Environmental Integrity Project
1303 San Antonio, Suite 200
Austin, Texas 78701
Phone: (512) 637-9477
Fax: (512) 584-8019
www.environmentalintegrity.org
September 4, 2009
Ms. LaDonna Castanuela
Chief Clerk, MC-105
Texas Commission on Environmental Quality
P.O. Box 13087
Austin, TX 78711-3087
Fax: (512) 239-3311
Re:
Via Hand-Delivery
TCEQ Docket No. 2009-0033-AIR; SOAH Docket No. 582-09-2005; Application of Las Brisas Energy
Center, LLC for State Quality Permit; Nos. 85013, HAP 48, PAL 41 and PSD-TX 1138.
Dear Ms. Castanuela:
Enclosed for filing in the above referenced matter is an original and one copy of Sierra Club's
Response to Environmental Defense Fund, Inc. 's Motion for Summary Disposition. Please return a file
stamped copy to our courier.
Sincerely,
Enclosure
cc:
Service List (Via U.S. Mail, Facsimile and Email)
CERTIFICATE OF SERVICE
I hereby certify that I have served a true and correct copy of the foregoing on this 4th day of September,
2009.
JJifk~~4---,.~£====-,...,
«anLeVin
Attorney for Sierra Club
ForSOAH
Via Hand-Delivery
Judge Tommy Broyles
Judge Craig Bennett
State Office of Administrative Hearings
300 West 15th Street, Suite 502
Austin, TX 78701
Fax: (512) 475-4994
For the Applicant
Via Hand-Delivery
John Riley
Chris Thiele
Vinson & Elkins
2801 Via Fortuna, Suite 100
Austin, TX 78746
Fax: (512) 236-3329
Email: [email protected]
[email protected]
For the Executive Directol'
Via Electronic Mail
Erin Selvera
Ben Rhem
Texas Commission on Environmental Quality
MC-175
P.O. Box 13087
Austin, TX 78711-3087
Fax: (512) 239-0606
For the Public Interest Counsel
Via Electronic Mail
Scott Humphrey
Office of Public Interest Counsel, MC-103
Texas Commission on Environmental Quality
P. O. Box 13087
Austin, Texas 78711-3087
Email: [email protected]
For the Individual Protestants
Via Electronic Mail
Nancy J Delvin
15357 Mutiny Court
Corpus Christi, TX 78418-6342
Email: [email protected]
Via First Class Mail
Manuel Cavazos, III
3409 Fairmont Dr.
Corpus Christi, TX 78408
For Environmental Defense Fund
Via Electronic Mail
Tom Weber
McElroy, Sullivan & Miller LLP
P.O. Box 12127
Austin, TX 78711
Email: [email protected]
For TCACC
For Roger Landress
Via Electronic Mail
Via Electronic Mail
Terrell W. Oxford
Susman Godfrey, LLP
901 Main, Suite 5100
Dallas, TX 75202
[email protected]
Roger Landress
242 Mt. Clair Dr.
Corpus Christi, TX 78412
Email: [email protected]
League of United Latin American Citizens.
Council No.1
Via First Class Mail
Susie Luna-Saldana, Education Chair
LULAC, Council No.1
4710 Hakel Dr.
Corpus Christi, TX 78415
Clean Economy Coalition
Via Facsmile
Gerald Sansing, Chairperson
Clean Economy Coalition
P.O. Box 537
Corpus Christi, TX 78403
Fax: (361) 854-5859
For the Medical Groups
Via Electronic Mail
Richard Lowerre
Lowerre, Frederick, Perales, Allmon & Rockwell
707 Rio Grande, Suite 200
Austin, TX 78701
Email: [email protected]
[email protected]
SOAH DOCKET NO. 582-09-2005
TCEQ DOCKET NO. 2009-0033-AIR
APPLICATION OF
LAS BRISAS ENERGY CENTER,
LLC FOR STATE AIR QUALITY
PERMIT NOS. 85013, PSD-TX1138, HAP 48, AND PAL 41
§
§
§
§
§
BEFORE THE STATE OFFICE
OF
ADMINISTRATIVE HEARINGS
SIERRA CLUB'S RESPONSE TO ENVIRONMENTAL DEFENSE FUND, INC.'S
MOTION FOR SUMMARY DISPOSITION REGARDING THE LAS BRISAS
TERMINAL
TO THE HONORABLE ADMINISTRATIVE LAW JUDGES:
COMES NOW Protestant Sierra Club and files this response in support of the
Environmental Defense Fund, Inc. ("EDF") motion for summary disposition regarding emissions
from the Las Brisas Terminal Company ("LBTC"), and would respectfully show as follows:
I.
SUMMARY
Applicant Las Brisas Energy Center ("LBEC") has impermissibly excluded from its
Application consideration of emissions from the adjacent Las Brisas Terminal Company
("LBTC"). Sierra Club agrees with Protestant EDF that LBEC cannot arbitrarily limit "the
major stationary source" to exclude the emissions associated with unloading, storage and
handling of pet-coke, lime, and other materials at the adjacent LBTC.
LBTC and LBEC comprise a single stationary source for purposes of preconstruction
authorization under the federal Clean Air Act and implementing regulations.
II. UNDISPUTED FACTS
There is no dispute that LBEC's Prevention of Significant Deterioration ("PSD") permit
application represents that, in addition to the LBEC site that is the subject of this proceeding, it
will be necessary to utilize the adjacent site at LBTC for purposes of bulk storage and handling
of plant materials, such as pet coke, lime, soda ash, sand, fly ash and bottom ash. See, Ex. A
Emissions from the transportation, handling and storage of bulk materials like pet coke
and lime are well known. See e.g., EPA's AP-42 (Emission Factors) at Chapters 13.2.2 (fugitive
emissions from roads); 13.2.4 (Aggregate Handling And Storage Piles).!
Both LBEC and LBTC are owned and controlled by Chase Power. See, Ex. B (E-mails
from Kathleen Smith, President and Chief Operating Officer of Chase Power Development,
LLC)
The LBTC is a required and integral part of Chase Power's plan to construct and operate
LBEC. See, Exs. A and B.
The LBEC Application and Draft Permit do not consider emissions from LBTC in any
ambient impacts analyses (i.e., air dispersion modeling) and do not contain any BACT analyses
for emissions units at LBTC.
III.
LBEC'S APPLICATION MUST INCLUDE ALL EMISSIONS
FROM THE PROPOSED POWER PLANT, INCLUDING LBTC
A.
LBEC and LBTC Comprise a Single Major Stationary Source That Is the
Subject of This Proceeding
LBEC and LBTC are a single "major stationary source" for purposes of PSD review.
A single source under the Clean Air Act is not necessarily limited to a single structure or
building. When it passed the Act, Congress "clearly envisioned that entire plants could be
AP-42 is the U.S. Environmental Protection Agency's emission factors that are commonly used.
AP-42 is available at http://www.epa.gov/ttn/chicf/ap42/.
2
considered to be single 'sources.'" Alabama Power Co. v. EPA, 636 F.2d 323, 397 (D.C. Cir.
1979). To make sure that air pollution from the "entire plant or other appropriate grouping of
industrial activity" is controlled, id., the U.S. EPA has defined a "source" to include related
buildings, structures, facilities, and installations that met three characteristics. Sources of
emissions are aggregated and considered to be part of the same major source if they are:
•
contiguous or adjacent,
•
under common control, and
•
classified in the same 2-digit SIC group. 40 C.F.R. §§ 52.21(b)(5), (b)(6).
See, U.S. EPA "single source" determination letters, attached as Exhibit C, and
individually cited herein? In the LBEC matter, it is undisputed that Chase Power wholly owns
and controls both LBEC and LBTC. Chase Power should not be allowed to arbitrarily piecemeal
its project to circumvent federal and state ail' quality standards.
2 Exhibit C includes: September 20, 2007, Letter from EPA Region 5 to Bureau of Air, Illinois EPA, Re:
Air Products and Chemicals Incorporated; December 6, 2004, Letter from EPA Region 7 to James Pray, Re:
"support facility" concept; March 29, 2001, Letter from John Seitz, US EPA Office of Air Quality Planning and
Standards to Kentucky Division for Air Quality, Re: Gallatin Steel; October 11, 2000, Letter from EPA Region 2 to
New York Division of Air Resources Re: St. Lawrence Cement's Proposed Greenport Project; August 25,1999
Letter from EPA Region 5 to Wisconsin Dept. of Natural Resources, Re: Oscar Mayer Foods; April 20, 1999, Latter
from EPA Region 8 to Colorado APCD, Re: American Soda Commercial Mine and processing plant; November 12,
1998, Letter from Richard Long, U.S. EPA Region 8, to Colorado Air Pollution Control Division, Colorado Dept. of
Public Health and Environment, Re: Siugle Source Determination for TriGen/Coors; May 21, 1998, Letter from
EPA Region 8 to Utah Division of Air Quality, Re: Response to Request for Guidance in Defining Adjacent with
Respect to Source Aggregation (Re: Utility Trailer Manufacturing Co); March 13, 1998, Letter from EPA Region
5 to Illinois EPA re: Acme Steel Co.; August 8, 1997, Letter from EPA Region 8 to Utah Dept. of Environmental
Quality Division of Air Quality Re: Great Salt Lake Minerals; August 27, 1996, Memo from Robert Kellum, EPA
Office of Air Quality Planning and Standards, to Richard Long, Director, US EPA Region 8, Re: Analysis of
Applicability of PSD to Anheuser-Busch and Nutri-Turf.
3
i.
EPA Guidance on Adjacency
While there is no dispute that LBEC and LBTC are adjacent, EPA's longstanding policy
on adjacency sheds light on the heavy weight given to the functional inter-relationship, or
integral connectedness between two facilities. EPA stated in 1998, that "we have found no
evidence that any EPA office has ever attempted to indicate a specific distance for 'adjacent' on
anything other than a case-by-case basis." May 21,1998, Letter from EPA Region 8 to Utah
Division of Air Quality Re: Utility Trailer Manufacturing Co. Instead, EPA has stated, that
"whether two facilities are 'adjacent' is based on the 'common sense' notion of a source and the
functional interrelationship of the facilities, and is not simply a matter of the physical distance
between two facilities." October 11, 2000, Letter from EPA Region 2 to New York Division of
Air Resources Re: St. Lawrence Cement's Proposed Greenport Project. See also, Apri120, 1999,
Letter from EPA Region 8 to Colorado APCD, Re: American Soda Commercial Mine and
processing plant.
