing
and the subsequent public comment period.

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     Authorization to Construct shall take effect on the
date of this notice.
                              Si
                            / Paul De Falco, Jr.
                            /  Regional Administrator
Enclosures
cc:  San Diego Air Pollution Control District
     California Air Resources Board, Sacramento

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                   Authorization to Construct/Modify
                          a Stationary Source
          In compliance with provisions of the Clean Air Act, as
     amended (42  (U.S.C. 1857 et seq.), Macario Independent Refin-
     ery Company is authorized to construct:

          (1)  A 100,000 bbl/d fuel oil refinery in north San Diego
               County, California and to the south of the City of
               Carlsbad including;

                    a)  1 - Crude Atmospheric Distillation Unit
                    b)  1 - Naphtha Hydro-desulfurization Unit
                    c)  1 - Distillate Hydro-desulfurization Unit
                    d)  1 - Residuum Hydro-desulfurization Unit
                    e)  1 - Catalytic Reformer & Methanator Unit
                    f)  1 - Hydrogen plant
                    g)  1 - Sulfur Recovery and Tail-Gas Scrubbing
                            Plant

          (2)  The necessary support system as described in the
               application for Authority to Construct dated
               October 14, 1974.

          (3)  Tankage as follows:

Service
No. of
Tanks
Total
Capacity
(Barrels)
Dimensions
Diameter Height
(feet) Type
Crude Oil             3
(100, 101, 102)

Intermediate Storage

Naphtha   (201)        1

Gas Oil  (202)         1

Hydrogen Plant Feed   1
 (203)
1,353,000
240
56   Floating Roof
  112,800      120

  112,800      120

   67,140     -100
          56   Floating Roof

          56   Floating Roof

          48   Floating Roof

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Residuum  (204)        1

Butane  (205, 206)     2

Product Storage

Diesel  (301, 302)     2

GT3 Fuel  (303)        1

Fuel Oil  (304, 305,   3
  306)

Utilities

Fresh Water and       1
  Fire Water (401)

Reclaimed Water  (402) 1

Boiler Feed           1
  Condensate (403)

Fuel Oil  (404)        1

Miscellaneous
Slops  (501)

Sulfur  (307)
1

1
          451,200

            5,000



          225,600

          112,800

        1,353,000
200,500


 17,000

 17,000


 25,000



  1,000

  7,000
             240

              30



             120

             120

             240
160


 50

 50


 67



 21

 40
          56   Floating Roof

               Sphere



          56   Floating Roof

          56   Floating Roof

          56   Floating Roof
56   Open Top


45   Open Top

45   Cone Roof


40   Floating Roof



16   Cone Roof

32   Cone Roof
     Vapor Recovery
and an additional five to ten small capacity tanks to be provided  for
utility and miscellaneous storage in accordance with the plans  sub-
mitted with the application and with the Federal regulations  governing
Review of New or Modified Sources  (40 CFR 52.233(g)) and other  condi-
tions attached to this document and made a part of this authorization.

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                             -3-
     Failure to comply with any condition or term set forth
in this authorization shall constitute a violation of 40 CFR
52.233(g), a federally promulgated portion of the California
State Implementation Plan, and will be considered grounds for
enforcement action pursuant to Section 113 of the Clean Air
Act.

     This authority to construct a stationary source grants
no relief from the responsibility for compliance with any
other applicable provision of 40 CFR Parts 52, 60 and 61 or
any applicable Federal, State, or local regulations.
     This authorization shall become effective immediately.
Dated:    11-28-75
                                   Regional Administrator

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I.        NOTIFICATION OF STARTUP

The Regional Administrator shall be notified on the antici-
pated date of initial startup not more than sixty (60)  days
nor less than thirty  (30) days prior to such date and shall
be notified of the actual date of startup within fifteen
(15) days after such date.

II.       FACILITIES OPERATION

All equipment, facilities, or systems installed or used to
achieve compliance with the terms and conditions of this
authorization to construct/modify shall at all times be
maintained in good working order and be operated as effi-
ciently as possible.

III.      MALFUNCTION

The Regional Administrator shall be notified within fifteen
(15) days following any sudden and unavoidable failure of
air pollution control equipment, or process equipment, or of
a process to operate in a normal manner which results in an
increase in emissions, and shall be notified of the estimated
resultant emissions in excess of those projected under
normal operations; and shall be notified of the methods to
be utilized to restore normal operations.

IV.       RIGHT TO ENTRY

The Regional Administrator, the head of the State Air Pollu-
tion Control Agency, and/or their authorized representatives,
upon the presentation of credentials shall be permitted:

     a.   to enter upon the premises where the source is
          located or in which any records are required to be
          kept under the terms and conditions of this authority
          to construct/modify; and

     b.   at reasonable times to have access to and copy any
          records required to be kept under the terms and
          conditions of this authority to construct/modify;
          and

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                              -2-
     c.   to inspect any equipment, operation,  or method
          required in this authority to construct/modify;
          and

     d.   to sample emissions from the source.

V.        TRANSFER OF OWNERSHIP OR CONTROL

In the event of any changes in control or ownership of
facilities to be constructed or modified, the succeeding
owner or controller shall be notified of the existence of
this authorization to construct/modify by letter, a copy of
which shall be forwarded to the Regional Administrator and
the State Air Pollution Control Agency.

VI.       SEVERABILITY

The provisions of this authorization to construct/modify are
severable, and, if any provision of this authorization to
construct/modify are held invalid, the remainder of this
authorization to construct/modify shall not be affected
thereby.

VII.      SPECIAL CONDITIONS

     a.   The Macario Independent Refinery Company shall
          perform monitoring and record keeping functions
          regarding the petroleum storage vessels in ac-
          cordance with the Standards of Performance for New
          Stationary Sources  (40 CFR 60.113).

     b.   The Macario Independent Refinery Company shall
          notify the Regional Administrator of any antici-
          pated change to the plans submitted with the
          application and shall not effect such changes in
          the construction or operation of the LSFO Refinery
          until EPA approval is received if such changes
          will result in an increase over that predicted of
          any pollutant emitted.  The Regional Administrator
          shall also be notified of all changes, if any,
          that are required to comply with the special con-
          ditions placed upon the Authority to construct.

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                         -3-
c.   The Macario Independent Refinery Company  shall
     submit to the Regional Administrator,  prior  to  the
     initial startup date, a complete approvable  con-
     tingency plan.  The plan shall describe all  actions
     to be taken in the event of any sudden and unavoid-
     able failure of air pollution control  equipment,
     or process equipment, or of a process  to  operate
     in a normal manner which results in an increase in
     emissions over that occurring during normal  operations.

d.   An Environmental Impact Report for the refinery
     project shall be submitted to the appropriate
     agency and all permits, licenses or other approvals
     shall be received from local, state and Federal
     agencies prior to the date on which construction
     of the project commences.

e.   The Macario Independent Refinery Company  shall
     submit to EPA, before the date on which construc-
     tion commences, written assurances from all
     appropriate regulatory agencies stating that as a
     minimum, the volume of synthetic natural  gas
     produced at the Macario Refinery that  is  required
     to satisfy EPA's tradeoff approach, 30 million
     cubic feet, will not be allocated out  of  the San
     Diego Air Basin during the life of the refinery.
     (EPA's tradeoff approach, the basis for the  basin-
     wide analysis, assumes that a certain  volume of
     Macario produced synthetic natural gas burned in
     the San Diego Air Basin in addition to that  which
     would normally be allocated to the basin  and in
     lieu of an equivalent amount of fuel oil  that
     would otherwise be burned by interruptable customers
     in the basin, would offset the hydrocarbon emissions
     from the refinery and associated storage  vessels.)
     In addition, such regulatory agencies  shall  provide
     by way of assurance that this volume of gas  will
     not be considered by these agencies in their
     normal planning for allocation of fuels within
     their jurisdiction.  The operation of the Macario
     refinery is contingent upon that volume of synthetic
     natural gas not being allocated outside of the San
     Diego Air Basin as may be found necessary to
     satisfy EPA's tradeoff approach.  Periods of
     emergency situations will be excepted, however,
     the Macario Independent Refinery Company shall
     notify EPA of such conditions no later than 15
     days after such an emergency condition is declared
     by an appropriate agency or commission.

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                         -4-
f.    All fuel used in processing operations within the
     Macario LSFO facility shall be limited to a sulfur
     content less than or equal to 0.05% S by weight.
     Records of all fuel usage shall be kept for each
     process heater and boiler and made available to
     state and Federal officials upon request.  Records
     shall contain all fuels used/ the percent sulfur
     content by weight of each fuel and the dates
     through which each fuel is burned.

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      KAY i«: eomoN
      CSA rpwjt (41 CFR) i8*-it."
      UNITED STATES GOVERNMENT


      Memorandum                          **• -1-4-4-4 ?


ro    : Files                                      DATE:
                                                          SEP  8 1975

?ROM  : Staff


IUBJECT: Trip Report - Macario Public Hearing


      I.   Purpose;

           Conduct public hearing on proposed construction of the

           Macario Oil Refinery in Carlsbad, California.

      II.  Place and Date;

           Saturday, August 23, 1975  (9:30 am - 1:30 pm - 7:30 put)

           Carlsbad, California

      III. Attendees:

           a.   Hearing Panel

                Matt Walker, Hearing Officer

                Frank Covington, Director, A&HMD

                Stan Zwicker, Environmental Engineer

           b.   Support Staff

                Lorraine Pearson

                Mat Siinoncini

                Wayne Blackard

      IV.  Media coverage:

           San Diego TV  (Channel 8) interviewed Frank Covington

           and Mark Nelson, President of Community Cause.  Blade

           Tribune, Gil Davis; Carlsbad Journal, Rex Wilson;  San

           Diego Union, Neil Ball.
              Buy U.S. Savings Bonds Regularly on tbz Payroll Savings Plan

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V.   Discussion:




     Approximately 400 people attended the public  hearing



     that EPA held on Saturday,  August 23, 1975, concerning




     the proposed construction of the Macario Oil  Refinery.



     The hearing was held because of significant public



     interest and comments on EPA's intended action to grant




     a permit pursuant to the Federal regulations  of 40 CFR



     52.233.




     Forty-seven people presented formal statements to the




     hearing panel.  Included were statements from the




     following organizations:




          Pacific Resources, Inc. (Parent Company, Macario




            Refinery)




          Macario Refinery - Manager, Bruce Bean




          San Diego Air Pollution Control District - Rich




            Sommerville




          Carlsbad Community Cause - Mark Nelson,  President




          Leucadia Town Council




          League of Women Voters




          Sierra Club



          San Diego Gas and Electric Co.




          Labor groups & Real Estate




          (not present at the hearing - Mayor, City Council,




          ARE, CZC)




     The views of opponents and proponents were well represented




     at the hearing.  The hearing was well organized and




     despite the emotional nature of the citizens views, no

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                              -3-




     signifleant incident occured.




VI.  Significant Items of Interest




     1.   Community Cause (a citizens group opposed to the



          construction of the refinery)  submitted a resolution



          requesting a delay of the final decision until



          further technical studies, including the required




          impact report (EIR) were completed.  Approximately



          20 of the speakers were associated with Community




          Cause.




     2.   Labor groups presented statements regarding economic




          matters as they related to first, jobs and second,




          fuel availability, to maintain economy.




     3.   SD G&E presented information as to the need for




          the fuel produced by the Macario Refinery.




     4.   The APCD and several speakers raised a number of




          significant technical points which will be investigated,



          These include:




          (a)  Emission effects during startup and emergency




               conditions - Our analysis was for normal




               operation and it was alleged that breakdown




               will frequently occur  i.e. increased emissions




               from flare and pressure relief systems.




