21.2
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
JUN 16, 1981
Mr. R. W. Kreutzen
General Manager
Environmental Affairs
Chevron U.S.A. Inc.
P.O. Box 3069
San Francisco, CA 94119
Dear Mr. Kreutzen:
This is in response to your letter of May 8, 1981, requesting an
applicability determination for the Richmond Lube Oil Project. This project
will modernize lube oil facilities and increase lube oil manufacturing
capacity. Current Offset Policy provisions do not permit construction of
this project, since it would result in a significant net increase in
emissions in a nonattainment area without an approved SIP. However, EPA has
proposed to change the definition of source in nonattainment areas (46 FR
16280, March 12, 1981). Under the new definition, your evidence indicates
there would be no significant net increase in VOC emissions at the refinery,
and the project would thus not be subject to review under the Offset Policy.
Chevron submitted a permit application for this project to the Bay Area
Air Quality Management District (BAAQMD) on March 5, 1981, and the permit is
currently undergoing review. Chevron expects that shortly the application
will be approved and the district will grant the authority to construct.
Your letter requests our determination on a problem regarding the
enforceability of this permit.
Section II. A. 7 (v) of 40 CFR 51, Appendix S (45 FR 52742, August 7,
1980) specifics that in determining if a net emissions increase occurs,
accompanying decreases in actual emissions occurring at the source are
creditable only to the extent that they are federally enforceable. Even
though the BAAQMD has approved authority to construct rules pursuant to the
Clean Air Act of 1970, rules adopted to comply with the 1977 amendments and
EPA implementing regulations have not yet obtained final approval from EPA.
Chevron requests EPA concurrence that emission decreases in the Lube Oil
Project be considered federally enforceable.
DSSE agrees the decreases would be federally enforceable. Federally
enforceable, as defined at 40 CFR 51, Appendix S (II.A.15), means "all
limitations and conditions which are enforceable by the Administrator,
including those requirements
developed pursuant to CFR Parts 60 and 61, requirements within any
applicable SIP, and any permit requirements established pursuant to this
Ruling, 40 CFR 52.21, or under regulations approved pursuant to 40 CFR 51.18
or 51.24". Provided the original Section 51.18 permit regulations are still
in place, these can continue to be used to establish an enforceable permit
condition. The important parts of the current and proposed rules are the
same, and the change in the Bay area rules does not mean EPA considers the
permit no longer federally enforceable. Although concern has arisen over
the ability of the BAAQMD to insure that offsets proposed by Chevron are
carried out (a concern which arises if EPA adopts a definition of source
which allows Chevron to use netting in this situation), this potential
problem should be resolved through discussion with the Region IX office.
This determination constitutes an opinion as to whether the permit is
enforceable and does not in any way represent a judgment as to the validity
of any offset or approval of any permit. The permit itself is conditioned
upon approval by the BAAQMD with appropriate requirements. Approval to
construct can only be given if EPA changes the definition of source in
nonattainment areas to one which would enable Chevron to offset the project
emissions by obtaining reductions in other areas of the refinery.
Region IX has expressed concern over possible increases in throughput
and other factors which may increase the amount of offsets required. We
advise you to follow up this response by contacting Region IX, to ensure
that any required permits are obtained and all applicable New Source Review
Provisions are met. Rick Sugarek is the regional contact and he can be
reached at 415-556-3454.
This response has been prepared with the concurrence of EPA's Office of
General Counsel.
Sincerely yours,
Edward E. Reich, Director
Division of Stationary
Source Enforcement
cc: Mike Trutna
Bill Pierce
Eric Smith
Rick Sugarek
Nancy Mayer
Chevron U.S.A. Inc.
555 Market Street, San Francisco, California - Phone (415)894-3041
Mail Address P.O. Box 3069, San Francisco, CA 94119
R. W. Kreutzen
General Manager
Environmental Affairs
May 8, 1981
Mr. Edward E. Reich (EN-341)
Division of Stationary Source Enforcement
Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Dear Mr. Reich:
Chevron U.S.A. Inc. recently announced plans to modify its major refinery in
Richmond, California across the Bay from San Francisco. The modification
involves numerous modifications of existing equipment, and additions of new
equipment, and is called the "Richmond Lube Oil Project." We would greatly
appreciate your confirmation of our conclusions regarding the applicability
of certain EPA air pollution regulations to the Project.
The Project will consist of modern lubricating oil manufacturing facilities
at the Refinery. The new facilities will increase lube oil base stock
manufacturing capacity to about 9,500 barrels per day and will make the lube
oils from domestic, rather than imported, crude oil. The Project will
replace aging, less efficient facilities that are now used for lube oil
manufacture at the Refinery. While Chevron will make a capital investment
of $440 million to construct the Project, the Project is only a small part
of the Refinery, which refines about 300,000 barrels per day of crude oil.