More specifically, EPA stated that a determination of adjacency should be based on the
following:
Was the location of the new facility chosen primarily because of its proximity to the
existing facility, to enable the operation of the two facilities to be integrated? In other
words, if the two facilities were sited much further apart, would that significantly affect
the degree to which they may be dependent on each other?
Will materials be routinely transferred between the facilities? Supporting evidence for
this could include a physical link or transportation link between the facilities, such as a
pipeline, railway, special-purpose or public road, channel or conduit.
Will managers or other workers frequently shuttle back and forth to be involved actively
in both facilities? Besides production line staff, this might include maintenance and repair
crews, or security or administrative personnel.
4
Will the production process itself be split in any way between the facilities, i.e., will one
facility produce an intermediate product that requires further processing at the other
facility, with associated air pollutant emissions? For example, will components be
assembled at one facility but painted at the other?
May 21,1998, Letter from EPA Region 8 to Utah Division of Air Quality, Re: Utility Trailer
Manufacturing Co. EPA regional offices have frequently applied these factors to find that two
facilities were single sources, even when separated by many miles. For example, EPA
determined that a mine and a processing plant were a single source even though they were 35-40
miles apart, because they were connected by a 44-mile-Iong dedicated pipeline that made them
"functionally interdependent." 1d. Similarly, EPA determined that a salt processing plant and a
pump station 21.5 miles apart were a single source, because the dedicated pipeline between them
demonstrated that the physical relationship between the two facilities was similar to "conveying
operations that support raw materials to a processing plant." August 8,1997, Letter from EPA
Region 8 to Utah Dept. of Environmental Quality Re: Great Salt Lake Minerals. See also,
August 27,1996, Memo from Robert Kellum, EPA Office of Air Quality Planning and
Standards, to Richard Long, Director, US EPA Region 8, Re: Analysis of Applicability ofPSD
to Anheuser-Busch and Nutri-Turf (Concluding that a brewery and landfarm are commonly
owned, are on contiguous or adjacent property, and the landfarm is a support facility for the
brewery).
EPA determined that two steelmaking operations in Chicago, separated by a distance of
more than 3 miles, were a single source, because "[a]1though the two sites are separated by Lake
Calumet, landfills, 1-94, and the Little Calumet River, USEPA considers that the close proximity
of the sites, along with the interdependency of the operations and their historical operation as one
5
source, as sufficient reasons to group these two facilities as one." March 13, 1998, Letter from
EPA Region 5 to Illinois EPA re: Acme Steel Co. (emphasis added).
Thus, EPA has found that rail and pipeline connections between two facilities supply the
functional interrelationship necessary to meet the adjacency test, even when facilities are
separated by some distance. While there can be no argument that LBEC and LBTC are
physically adjacent, the conveyors between LBTC and LBEC further show the physical and
operational interconnectedness between these two facilities.
ii.
Industrial Grouping
The first two prongs of the "single source" test (adjacency and common control) are easy
questions to answer, but the third prong (same industrial grouping) is a harder question because,
as the Applicant may argue, LBTC is a marine terminal and LBEC is a power plant. However,
this is a false distinction for PSD applicability purposes. LBTC and LBEC comprise a single
source for PSD purposes because LBTC is a support facility.
EPA has a longstanding policy that facilities may be aggregated, even if they have
different Standard Industrial Classification ("SIC") codes, if they are "support facilities" that are
integrally related to the primary activity at the site. When it first promulgated its PSD rules in
1980, EPA stated:
Each source is to be classified according to its primary activity, which is determined by
its principal product or group of products produced or distributed, or services rendered.
Thus, one source classification encompasses both primary and support facilities, even
when the latter includes units with a different two-digit SIC code. Support facilities are
typically those which convey, store, or othelwise assist in the production of the principal
product. Where a single unit is used to support two otherwise distinct sets of activities,
the unit is to be included within the source which relies most heavily on its support.
6
, 45 Fed. Reg, 52695 (August 7,1980). EPA has stated that this "primary activity test" must be
applied on a case-by-case basis, As stated in the preamble to the 1980 regulations, "[e]ach
source is to be classified according to its primary activity, which is determined by its principal
product or group of products produced or distributed, or services rendered" Id.
Under this primary activity test, EPA or the permitting authority should review all the
facts and circumstances of the particular case to determine what is the main purpose and
function of the overall operation, and make an applicability determination based on the
status (listed vs. nonlisted) and tonnage threshold (100 tons per year vs, 250 tons per
year) of the primary activity.
54 Fed. Reg, 48870, 48881 (Nov. 20, 1989),
EPA confirmed this position in a 1991 proposed rulemaking on defining major sources
under the Title V operating program. In the 1990 amendments to the Clean Air Act, Congress
provided that major sources must obtain operating (a,k.a. "Title V") permits, and defined major
sources to include "any group of stationary sources located within a contiguous area and under
common control." 42 U.S.c. § 7661(2). EPA interpreted this passage to mean:
[A]ggregation by SIC code should be done in a manner consistent with established NSR
procedures. Accordingly, any equipment used to support the main activity at a site would
also be considered as part of the same major source regardless of the 2-digit SIC code for
that equipment. For example, an automobile manufacturing plant may consist of a
foundry (SIC group 33), a power plant (SIC group 49), and an assembly plant (SIC group
37). Assume that the equipment is situated at the same site, under common ownership,
and that the foundry and power plant are used solely to supply the assembly plant. In this
example, all three activities would be considered to be part of one major source.
However, if less than 50 percent of the output of the foundry was dedicated to the
mentioned auto assembly plant, it would be considered as a separate source. If the power
plant supported both the foundry and the assembly plant, it would be considered part of
the source that consumes the largest percentage of the power generated.
7
56 Fed. Reg. 21712, 21724 (May 10, 1991). Thus, EPA has consistently held that
primary and support facilities with different SIC codes are to be treated as a single source where,
as a practical matter, they function as a single entity. Further, EPA has consistently held the
position that the primary activity test, to determine if a facility supports the primary activity,
should be applied on a case-by-case basis.
The main factor in determining whether to treat primary and support facilities as a single
source for PSD purposes is the extent to which the support facility provides output or services for
the primary facility. Other factors include the following:
(1) the degree to which the supporting activity receives materials or selvices from the
primary activity (which indicates a mutually beneficial arrangement between the primary
and secondary activities);
(2) the degree to which the primary activity exerts control over the support activity's
operations;
(3) the nature of any contractual arrangements between the facilities; and
(4) the reasons for the presence of the support activity on the same site as the primary
activity (e.g., whether the support activity would exist at that site but for the primary
activity).
August 25,1999 Letter from EPA Region 5 to Wisconsin Dept. of Natural Resources, Re: Oscar
Mayer Foods.
EPA has determined that a separately owned brewery and power plant comprise a single
source for PSD purposes, because the "support/dependency relationship" satisfies not only the
common control requirement but also the "support facility" (or, primary activity) test. See,
November 12, 1998, Letter from Richard Long, U.S. EPA Region 8, to Colorado Air Pollution
Control Division, Colorado Dept. of Public Health and Environment, Re: Single Source
Determination for TriGen/Coors. In reaching its conclusion, EPA explained: "As the [SIC]
8
manual explains, the SIC code is a system for classifying facilities according to type of economic
activity. Here, the power plant lacks a primary economic activity of its own; instead, it serves to
support the activity of another facility. Therefore, the power plant is properly classified under the
same SIC code as the brewery, which is the primary economic activity on the site." Id. The same
is true for LBEC and LBTC. LBTC provides fuel and other inputs so that LBEC can produce
electricity.
In 1989, in determining whether a coal mine and power plant were a single source, EPA
stated:
These commenters noted, that in 1980, EPA stated, in response to a specific comment,
that a power plant and a [coal mine] connected by a 20- mile railroad would be
considered separate sources because of the distance and the different two-digit SIC codes,
but sought clarification as to a [coal mine] and a closer or adjacent coal-fired power plant.
As stated above, these matters must be decided on a case-by-case basis. However, EPA
anticipates that it would, in most cases, conclude that a [coal mine1and an adjacent minemouth power plant controlled by the same entity would be considered a single source, the
primary activity of which is either the generation of electrical power or the mining of
coal, depending on the most likely overall purpose of the facility.
54 Fed. Reg. 48870, 48881-82 (Nov. 28, 1989). While the coal industry challenged other aspects
of this rulemaking, it did not challenge EPA's finding on this single source issue. NRDC v.
EPA, 937 F.2d 641 (D.C. Cir. 1991).
LBTC and LBEC would function as a single entity to produce electricity. Thus, under
EPA's longstanding "primary activity" (or "support facility") test, LBTC supports the primary
activity - power generation - and, therefore, LBEC and LBTC have the functional
interrelationship necessary for classification as a single source for PSD purposes.
9
B. SOAH Has Adopted a Similar Common Sense-Based Test to Determine Whether
Emissions From an Interconnected Facility Should be Considered in the
Primary Facility's Air Quality Application
The ALI's Proposal for Decision and Order in the Matter of the Application of
ASARCO, Inc. for the renewal of Air Permit No. 20345 (SOAR Docket No. 582-05-0593) is
instructive. Portions referenced below are included as Exhibit D. Although that contested case
involved a state air quality permit and not a PSD permit, the AU grappled with similar factors
(i.e., the symbiotic relationship between two facilities). In that case, the AU found that "[g]iven
the reasonable likelihood of significant PM emissions from Oglebay Norton and ASARCO's
interconnected and interdependent arrangement with that company regarding slag, Oglebay
Norton's PM emission's must be considered to avoid a circumvention and determine whether
renewal of Permit 20345 will cause or contribute to an exceedance of the standards in the PM
NGLC rule, hence air pollution." (ASARCO Order at 57). Even though the AU found, "the
only evidence is that Oglebay Norton is a separate company operating a legally separate facility,
it operates on property adjacent to and owned by ASARCO to process the slag from ASARCO's
smelter and generates PM emissions from that processing." (ASARCO PFD at 81) The AU
determined that "[g]iven the evidence showing a reasonable likelihood of significant PM
emissions from Oglebay Norton, ASARCO's arrangement with that company regarding slag is
so interconnected and interdependent that it seems extremely close to a contrivance." (ASARCO
PFD at 81).3 With regard to modeling, "the ALJs agree [with] the Protestants that ASARCO
3 "No
person shall use any plan, activity, device or contrivance which the executive director determines will, without
resulting in an actual reduction of air contaminants, conceal or appear to minimize the effects of an emission which
would otherwise constitute a violation of the Act or regulations." 30 TAC §101.3
10
should have modeled all other PM sources at its plant and at an adjacent facility intimately tied
to ASARCO's plant." (ASARCO PFD at 67)
IV. CONCLUSION
Under the federal Clean Air Act, LBTC and LBEC comprise a single "stationary source"
for PSD permitting. LBTC is adjacent to LBEC; owned and controlled by the same parent
company, Chase Power; and supports the primary activity, namely power generation. LBTC and
LBEC are not only physically adjacent, but are inextricably linked together, functionally and
operationally.