          (b)  Synergistic effects of increased SC>2/Ox on




              . flower industry.  This might have a damaging




               effect at levels far below the secondary




               standard for SC>2 -

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                         — 4—

     (c)   Emissions from barging fuel  oil  to SD G&E

          plants in South County Area.

     (d)   Reallocation of crude feed stocks and refinery

          produced products by other State and/or

          Federal agencies could invalidate the basis
                                                r
          (Tradeoff Approach)  of our technical analysis.

     (e)   Possible use of SNG instead of LSFO by the

          refinery to minimize local SC>2 emissions.

     (f)   EPA's analysis did not consider  indirect

          emissions resulting from increased VMT.

5.   Sierra Club objected to our analysis  and was

     critical of EPA's intended decision to approve,

     however, they did not offer any suggestions to

     improve our technical approach.  Criticism involved:

     (a)   Insufficient data;

     (b)   S02 analysis does not substantiate our intended

          action;

     (c)   Analysis did not consider effect of ocean;

     (d)   H2 804 was not considered; and

     (e)   Should use more accurate methods.

6.   League of Women Voters stressed that  there were no

     assurance that EPA's analysis which was based on

     the refinery produced products being  consumed in

     the air basin was valid i.e. tradeoff approach is

     not acceptable.

7.   San Diego APCD pointed out the need for the Federal

     Government to develop an energy policy.

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                              -5-

     8.   A statement was made that San Diego  APCD  has  a

          poor enforcement program in that they were reluctant

          to respond quickly to complaints by  local citizens.

     9.   The adequacy of EPA's technical review was defended

          by several individuals (who qualified themselves
                                                     r
          as retired chemical engineers)  in response to

          attacks by members of Community Cause.

     10.  A brief confrontation took place between  Acting

          APCD Director Rich Soinmerville and C.M. Lafoon of

          SD G&E over remarks made by Sommerville concerning

          the accuracy of information supplied by SD G&E.

     11.  As expected a number of side issues  (i.e. oil

          spills) were raised.  It was made clear that  these

          issues would be dealt with by the proper  agencies

          prior to any project construction.

     12.  Although a number of statements were presented

          which either disagreed with EPA's intended approval

          or requested a delay in our action,  EPA's decision

          to hold the public hearing though not required was

          applauded.

The public testimony that was received including a  resolution

of the significant technical issues, as outlined above, will

be resolved before any final decision is made. The  hearing

was a positive step for EPA to take in obtaining public

input on a controversial decision.
     Paul De Falco
     A&HMD
     Enforcement Division
     OER

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                    AMBIENT AIR QUALITY IMPACT APPRAISAL            1444 7

                       MACARIO FUEL OIL REFINERY
 I.  Applicant

    Macario  Independent Refinery Company
    5850 Avenida Encinas
    Carlsbad, California 92008

II.  Type of  Project

    Construction of a new refinery to produce low sulfur fuel oils and refinery
    manufactured fuel gas from imported crude oil.

II.  Project  Location

    The location of the proposed fuel oil refinery is in the northwest portion
    of San Diego County in the Vicinity of Carlsbad, California.  The site is
    north and west of the Palomar Airport and approximately 2.2 miles east of
    the Pacific Ocean coastline.

IV.  Project  Description

    The project consists of a group of process plants, petroleum storage vessels,
    and associated support facilities.  These facilities will be capable of
    producing 41,000 barrels per day of low-sulfur residual fuel oil, 29,400
    barrels  per day of low-sulfur distillate fuel oils and, 100 million cubic
    feet per day of refinery manufactured fuel gas from one hundred thousand
    barrels  per day of crude oil.  The crude oil will be delivered to the site
    by underground pipeline from the existing marine terminal at San Diego Gas
    and Electric Company's Encina Power Plant.

    The new  facilities proposed include:

    1.  A Crude Atmospheric Distillation Unit.

    2.  A Naphtha Hydro-desulfurization Unit.

    3.  A Distillate Hydro-desulfurization Unit.

    4.  A Residuum Hydro-desulfurization Unit.

    5.  A Catalytic Reformer and Methanator Unit.

    6.  A Hydrogen Plant.

    7.  A Sulfur Recovery and Tail Gas Scrubbing Plant.

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                                      -2-
    To support these systems,  a Utility  Section to supply steam and compressed
    air,  seventeen petroleum storage  tanks,  three water storage tanks and a
    sulfur storage tank are proposed.  In addition, the new facilities proposed
    will  include two elevated flares, a  closed cycle cooling system, tankage,
    a wastex^ater treatment facility,  fire protection facilities, a truck loading
    rack  and supporting administrative facilities.

    The facilities to which this assessment  applies include the above described
    process equipment and associated  utilities.

V.   Project Background                                                       •

    An increased need for low-sulfur  fuel comes as a result of the natural gas
    shortage and the increasing curtailment  of the supply of natural gas to
    Southern California.  As a substitute for natural gas, industrial and com-
    mercial users must burn fuel oil.
                                                        \

    The low-sulfur fuel oils produced by the proposed refinery will be utilized
    by the area's gas and electric  utility,  San Diego Gas and Electric Company.
    The manufactured fuel gas  is intended primarily for general industrial use
    to ease the impact of the  curtailment on interruptible service customers.
    All of the fuel oils and manufactured fuel gas is intended for use by
    existing sources within the San Diego Air Quality Control Region (SDAQCR).

    According to local regulations, fuel oil burned in San Diego County must
    not exceed 0.5% sulfur content  by weight.  There is also a shortage of
    naturally occurring fuel oils which  meet this requirement.  Therefore, in
    order to meet the anticipated pox^er  demands of their customers, it would  be
    necessary for power plants to burn high  sulfur content fuel oil.

I.   As a  result of the operation of the  refinery, there will be an increase in
    the emission of all criteria pollutants  within the SDAQCR.  These increases
    have  been analyzed based upon data supplied by the San Diego Air Pollution
    Control District and the California  State Air Resources Board.  The data
    consists of an emission inventory in ton/day of pollutants in the SDAQCR
    and shows the established allowable  emission levels for each pollutant.
    These allowable emission levels reflect  the maximum amount of emissions
    (measured in tons/day) which can  be  allowed in the SDAQCR without violating
    the National Ambient Air Quality  Standards  (NAAQS).  The following table
    summarizes the allowable levels,  current emission levels,  the incremental
    emission increases due to the project, the NAAQS for each  pollutant and  the
    reported AQ levels in the San Diego  AQCR.

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                                   -3-
Pollutant

CO

NOX

sox

HC (reactive)

Particulates
T/D
Allow-
ably

660

360

390

 57

 49
1972 Emission
Level (T/D)

    1195

     243

      36

     289

      97
Emission
Increment    National     1972
from Proj    Standard     Concen-
(T/D)        (PPM)         tration

  0.4        9(8hr Avg.)  19ppm

  4.7        0.05(annual  0.04
                  Avg.)
  7.4        0.2(annual    	
                  Avg.)
  1.3*       oxidant      .32
             O.OS(lhr)
  0.2        75ug/m3      89ug/m3
^Assumes 100% of HC is reactive
The addition of the emissions of NOX and SOX will not result in interference with
either the attainment or maintenance of the NAAQS for these pollutants.   Although
emissions of CO currently exceed the allowable limit, projections contained in
the State Implementation Plan for SDAQCR show that the NAAQS for CO will be
met.  The minimal increase in CO from this project will not interfere with the
maintenance of that standard.

Emissions of hydrocarbons and particulates also currently exceed the allowable
limit.  However, there is no expectation of reducing the emission of these
pollutants to within allowable limits as far into the future as 1985.  Therefore,
the projected increases for these pollutants would have an effect on the
attainment of the standards for oxidant and particulates.

On the basis of the foregoing analysis alone, the proposed project could not
be granted approval.  However, when analyzing the effect of the emission
increases within the SDAQCR, the total impact of the project must also take
into account the use of products of the refinery and include their effect on
the air quality.

The products (LSFO and refinery manufactured fuel gas) of the Macario Refinery ar
expected to be consumed totally within the SDAQCR to replace supplies at existing
facilities where natural gas curtailment will occur.  This use within the
SDAQCR will result in overall decrease in all criteria pollutants over what
would otherwise be expected.

This finding is based upon calculating- the emissions resulting from the sub-
stitution of the refinery manufactured fuel gas for the emissions resulting
from the use of distillate oil which would have to be stored and burned in
the SDAQCR to meet the expected energy demands.  The calculations which demon-
strate this and the assumptions made to support it can be found in the appendix
to this assessment.  The results of the calculations are summarized in the
following table:

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                                   -4-
                          Emission Comparisons
                       Fuel Gas vs Distillate Fuel

                             Emissions (T/D)

Source                      Particulates    SOV      CO      HC      NO
                                                                       x
Combustion of 100 mmcf
   Fuel gas                     0.75        0.03     0.90    0.15    21.0

Combustion of equivalent
   fuel oil by
   a.  industrial curtailment   1.60        3.03     0.43    0.32     6.4
   b.  other uses               1.94        7.12      .73    0.44    25.4

Storage.and Distribution
   Losses                       	        	     	    1.64    	
   Total fuel oil               3.54       10.15     1.16    2.40    31.8
   emissions

Emission Saving (fuel gas
   use in lieu of fuel oil)     2.79       10.12     0.26    2.25    10.8

Macario Refinery Emissions      0.2         7.4      0.4     1.3      4.7

Net AQCR increase
   (Decrease)                  (2.59)      (2.72)    0.14   (0.95)   (6.1)

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                                       -5-
VI.  Conclusions

     Based upon the above analysis and under the assumptions as outlined in
     the report, we concluded that:

     1.  The new emissions of CO, NOX, and SOX will not adversely affect
        the attainment or maintenance or the NAAQS in the San Diego AQCR.

     2.  The production of LSFO and refinery manufactured fuel gas at the refinery and
        its subsequent usage by existing commercial and industrial users will emit
        less  emissions from these sources during perdicted gas curtailments than
        if a  substitute fuel were burned.

     3.  The proposed project is required for the production of clean fuels
        which will be used by existing commercial and industrial users
        during natural gas curtailment in the San Diego Air Quality Control
        Region.

     4.  The project will not prevent the attainment or maintenance of any
        NAAQS.

     Therefore, it is tentatively proposed to grant Macario approval to construct
     the proposed refinery and all of the specified associated facilities as
     described in the application.  This approval will be subject to conditions
     concerning the operation, procedures, notification, monitoring and other
     requirements as appropriate to insure that there will not be interference
     with the  attainment or maintenance of the NAAQS.

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                                  APPENDIX

                     Substitution of Refinery Manufactured

                          Fuel Gas for Alternate Fuels^

Basis

As the availability of natural gas declines, more interruptible gas users •
and possibly even firm gas customers will be forced to turn to alternate
fuels, unless new supplies of natural gas are found.  The fuel gas, which
is to be manufactured at the proposed Macario Refinery, would be available
as a direct supplement for natural gas.  The introduction of this gas into
the utility system will reduce the need for alternate fuels.

Reference

Summary Report, 10-year forecast of gas utilities requirements and
supplies 1974-1983; California Public Utilities Commission; 13 December
1974.

Curtailment

The referenced Public Utilities Commission report shows the total curtail-
ment for regular interruptible users in 1978 to be 962 MM cf/d - 111 MM cf/d
851 MM cf/d (Ref. page 12, lines 21, 22) for Southern California.