The Project will create about 1,200 construction jobs and about 50 permanent
new jobs at the Refinery. By retiring old equipment and adding modern
pollution control equipment, the Project will reduce the net emissions of
all air pollutants from the whole Refinery, even though lube oil
manufacturing capacity is being increased.
Most importantly, the Project will not result in a "significant net
emissions increase of any pollutant" (as used in 40 C.F.R. 52.21 (b) (2) ,
52.24(f) (6)) at the Refinery, if the decreases in actual emissions
occurring at the Refinery in connection the Project are "federally
enforceable" and hence creditable.[SEE FOOTNOTE 1] We believe that the
Project emissions decreases will be "federally enforceable" and we would
appreciate your confirmation of our conclusion.
---------------------------------------------------------------------------
[FOOTNOTE 1] We assume that the "dual source definition (40 C.F.R.
Subsection 52.24(f) (3) and related sections) will be eliminated as proposed
by EPA (see 46 FR 16280, March 12, 1981). In this letter, we do not
consider that issue nor do we ask for any EPA interpretation concerning it.
Mr. Edward E. Reich - 2 May 8, 1981
Our conclusion is based upon the fact that the reductions will be mandated
by "limitations and conditions which are enforceable by the Administrator,
including . . . requirements within any applicable State Implementation
Plan, and any permit requirements established . . . under regulations
approved pursuant to 40 C.F.R. 51.18" (40 C.F.R. 52.21(b) (17), 52.24(f)
(15)). In order to construct and operate the Project, Chevron must obtain
an Authority to Construct and Permit to Operate from the Bay Area Air
Quality Management District (BAAQMD). The District Authority to Construct
the Project will contain limitations and conditions requiring all Project
emission reductions.
The permit application was recently submitted to the BAAQMD and is currently
under review. Additional supporting information requested by BAAQMD staff
has been provided. As pertinent background information, the following brief
chronology of BAAQMD rules and our application to construct is provided:
- 1972-1975: EPA approves the District Authority to Construct rules, and
amendments to the rules, pursuant to the Clean Air Act Amendments of
1970 and 40 C.F.R. 51.18. A copy of the EPA-approved, amended District
rules, which we obtained from EPA Region IX and which are marked with
EPA's approval dates, is attached as Exhibit A.
- 1977-1980: The District adopts further amendments to its Authority to
Construct rules to comply with the Clean Air Act Amendments of 1977 and
EPA implementing regulations. A copy of the current District rules is
attached as Exhibit B. Please note that the amendments recodify and
generally expand on the EPA-approved earlier version (for example,
compare Exhibit A, sections 1301 and 1302 with Exhibit B, sections 2-1-
301 and 2-1-302). The amendments have been submitted to EPA Region IX
for approval, but we cannot wait any longer for EPA Region IX to act.
- March 5, 1981: We applied to the District for an Authority to
Construct the Project under the currently effective District rules
(i.e., Exhibit B). Chevron applied on the basis of a net Refinery-wide
decrease of all pollutants emitted by the Project. We expect our
application to be deemed complete very soon and the District to grant
the Authority to Construct promptly.
You may assume that the BAAQMD will incorporate as conditions of the final
Authority to Construct at least all of the offered emission reductions.
Such reductions will, therefore, apart from the "federal enforceability"
requirement, prevent any "significant net emissions increase" from occurring
at the Refinery. Given these assumptions, we ask that you confirm that the
Refinery reductions required by the District Authority to Construct the
Project will be "federally enforceable" (as used in EPA air pollution
regulations).
We are concerned about this matter because of the size, importance
Mr. Edward E. Reich - 3 May 8, 1981
and fast schedule of the Project. Accordingly, we would greatly appreciate
your prompt and brief written confirmation of our conclusions, and
publication of your confirmation in the Federal Register.
Sincerely,
RW Kreutzen
Attachments
cc: Mr. K. T. Derr
President
Chevron U.S.A. Inc.
Mr. W. J. Price
Senior Vice President, Manufacturing, Supply & Marketing
Chevron U.S.A. Inc.
Ms. Sheila Prindiville
Acting Regional Administrator
EPA Region IX
215 Fremont Street
San Francisco, CA 94105
Mr. Richard Biondi (EN-341)
Division of Stationary Source Enforcement
Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Eric Smith, Esq. (A-133)
Office of General Counsel
Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Mr. Michael Trutna (MD- 15)
Environmental Protection Agency, Standards
Implementation Branch
Office of Air Quality Planning and Standards
Research Triangle Park, NC 27711