Emission sources from the LBTC must be considered as part of LBEC's
application. They are not, and therefore the application is fatally flawed.
WHEREFORE, PREMISES CONSIDERED, Protestant Sierra Club respectfully
requests that the Administrative Law Judges grant EDF's motion for summary disposition.
Respectfully submitted,
ILANLEVIN
LAYLA MANSURI
ENVIRONMENTAL INTEGRITY PROJECT
1303 SAN ANTONIO ST., STE. 200
AUSTIN, TX 78701
512/637·9477
512/584·8019 (FAX)
11
EXHIBIT A
Section 4
Process Description
The proposed facility will consist Of four 300-megawatt (MW) circulating fiuidlzed bed (CFB)
boilers that will use petroleum coke (pet coke) as fuel. The steam produced from the boilers will
be routed to two single turbine generator sets, each rated at 600 MW. The 1,200 MW of power
generated will be sold to the Corpus Christi Port Authority for retail sale to the looal electricity
transmission and distribution grid. Other activities at the site include loadlngfunloading,
transferring, and storage of fuels, sorbent materials (limestone and lime), sand, and combustion
by-products (fly and bottom ash). The following sections describe the different equipment and
processes occurring at the site in further detail. A Simplified process fiow diagram is included at
the end of this section as Figure 4-1.
4.1
Circulating Fluidized Bed (CFB) Boilers
Each of the four boilers to be installed .and operated will have a full/normal heat input load of
3,080 Million British Thermal Units per hour (MMBtufhr). The CFB boilers will be designed to fire
solid fuel. The exhaust flue gas from the first two CFB boilers (FIN: CFB-1 and CFB-2) will exit
through a chimney that consists of two stacks (EPN: 7 and 1), one for each boiler. Similarly, the
exhaust fiue gas from the other two CFB boilers (FIN: CFB-3 and CFB-4) will exit through a
second chimney that alsO consists of two separate stacks (EPN: ? ano 1), one for each boiler.
CFB-1 and CFB-2 will fire pet coke producing steam to drive one of the 600-MW single turbinegenerator set (EPN: 02A). CFB-3 and CFB-4 will also fire pet coke and will feed steam to a
second single turbine-generator set (EPN: 02B) that is rated at 600 MW. By-products from the
CFB boilers will Include fly ash and bottom ash. Fly ash will be discharged (rom the CFB boilers
and collected with add-on pOllution control devices, such as fabric filters. Bottom ash will be
collected and transferred to storage silos. Both the fly ash and bottom ash have potential
commercial uses and will be shipped off-site via third party.
4.2
Material Handling Facilities
Material handling facilities will be required for pet coke, limestone, lime, sand and combustion byproducts (fly ash and bottom ash). , A simplified process flow diagram for the materials handling
facilities Is included at the end of this section as Figure 4-2. The pet coke and limestone will be
transported in trucks to the adjacent pet coke and limestone stockpile site operated by Las Brisas
Terminal Company, LLC (LBTC). The pet coke and limestone will be unloaded by gravity feed
17
LB0000038744
into receiving hoppers located below grade and equipped with a windscreen and wet suppression
system. Additional pet coke will be delivered to the facility by barges and/or ships and unlo.aded
to the pet coke stockpile. The pet coke and limestone from the LSTC stockpiles will pe delivered
to the LB"C material handling systems via conveyors, equipped with hoods to reduce the
particulate emissiorW.
Sand will be used in the boilers to prevent agglomeration when firing pet coke. Sand will be
unloaded pneumatically from trucks into one of two storage silos, and each storage silo will
supply two day-bins. "ach storage silo. and day-bin will have a bin vent equipped with a fabric
filter (baghollse) to provide a high level of particulate emisSion control.
Fly ash and bottom ash will be generated as by-produots oHM CFB combustion prooess. Fly
ash will be collected from each CFB bag house and bottom ash will be collected from the CFB
beds. "Bch matertal Will.be separately conveyed pneumatically to storage .silOs in an enclosed
process. The bottom ash will undergo a cOoling step before transport to the silo. "aoh silo will
have a bin Veht equipped with a fabrlo filter (baghouse) that provides a high level of particulate
emission control. Fly ash and bottom ash collected In (he silos will be loaded Into trucks for offsite shipment through a closed-vent system, which Is vented back to the silos.
The material handling aotivitles located within the LB"C property boundary are inoluded in this
permit applloatlon while the maierial handling aotivitles occurring prior to the custody transfer (Le.,
active storage pile, inactive storage pile, conveyors, and etc.) will be authorized under a separate
NSR authorization by LBTC.
4.3
Emergency Generators
Two 600 kW diesel-fired emergency generators (EPN: ? and 1) will be installed at the site to
provide electricity to the facility in case of power failure. The generator will operate no more than
500 hours per year.
4.4
Diesel Fire Water Pumps
Two 360 HP diesei-fired pumps (EPN: ? and 7) will oe installed at the site io provide water in the
event of a fire. The pumps are expected to operate no more than 500 hours per year.
4.5
Storage Tanks
Anhydrous ammonia (NH 3) will be stored In ?-gallon, pressurized tanks (EPN: ? & ?) that will
supply ammonia for the SNCR system installed on each CFS boiler. The tanks will not generate
18
LB0000038745
EXHIBIT B
From:
Sent:
To:
Kathleen Smith <[email protected]>
Friday, April 25, 2008 12:59 PM
John
Upchurch
com> i
Shanon DiSorbo <[email protected]>; John Riley <[email protected]>; Jarrett Cantrell
<[email protected]>; EYBERG, DOUG <[email protected]>; Tim Spear
<[email protected]>; Thomas Jarboe <[email protected]>; Vilma Luna
<[email protected]>; Brandon Aghamalian <[email protected]>; Snapper
Carr <[email protected]>; Bill Miller <[email protected]>; Jay Howard
<[email protected]>; Buddy Jones <[email protected]>
Ce:
Subject:
com> i
John LaRue <[email protected]>; Roland Mower <[email protected]>; Frank Brogan
<[email protected]>; Frank Putman <[email protected]>; Dave Michaelsen
<[email protected]>; Greg Brubeck <[email protected]>
Official name
Team As many of you know, we have been working on selecting a name for the Corpus power company and terminal company. We
appreCiate the input many of you gave. We are pleased to announce that the new names will be Las Brlsas Energy Center, LLC
and las Brlsas Terminal Company, LLC. Chase Power Development remains the holding company, but, to the extent there is
press around the projects, they will be branded with Las Brlsas. We are quite excited about the great developments over the
past month and look forward to working with each of you on successful execution going forward.
Best Regards,
Kathleen
Kathleen Smith
Managing Partner
Chase Power Development
(281) 253-4385
LB0000040701
from:
Sent:
To:
Subject:
Ken Roberts
Monday, October 20,2008 1:15 PM
Shanon DISorbo <[email protected]>
Las Brisas Terminal
Shanon, do you think there is any possibility that the proposed Las Brisas Terminal facility could be a major source and require a Title
V permit? (I can't imagine, but then I was surprised that the Gulf Island Fabrtcators facility in Houma that I visited with RBAwas a
major source.)
Ken Roberts, Manager, Corpus Christi Office
RPS JDC, Inc" 3833 S, Staples, Suite N-229, Corpus Christi, TX 78411
lit Office (361) 288-1902
I!!l (361) 855-7410
~ robertske@rosgroup,com
JjJefore printing, think about the environment
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hl~~m
LB0000039056
From:
Sent:
To:
Ce:
Subject:
Kathleen Smith <[email protected]>
Wednesday, May 21, 2008 2:31 PM
John Riley <[email protected]>; Shanon DiSorbo <[email protected]>; Dan Pearson
<[email protected]>; Vilma Luna <[email protected]>; Leah Ollvarrl
<[email protected]>
John Upchurch <[email protected]>; Redacted
; Douglas Eyberg <[email protected]>; Tim
Redacted
Spear <[email protected]>
FW: Site address
FYI - The city has assigned us a physical address now. If you want to make
that change In the permit, we can. Otherwise, please keep for your records
going forward.
Thanks!
Best Regards,
Kathleen
------ Forwarded Message
From: Greg Brubeck <[email protected]>
Date: Wed, 21 May 2008 09: 16: 35 -0500
To: Kathleen Smith <[email protected]>
Cc: John Upchurch <[email protected]>, Dave Michaelsen
<[email protected]>, Frank Brogan <[email protected]>, John LaRue
<[email protected]>
Subject: Re: Site address
Finally heard back from the City. The address for the plant entrance will be
"6059 Joe Fulton Corridor, Corpus Christi, Texas 78402".
Greg Brubeck
(361) 885-6138 (WORK)
(361) 816-3609 (CELL)
(361) 851-2602 (HOME)
»> Kathleen Smith <[email protected]> 5/15/0821:55 »>
Thanks Greg I
On 5/15/08 6:50 PM, "Greg Brubeck" <[email protected]> wrote:
> I should be able to get the Fulton corridor address to you tomorrow.