San Diego Gas & Electric advises that the San Diego portion of that curtail-
ment is 29.5 MM cf/d.  Refinery fuel gas production  = 100 MM cf/d less
curtailment is 70.5 MM cf/d for power plant usage.  Assumption: The entire
100 MM cf/d will be utilized in the San Diego Air Quality Control Region.

Distillate Fuel Oil Equivalent for Industrial and Commercial Usage

           29,500,000 cf/d x 1,000 BTU/cf  = 2l3,62l gal/day = 5,086 BPD
                 138,095 BTU/gal F.O.
Fuel Oil Equivalent for Power Plant Usage

           70?5007000 cf/d x 1,000 BTU/cf  = 485 410 gal/day = 11,557 BPD
              145,238 BTU/gal F.O.                   6     y

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                              -2-
              Estimated 1978 Emissions Reduction

           Resulting From Combustion of Macario Refinery

       Manufactured Fuel Gas Rather Than Distillate Fuel Oil
Basis

Emissions savings in 1978 may be achieved as a result of burning
refinery manufactured fuel gas rather than distillate fuel oil.
If refinery manufactured fuel gas is not produced,  16,643 BPD
of distillate fuel oil would be required to fulfill the power and
interruptible gas customers' needs.

Reference

AP-42


Calculations

Calculate emissions savings as a result of consuming 29.5 MM cf/d
of refinery manufactured fuel gas as compared to 5,086 BPD of
distillate fuel and 70.5 MM cf/d as compared to 11.557 BPD of
povzer plant fuel.

     1)Combustion of Manufactured Fuel Gas (SNG)

       Particulates (15£/MM cf)    15 x 100 = 1500£/d =0.75 t/d

       SOX (0.6§/MM cf) ;  0.6 x 100 = 60f/d = 0.03 t/d

       CO  (17-20 #/MM cf);  18 x 100 = 1800 */d = 0.9 t/d

       EC  (3S/MM cf industrial)(IfMM cf power plant)
           use 3S/MM cf

           3 x 100 = 300 £/d =0.15 t/d

           (Cont. on next page)

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                          —3—
   NO
     X
(120-230 t MM cf industrial)(300-700 # MM cf power plant)

use 230t/MM cf and 500t/MM cf

230 x 29.5 = 6785
500 x 70.5 =35250

            42035 t/d =21.0 t/d
Combustion of Equivalent Distillate Fuel Oil by Industrial
and Commercial Users

   Particulates  (15 f/1,000 gal.)

       15 x 5086 x 42
       	1000	 ~ 3204.2 t/d = 1.60 t/d

   SOX (142 S/1,000 gal)  S = sulfur content
       Assume S (sulfur content)  @ 0.2%

       142 x 0.2 x 213.6 = 6066.2 #/d = 3.03 t/d

   CO  (4 f/1000 gal)

       4 x 213.6 = 854.4 t/d = 0.43 t/d

   HC  (3 #/1000 gal - combustion only)

       3 x 213.6 = 640.8 f/d = 0.32 t/d

   NOX (40-80f/1000 gal)

       60 x 213.6 = 12,816.0 £/d = 6.41 t/d

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L  Combustion of Equivalent Fuel Oil by Power Plants

      Particulates (8 t/1000 gal)

          Q v- 1 1 ^^"7 v 4?
              nn          = 3883.2 £/d = 1.94 t/d
            _L / U U U

      SOX (157  S/1000 gal)     Assume S sulfur content @ 0.2%

          157 x 0.2 x 485.4 = 15,241.6 S/d = 7.12 t/d

      CO  (3 f/1000 gal)

          3 x 485.4 = 1456.2 #/d = 0.73 t/d

      HC  (2#/100Q gal - combustion only)

          2 x 485.4 = 970.8 t/d = 0.44 t/d

      NO  (1053/1000 gal)
        X

          105 x 485.4 = 50,967.0 #/d = 25.4 t/d

    Storage of  Distillate Fuel Oil for Industrial Use

      Assume 90 days of storage - FEA shows average primary
      storage exceeds 30 days.  Additional user storage
      estimated at 60 days (see Attachment A) .  Loss calculations
      based on  AP-42, pages 4.3 - 8.

      Primary Storage

      Breathing losses (0.041 #/day/l,000 gal)

      0.041 x 30 days x 213,600 gal/day _
                1/000 gal

      Working losses (1 I/M gal throughput)

      1.0 ft x 213,600 gal/day _ 213 6
            1,000 gal

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                              -5-



        Secondary Storage



        Breathing losses  (0.123 f /day /I, 000 gal)



        0.123 x 60 days x 213,600 _ , ,.-,(• -,-,
        ~-r-~L ~'—~  ~ • ~ ~-, ~ "J~7i~v\"">* "   -i '          — J_ O / O • J /
               1,000 gal



        Working losses



        1.0 # x 213,600   _,, c . . ,
        - 1/QQO gal   = 213.6 f/d




        Total storage losses = 2266.3  S/d =1.13  t/d



4b.   Storage of Fuel Oil for Other Use



        Assume 30 days and fixed roof  type tank  (Minimum required

        by  regulation for low vapor pressure  liquids)



        Breathing loss (0.036 t/d - 1,000 gal.)



        485,410 gal x 30 days x .036#  _ ,-,. o  „ /-,

               1/000    -               b24^  1f/
        Working loss (1#/M gal throughput)



        1.0 x 485,410 gal _ 485  . #/,

          1,000 gal-day   ~ ***'* v/a



        Total = 1009.6 #/d



                1009.6 f/d + 2266.3 #/d =  3275.9  #/d = 1.64 t/d

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             ATTACHMENT A




PRIMARY STOCKS OF DISTILLATE FUEL  OIL
Ref :
1974
SEP
JUN
MAR
1973
DEC
SEP
JUN
MAR
1972
DEC
SEP
JUN
MAR
Monthly Energy Report,
Domestic Demand
MBPD
2501
2249
3145

3695
2660
2412
3314

4232
2205
2194
3482
Nov. 1974, FEA,
Stocks, MBOL
226,624
173,639
128,822

196,421
190,171
137,844
111,270

154,284
190,250
128,739
101,728
Page 16
Days Storage
90.6
77.2
41.0

53.3
71.5
57.1
33.6

36.5
86.3
58.7
29.2

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MACARIO REFINERY—ANALYSIS OF S02 IMPACT

         ON LOCALIZED AIR QUALITY
          I.     Scope and Objectives
          II.    Background Levels of
          III.    Analysis
          IV.    Conclusions

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             MACARIO REFINERY—ANALYSIS OF SO2 IMPACT
                      ON LOCALIZED AIR QUALITY
I.     Scope and Objective

      The impact of the Sulfur Dioxide (SO2) emissions from the proposed
Macario Refinery on the localized air quality was analyzed with respect
to both Federal and State ambient air quality standards. Additionally,
an analysis was conducted to determine if the increments of significant
deterioration under Federal Regulations were violated.

      The analysis was conducted using  the multiple point source model
(PTMTP) of the EPA's Users Network for Applied Modeling of Air Pollution
(UNAMAP)  System.  The model and the assumptions made for this analysis
are discussed in Appendix A.  In an attempt to more closely simulate possible
topographical effects, a simple modification was made to the emission input
data for the model.  A discussion of this modification can be found in Appendix B

      Source emission data used in the analysis were calculated from data
supplied to EPA by the Macario Independent Refinery Company.  Meteorological
data used as input to the model were extracted from data supplied by
and the San Diego Air Pollution Control District.4
II.    Background Levels  of SO?

      In terms of ambient air quality, background is defined as the level
of a pollutant in the atmosphere which is due solely to natural processes
uninfluenced by  man.  Examples of possible natural SO2 sources are volcanoes
and geysers.
      The true background level of SO£ in the San Diego Air Basin is probably
close to zero.  It is known,  however, that an ambient concentration of SO2
does exist due to sources such as ships,  motor vehicles, and other sources
either too small or too far away to account for individually. Thus, for the
purposes of this report, the background  will be defined as that level of S02
that is known to exist from these small or unidentifiable sources .

      Sulfur dioxide has been monitored in the San Diego Air Basin since
1972 by the San Diego Air Pollution Control District. 803 monitoring in the
northern portion of the basin was not begun until January 1975, with the
installation of a monitoring  station at Oceanside,  California.  The  maximum

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                                    -2-

 one-hour average recorded at this station has been 0.02  ppm (52.4 ug/m3),
 measured at El Cajon in 1973. The maximum annual average SOo concen-
 tration in 1973 in the San Diego Basin was approximately 0.0037 (10 ug/m )
 monitored at the downtown San Diego Station. ^ The basin-wide annual
 average concentration of SC>2 is currently estimated to be approximately
 0.001 ppm (3.0  ug/m3) .6

       In an independent SC>2 monitoring study undertaken in the San Diego
 area from December 1973 to September 1974, hourly average concentrations
 were measured at three locations: Meadowlark, West Sycamore, and Proctor
 Valley.  The station located closest to the proposed refinei-y site was set up
 at Meadowlark, west-southwest of Escondido. The one-hour average concen-
 tration measured at the site fell into the .001 - .01 ppm (3 - 26 ug/m3) range
 which represents 97.3% of the total hours monitored.  The remaining 0.7%
 of the measurements were in the  .011 - .02 ppm  (27 - 52 ug/m3) range.^

       The higher readings seem to reflect contributions from the Encina
 Power Plant, since it is the only major existing 862 source in the vicinity.
 During the study period, 75% of the fuel burned at the power plant was a low
 sulfur fuel oil, i.e., 0.5% or less sulfur.

      As alternate fuels such as fuel oil are substituted for natural gas, the
 ambient concentrations of SC>2 in the San Diego Air Basin are expected to
 increase. Data supplied by the California Air Resource Board® seems to
 indicate a 1978 background level of 10 ug/m3 or less,  based upon a current
 background of 3 ug/m3.  While it is impossible to predict the exact increase
 in the background levels of S09 within the basin, a more conservative  (higher)
                  Q         u
 estimate of 27  ug/nr3 was used for this analysis.

 III.   Analysis

      Simulation runs were made to analyze the effect that emissions from
 the proposed refinery would  have on the local air quality.  Predicted concentra-
 tions  were analyzed in terms of the Federal Ambient Air Quality Standards
for sulfur oxides  (measured as sulfur dioxide) and the California Ambient
 Air Quality Standards for sulfur dioxide.  The analysis was performed in
two parts.  The first part predicted the maximum one-hour  SO concentrations
that can be expected, assuming v/orst case conditions and the prevailing
 west wind. The second part projected a maximum 24-hour S02 concentration
 utilizing  actual data recorded during a 24-hour period at Palomar Airport
in Carlsbad, California.

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                                   -3-
      Three cases were studied for both parts of the analysis.  The first case
examined emissions from the proposed Macario Refinery by itself.  The sec-
ond case looked at the combined effect of emissions from the proposed refinery
and the four stacks of the Encina Power Plant-presently in operation.  The
third case considered emissions from the proposed Macario Refinery and the
Encina Power Plant with a proposed fifth unit and a single 400-foot stack.

      In addition, the maximum one-hour concentration resulting from the
proposed refinery was predicted for the worst case meteorological conditions
and a northerly wind.  Based upon discussions with the San Diego Air Pollu-
tion Control District, a review of the climatology data and the modeling results,
maximum ambient concentrations are expected to occur under slightly unstable
conditions with a wind speed of approximately 4.5 m/sec.  Higher concentra-
tions were predicted  by the model using other meteorological conditions but
these conditions are not believed to be representative of the meteorology in
the area of the proposed refinery.