>
> Greg Brubeck
> (361) 885-6138 (WORK)
> (361) 816-3609 (CELL)
> (361) 851-2602 (HOME)
>
»» Kathleen Smith <[email protected]> 5/15/0818:44 »>
> Yes, let's please just get an address for the power plant In Cell C as you
> have shown and we will likely just keep the current bulk terminal address as
> the new facilities inside the loop track would not include another office
> building. Thanks so muchl
>
> Best Regards,
>
LB0000039764
> Kathleen
>
>
> On 5/15/08 11:27 AM, "Greg Brubeck" <[email protected]> wrote:
>
» Kathleen:
»
>>
»
»
>>
See attached pdf file. I was going to get you an official address for the
entrance off the Fulton Corridor shown on the map. Until we have a planned
layout inside the Loop Rail track, don't believe we can get an address yet.
Will this one address at this location be all you need at this time?
»
»
The Bulk Terminal address is:
»
»
4820 East Navigation Blvd.
»
»
> > Greg Brubeck
» (361) 885-6138 (WORK)
» (361) 816-3609 (CELL)
» (361) 851-2602 (HOME)
»
» » > <[email protected]> 5/13/0816:09 »>
» We would like an address for the power plant which will be In Cell C. Will
» we
» have a designation on Joe Fulton corridor? Also, is there currently a
» mailing
» address for the Bulk Terminal?
»
» John U - do you want to have another designated address for the area inside
> > the loop track?
»
»
Thanks Greg.
»
»
Best Regards,
»
» Kathleen
» ------Original Message-----> > From: Greg Brubeck
»
Sender:
»
»
»
>>
>>
>>
»
To: [email protected]
To: Frank C. Brogan
To: John P. LaRue
Cc: John Upchurch
Cc: Dave Michaelsen
Sent: May 13, 2008 2: 29 PM
Subject: Re: Site address
»
>>
»
»
»
I can get an official address from the City of Corpus Christl. Just need to
show the City a physical location and they will give us a street address to
use. Do we have a preferred physical location to get the first address for? I
am assuming we will be requesting an address along the Fulton Corridor.
»
> > Greg Brubeck
(361) 885-6138 (WORK)
» (361) 816-3609 (CELL)
» (361) 851-2602 (HOME)
»
»
» » > Frank Brogan 5/13/0814:00 »>
> > I believe we have set mile markers along the Fulton Corridor that we should
» be
» able to use to develop a street address. I will ask Greg to work with Dave
LB0000039765
»
Michaelsen on this,
»
»»> <kathleensmlth@chase-power,com> 5/13/2008 1: 55 PM »>
»AII » We have been asked about the physical address for our plant site for public
» notices and permitting, In our option agreement, the site Is described as
» "west of the bulk terminal", How do start a process to assign an actual
»
»
»
»
address or do we have one? Thanks!
Best Regards,
» Kathleen
> > Sent from my Verlzon Wireless BlackBerry
»
»
»
»
> > Sent from my Verlzon Wireless BlackBerry
»
>
>
>
>
------ End of Forwarded Message
LB0000039766
From:
Sent:
To:
Subject:
Attach:
Shanon
Kathleen Smith <[email protected]>
Tuesday, April 22, 2008 10: 16 AM
Shanon DiSorbo <[email protected]>
Bulk Terminal and site
Bullk Terminal Overall.jpeg;Bulk Terminal.jpg;Chase Fact Sheet (w-new log[l].pdf
~
Attached are some flies showing the Bulk Terminal facilities and our site. The CAD flies are quite large from the Port and have
the coordinates for the site -I will try again to send to you in separate email (bounced back the first time). The survey Is
underway as we speak. Also attached is a fact sheet that the local pr group had drafted some time ago (which we Intend to
work on quite a bit). flope this is what you need. We are on a call with Bechtel right now and will also get the updated GA
Imposed on the site.
Please let us know if you need anything else. Thanks so much.
Best Regards}
Kathleen
LB0000040722
EXHIBIT C
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 5
77 WEST JACKSON BOULEVARD
CHICAGO. IL 60604·3590
REPLY TO THe ATTENTION OF;
(AR-18J)
SEP 20 2001
Edwin C. Bakowski
Acting Manager, Permits Section
Bureau of Air
Illinois Environmental Protection Agency
1021 North Grand Avenue East
P.O. Box 19506
Springfield, Illinois 62794-9506
Dear Mr. Bakowski:
Thank you for your April 12, 2007, letter regarding Air Products
and Chemicals Incorporated. Specifically, you request the
concurrence of the U.S. Environmental Protection Agency with the
Illinois Environmental Protection Agency's (IEPA) determination
that the Tuscola, Illinois, facilities of Air Products and
Chemicals Incorporated (Air Products) and Cabot Corporation
.. (Cabot) should be considered a single source, for purposes of
New Source Review and Title V permitting. EPA concurs in IEPA's
determination that the Tuscola, Illinois, facilities of Air
Products and Cabot should be considered a single source.
In the Federal Prevention of Significant Deterioration (PSD)
regulations, 40 CFR Part 52 - Approval and Promulgation of
Implementation Plans, the Administrator provides the following
definitions -52.21(b) (5): "Stationary source means any building,
structure, facility, or installation which emits or may
emit a regulated NSR pollutant."
52.21 (b) (6): "Building, structure, facility, or
installation means all of the pollutant-emitting activities
which belong to the same industrial grouping, are located
on one or more contiguous or adjacent properties, and are
under the control of the same person (or persons under
common control) [with exceptions not herein applicable.]"
RecycledlRecyclable • Printed with Vegetable Oil Based Inks on 100% RecyCled Paper (50% PoslCOnsumer)
2
Consequently, for two separate sources to constitute a single
"stationary source," both of their "pollutant emitting
activities" must:
1. belong to the "same industrial grouping,"
2. be "located on one or more contiguous or adjacent
properties," and
3. be "under the control of the same person (or persons under
common control). .
"
"Same Industrial Grouping"
In a January 19, 2007, letter of William Allison, Environmental
Specialist with Air Products ("Allison letter"), Mr. Allison
identifies the Air Products' facility as being classified under
SIC Code 2813, "a producer of Industrial Gases and NAICS Code
32512;" and the Cabot facility as being classified under SIC
Code 2819, "a producer of industrial inorganic chemicals."
In the 1980 proposed promulgation of 40 CFR 21(b) (5) and (6),
EPA stated that:
[olne source classification encompasses both primary and
support facilities, even when the.latter includes units
with a different two-digit SIC code. Support facilities
are typically those which convey, store, or otherwise
assist in the production of the principal product.
45 Fed. Reg. 52676, 52695 (August 7, 1980).
Cabot's "principal product" is inorganic chemicals. Beca).lse it
must have gaseous hydrogen and steam to produce inorganic
chemicals, in 1992 Cabot entered into a 15-year contract with
Air Products under which Air Products agreed to provide to Cabot
hydrogen and steam. Allison Letter. Though Cabot could obtain
these products ";from an adjacent location or in the case of
hydrogen, [have itj delivered over the road from an off-site
supplier," Air Products "supplies its entire volume of gaseous
hydrogen product, and a portion of its steam product" to Cabot,
with Air Products using the remainder of its steam product
itself. Id. Under the terms of their contract, Air Products
provides "hydrogen gas and steam at a specified volume,
pressure, and flow;" and Cabot compensates Air Products for its
hydrogen and steam "by a set payment schedule" negotiated by the
two parties. Id. In an earlier letter, Air Products informed
IEPA that the "hydrogen plant will operate 24 hours per day,
seven days per week[,j" and that "the gas will be delivered via
3
pipeline to the Cabot facility." Letter of Kent S. Kisenbauer,
PSG Operations - Environmental (January 30, 1992).
Given that the sole purpose of Air Products' Tuscola, Illinois,
facility is to provide the hydrogen and steam necessary for
Cabot to produce inorganic chemicals, with the Tuscola facility
having no other customers, one must conclude that Air Products
does "convey, store, or otherwise assist in the production of"
Cabot's inorganic chemicals, and, therefore, is a "support
facility" of Cabot. Consequently, a finding is warranted that
Air Product's Tuscola, Illinois, facility does belong to the
same "industrial grouping" as Cabot's Tuscola, Illinois,
facility. This finding is consistent with longstanding EPA
policy. See Determination Letter of John S. Seitz, Director,
Office of Quality Planning and Standards, to Kentucky Division
for Air Quality (March 29, 2001).
"Contiguous or Adjacent Properties"
Air Products facility is "located within the boundaries of the
Cabot Corporation, Cab-O-Si1 Division, facility located in
Tuscola,· Douglas County, Illinois." Kisenbauer Letter.. Air
Products "leases a parcel of land from the Cabot Corporation for
operation of its hydrogen plant." Allison Letter. As already
noted, the two facilities are connected by the pipeline through
which the Air Products facility delivers the hydrogen to the
Cabot facility. Given these circumstances, it is apparent that
the Air Products facility is "located on one or more contiguous
or adjacent properties." In fact, the Air Products facility is
on the same site as Cabot's facility, with Air Products paying
Cabot for being able to be located on Cabot's property.
"Under Control of the Same Person or Persons under Common
Control"
As noted, the contract between Air Products and Cabot is "for
the sale of hydrogen gas and steam at a specified volume,
pressure and flow." In that all of Air Products' production of
hydrogen goes to Cabot, and Cabot determines the "volume,
pressure and flow" of hydrogen to be delivered under the
contract based upon Cabot's requirements, it follows that, in
basing its levels of production on Cabot's requirements, Air
Products' production is controlled by Cabot. As a facility's
levels of production have a direct effect on the facility's
emission of pollutants, Cabot's hydrogen requirements control
the emissions of Air Product's Tuscola, Illinois, facility.
Moreover, given the nature of the contract, it is highly
4
unlikely that Air Products' Tuscola, Illinois, hydrogen
producing facility would have built at this site if Cabot was
not located at the same site. Rather, it was Cabot's needs and
location that controlled the Air Products' facility being
constructed and operated at the Tuscola site. Again, this
determination is consistent with earlier u.s. EPA determinations
addressing the application of this component of the
Administrator's definition of "building, structure, facility, or
installation." Seitz Letter.
Based on the specific facts which have been presented to us, we
believe that IEPA has reached the appropriate conclusion that
Air Products' and Cabot's Tuscola, Illinois facilities should be
considered a single source for purposes of New Source Review and
Title V permitting. If you have any further questions, please
feel free to contact me, or have your staff contact
Constantine Blathras at (312) 886-0671.