      In the case of the prevailing westerly wind, the maximum ambient one-
hour SC>2 concentration resulting from the proposed refinery of 87.94 ug/m3
was estimated to occur 2 kilometers (km) downwind of the refinery.  A wind
speed of 4.5 m/sec, a Pasquill stability class of "C" and a mixing depth  of
300 meters (m)  was used.  These conditions are anticipated to occur approxi-
mately 9.2% of the year and could persist for several hours on  any given
occurrence.

      The Encina Power Plant is the only major source of SO2  in the area
of the proposed refinery site, approximately 4 km due west.  There are
presently four units operating in the power plant, each with a 52.7 m stack.
When looking at the combined effect of emissions from the power plant in
its present configuration and the proposed emissions from the  Macario
Refinery,  a maximum ambient one-hour concentration of 236.9 ug/m3 was
predicted to occur 2  km downwind of the refinery under the same meteoro-
logical conditions previously mentioned.  By adding the projected background
level of 27.0  ug/m3 to the predicted concentration, a maximum one-hour
ambient concentration of 263.9 ug/m3 is predicted.  This figure is well below
the California one-hour standard of 1310 ug/m3-             . .'

      San Diego Gas  & Electric has initiated- a project to build  a fifth unit and
a single 400-foot stack at  the Encina Power Plant through which all emissions
from the power plant would be vented.  Under the conditions of a 4.5 m/sec
westerly wind, a  stability class of "C" and a 300 m mixing height, the plume
from the 400-foot stack would penetrate the inversion layer aloft and would

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                                    -4-

 not contribute to the ground level concentration. If a mixing layer were
 to extend to an elevation of 500 m with a 4.5 m/sec wind speed and a "C"
 stability category, the model predicts a maximum one-hour concentration of
 307.3  ug/m  at a downwind distance of approximately 2.5  km from the
 refinery. Adding the maximum projected background concentration  of
 27 ug/m  , the total ambient concentration becomes 334.3 ug/m^, or  approxi-
 mately 26% of the California one-hour SO2 standard.

       The increment of ground level concentrations of SOo resulting from
 emissions of the proposed refinery can be expected to be the greatest with a
 northerly wind, all other meteorological parameters being  unchanged.  This
 is due to the proposed  configuration of the refinery stacks. The maximum
 one-hour SC>2 ground level concentration resulting from the refinery emissions
 with a north wind of 4.5 m/sec. a "C" stability class, and a 300  m mixing height
 is anticipated to be  148.9 ug/m , or 11.4% of the California one-hour SO2 standard
 and 21% of the 3-hour average allowable SC>2 increment under EPA's Regulation
 for Significant Deterioration.  Emissions from the Encina Power Plant did not
 contribute to the ambient concentration due south of the proposed refinery site
 because of the location of the power plant in respect to the  proposed  refinery
 site.  The plumes from the two plants would not likely intersect  within 10-15 km
 downwind of the plants.  In addition to the fact that the plant configuration
 itself causes higher concentrations to occur with northerly winds, southerly
 winds  are frequently accompanied by periods of very good dispersion.

      Two sets of meteorological data for actual 24-hour periods were supplied
 by the San Diego Air Pollution Control District.  These two periods of data
 are representative of days on which dispersion of pollutants in the atmos-
 phere would tend to be poor.  These data were used as input to the model so
 that a 24-hour analysis could be performed, based on poor dispersion con-
 ditions.  The two days  of data were January 25, 1975 and July 6, 1975.  The
 data is presented in Appendix C.

      The January  25  data were not suitable for our analysis.  Although
 the meteorological conditions present on that day would greatly restrict dis-
 persion of pollutants generated at ground level, such as carbon  monoxide
 from automobiles, the height of the mixing layer was lower than the calcu-
 lated effective stack heights of the Encina Power Plant and  the proposed Macario
 Refinery  stacks, thus the plume would be expected to remain aloft and not
influence ground level  concentrations.  With the low mixing layers that
persisted on that day, the ground level concentrations from the two sources
would be negligible.

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                                   -5-

      Utilizing the July  6, 1975 meteorological data as input to the model,
simulation runs were made using three sets of emission data and numerous
receptor locations. The first case considered only the emissions from the
proposed fuel oil refinery- This case was examined to determine the
increment of SCX that would be added to the existing ambient concentrations
as a result of the proposed refinery operations. The maximum additional 24-hour
average increment was predicted to be 26.43 ug/m3 or 26.43% of the allowable
increment of 100 ug/m3 as specified in the EPA Regulation for Significant
Deterioration.  Adding the projected background of 27 fug/m , the total ambient
24-hour concentration would be 53.43 ug/m  .

      The second case considered emissions from both the proposed refinery
and the Encina Power Plant as it is presently operated with emissions
exiting through four stacks.  The maximum 24-hour average ambient S02
ground level concentration was estimated to be 40.59 ug/m3 at a distance of
approximately 0.85 km to the east of the refinery site.  Adding this concen-
tration to the maximum projected background level projected for 1978 of
27 ug/m  , the ambient concentration expected would be 67.59 ug/m  .
approximately 60% of the California 24-hour SC>2 standard of 105 ug/m , or
18% of the national primary SO  standard of 365 ug/m .
                           A.

      The third case considei'ed the projected emissions from the proposed
refinery and the emissions from the proposed 400-ft. stack at the Encina
Power Plant.  The maximum 24-hour average S02 ground level concentration
for this case was found to be 35.76 ug/m , approximately 0.9 km downwind of
the proposed refinery site.  Adding this concentration to the projected back-
ground level of  27 ug/m , a total ambient concentration of 62.76 ug/m  would
be expected.  This concentration is 17% of the Federal Primary 24-hour
sov standard or 59.7% of the California 24-hour S09 standard.
  .A.                                           £

      Based upon the long-term modeling analysis performed by Meteorology
Research Incorporated  and an examination of the climatology of the area,
it was determined that the 1-hour and the 24-hour concentrations are the ones
most likely to approach the standards. Therefore, it was concluded that
the standards for  annual average concentrations would also not be exceeded.

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                                    -6-
IV.   Conclusions

      Based upon the preceding analysis, and under the assumptions as
discussed in the report, it is concluded:

      1.     That the project will not adversely affect the maintenance of the
            California State SO2 standard or the National Ambient Air Quality
            Standard for SC^in the San Diego AQCR; and

      2.     That the proposed project will net significantly deteriorate the
            air quality as defined in the EPA Regulation for Significant
            Deterioration.

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                                    -7-

Footnotes

      ^-Written correspondence dated 5/25/75 to Mr. Stan Zwicker from
Mr. Bruce Bean, Manager, Macario Independent Refinery Company.
Emission data sheets are attached.

      2
      ^Technical Report "Measurements of Average SC>2 Concentrations,
1974 Climatological Data" prepared by Meteorology Research, Incorporated,
under contract to Macario Independent Refinery Company.

      3
       Technical Report "Meteorology and Air Quality Section Environmental
Report for Macario Independent Refinery Company," prepared under contract
by Meteorological Research, Incorporated.

       Telephone conversation with various San Diego Air Pollution Control
District staff and meeting of 7/7/75.

       Air Pollution in  California, Annual Report 1974, State of California
Air Resources Board, March 1975, page 65.

       Telephone conversation with staff of San Diego Air Pollution Control
District.

      7Source: TRW, Inc.

      8Air Pollution in  California, Annual Report 1973, State of California
Air Resources Board, January 1974, page 32.

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           Appendix A Description of the PTMTP Model
     PTMTP produces hourly concentration  at  up  to  30  receptors
whose locations are specified  from  up  to  25  point  sources.
A Gaussian plume model  is  used.   Inputs  to  the  program
consist of the number of sources  to be considered,  and for
each source the emission rate,  physical  height,  stack gas
temperature,  volume flow,  or stack  gas velocity  and diameter,
the location, in coordinates.   The  number of receptors, the
coordinates of each and the height  above  ground  of  each
receptor are  also required.  Concentrations  for  a  number of
hours up to 24 can be estimated,  and an  average  concentration
over this time period is calculated.  For each  hour the
meteorological information required is:   wind direction,
wind speed, stability class, mixing height,  and  ambient air
temperature.

     The assumptions that  are  made  in  this  model  follow:
Meteorological conditions  are  steady-state  for  each hour and
a Gaussian plume model  is  applicable to  determine  ground
level concentrations.  Computations can  be  performed  according
to the "Workbook of Atmospheric Dispersion  Estimates."'
The dispersion parameter values used for  the horizontal
dispersion coefficient, sigma  y,  and the  vertical  dispersion
coefficient,  sigma z, are  those given  in  Figure  3-2 and 3-3
of the Workbook.2  The sources  and  receptors exist  in
either flat or gently rolling  terrain, and  the  stacks are
tall enough to be free from building turbulence  so  that no
aerodynamic downwash occurs.  The wind speed and wind direction
apply from the shortest to the tallest plume height.   No
wind direction shear or wind speed  shear  occurs.  The given
stability exists from ground-level  to  well  above the top of
the plume.
     Turner, D. Bruce, "Workbook of Atmospheric Dispersion
     Estimates", Revised 1970, U.S. Environmental Protection
     Agency, Office of Air Programs Publication No. AP-26

     ibid:  pages 8,9

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                         Appendix  B

           Modification of Input  Data  to  the  Model
     The terrain in the vicinity of the  proposed  refinery
site ranges in elevation from sea level,  just west of the
Encina Power Plant to 587 feet (msl)  at  Mount Hinton, 4km
NE-ENE of the proposed refinery site.  As stated  previously
in the report, the PTMTP model assumes that  the  sources and
receptors exist in either flat or gently  rolling  terrain.
The modification was made in  an attempt  to account for any
limiting effects that the topography  might have  on the
dispersion of pollutants from the proposed refinery.   This
modification causes the model to predict  higher  concentra-
tions than are predicted by the basic model  without the
modification.

     For this analysis, the heights of all stacks in  the
proposed refinery and the Encina Power Plant were normalized
to the stack with the highest base elevation above mean sea
level (msl), i.e. the Macario crude oil  heater unit  for
input into the model.

     An example of this procedure follows; one of the two
stacks with the highest base  elevation  (msl) is  the crude
oil heater unit in the proposed refinery.  The proposed
height of the physical stack  on the unit  is  54.9m with a
base elevation of 48.8m (msl).  Another  proposed  source in
the refinery is the sulfur recovery unit, also with a physical
stack height of 54.9m.  The base elevation of the stack,
however, would be 27.4m (msl).

     If only the physical stack heights  of the two sources
were considered in the analysis, as called for in the program,
the model would assume that the tops  of  the two stacks were
in the same horizontal plane.  Actually,  however, the top of
the sulfur recovery unit stack would  be  21.4m. lower than
the top of the crude oil heater stack.

         (48.8m       -       27.4m          = 21.4m)
      base elev. of        base of elev.  of
     crude oil heater    sulfur recovery unit

     The difference in the base .elevations of the two stacks
was then subtracted from the physical stack height of the
sulfur recovery unit

-------
     Calculations  for each  hour  are  made  by  considering  each
source-receptor pair.  Plume  rise  is calculated  according to
Briggs1  plume rise estimates.   For each source-receptor
pair,  the downwind and crosswind distances are  determined.
If the downwind distance  is closer than the  distance  to
final  rise,  the plume rise  for  this  distance is  calculated.
The concentration  from this source upon this receptor is
determined using these distances by  the Gaussian model.   For
each model run in  this analysis, receptors were  located  at
0.5km increments to a distance  of  20-50km in a  number of
downwind directions from  the  refinery.

     Because of scientific  and  technical  limitations  the
diffusion computation method  used  in the  model  may  provide
best estimates but not infallible  predicitons.   In  the
unstable and stable cases,  severalfold errors  in estimate of
Sigma Z can  occur  for the longer travel distances.  In some
cases, however, the Sigma Z may  be expected  to  be correct
within a factor of 2.  These  are:  (1)  all  stabilities  for
distance of  travel out to a few  hundred meters;  (2)   neutral
to moderately unstable conditions  for distances  out  to a few
kilometers;  and (3)  unstable conditions  in  the  lower 1000
meters of the atmosphere  with a  marked inversion above for
distances out to 10km or  more.3
     Turner, D. Bruce, Workbook of Atmospheric Dispersion
     Estimates, Revised 1970, U. S. Environmental Protection
     Agency, Office of Air Programs Publication No. AP-26,
     P9 7

-------
                              -2-
         (54.9m      -       21.4m          = 33.5m)
      stk.  height of       cliff,  in base
 sulfur recovery unit          elev.

giving the  normalized stack height of the sulfur recovery
unit as 33.5m for input into the  model.   This modification
to the stack heights allowed the  model  to more accurately
account for the relationship between  the heights of the
receptors and the individual stack heights.

Table B-l on the following page  lists the normalized stack
heights used as input to the model.

-------
                                         Table B-l
                               Input Stack Heights
                       to PTMTP
Crude Oil Heater
Naptha Process Heater
Distillate Process Heater
Residium Process Heater

Hydrogen Process & Reform.

Catalytic Reformer
Sulfur Recovery
Utili ty  Plant   '

Encina (Assumed Base Elev.
Existing Units
Proposed Unit
  Stack No.5 will handle
  emissions from units  1-5
                           Stack
                            No.
 1
 2
 3
 4
 5
 6
 7
 8
 9
10
 20
 1
 2
 3
 4
 5
feet)
         Base Elev
            msl
            (m)

           48.8
           45.7
           36.6
           33.5
           33.5
           36.6
           36.6
           48.8
           27.4
           45.2
            6.1
            6.1
            6.1
            6.1
            6.1
  Physi cal
Stack Height
    (m)

    54.9
    45.7
    45.7
    54.9
    54.9
    30.5
    30.5
    45.7
    54.9
    45.7
    52
    52
    52
    52
   116.7
Diff .
Base
Unit
Oil
















Between
Elev. of
& Crude
Heater
(m)
0.0
3.1
12.2
15.3
15.3
12.2
12.2
0.0
21 .4
3.6
42.7
42.7
42.7
42.7
42.7
Normali zed
Input Stack
  Height
    (m)

    54.9
    42.6
    33.5
    39.6
    39.6
    18.3
    18.3
    45. 7
    33.5
    42.1
    10
    10
    10,
    10,
    74.0

-------
                         Appendix  C

     The following tables include  the  two  24-hour periods of
meteorological  data used  in  the  24-hour analysis.  The data
appears as it was supplied by  the  San  Diego Air Pollution
Control District.  The mixing  heights  and  Pasquill  Stability
classes were assigned by  the San Diego APCD.   The only
adjustments made to the data by  EPA  were to assign  a 0.1
m/sec wind speed to those wind speeds  recorded as 0.0 m/sec
in the tables.   The PTMTP model  does not accept input wind
speeds of 0.0 m/sec.

-------
                           Table C-l

         Meteorological  Parameters  Recorded at Palomar
       Airport,  Carlsbad,  California  on January 25, 1975
    Hour
 2400-
 0100-
 0200-
 0300-
 0400-
 0500-
 0600-
 0700-
 0800-
 0900-
 1000-
 1100-
 1200-
 1300-
 1400-
 1500-
 1600-
 1700-
 1800-
 1900-
 2000-
 2100-
 2200-
 2300-
•0100
•0200
•0300
•0400
•0500
0600
•0700
•0800
•0900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
2300
2400
             Wind  Direction
                (degrees)
100
110,
 90
 90
110,
120,
110.
 60,
 40,
 60.
240.
260.
250.
240.
260.
280.
220.
330.
240.
310.
 20.
 50.
 20.
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
180.0

Wind
Speed
(m/sec)
2.6
3.2
2.0
1.5
2.0
2.6
2.6
3.2
3.2
1.5
2.0
3.6
4.6
4.6
2.6
3.2
2.0
2.0
2.6
0.0
2.6
4.1
2.0
1.5
Pasqui 1 1
Stability
Class

6
6
6
6
6
6
6
6
2
2
2
2
3
3
2
2
6
6
6
6
5
4
5
6

Mixing
Height
(meters)
30.
30.
30.
30.
30.
30.
30.
30.
30.
91.
213.
213.
213.
152.
122.
122.
122.
122.
122.
122.
91.
33.
33.
33.

Ambi
Air
(°
283
283
284
283
282
281
282
280
282
287
291
291
291
290
289
289
289
289
287
285
285
283
283
282

ent
Temp
k)
























*Note:  Mixing heights were calculated  from  temperature  soundings
taken  at Montgomery field.  Temperature  soundings  are  not  taken at
Palomar Airport.
**Data furnished by the San Diego Air  Pollution  Control  District.

-------
                          Table C-2
  Meteorological  Parameters Recorded at Palomar  Airport
             Carlsbad,  California, July 6, 1975
   Hour
2400-0100
0100-0200
0200-0300
0300-0400
0400-0500
0500-0600
0600-0700
0700-0800
0800-0900
0900-1000
1000-1100
1100-1200
1200-1300
1300-1400
1400-1500
1500-1600
1600-1700
1700-1800
1300-1900
1900-2000
2000-2100
2100-2200
2200-2300
2300-2400
Wind Direction
   (degrees)

    140.0
    100.0
     80.0
     60.0
     30.0
     40.0
     50.0
     60.0
    360.0
    290.0
    260.0
    300.0
    280.0
    290.0
    280.0
    300.0
    270.0
    280.0
    300.0
    260.0
    240.0
    220.0
    190.0
    170.0
Wind
Speed
(m/sec)
1.5
2.0
.0
1.5
2.0
.0
.0
2.6
2.6
2.6
5.1
5.1
5.7
5.1
6.7
2.6
5.7
4.0
3.6
3.2
.0
2.0
2.0
1.5
P a s q u i 1 1
Stab 11 i ty
Class
6
6
6
4
4
4
4
4
3
1
3
3
3
3
3
1
3
2
2
2
6
6
6
6
Mixing
Height
(meters )
500
500
500
400
400
400
400
400
400
400
500
500
500
500
500
500
600
500
500
500
400
400
400
400
Ambient
Air Temp
(°k)
290
290
290
290
290
290
290
290
290
292
294
294
295
295
295
297
297
296
295
294
293
292
291
291
*Note:  Mixing  Heights were calculated from  temperature soundings
ta!
-------
              UNiTED STATES ENVIRONMENTAL PROTECTION AGENCY
                                                            .A '
                                                             l
-------
A.   Residual fuel oil is presently barged from the storage
     facilities at the Encina Power Plant to the SDG&E south
     county plants.  Present emissions  from the barges have
     been determined by the San Diego APCD to be essentially
     zero because the low vapor pressure of residual oil.
     No new emissions will occur from barging fuel oil as  a
     result of the Macario Refinery because there will be  no
     increase in the amount of fuel barged.  The only dif-
     ference will be that the fuel oil  will be produced at
     the Macario Refinery rather than being produced at some
     other refinery and stored at the Encina Power Plant
     storage facilities.

     One potential source of hydrocarbon emissions are the
     tankers that will be required to supply the crude oil
     to the refinery for feedstock.  Presently, an average
     of 3 tankers arrive monthly at the mooring site off
     shore from the Encina Power Plant.  It is estimated
     that 5 to 6 tankers will visit the mooring site monthly
     if the proposed refinery becomes operational.

     The major source of HC emissions would come from the
     tankers without segregated ballast systems, assuming
     that the old type of tanker v/ere still in service at
     the time the refinery began operating.  Once the crude
     oil is unloaded from a tanker, depending upon weather,
     10000-15000 barrels of saltwater ballast may be taken
     on for stability and maneuverability while in port.  On
     tankers without segregated ballast systems, the saltwater
     is loaded into the same compartments in which the
     shipment of crude is carried thus  displacing up to
     5000-6000 Ib HC from the tanks. On new tankers with
     isolated or dedicated ballast systems, these HC emissions
     do not occur because the ballast is loaded into clean
     ballast tanks which are separate from the compartments
     used to carry the crude.

     San Diego APCD staff personnel have made several
     inquiries into the question of segregated  (dedicated)
     versus non-dedicated ballast systems and their use in
     oil tankers.  According to Captain R. H. Brandenburger,
     mooring master acquainted with the mooring site offshore
     from the Encina Power Plant, there are very few U.S.
     tankers with non-dedicated systems around today and
     they are quickly going out of service, although he
     didn't know their frequency of retirement.  He also
     said that the holds of tankers are not purged with air
     at the mooring site after unloading the crude.

-------
                        —3 —

Commander Franke, a Coast Guard Marine Safety Officer
in San Diego said that he believes that even some new
ships have non-dedicated systems but that he did not
know the ratio of dedicated to non-dedicated systems.

The National Steel and Ship Building Company in San
Diego was then contacted.  The head of their mechanical
engineering department said that all new ships being
constructed have dedicated ballast systems and that in
about 3 years essentially all American tankers will
have dedicated systems.

Since the San Diego APCD gathered the above information,
the U.S. Coast Guard published Rules and Regulations
for Protection of the Marine Environment Relating to
Tank Vessels Carrying Oil in Domestic Trade, Part 157
of Title 33, Code of Federal Regulations.  These
regulations, effective October 14, 1975, include the
requirement that "new tank vessels" of 70,000 tons DWT
and over that carry oil in the U.S. domestic trade to
have segregated ballast systems.  "Additionally, these
regulations will be extended to encompass the remainder
of the U.S. seagoing vessels and foreign vessels trading
into U.S. waters."

Although these regulations were promulgated for the
expressed purpose of ending operational pollution from
tank clearing and deballasting operations, the regulations
will also eventually discontinue the situation of
hydrocarbon vapors being displaced when ballasts is
added to tanks that have been unloaded of their oil
cargo.

Since the crude used by the Macario Refinery will most
likely be from Alaska's North Slope, U.S. tankers with
the new ballast systems will be used.

Hydrocarbon emissions from tanker fuel unloading opera-
tions should be negligible because the crude is pumped
from the bottom of the holes of the tankers to the
refinery in a closed system.  Also, because the tankers
will be unloaded rather than -loaded at the mooring
site, hydrocarbons will not be displaced from the ships
tanks by incoming liquid.

Based upon the above information it does not appear
that HC emissions from the tanker operations will be a
problem.

-------
                             -4-

3.Q. It was stated at the hearing  that EPA's analysis  did
     not consider indirect emissions  resulting  from increased
     VMT.

     Under the proposed EPA indirect  source regulations  pre-
     construction reviews would be required only  for CO  and
     for facilities accommodating  1000 or more  vehicles.
     The Macario Refinery project  would not provide parking
     facilities for more than 200  vehicles and  thus would
     not have been subject to the  ISR regulations.   Secondly,
     CO which is the pollutant upon which the review is
     based is not a problem in the project area.

     The proposed EPA regulations  have been indefinitely
     suspended and the only current authority for conducting
     an ISR would be under an approved portion  of an SIP.
     Such a review would then have to be conducted by  the
     appropriate local government.