Pamela Blakley, Chief
Air Permits Section
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 7
901 N. 5 th STREET
KANSAS CITY, KANSAS 66101
AIR PERMIITING AND
COMPLIANCE BRANCH
December 6, 2004
James Pray
Brown, Winick, Graves, Gross,
Baskerville and Schoenebaum, P.L.C.
666 Grand Avenue, Suite 2000
Des Moines, Iowa 50309-2510
Dear Mr. Pray:
During a recent visit in Des Moines, and in a subsequent letter dated October 15,
2004, you asked EPA Region 7 to carefully consider whether the "support facility"
concept should be applied to country grain elevators that are located near value-added
agricultural industries such as ethanol plants. The concern is that if a new ethanol plant
locates too closely to an existing country grain elevator or series of elevators throughout
the local grain supply network, the owners and operators of the grain cooperatives may
inadvertently be drawn into the PSD (Prevention of Significant Deterioration) permitting
program or may otherwise be co-located with the ethanol plant for permitting purposes.
If PSD is triggered, you suggest that the result can be economically devastating for a
country elevator because it may have to install hundreds of thousands of dollars of
control equipment that would never otherwise be required.
As an alternative to a "support facility" finding, you asked EPA to consider a
common sense approach that would factor in the historical relationship between elevators
and their local farmers and the notion that grain and other ethanol feed stocks are
commodities which can be bought, sold, and traded on the open market. Since corn and
other commodity feed stocks are available anywhere there is a production network (e.g.
farms, elevators, and transportation), you suggest that it is not necessary to tie an ethanol
plant to anyone or more of these entities, thus preserving the independence of the
country elevator system.
While we nnderstand the elegance of a simple, straightforward determination that
independent country elevators should not nniversally be considered a snpport facility for
a new ethanol plant locating nearby, such a general finding is not possible given the
unique circumstances that may exist at each installation. The determination of whether
two activities are within the scope of a single source is a case-by-case determination that
depends on several criteria set forth in regulations and the facts of each situation.
The SIP-approved PSD regulations of the Iowa Department of Natural Resources
adopt the EPA's PSD regulation by reference [Iowa Administrative Code § 56722.4(455B)]. Thus, even though Iowa operates a SIP-approved PSD program, the
2
regulations at 40 C.P.R. § 52.21 (as amended through March 12, 1996) are applicable to
sources in attainment or unclassifiable areas in Iowa. The determination of the scope of a
stationary source subject to the PSD program in Iowa is therefore governed by the
definitions in sections 52.21(b)(5) and 52.21(b)(6). In accordance with these definitions,
a stationary source is a building, structure, facility or installation, which is, in turn,
defined as follows:
All of the pollutant-emitting activities which belong to the same industrial
grouping, are located on one or more contiguous or adjacent properties, and are
under the control of the same person (or persons under common control).
Pollutant-emitting activities shall be considered as part of the same industrial
grouping if they belong to the same "Major Group" (i.e. which have the same first
two digit code) as described in the Standard Industrial Classification Manual.
Thus, pollutant-emitting activities are generally considered part of a single stationary
source when these activities are (1) part of the same industrial grouping (as determined
by applicable SIC codes), (2) contiguous or adjacent, and (3) under common control. In
several guidance documents, EPA has recognized that one or more of these criteria can
be satisfied when an emissions unit is a "support facility" or serves in a supporting role
for a primary activity at a nearby location.
One approach to separating sources is to find that they are neither adjacent or
contiguous to each other. In the general scenario you present, it is unclear whether this is
a typical circumstance or not. Generally, the closer two facilities are the more likely they
may be considered contiguous or adjacent. In addition, the existence of a dedicated
pipeline or transportation link for moving materials between two facilities may also be
relevant to this determination.
Once two sources are found to be contiguous or adjacent by virtue of their
proximity and interaction with one another, the focus may shift to the nature of that
interaction and how they may control or support each other. This usually requires a case
by case evaluation to determine if common control is present. Even where facilities have
separate legal owners, EPA has found that common control may be established on the
basis of a contract which creates a support or dependency relationship between the
1
facilities.
In a related example, we would not typically connect a fuel oil supplier to an adjacent
industrial site just because the company fires oil, another widely-traded commercial
product, in its boilers. Instead, we would first determine whether "common control"
exists between the two entities. As long as the oil supply vendor and industrial facility do
not "exercise restraining or directing influence over," "have power over,"
1 Letter from Richard R. Long, EPA Region 8 to Julie Wrend, Colorado Department of Public Health
regarding "Single Source Determination for Coors/TriGen" (Nov. 12, 1998)
<http:Uwww.epa.govlRegion7/programs/artd/title5/t5memos/coorstri.pdf>
3
"have power of authority to guide or manage," or "regulate economic activity over" each
2
other , based on the various factors described in previous EPA guidance, it is likel y that
the common control link would be broken and the two sources would not be considered a
single source for permitting purposes.
Similarly, based on the general scenario you present, we agree that if an ethanol
plant is purchasing grain on the open market and accepts delivery from a number of
different suppliers in minority proportions, then there would typically be no basis for a
common control determination. Therefore, as long as the traditional commodity
transactions between the country elevators and the ethanol plant occur at arms length, the
grain suppliers would likely not be considered to be under common control for permitting
purposes. On the other hand, if a grandfathered grain elevator executes a contractual
agreement with an adjacent or contiguous greenfield ethanol plant to provide the bulk of
its output, then it may be more difficult to demonstrate that the two entities are not under
common control.
If the facts of a case-by-case evaluation show the common control of two
contiguous or adjacent plants, we would then turn our attention to whether the
installations share a common standard industrial classification code. In most cases where
they operate independently, the ethanol plants and grain suppliers are not likely to share a
common standard industrial classification (SIC) code. Ethanol plants are typically found
in Group 28 for chemical manufacturing. Grain handling is typically found in Groups 20
or 51 depending on the nature of the operation. However, a support facility may be
considered to be a part of the same major group as the primary facility it supports even if
the support facility would be classified in a separate group when operated
independently. 3 Thus, in the case of a grain elevator and an ethanol plant, the single
source determination could hinge on a determination of whether one facility was a
support facility for another.
EPA's August 25, 1999, "Oscar Meyer,,4 determination, while not directly
relevant to the circumstances you describe, looks at whether the placement of emergency
backup generators by the local utility on the Oscar Meyer property constitutes a support
facility . EPA notes that it
Letter from William Spratlin, EPA Region 7 to Peter Hamlin, Iowa Department of Natural Resources re
Common Control(September 18, 1995).
<http://www.epa.goviRegion7/programs/artd/air/titie5/t5 memos/contro l.pdf>
2
45 Fed. Reg. 52695 (Aug. 7, 1980); Letter from Robert B. Miller, EPA Region 5 to William Baumann,
Wisconsin Department of Natural Resources regarding Oscar Mayer and Madison Gas & Electric (Aug. 25,
1999) ["Oscar Meyer"]; Memorandum from John S. Seitz, EPA OAQPS entitled "Major Source
Determinations for Military Installations under the Air Toxics, New Source Review, and Title V Operating
Permit Programs of the Clean Air Act" (Aug. 2,1996)
<http://www.epa.govlRegion7/programs/artd/air/nsr/nsrmemosidodguide.pdf>
3
Letter from Robert B. Miller, EPA Region 5 to William Baumann, Wisconsin Department of Natural
Resources cited above.
4
4
... has provided a great deal of guidance to States and sources regarding support
activities since 1980, in which the Agency has emphasized that determinations of
this nature are very fact-specific. USEPA provided a detailed summary of the
Agency's existing policy in a recent public draft of a proposed rulemaking. See
Draft preamble to the Part 70 revisions (notice of availability published June 3,
1997, (62 FR 30289)). In short, where more than 50% of the output or services
provided by one facility is dedicated to another facility that it supports, then a
support facility relationship is presumed to exist. Even where this 50% test is not
met, however, other factors may lead the permitting authority to make a support
facility determination. Support facility determinations can depend upon a number
of financial, functional, contractual, and/or other legal factors. These include, but
are not limited to: (1) the degree to which the supporting activity receives
materials or services from the primary activity (which indicates a mutually
beneficial arrangement between the primary and secondary activities); (2) the
degree to which the primary activity exerts control over the support activity's
operations; (3) the nature of any contractual arrangements between the facilities;
and (4) the reasons for the presence of the support activity on the same site as the
primary activity (e.g., whether the support activity would exist at that site but for
the primary activity). Where these criteria indicate a support relationship,
permitting authorities may conclude that a support activity contributing more or
less than 50% of its output may be classified as a support facility and aggregated
with the facility it supports as part of a single source.
Finally, it is important to note that what an ethanol plant can do and what it
actually does when making its grain purchase decisions may affect whether common
control or a support facility relationship exists or not. For example, if an ethanol plant
purchases grain from an array of local country grain elevators, such transactions appear to
occur within the commodity scheme you suggest. However, if an ethanol plant has many
supply choices but instead opts to enter into contracts to purchase only from the elevator
next door, then such transactions may appear to be more like two sources acting as one.
In summary, because of the unique details that each installation presents it is not
possible to pre-determine all the circumstances under which a grain supply elevator may
be a single source by itself or an included part of a larger stationary source. Nor is it
possible to grant a broad commodity-based exception when determining PSD source
applicability. In that regard, we encourage you to work closely with your state and local
air pollution control agencies to evaluate these site-specific factors. As a final note, even
though we encourage SIP-approved PSD states like Iowa to follow EPA guidance to
ensure consistency in implementation of the program, such guidance is not legally
binding and does not substitute for the controlling regulations. EPA and the states retain
the discretion to apply the regulations and to reach different conclusions where
appropriate based on differing specific circumstances of particular cases. Further, the
5
methodology described above is not intended to imply that the three key criteria for a
single source determination must be evaluated in any particular order. All three criteria
must be satisfied at the same time in order for activities to be considered part of a single
source.
We have coordinated this response with EPA's Office of Regional Counsel,
Office of General Counsel, Office of Enforcement and Compliance Assurance, and
Office of Air Quality, Planning & Standards. If you have any questions, please contact
Jon Knodel at (913) 551-7622 or [email protected].
Sincerely,
/s/
JoAnn Heiman
Chief
Air Permitting and Compliance Branch
cc;
Catherine Fitzsimmons, Iowa Department of Natural Resources
Dave Phelps, Iowa Department of Natural Resources
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
Office of Air Quality Planning and Standards
Research Triangle Park, North Carolina 27711
MAR292001
Mr. John E. Hornback, Director
Kentucky Division for Air Quality
803 Schenkel Lane
Frankfort, KY 40601
Dear Mr. Hornback:
As you are aware, the U.S. Environmental Protection Agency (EPA) recently lodged a consent decree with the
U.S. District Court for the Eastern District of Kentucky with Gallatin Steel Company (Gallatin). This consent decree
settles claims by the EPA against Gallatin for violations of the Kentucky State Implementation Plan (SIP). Although
the consent decree addresses a number of violations of the Clean Air Act (CAA) by Gallatin, the consent decree does
not address possible violations at the slag processing facility located next to the Gallatin plant, which is owned and
operated by Heckett MultiServ (a division of Harsco Corporation). We understand, however, that the Commonwealth
of Kentucky has determined that the Gallatin steel manufacturing facility and the Heckett MultiServ slag processing
facility are a single source for purposes of the prevention of significant deterioration (PSD) program. This letter is to let
you know that the EPA agrees with the State's conclusion that these facilities should be considered a single source.
The Federal PSD regulations define "stationmy source" as "any building, structure, facility, or installation
which emits or may emit any air pollutant subject to regulation under the Act" and further define "building, structure,
facility, or installation" as all of the pollutant- emitting activities which belong to the same industrial grouping, are
located on one or more contiguous or adjacent properties, and are under the control of the same person (or persons
under common control) 40 C.F.R. § 51.166(b)(5) and (6).
Consistent with the requirement that all SIPs use the definitions set forth in the Federal regulations, 40 C.P.R. §
51.166(b), the Kentucky PSD regulations use the same definition of "stationmy source" and "building, structure,
facility, or installation." 401 KAR 51:017 Section 1(9) & 1(38). TIle issue then is whether the Gallatin steel
manufacturing facility located near Ghent, Kentucky, and the nearby Heckett MultiServ slag processing facility belong
to the same industrial grouping, are located on contiguous or adjacent properties, and are under common control.
2
It is our understanding that there is no question that the Gallatin facility and the Heckett MultiServ facility are
located on contiguous properties. Moreover, the EPA would consider the two facilities to be part of the same industrial
grouping and to be under common control. The EPA, thus, agrees with Kentucky's conclusion that the two facilities are
a single source for pUlposes of PSD.
In a relevant determination, EPA's Region 8 office explained recently that "EPA is guided in making case-bycase source determinations by the definition of 'control' found in the regulations of the Securities and Exchange
CommissiOl~" citing 45 Fed. Reg. 59874 (Sept. 11, 1980). Letter from Richard R. Long, Director, Air and Radiation
Program, the EPA's Region 8 office to Margie Perkins, Air Pollution Control Division, Colorado Dept. of Public Health
& Environment. The EPA has applied this definition in a number of cases over the past twenty years. The letter from
the EPA's Region 8 office also explains that:
In the past, the EPA has looked to see if control has been established through ownership of two entities by the
same parent corporation or subsidiary of the parent corporation. The EPA has also considered whether control has been
established by a contractual arrangement giving one entity decision-making authority over the operations of a second
entity. The EPA also has looked for a contract for service relationship between two entities, in which, one sells all of its
product to the other under a single purchaser contract. Finally, the EPA has considered whether there is a support or
dependency relationship between the two entities, such that one would not exist "but for" the other.
In this case, based on the information before us, it appears that the operational and contractual relationship
between Gallatin and Heckett MultiServ points towards a conclusion that the two are commonly controlled. In short, as
we understand it, Gallatin is a steel mini- mill which utilizes an electric arc furnace to melt scrap metal to produce rolled
steel coils. Slag is generated as a byproduct of this process. Heckett MultiServ owns and operates the slag processing
facility located on contiguous property with Gallatin. All of the slag generated by Gallatin is processed by Heckett
MultiServ pursuant to a slag handling and processing agreement between the two parties'. The terms of this agreement
provides evidence that Gallatin and the Heckett MultiSelv slag processing facility are commonly controlled. It is also
relevant to note that the slag processing facility would not have been constructed if the Gallatin Steel plant were not in
existence; not only is all of the slag generated by Gallatin processed by Heckett MultiServ, but the only slag processed
at Heckelt MultiServ is the slag from Gallatin. Moreover, Gallatin's operations in effect initiate pollutant -emitting
activities at the slag processing facility because the main pollutant -emitting activity there is the dumping of slag. TIle
quantity and composition of the slag generated by Gallatin directly affect the quantity and composition of the emissions
from the slag processing facility owned and operated by Heckett.
, EPA was provided with a copy of the agreement between Gallatin Steel and Heekett MultiServ, but has agreed
to treat the terms of the agreement as confidential business information.
3
Regarding whether Gallatin and the slag processing facility are in the same industrial grouping, the two
facilities should be considered to be in the same industrial grouping regardless of whether the first two digits of the
Standard Industrial Classification (SIC) codes for the two entities are the same. Under longstanding EPA policy, a
facility that conveys, stores, or otherwise assists in the production of the principal product of another facility is
considered a support facility and part of the same industrial grouping. 45 Fed. Reg. 52676, 52695 (Aug. 7, 1980).
Based on our review of the relationship between the two facilities, it is clear that the Heckett MultiServ slag processing
facility is a suppOIt facility for the Gallatin Steel plant.
We hope this letter will be useful. It is written as guidance as it remains Kentucky's responsibility to determine
whether the Gallatin facility and the slag processing facility are one stationary source for purposes of inaplementing
your PSD program. However, based on the specific facts which have ben presented to us, we believe that Kentucky
has reached the appropriate conclusion that the two facilities are located on contiguous properties, under common
control, and within the same industrial grouping. Therefore, we SUppOit Kentucky's determination that the two
facilities are one stationary source within the meaning of the Federal PSD regulations. This conclusion is consistent
with that reached by the EPA's Region V office in a letter dated July 15, 1997, regarding a steel manufacturing facility
in Cleveland, Ohio and the two adjacent slag processing facilities. Applying the same principles outlined in his letter,
the EPS's Region V office concluded that the facilities, although, independently oWlled and operated, comprised a
single source for purposes of the Title V operating permit program.
I appreciate this opportunity to be of service and trust that this infonnation is helpful to you. If you have any
questions concerning this letter, please contact Raj Rao at (919) 541-5344.
Sincerely,
lsi Henry Thomas for
John S. Seitz
Director
Office of Quality Planning and Standards
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 2
290 Broadway
New York, NY 10007-1866
October 11,2000
Mr. John T. Higgins, P.E., Director
Bureau of Application Review and Permitting
Division of Air Resources
New York State Department of
Environmental Conservation
50 Wolf Road
Albany, New York 12233
Re:
St. Lawrence Cement's (SLC's) Proposed GreenpOlt Project and its Relationship with its
Existing Catskill Facility Located 6 Miles Apart for the Purpose of New Source Review
(NSR)/prevention of Significant Deterioration of Air Quality (PSD) Applicability
Dear Mr. Higgins:
This is in response to the New York State Department of Environmental Conservation's
(NYSDEC's) request for guidance regarding st. Lawrence Cement's (SLC's) pending permit
application for its Hudson Valley Operation. SLC has expressed to NYSDEC and the Region 2
Office of the U.S. Environmental Protection Agency (EPA) its position as to why SLC's Catskill
and Greenport facilities should be treated as one single source.
EPA's definition ofa source is based on the "common sense" notion ofa plant. See 45
Fed. Reg. 52676, 52695 (August 7, 1980). EPA has reviewed the information and arguments
presented by SLC and Young, Sommer, Ward, Ritzenberg, Wooley, Baker & Moore, LLC
(representing Friends of Hudson), to assess whether SLC's Catskill and Greenport facilities meet
the "common sense" notion of a plant. As you are aware, such determinations are made on a
case-by-case basis, and in some situations can require a careful weighing of the specific facts at
hand to reach a conclusion. We recognize that with respect to the Catskill and Greenport
facilities, the question of whether these two facilities comprise one or two sources is a difficult
one. However, based upon this review, EPA Region 2, in coordination with our HQ's Office of
Air Quality Planning and Standards and Office of General Counsel, has concluded that the best
decision, in this particular case, is that the Catskill and Greenport facilities should be treated as
two separate sources. Our reasoning is explained below.
2
Background
St. Lawrence Cement (SLC) has manufactured cement in the Hudson Valley of New
York for over 25 years. SLC's current operations in the Hudson Valley consists oftwo facilities
located on separate sides of the Hudson River approximately 6 miles apart: the Greenport
facility located in the towns of Greenport and Hudson, NY and the Catskill facility located in
Catskill, NY. SLC has proposed to modify its current cement manufacturing operations by
shutting down its existing clinker manufacturing activities at the Catskill facility which utilizes
the wet process and constructing a new, "technologically-advanced" facility at the Greenport
facility which utilizes the dry process. The proposed project at the Greenport facility would
include the following: the construction of a new cement plant in Greenport; the rehabilitation
and expansion ofSLC's existing Hudson River dock in the City of Hudson; the construction of a
conveyor system connecting the Greenport plant to the dock; and the construction of a number
. of storage and other structures at the Greenport facility. The proposed new plant would
manufacture up to 2.6 million tons of clinker per year.
SLC plans to shut down its existing plant for manufacturing clinker at the Catskill
facility. However, SLC intends to continue limited operations at the Catskill facility consisting
of: cement grinding; packaging; storage and shipping. In addition, SLC will continue to operate
its existing landfill at Catskill to dispose of cement kiln dust.
Discussion
Since the NYSDEC has a PSD-delegated program, the federal definitions under 40 CFR
52.21 apply. 40 CFR Palt 52.21 (b)(5) defines "stationary source" as:
... any bnilding, structure, facility, or installation which emits or may emit any air pollutant
subject to regulation under the Act.
Furthermore, 40 CFR Part 52.21(b)(6) defines "building, structure, facility or
installation," in pertinent part, as:
... all of the pollutant emitting activities which belong to the same industrial grouping, are
located on one or more contiguous or adjacent properties, and are under the control of the
same person (or persons under common control) except the activities of any vessel.
Pollutant-emitting activities shall be considered as part of the same industrial grouping if
they belong to the "Major Group" (Le., which have the same first two digit code) as
described in the Standard Industrial Classification Manual, 1972, as amended by the 1977
Supplement. ...