     Indirect emissions resulting  from increased  VMT will  be
     addressed, however, in an Environmental Impact Report
     which will be reviewed by either the City  of Carlsbad
     or San Diego County.

4.Q. Concern was expressed at the  fact that the reallocation
     of crude feed stocks and/or refinery produced products
     by other State and/or Federal agencies could invalidate
     the basis (Tradeoff Approach)  of EPA's technical  basin-
     wide analysis.

     In basing our analysis on the tradeoff approach,  it was
     determined that approximately 30% of the 100X106  ft3  of
     synthetic natural gas (SNG) produced daily at the
     Macario Refinery would have to be used in  the San Diego
     Air Basin, in addition to the natural gas  that is
     predicted for 1978, to meet the  necessary  tradeoff
     requirements.  The actual volume of SNG required  for
     the tradeoff may differ from  the calculated  30X106  ft3
     due to either design or operational changes  in the
     refinery that may be required by other governmental
     agencies.  This, however, should be determined in the
     next several months.  EPA, Region IX personnel have,  to
     date, been unable to obtain assurances from  the PUC
     that at least the minimum amount of Macario  produced
     SNG required to achieve the necessary tradeoff would
     remain in the San Diego Air Basin and would  not influence
     the Basins current natural gas supply.

-------
                             -5-

     We feel that the burden of obtaining  the  necessary
     assurances should be placed  upon  the  applicant  and  that
     it should be presented as  a  special condition to  a
     permit to construct.   This situation  has  been discussed
     with Bruce Bean, Manager of  Marcario, who in turn has
     discussed it with staff members of the  PUC.

5.Q.  Concern was expressed at the fact that  H2SO4 was  not
     considered in the analysis and that synergistic effects
     of increased SC>2/Ox might  have damaging effects on  the
     agricultural and ornamental  flower industries south of
     Carlsbad at levels below the secondary  standard for S02

     "The Administrator' realizes  there are limitations in
     the scientific knowledge of  vegetational  effects
     resulting from exposure to SO2 in combination with
     other air pollutants.   As  an example, it  is known that
     sulfur dioxide in combination with other  pollutants may
     cause visible injury on vegetation to occur at  lower
     levels than if vegetation  were exposed  to S02 alone."
     ..."The potential for damage at low concentrations  of
     pollutant mixtures clearly exist  [sic] ; however,  there
     is not at this time,  in the  judgement of  the Adminis-
     trator, adequate data on which to base  a  standard
     solely on the combined effects."!
     In the case of the formation of sulfuric  acid
     in the atmosphere, both data from field studies  and data
     from laboratory experiments  show that SO2 can be oxidized
     to H2SC-4 or a salt of the acid in the atmosphere.   Evidence
     from field studies conducted in a number  of geographical
     locations shows that there is a relationship between S02
     and H2S04 concentrations in  the air.   The relationship is
     partially dependent upon the amount of moisture  in the
     air, partly upon the time the sulfur  contaminants have been
     in the atmosphere, the amount of catalytic particulate
     matter in the air, the amount (intensity  and duration)  of
     sunlight, the quantities of  hydrocarbons  and oxides of
     nitrogen and the amount of directly reactive and adsorptive
     materials in the air, as well as on the extent of recent
     precipitation . 3
     j
     In light of the above statements, it  would seem  that in
     analyzing the effects that emissions  from the proposed
     Macario Refinery would have  on the environment,  prudence
     dictates that we attempt to  examine any negative effects
     on the multi-million dollar  flower industry centered
     approximately 3 miles south  of the proposed site and
     agricultural crops in the area and that we take  steps
     to minimize any such negative effects.

-------
                         -6-

Vegetation is most easily injured under conditions that:
(1) adequate soil moisture for growth is present,
(2) humidity is high, (3) temperatures are above 40°F,
(4) the vegetation is actively growing and (5)  sunlight
is present.1  These conditions exist a large percentage
of the time in the San Diego Air Basin.  The enviropmental
factors stated above are interrelated but the relative
importance of each has not been adequately determined.
In fact, the mechanisms of action for combined pollutants
themselves are poorly understood.  Very little is  known
about physiological or biochemical changes in plants
exposed to pollutant concentrations.2

The information that is known on the synergistic effects
of SO2 with other pollutants is not based on extensive
studies.  Most studies have been performed in laboratories
or in field chamber units to determine the direct  effects
of various pollutants on vegetation without the effect
of numerous environmental effects.  As a result, these
tests tend to minimize environmental conditions which
might make vegetation more sensitive or condition  the
vegetation to be much more sensitive than would be
found under natural conditions.1

Floracultural crops grown in the area south of the pro-
posed refinery site include such plants as gladiolas,
hydrangeas, geraniums, Poinsettias, carnations, Bird of
Paradise, and daisies.  At least several of the species
are known to be sensitive to S02-  Agricultural crops
grown in the area include zuccini and tomatoes.

Although these particular species of floracultural crops
have not been used in studies on the synergistic effects
of S02 with other pollutants, a number of horticultural
crops in the same sensitivity range have been used.
Foliar injury to three agronomic crops (alfalfa, broccoli,
and radish) was greater after 4-hour exposures of 802/03
mixtures of 262/196 ug/m3 (0.1/0.1 ppm) for each pollutant
than for ozone alone.  No injury had been observed after
exposure to S02 alone.  Foliar injury to four other
agronomic crops (beans, oats, radish, and soybeans)
developed after 4-hour exposures to S02/N02 mixtures of
262/188 ug/m3 (O.I/ 0.1 ppm) of each pollutant.  The
concentrations used in this study were below the injury
threshold for each of the gases.

-------
                         -7-

In a study which looked at the synergistic effects of
S02 and other pollutants on tomatoes, the percent
foliar damage to the plants after 4-hour exposures was
generally less from a mixture of SO2 and ozone than the
additive percent injury of the single gas exposures.
When tomatoes were exposed to various mixtures of SO2
and nitrogen dioxide (NC>2) , in half of the concentration
mixtures no increase in foliar injury was evident below
the threshold injury concentration for SO2 (0.5 ppm) or
NO2 (2.0 ppm) when used alone.  In two additional tests
using different concentration mixtures, a 1.0% increase
in foliar injury occurred and in one case a 17% increase
was reported.3

Considering the limitations inherent in the model used
in EPA's SO2 analysis for Macario, levels equal to the
SO2 levels causing injury in the studies could possibly
exist in the area of the flower fields.  It is impossible
to accurately predict whether or not emissions from the
operation of the Macario Refinery, as now proposed, would
significantly effect the floracultural crops south of
Carlsbad.  Evidence does, however, indicate that the
possibility does exist.

To minimize any effect the refinery would have on the
flower industry near Leucadia, one of two alternatives
could be implemented in terms of a condition placed on
a permit to construct.   The first alternative would be
to require Macario to burn naphtha and/or SNG in all of
the fuel burning operations in the refinery.  According
to calculations performed by the staff of the San Diego
APCD and presented at the Macario Public Hearing, if
naphtha were the only fuel burned, SO2 emissions from
the refinery would be reduced from 7.82 T/D to 1.09 T/D,
a 86.1% reduction below the emissions calculated for LSFO.
In addition, NC>2 emissions could be expected to be reduced
15.3% from 6.68 T/D to 5.66 T/D and a 5.0% reduction in HC
from 1.20 T/D to 1.14 T/D, could be realized.  Significant
reductions in CO and particulates would also be expected.

Emissions would be even lower if SNG were burned exclusively
but the economics would be very restrictive.  Naphtha,
produced as a by-product of the refinery process,would.
be readily available.  A disadvantage with the alternative
of using naphtha as the fuel in the refinery is that the
proposed daily SNG production of 100 mm cu ft. would be
reduced by approximately 25% offsetting some of the
beneficial environmental impact of burning SNG elsewhere
in the air basin.

-------
                         -8-

A second alternative would simply limit the sulfur
content of fuel burned in the refinery processes to
0.05% sulfur thus not limiting so drastically the type
of fuels that could be burned.  According to Mr. Bruce
Bean, Manager of the Macario Refinery, some distillate
oil can be desulfurized to 0.05% S.  This alternative
xvould reduce S02 emissions from the fuel burning opera-
tions by a minimum factor of 9 below the emissions
initially projected.  According to the San Diego APCD
calculations, if 0.1% distillate oil were burned, SC>2
emissions from the refinery would be reduced by 77.9%,
from 7.82 T/D to 1.73 T/D.  If 0.05% S fuel were burned
throughout the refinery, S02 emissions from the refinery
would be approximately 0.87 T/D.  The disadvantage to
this alternative is that because distillate oil has a
lower BTU heating value than residual oil, more distillate
than residual would be required to produce the necessary
heat output.  So during the periods when 0.05% distillate
was being used there would be a slight increase in HC,
NO and CO emissions.  Under the worst case, if 0.05% S
distillate were used all the time, HC emissions from
the refinery would increase approximately 4.8%, from
1.20 T/D to 1.26 T/D.  N02 emissions would increase
5.4% from 6.68 T/D to 7.06 T/D and CO emissions would
increase 2.2%, from 0.90 T/D to 0.92 T/D.  This alter-
native would require approximately an extra 0.58 mm cu ft.
of SNG produced by Macario to remain in the San Diego
Air Basin in addition to the SNG previously calculated
in EPA's basinwide analysis.  Table 5-1 presents fuel
switching alternatives and the corresponding refinery
emission levels as calculated by the San Diego APCD and
presented at the August 23, 1975 Macario Public Hearing.
EPA, however, has modified the table to reflect the
emissions and resulting reductions of using 0,05%
S distillate oil rather than 0.1% S distillate oil.

-------
                                                        TABLE 5-1

                                     REDUCTIONS IN EMISSIONS THROUGH FUEL SWITCHING

                                                     (tons per day)
                    Emissions
                    Using 0.5%5
           Emissions
           Using 0.05%S
                               Emissions
                               Using
                                   Emissions
                                   Using
Pollutant Residual Oil
Sulfur Dioxide
Particulates
Hydrocarbons
Nitrogen Dioxide
Carbon Monoxide
7.82
2.29
1.20
6.68
0.90
Distillate Oil
0.87
1.62
1.26
7.06
0.92
% Reduction
88.9
29.3
+ 4.8
+ 5.4
+ 2.2
Naphtha
1.09
0.92
1.14
5.66
0.85
% Reduction
86.1
59.9
5.0
15.3
5.6
Synthetic Gas
0.24
0.21
0.98
4.07
0.74
% Reduction
96.9
90.8
18.4
39.1
17.8
Totals
18.89
11.73
37.9
9.66
48.9
6.24
67.0
Emission factors for synthetic gas derived from Table 1.4-1 in AP-42 assuming units are industrial  process  boilers.

Emission factors for residual and distillate oil derived from Table 1.3-1 assuming units are industrial  and commercial
fired units.

Emission factors for naphtha are interpolated between those for distillate and those for gas for lack  of better data.
These emissions will probably be lowered as we get additional data on naphtha.
                                                            -9-

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                              -10-
6.Q. Concern was expressed during the public comment period
     following the Macario Public Hearing that EPA had not
     addressed the synergistic effects of S02 and ocean salt
     spray in the atmosphere.