3
Common Control
Because both the Greenport and Catskill facilities are wholly-owned and managed by
SLC, these two facilities are under common control.
Industrial Grouping
In its permit application, SLC states that the Greenport and Catskill facilities currently
have the same standard industrial classification (SIC) code of 3241 (Hydraulic Cement) which
means "establishments primarily engaged in manufacturing hydraulic cement, including portland,
natural, masonry, and pozzolana cements." Although it appears that the Greenport and Catskill
facilities belong to the same industrial grouping at this time, there is some question whether the
Catskill facility will continue to be classified as SIC code of 3241 once SLC shuts down the
clinker manufacturing operations at the site. However, even assuming that the two facilities fall
within different SIC codes, the Catskill facility could well be viewed as a support facility for the
Greenport facility. Regardless, the SIC code is not a determining factor in this case because of
the adjacency discussion that follows below.
Contiguous/Adjacent Location
Over the years, EPA has issued guidance in a number of cases regarding the question of
whether two facilities should be considered contiguous or adjacent. As SLC has noted, there is
no bright line, numerical standard for determining how far apart activities may be and still be
considered "contiguous" or "adjacent." As explained in the preamble to the August 7, 1980 PSD
rules, such a decision must be made on a case-by-case basis. Moreover, in further explaining this
factor, EPA has noted that whether or not two facilities are adjacent depends on the "common
sense" notion of a source and the functional inter-relationship of the facilities and is not simply a
matter of the physical distance between the two facilities. However, the physical distance
between two facilities is obviously a factor to be considered in deciding whether the two are
close enough to be considered one source in a given situation.
The vast majority of the past EPA single-source decisions have involved operations that
are situated less than 6 miles apart. Thus, the distance separating SLC's operations is distinctly
farther than the majority of the past EPA single-source decisions. Where EPA has made singlesource decisions in situations involving facilities separated by 6 or more miles, these cases have
tended to involve a clear physical connection via a pipeline or dedicated conveyance. For
example:
1.
American Soda Commercial Mine and processing plant - Distance:
approximately 35-40 miles, connected by a 44-mile long pipeline. (See April 20,
1999 letter from Richard R. Long, EPA Region 8, to Mr. Dennis Myers, Colorado
Department of Public Health and Environment.)
4
2.
Great Salt Lake Minerals plant and a pump station - Distance: 21.5 miles,
connected by a dedicated channel 01' "pipeline." (See August 8, 1997 letter from
Richard R. Long, EPA Region 8, to Lynn R. Menlove, Utah Department of
Environmental Quality.)
3.
Anheuser-Busch brewery and the Nutri-Turf, lnc.landfarm - Distance:
approximately 6 miles apart, connected by a pipeline. (See August 27, 1996 letter
from Robert Kellam, EPA OAQPS, to Richard R. Long, EPA Region 8.)
In each of these cases, although the facilities were separated by a number of miles, the
two operations were physically connected by a pipeline or dedicated conveyance. We believe
that this physical connection in these cases was a salient factor, demonstrating an integral
connectedness between the facilities that led EPA to conclude that the facilities operated as one
source. In the case of SLC, the two facilities are located approximately 6 miles apart, there is no
pipeline or dedicated conveyance between the two operations, and the two facilities are separated
by the Hudson River.
In this particular case, EPA has weighed the information before it and concluded that the
two facilities are not close enough to be considered one source under the circumstances for
purposes of NSR(PSD. No one factor was determinative in reaching this conclusion. Rather, we
took into account a number of factors specific to the case at hand. As noted above, the two SLC
facilities are located a greater distance from one another than many of the facilities which EPA
has considered to be adjacent or contiguous. Although EPA has found facilities located 6 or
more miles apart to be one source in a limited number of cases based on the specific
circumstances of those cases, the actual physical connection between the facilities in those cases
tends to suggest a high degree of functional interrelationship. Although a physical connection
such as a dedicated pipeline is absent here, EPA did consider whether there were additional
factors showing a functional relationship between the two facilities such that the two could be
considered close enough to operate as one source. Specifically, it appears that cement kiln dust
from the Greenport facility will be disposed of at the waste disposal operation at the Catskill
facility, and that SLC expects to operate the two facilities in such a way as to create some
functional interrelationship between them. However, given the six miles and the Hudson River
separating the two facilities, it is EPA's opinion that SLC's somewhat generalized explanation of
a limited functional interrelationship between the two facilities does not outweigh the evidence
that the two facilities do not meet the "common sense" notion of a single plant.
Conclusion
Based on the totality ofthe above factors, we have concluded that SLC' s Catskill and
Greenport facilities do not meet the "common sense" notion of a single source and that they
5
should be treated as two separate facilities when NYSDEC conducts its NSR and PSD
applicability determination, and Title V permitting. This letter is not a final agency action on the
part of EPA. Rather, we hope that it will assist the state to properly carry out its applicability
review of SLC's PSD permit application.
If you have any questions, please call me at (212) 637-4074 or Frank Jon, of my staff, at
(212) 637-4085.
Sincerely yours,
/s/
Steven C. Riva, Chief
Permitting Section
Air Programs Branch
cc:
Thomas S. West, Attorney
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Leon Sedefian, NYSDEC - Albany
http:/tyosemite,epa,gov/r5/ardcorr",4dc3b862567ec00554873?OpenDocument
&EPA
u.s. ~nvironrriental Protection Agency
Region 5 - Air and Radiation Divislof)
Correspondence
========================~========================
August 25, 1999
William Baumann, Chief
Combustion and Forest Products Section
Wisconsin Department of Natural Resources
101 South Webster Street
P,O, Box 7921
Madison, Wisconsin 53707-7921
Dear Mr. Baumann;
This letter is in reply to your May 26, 1999, letter regarding the Oscar Mayer Foods facility in
Madison, Wisconsin. You explain in your letter that Madison Gas & Electric (MGE) has
proposed to construct six electric generating units on Oscar Mayer's property and that these
units will have a dual purpose: (1) to provide backup electrical generating capacity to the Oscar
Mayer facility; and (2) to provide surplus electricity to the MGE system. You have asked
whether we would consider the generating units to be Oscar Mayer's "support facility" based on
the United States Environmental Protection Agency's (USEPA) preamble to the Final Rule for
Part 52 published in the August 7, 1980, Federal Register (45 FR 52695). According to that
preamble, if the generators do constitute Oscar Mayer's support facility, then the generators
and the Oscar Mayer facility may be one "stationary source" within the meaning of 40 CFR Part
52. We understand that, at least on this point, Wisconsin's Prevention of Significant
Deterioration (PSD) regulations are nearly identical to the Federal PSD rule. In our discussion,
we refer to Part 52 as we would if we were the permitting authority. Because your program is
nearly identical to the Federal program under Part 52, we recommend that you look to the
same guidance in making your analysis under Part 51 and your PSD program.
Part 52 defines "stationary source" as "any building, structure, facility, or installation which
emits or may emit any air pollutant subject to regulation under the Act" and further defines
"building, structure, facility or installation" as "all of the pollutant-emitting activities which belong
to the same industrial grouping, are located on one or more contiguous or adjacent properties,
and are under the control of the same person (or persons under common control." 40 CFR Part
52.21 (b)(5) and (6). The generators MGE proposes to construct will be contiguous or adjacent
to the Oscar Mayer facility. Thus, if the generators and the Oscar Mayer facility also belong to
the same industrial grouping and are under common control, then they constitute one stationary
source under Part 52.
Pollutant-emitting activities are considered to be part of the same industrial grouping if they
have the same first two digit SIC code. 40 CFR Part 52.21 (b)(6). In addition, a support facility is
considered to be part of the same industrial grouping as that of the primary facility it supports
even if the support facility has a different two digit SIC code. One source classification
encompasses both primary and support facilities, even when the latter includes units with a
different two digit SIC code. Support facilities are typically those which convey, store, or
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otherwise assist in the production of the principal product." (45 FR 52695) (August 7, 1980).
USEPA has provided a great deal of guidance to States and sources regarding support
activities since 1980, in which the Agency has emphasized that determinations of this nature
are very fact-specific. USEPA provided a detailed summary of the Agency's existing policy in a
recent public draft of a proposed rulemaking. See Draft preamble to the Part 70 revisions
(notice of availability published June 3,1997, (62 FR 30289)). In short, where more than 50% of
the output or services provided by one facility is dedicated to another facility that it supports,
then a support facility relationship is presumed to exist. Even where this 50% test is not met,
however, other factors may lead the permitting authority to make a support facility
determination. Support facility determinations can depend upon a number of financial,
functional, contractual, and/or other legal factors. These include, but are not limited to: (1) the
degree to which the supporting activity receives materials or services from the primary activity
(which indicates a mutually beneficial arrangement between the primary and secondary
activities); (2) the degree to which the primary activity exerts control over the support activity's
operations; (3) the nature of any contractual arrangements between the facilities; and (4) the
reasons for the presence of the support activity on the same site as the primary activity (e.g.,
whether the support activity would exist at that site but for the primary activity). Where these
criteria indicate a support relationship, permitting authorities may conclude that a support
activity contributing more or less than 50% of its output may be classified as a support facility
and aggregated with the facility it supports as part of a single source.
One could argue that the generators at issue here will serve as a support facility to Oscar
Mayer. Although it is unlikely that 50% of their output will go to Oscar Mayer, the generators
would not be at this location but for the presence of Oscar Mayer and its potential need for
backup power in the event of an outage. Also, the contract between Oscar Mayer and MGE
provides that when Oscar Mayer needs back-up power due to an outage, the generators will
automatically send power to Oscar Mayer, regardless of whether or not MGE also needs power
from these generators.
However, even if the facts here establish a support relationship, we are concerned that the
Oscar Mayer facility and the six generators at issue may not be under "common control" so as
to make them one stationary source under Part 52. In an August 2, 1996, memorandum
regarding major source determinations for military installations (which can be located at the
USEPA Internet website: http:({www.epa.gov/ttn/oarpg/t5Imemoranda/dodguid.wpd), John S.