A.   Experiments have been conducted which look at the synergistic
     effects of SC>2 with both  irritant particles such as the
     aerosols of ferrous iron, manganese or vanadium and "inert"
     particles such as sodium  chloride aerosols.  Ocean salt
     spray is essentially sodium chloride aerosol.  These
     experiments were reviewed by EPA and are discussed in  some
     detail in the document, Air Quality Criteria for Sulfur
     Oxides.5

     To quote the summary to the discussion,

          "The experiments reviewed use changes in pulmonary
          function, changes in pathology, and mortality to
          evaluate possible potentiating or synergistic effects
          of particulate matter on the toxicity of sulfur
          dioxide.  Only changes in pulmonary function may  be
          studied in experiments on man.  Synergism by both
          irritant and "inert" particles is considered.

          Sulfur dioxide in the atmosphere may be partly
          converted into the more irritant sulfuric acid,
          especially at high humidity and in the presence
          of particulate material.  The irritant potency of
          sulfuric acid aerosol in itself is dependent on
          size and relative humidity.

          The potentiation by  particulate matter of toxic
          responses to sulfur  dioxide (synergism) has been
          observed under conditions which would promote the
          conversion of sulfur dioxide to sulfuric acid.
          The degree of potentiation is related to the
          concentration of particulate matter.  A threefold
          to fourfold potentiation of the irritant response
          to sulfur dioxide observed in the presence of
          particulate matter capable of oxidizing sulfur
          dioxide to sulfuric  acid.  Aerosols of soluble
          salts of ferrous iron, manganese, and vanadium
          have been observed to produce this potentiation,
          although the concentrations used  (0.7 mg/m^ to 1.0
          mg/m3) were considerably greater than any reported
          levels of the metals in urban air.

          Experiments with normal human subjects have failed
          to demonstrate any consistent potentiation of response
          to sulfur dioxide by sodium chloride particles.  In
          the guinea pig, sodium chloride is the least effective
          of the various soluble aerosols that produce any
          potentiation."

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                              -11-

7.Q. The concern was repeatedly expressed that the Macario
     Refinery would attract other heavy industrial sources
     and thus additional emissions.

A.   If any other heavy industry such as another refinery is
     proposed in the vicinity of the Macario Refinery, it
     too will have to apply for and receive an authority to
     construct before any construction commences. ' This
     authority to construct can only be granted if the
     required New Source Review determines that emissions
     from the source would not prevent or interfere with the
     attainment or maintenance of the National Ambient Air
     Quality Standards and if the analysis shows that the
     appropriate significant deterioration increments for SC>2
     and TSP as stated in EPA's Prevention of Significant
     Deterioration Regulations will not be used up.  Increments
     of. SC>2 and TSP have been established that, when added
     to the existing baseline air quality as of December 31,
     1974, cannot be exceeded by any new source covered by
     the regulations.  The maximum 24-hour allowable increment
     of TSP in Class II areas (current classification of the
     San Diego AQCR) is 30 ug/m^.  Based upon the use of
     0.5% residual oil, as initially proposed, the 24-hour
     increment of TSP resulting from the Macario Refinery
     would be 7.7 ug/m3 or 26% of the allowable increment.
     Based upon a permit condition limiting the refinery
     fuel to 0.05% S distillate,, however, the maximum 24-hour
     increment for TSP would be about 5.7 ug/m3 or 19.2% of
     the allowable increment.

     The maximum 24-hour allowable increment of S02 in a
     Class II area is 100 ug/m3.  The maximum allowable
     increment allowed on a 3-hour basis is 700 ug/m3.
     Based upon the proposed use of 0.5% residual oil, the
     maximum 3-hour increment resulting from the refinery
     could be expected to be approximately 12.4 ug/m3 or
     17.7% of the allowable 3-hour increment.  The maximum
     24-hour increment resulting from the refinery for this
     case would be 26.4 ug/m3 or 26.4% of the allowable 24-hour
     increment.  Based upon the use of fuel with -0.05% S,
     as would be required by conditioning any permit to
     construct that is issued, the maximum 3-hour increment
     wo'uld be approximately 13.6 ug/m3 or 1.9% of the allowable
     increment and the maximum 24-hour increment resulting
     from the refinery would be 2.94 ug/m3 or 2.94% of the
     allowable increment.  Air quality increments resulting
     from all new sources in the area will be tracked and
     recorded so that it will be assured that the allowable
     increments are not exceeded.

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                              -12-

8.Q  One criticism raised of EPA's analysis of the proposed
     Macario Refinery was that it was based upon insufficient
     data.

A.   EPA conducted its evaluation of the Macario Refinery
     using all available data.  The public hearing was held
     in Carlsbad, California on August 23, 1975 to obtain
     any additional data that the public felt should be
     considered in the analysis before the agency took final
     action on the application for the authority to construct.
     Testimony was presented by 49 speakers and 38 exhibits
     during the hearing and an additional 26 responses were
     received by EPA during the 30 day public comment period
     following the hearing.  Included in the responses
     received during the public comment period were letters
     from the Federal Energy Administration and the California
     Public Utilities Commission which are presented in
     Appendix A to this document.  A number of pertinent
     issues were raised through the public input processes and
     are addressed throughout the text of this correspondence.
     As a result of this public participation, EPA feels that
     there is a sufficient data base on which to perform the
     analysis.

9.Q  It was stated during the public hearing that the modeling
     studies conducted by EPA cannot alone be used to determine
     the impact of the refinery on the air quality and that
     EPA should use more accurate methods to assess the emission
     impact.

A.   Modeling studies were used as a tool to evaluate the
     total impact of the project on the localized air quality.
     The models which were used were selected from those
     available based upon their applicability to the Macario
     situations.  There were no alternative methods of analysis
     suggested to replace the modeling studies, either during
     the public hearing or during the 30-day public comment
     period that followed the hearing, however, additional
     aspects for consideration in the analysis were presented
     and have been incorporated into the analysis where applicable,

10.Q Concern was expressed that although the dispersion
     model used in EPA's analysis provides only best estimates
     and not infallible predictions'(as was stated in the
     analysis) the model predicts ground level concentrations
     to four significant digits.  It was felt that this may
     lead a lot of people to think of the numbers as absolute
     when in fact, they could be considerably higher  (or
     lower) .

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                             -13-

A.   The modeling analyses which were conducted were not
     intended to provide absolute values of air quality
     concentrations but rather to provide a relative
     indication of what the approximate air quality con-
     centrations would be.  The use of computer modeling, as
     a tool for accomplishing this purpose did, however,
     result in numerical values which were then evaluated to
     determine the project's impact on air quality.

     The highest 1-hour concentration predicted in the
     analysis was 26% of the 3-hour Federal secondary stand-
     ard.  There is no Federal 1-hour SC>2 standard.  The
     highest 24-hour concentration predicted was 18% of the
     24-hour Federal primary standard.

     The highest 1-hour SO2 concentration predicted in the
     analysis was 334.3 ug/m^ or 26% of the 3-hour Federal
     secondary standard.  The highest 24-hour concentration
     predicted was 105 ug/m^ or 18% of the 24-hour Federal
     primary standard.  Because of the low concentrations
     predicted in the modeling analyses it is felt that an
     adequate margin for potential error in the modeling
     exists to insure that Federal standards are not violated.

     The numbers predicted in the modeling analysis were
     based upon the assumption that 0.5% residual fuel oil
     would be burned in the processes in the refinery.  With
     a special condition that EPA may place on any authority
     to construct limiting the sulfur content in the refinery
     fuel to 0.05% S, the SC>2 air quality levels resulting
     from the refinery emissions will be at least a factor
     of 9 lower.

11.Q One speaker observed that the analyses did not consider
     the effect of the ocean.  It was stated, "We noted that
     the EPA model did not include the ocean but replaced it
     with a continuum of a simplistic topography of the land
     area.  It would seem that the thermodynamics and other
     factors of the ocean would modify the atmospheric
     mixing of the effluents."

A.   -*The atmospheric mixing of pollutants is determined by
     the meteorological and topographical conditions of the
     area.  The effects of the ocean on the atmospheric
     mixing were fully taken into account by the fact that
     the meteorological data used in the analysis were
     actual data recorded near the proposed site.  These
     data would reflect any effect the ocean would have on
     such data.

     Refer back to question £6 regarding the synergistic
     effects of SC>2 and ocean salt spray.

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                              -14-

12. Q Concern was expressed that the EPA analysis did not
     consider water quality impacts from the proposed refinery.

A.   The regulations under which EPA conducted its review
     [40 CFR 52.233 (g) ]  require a reviev; for air quality
     impacts only.  The Macario Independent Refinery Company
     has indicated that the discharge from the proposed
     refinery would be directed through the outfall of the
     Encina water pollution control facility.  If the refinery
     discharge were to increase the flow through the Encina
     facility by greater than 10% the Encina facility would
     be required to apply for a modification to their National
     Pollutant Discharge Elimination System  (NPDSS) Permit.
     If, on the other hand, there were a direct discharge
     from the Macario Refinery, the Macario Independent
     Refinery Company would be required to obtain a NPDES
     permit from the San Diego Regional Water Quality Control
     Board before construction of the refinery commences.
     Prior to issuing a permit, the Board must conduct an
     analysis of all potential water quality impacts from
     the refinery and must insure that all pertinent standards
     and regulations vrould be complied with.  In addition,
     any action taken by the Regional Water Quality Control
     Board would be reviewed by EPA.

13.Q It was expressed repeatedly that EPA should refrain
     from acting upon the permit application until an EIR is
     completed for the refinery project.

A.   The New Source Review Regulations require that EPA
     conduct a review and either deny or issue an authority
     to construct within 60 days after receiving an application
     for an authority to construct.  This regulatory require-
     ment precludes EPA from waiting until an EIR is completed
     before acting on the application.

     If an authority to construct is granted, however, a
     condition v/ill be placed on the permit  requiring that
     the EIR  be completed and reviewed by the appropriate
     agencies before construction of the refinery commences.

14.Q During the public hearing the concern was expressed
     that EPA had not considered alternatives to the proposed
     project.

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                              -15-

A.   A number of alternatives were considered in analyzing
     potential environmental impacts of the proposed Macario
     Refinery.  The first major alternative considered was
     the NO PROJECT alternative.  If the proposed refinery
     were not constructed, the projected pollutant emissions
     from the refinery and connected operations such as
     transporting crude oil would be eliminated.  This,
     however, would not reduce the need for low sulfur fuel
     oil and natural gas in the San Diego Air Basin.  The
     demand for low sulfur fuel oil in San Diego County as
     well as the rest of the nation presently exists and is
     projected to increase considerably in the next 10
     years.  Refinery capacity to produce cleaner, low
     sulfur fuels from high sulfur crude oil is inadequate
     to meet present and future needs.  In view of this
     projected shortage forecast for the future, if the
     proposed refinery is not built it is entirely possible
     that low sulfur fuel oil will not be available.  This
     would force the SDG&E to seek a variance from San Diego
     APCD's sulfur content in fuel regulation (Rule 62).  If
     the variance were not granted, this would result in
     curtailed electrical production and/or rolling blackouts.
     If the variance were granted and higher sulfur fuel oil
     were used for electricity production, this could have a
     significant impact on the air quality of the San Diego
     Air Basin.

     The California Air Resources Board has estimated the
     S02 emissions for the San Diego Air Basin for the case
     where supplies of low sulfur oil are inadequate in
     1976.  It was assumed that, 1.6% sulfur oil would be
     used for the remainder of demand allocated among
     California utilities on the basis of the same percentage
     satisfaction of low sulfur oil.  It is predicted that
     S02 emissions would about double for the San Diego Air
     Basin from 144 to 286 tons/day in 1976 if this were to
     occur.  With the projected increase in demand for low
     sulfur fuel oil, the S02 emissions would be expected to
     be even greater by 1978.

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                        -16-

This doubling in SC>2 emissions compares with the
refinery's estimated emissions of 0.87 tons/day based
upon the alternative chosen by EPA for fuel usage
within the refinery.  The no project alternative would
also result in no production of the other clean fuels,
refinery produced SNG and low sulfur distillate fuels.
The replacement of the portion of these fuels to be
burned in the San Diego Air Basin with conventional
fuels, would result in a substantial increase in future
pollution levels within the air basin.  Therefore, it
is EPA's determination that the alternative of the
source being constructed presents the more optimum
alternative.  This alternative is further based on the
Agency's technical determination under its new source
review procedures that construction of the source will
not prevent or interfere with the attainment or main-
tenance of national ambient air quality standards.

The second major type of alternative considered related
to fuel usage within the refinery.  The fuel that was
initially proposed to be used in the refinery was low
sulfur residual oil (0.5% sulfur by weight).  Based
upon the use of this fuel in the refinery, S02 emis-
sions of 7.82 tons/day were projected.  It was shown by
modeling analyses that no air quality standards or
increments of significant deterioration would be
violated as a result of using this fuel.  Research has
indicated, however, that SC>2 in levels below those
predicted could possibly react synergistically with NOX
or photochemical oxidant to produce adverse effects on
certain agricultural or floracultural crops in the
areas south of the proposed site.  Another alternative
fuel that was considered and may be chosen as the fuel
EPA would require to be burned in the refinery was
a fuel with a sulfur content of -0.05% sulfur.  Fuels
that could be considered by this alternative are SNG,
naphtha and 0.05% distillate oil.  Based upon this fuel
limitation, the maximum projected SC>2 emissions from
the refinery would be approximately 0.87 tons/day.
This quantity of SC>2 emissions is a factor of 9 smaller
than the projected emissions based upon the planned low
^sulfur residual.  In addition to assuring that SC>2
ambient air quality standards will not be exceeded and
that the allowable increment of Significant Deterioration
will not be used up, it will also greatly reduce any
chance of adversely affecting vegetation in the area
due to synergistic effects of SO2 with other pollutants.

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                         -17-

The other alternatives considered in regard to the
project were areas for site locations.   The emissions
associated v?ith the refinery itself would be the same
regardless of site location.  The first type of site
considered was one between the crude source and the
point of product consumption.  Such alternative sites
might include Hawaii or another location along the
western coast of the United States.  If any of these
sites were to be chosen, many of the physical impacts
expected to occur in the San Diego Region would be
transferred elsewhere.  But because of the technical
difficulties of transporting SNG long distances, either
by vessel or pipeline, it would be imperative to construct
the SNG facility at the point of use.  It is evident
that two processing sites with their separate support
facilities, utilities loads, transportation networks,
etc. would have a greater environmental impact than a
single combined facility.

Also, the extra handling of petroleum inherent in
shipping crude oil to an intermediate point, unloading
it, reloading the refined product and then off loading
the refined product at the point of consumption increases
the potential for oil spills and consequent environmental
damage.  In addition, establishing the refinery outside
the San Diego County area provides less assurance that
the low sulfur fuel needs of San Diego County would be
supplied in times of shortage.

Another alternative would be a site at or near the
major point of consumption other than the proposed site
near the Encina Power Plant.  A site considered under
this alternative is assumed to be in the vicinity of
San Diego County.  Such a site should be within a
reasonable distance of a marine terminal for crude oil
supply and should be accessible to the major consumers
of fuel products in order to minimise the environmental
impacts associated with product distribution.  The
capacity of the marine terminal is also of primary
consideration.  With the long distances over which the
crude oil can be expected to be transported, the minimum.
size tanker that can adequately service a 100,000 BPD
refinery is 70,000 DWT.  Tankers of this size typically
draw 43 feet and carry 540,000 bbls.  Deliveries of
crude in this size vessel would require a shipment
every 5-6 days.

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                         -18-

The only harbor in San Diego County that could be
expected to handle the projected tanker traffic is the
Port of San Diego.  Certain portions of this harbor,
however, have a controlling depth of 40 feet which
would not accommodate the size tankers necessary to
effectively move crude oil over long distances.  ^n
addition, bringing tankers into closed harbors creates
a susceptibility to tanker collision and possible large
oil spills.

The only existing offshore mooring in the San Diego
Area is the terminal at the Encina Power Plant.  This
facility will accomodate tankers with a draft of
47 feet.  Use of the existing facility would also
preclude the environmental impacts associated with the
construction of a new offshore terminal and its associated
terminal-to-shore pipeline.

The third alternative considered for site location
would be a site elsewhere in San Diego County but some
distance inland from the coast.  This alternative
assumes use of the existing marine terminal offshore
from the Encina Power Plant for reasons discussed
previously.  Storage tanks, in addition to those
planned for the proposed project, would be required at
or near the point where the petroleum comes ashore.
This would cause additional hydrocarbon emissions over
those projected for the proposed project.  The further
inland the refinery is located, the greater the quantity
of additional pipeline and right of way that's needed.
Additional pump stations and possible reheat stations
could introduce new sources of air pollutants into the
basin.  If it were not feasible to deliver all products
over the longer distances by pipeline, the use of tank
trucks might be necessary.  Their exhaust emissions
would also have an adverse effect on air quality.  For
example, transporting only 20,000 bbl's of products
daily could utilize 100 tank trucks.  The construction
of additional pipeline to an inland site would necessitate
excavations, resulting in pipelines passing through
more populated areas, lagoon crossings, creek/river
crossings and possibly mountain areas and active fault
regions in addition to the coastal area that is planned
under the proposed project.

In summary, it was concluded that the adverse environ-
mental effects would be somewhat worse under each of
the alternatives than for the proposed project.

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                             -19-

15.Q Concern was expressed that Macario Refinery emissions
     might significantly impact the air quality of national
     parks or national forests.

A.   The nearest national forest is the Cleveland National
     Forest with its closest boundary approximately 25 miles
     east of the proposed site.  All areas are presently
     designated as Class II under EPA's Prevention of
     Significant Deterioration Regulation.  Under the
     amendments to the Clean Air Act that are presently
     being considered by Congress, however, all Federal
     lands may be reclassified as Class I areas.  Class I
     applies to areas in which practically any change in
     air quality is considered significant.  It is estimated
     that the Macario Refinery will not impact the Cleveland
     National Forest significantly as defined by the regulation.

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                              -20-

Referanges

1.   Revisions to Sulfur Oxides Criteria Document, FR Vol. 3S,
     No. 178 - Friday, September 14, 1973, pg. 25680.

2.   Plant Response to Pollutant Combination, Reinert, R.A.;
     Heagle, A.S.; Heck, W.W., Agricultural "Research Service,
     North Carolina State University, Raleigh, North Caroline.

3.   Effects of Sulfur Oxides in the Atmosphere in Vegetation;
     Revised Chapter 5 for Air Quality Criteria for Sulfur Oxides,
     EPA-R3-73-030, September 1973.

4.   Reductions in Emissions Through Fuel Switching, San Diego
     Air Pollution Control District,Table presented at hearing
     on Macario LSFO Refinery, August 23, 1975.

5.   Air Quality Criteria for Sulfur gxiaes, National Air
     Pollution Control Administration Publication No. AP-50,
     April 1970.

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               APPENDIX A
Correspondence received from the U.S. Federal
Energy Administration and the California Public
Utilities Commission during the 30-day public
comment period following the August 23, 1975
Macario Public Hearing

-------
              FEDERAL ENERGY ADMINISTRATION
                                                       -  -;,         •,
                                                        j f^N^ J7 p;-J »7?.

                                                           '
                        i 1 I .°!?45 STREET
                 SAM FFJAMCiSCO, CALIFORNIA S-'.Mi
                             21 AUG 1375


U.S. Environmental Protection Agency          .
ATTN:  ''Hatthev.7 Walker,  Hearing Examiner      ff^ t'£'/
100 California Street
San Francisco, CA  94.111

Dear Mr. Walker:

The purpose  of this "letter is to provide the  Environmental
Protection Agency with  Region IX,  Federal Energy Administration's
position regarding'the  necessity for construction and  operation
of the proposed Macario Independent  Refinery  at  Carlsbad,
California.

Our review has shown  that there  v?ill be an increasing  need.for
low sulfur fuel oil in  Southern  California, due  to natural gas
curt a i Intents to electric pov?er plants.

According  to the, California  Public Utilities  Commission's    . .
Summary Report 10-Year  Forecast  of Gas  Utilities'  Requirements
and Supplies 1974-1983  (reference page  10},' the  level  of
natural gas  service to  steam electric plants  vrill drop from
19,5% in 1974 to 2.8% in 1978.   This difference  will'have  to
be made up by low sulfur fuel oil.   The 41,000 barrels per day
of lev; sulfur residual  fuel  oil,  and 23,400 barrels per day
of low sulfur distillate  fuel oil-will  definitely help to
supply the increased  needs of San Diego's steam  electric power
plants for this type  of fuel.  Thus, based upon  the above  factors,
we request you to act positively on  the Approval-to-Construct
for the Macario Independent  Refinery at Carlsbad, California.

If v;e can  be of any further  assistance  in regard to this matter,
please do  not hesitate  to contact us.

Sincerely,
WILLIAM C.
Regional Administrator
                   Say? Energy imd Yon Serve America-

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                                                                ADtii!ESi ALL COMMUrllCATlOf

                                                                  TOTHECOMM1SS,0M

                                                                CALIFORNIA SlATt. RU?LOINC

                                                                SAN' FRA'iClSCO. CALIFORNIA

                                                                T.tirH = J.t. I«IS> 557.
                                                       ;:iS47

JJuMtr liUtttrii (Unmmuuiimt     SEP 2-1 1975
      STATE  OF  CALIFORNIA
                                                 3X
September 21, 1975


U.S. Environmental Protection Agency
Region IX
100 California Street
San Francisco, California  9^111

Attention:  Mr. Matthew Wa!Lker
            Hearings Officer

Gentlemen:

The following information is presented as requested by EFA representatives in
G meeting on August 19, 1975, with regard to the application to construct the
Macario Refinery.

     1.  We cannot determine at this  time the effect which gas deliveries
         froro the refinery to San Diego Gos & Electric Company would have
         on the level of gas deliveries frors Southern California Gas Company
         to San Diego.   Specific Commission action would be required to
         make this determination.  It does seera unlikely that Southern
         California Gss would be forced to provide wholesale gas service
         to the extent that San Diego's electrical generation plants or
         retail customers would enjoy higher levels of service than the
         other comparable retail or wholesale customers on the Southern
         California Gas Company system.

     2.  With regard to the possibility of the Macario Refinery being
         regu.Ta ted as a public  utility, gas producers have not been
         under Commission jurisdiction in the past.  However, by
         Decision Ho. 8^616, the Commission has directed its staff
         to prepare an order requiring the California gas producers
         /to show cause why thsy should not be regulated as public
         utilities by the CHIC.

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 U.S. Environriental Protection Agency
 September 21, 1975
 Pase 2
      3-  The following curtailments, excluding steam electric plants,
          are estimated for SDG&E's customers under the staff recommended
          end-use curtailment system.  This system is expected to be
          adopted shortly.

          Fossil Fuel                Natural Gas        Alternate Fuel
         JRequirecients                  Suppjy              Requirements

                                    1-Mcf/day
1978       168.6            •           146.5                 22.1

1979       172.3                       1*1-6. 9                 25Jt

 Very truly yours,

 PUBliC UTILITIES COXMISSIOK

 By
 WILLIA14 R. JOHNSON, Secretary

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