Seitz, Director of USEPA's Office of Air Quality Planning and Standards, indicated that a
common control determination must focus on who has the power to manage the
pollutant-emitting activities of the facilities at issue, including the power to make or veto
decisions to implement major emission-control measures or to influence production levels or
compliance with environmental regulations. Oscar Mayer "controls" the operation of the
generators only to the extent that, in the event of an outage, Oscar Mayer would be entitled to
100 percent of the output until normal power distribution is restored. According to their contract,
if an outage occurs and Oscar Mayer is receiving no electricity from the main grid, the backup
generating system would automatically come on-line to supply electricity to Oscar Mayer.
. However, Oscar Mayer has no ownership interest in the generators and nothing in its contract
with the owner, MGE, indicates that Oscar Mayer will have any power to manage the
generators' pollutant-emitting activities or to make any decisions relating to emission control or
compliance with environmental regulations.
The Seitz memo also indicates that where, as here, a contract provides that less than 100% of
output will go to the primary activity, the permitting authority should consider the following
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factors: (1) how integral the contracted activity is to the primary entity's operations; (2) the
percentage of output that goes to the primary entity; (3) whether the activity must be on site to
perform its service or produce its product; (4) whether the activity would remain on site if the
primary entity no longer received the output; and (5) the terms of the contract between the
primary and secondary entities. Although, in the event of an outage, the backup power from
these generators would be crucial to Oscar Mayer's operations, it is not likely that the power
provided during such outages will exceed 10% of total output. Also, although the generators
probably would not be on the Oscar Mayer facility but for the presence of Oscar Mayer, these
generators need not be on the Oscar Mayer site in order to fulfill their intended dual purposes.
They could be located elsewhere and serve the same purposes.
As the permitting authority, you must ultimately determine whether the Oscar Mayer facility and
these generators constitute one stationary source for purposes of implementing your PSD
program. However, if we were making this determination based upon our own PSD regulations
and our guidance as discussed above, we would find, based on the specific facts which have
been presented to us, that the Oscar Mayer facility and the six generators to be located on the
Oscar Mayer property are not under "common control", and, therefore, USEPA would not
consider them one stationary source within the meaning of Parts 51,52 and 70.
If you have any further questions, please feel free to contact me or contact Constantine
Blathras at (312) 886-0671.
Sincere Iy yours,
/s/
Robert B. Miller, Chief
Permits and Grants Section
~~~~~~~~~~~==================
AiR AND'·R'AbIATtON,pIVJ810N
77 ,WeST JACKSON
CHt<;:Aeo.
BOULI!V~RO',(A':18J)
h,~1.Hol~H!,0604
(800) 62t-8431 OR (3t2) 353-2212
3 of 3
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 8
999 18TH STREET - SUITE 500
DENVER, CO 80202-2466
April 20, 1999
Ref:
8P-AR
Mr. Dennis Myers, P.E.
Construction Permit Unit Leader
Stationary Sources Program
Air Pollution Control Division
Colorado Department of Public Health and Environment
4300 Cherry Creek Drive South, APCD-SS-B1
Denver, CO 80246-1530
Dear Dennis,
EPA Region 8 has reviewed the proposed PSD construction permits for the American Soda
Commercial Mine (Piceance facility) and processing plant (parachute facility), which were sent to the EPA
Region 8 office on March 17, 1999. We have identified two problems with this permit action: the first
related to the State's detelmination that these are two separate sources for PSD permitting, and the second
with the estimation and monitoring of VOC emissions. In addition, we are aware of the procedural and
BACf issues raised by the National Park Service in its April 12, 1999, comment letter, and welcome the
opportunity to discuss those concerns also.
Single vs. Separate Source
We have reviewed the information that American Soda's contractor, Steigers Corporation,
provided via fax transmittal on April 13, 1999. That fax contained an October 9,1998,5 page letter from
Hal Copeland to you, and your October 22, 1998, response. We have examined the State's determination
that the mine and processing plant are separate sources for purposes of PSD permitting, and did not find
any explanation for that decision. Since the mine and processing plant are planned to be roughly 35-40
miles apart (straight-line distance; connected by a 44 mile long pipeline), we surmise that the State is
treating them as separate sources primarily due to distance (i.e., not "adjacent"). EPA Regional offices, in
consultation with EPA Headquarters, have written several comment letters explaining that whether two
facilities are "adjacent" is based on the "common sense" notion of a source and the functional interrelationship of the facilities, and is not simply a matter of the physical distance between two facilities. I
have enclosed the EPA comment letters for your further consideration.
In the case of American Soda's Piceance and Parachute facilities, we believe that EPA's policy
holds that these facilities need to be considered as a single stationary source. The two clearly will be
functionally interdependent, as evidenced by the dedicated slurry pipeline and the spent brine return pipeline
which will connect the two facilities. Additional evidence is that one facility (the mine) is to produce an
intermediate product for processing at the other facility (the processing plant). Given the integral
connectedness of these facilities, we believe that the distance alone does not preclude these two being
considered adjacent for PSD permitting purposes.
'0
Printed on Recycled Paper
VOC emission estimation and monitoring
We are concerned with potential variability of VOC emissions from the solution mining process.
VOC's are evolved from this process by dissolving into the hot water solution as it passes through the
mineral deposits. American Soda's permit application stated: "injection fluid temperatures will generally
be between 300° and 420°F, and the returned production fluid temperature will generally be 50° to 125°F
less because energy is lost in the mining process." Over these temperature ranges, there are likely to be
variations resulting from increased solubility of VOC contaminants evolved from the oil shale deposits as
water temperatures rise. Similarly, we expect that there may be variations over the life of each solution
mining well (as fluid injection pressures and flow rates change, as well as changes to the mineral deposit as
it is depleted), and also due to physical location throughout the mineral deposits.
While we understand that the source has test data supporting its estimated emissions, we are still
concerned. Thus, we encourage the department to exercise due diligence in following-up on the
requirement that American Soda regularly test for VOC emissions (condition 16 of Piceance facility
permit). Furthermore, it is very important to ensure that such testing is done under normal operating
conditions. Thus, it would be prudent for the source to track water injection temperature and pressure,
well-head brine temperature, flow rates, and other parameters that would provide adequate justification that
its quarterly (or adjusted frequency) testing is consistent with ongoing operations at the facility. Finally,
we recommend that the State sClUtinize the sampling location and techniques employed in the source's
testing protocols to ensure that all VOC emissions will be adequately quantified. In the event that actual
VOC emissions are found to exceed the 40 tpy threshold, American Soda would need to address
appropriate PSD permitting requirements, including BACT controls for its VOC emission points, as if
construction had not yet commenced.
We look forward to assisting you with these issues. Please contact me at (303)312-6005 or
Meredith.Bond of my staff at (303)312-6438.
Sincerely,
Original signed by:
Richard R. Long, Director
Air and Radiation Program
Enclosures
January, 15, 1999, EPA Region 3 letter to JQhn Slade, Pennsylvania DEP
May 21,1998, EPA Region 8 letter to Lynn Menlove, Utah DAQ
August 8,1997, EPA Region 8 letter to Lynn Menlove, Utah DAQ
August 7,1997, EPA Region 10 letter to Andy Ginsberg, Oregon DEQ
August 27, 1996, memo from Robert Kellam, OAQPS/lTPID to Richard Long, Region 8
March 13, 1998, EPA Region 5 letter to Donald Sutton, Illinois EPA
cc:
Ram Seetharam, CDPHE-APCD
Tom Gibbons, Steigers Corporation
bcc:
Michele Dubow, EPNOAQPS/MD-12
Cindy Reynolds, 8ENF-T
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 8
999 18TH STREET - SUITE 500
DENVER, CO 80202-2466
[Original dated NOV 12 1998]
Ref: 8P-AR
Julie Wrend
Legal Administrator
Air Pollution Control Division
Colorado Department of Public Health and Environment
4300 Cherry Creek Drive, South
Denver, CO 80246-1530
Re: Single Source Determination for CoorsrrriGen
Dear Ms. Wrend:
The U.S. Environmental Protection Agency (EPA), Region 8, has reviewed your October
6, 1998 letter to Terry Lukas in the Office of Regional Counsel, concerning whether the TriGen
power plant located at the Coors Brewery in Golden, Colorado should be considered part of the
brewery, rather than a separate source. In particular, you asked us to confirm your analysis (1)
that the power plant is a "support facility" belonging to the same major industrial grouping (same
two-digit SIC code) as the brewery and (2) that the power plant and the brewery are under
"common control." We agree with both parts of your analysis. The power plant and brewery are
properly considered to be single source for purposes of pre-construction permitting (PSD and
non attainment area New Source Review) and Title V.
As we understand the pertinent facts, the TriGen power plant is located on the Coors site,
adjacent to the brewery. Originally, Coors owned and operated the power plant, but recently sold
the plant to TriGen. TriGen operates the plant under a 30-year contract that requires TriGen to
supply 100 percent of the power needs of the brewery. Any additional electricity generated may
be sold to outside users, although TriGen does not have any other other customers at this time.
Under a settlement agreement between Coors and the Air Pollution Control Division, VOC
emissions from the brewery must be ducted to the power plant and destroyed in its utility boilers.
EPA regulations define "major source" as any stationary source (or any group of
stationary sources located within a contiguous or adjacent area, under the common control of the
same person, and classified under the same 2-digit Standard Industrial Classification (SIC) code)
that meets the "major" source threshold of one of various sections of the Clean Air Act. See,~,
o
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40 C.F.R. § 51-166(b)(1) and (6); 40 c'F.R. § 70.2. To take the second point of your analysis
first, EPA has established several mechanisms by which sources and permitting authorities can
determine whether there may be "common control" over a group of stationary sources. First,
common control can be established through ownership of multiple sources by the same parent
corporation or by a parent and a subsidiary of the parent corporation. Second, common control
can be established if an entity such as a corporation has the power to direct the management and
policies of a second entity, thus controlling its operations, through a contractual agreement or a
voting interest .. If common control is not established by the first two mechanisms, then one
should consider whether there is a contract for service relationship between the two companies or
if a support/dependency relationship exists between the two companies in order to determine
whether a common control relationship exists. '
In the case of Coors and TriGen, the brewery and power plant which were once held in
common by Coors are now held under separate ownership. TriGen is not a subsidiary of Coors,
so the first mechanism does not apply. Nor do the facts suggest the kind of contractual
agreement between Coors and TriGen or voting interest that would meet the general definition of
"control" used by the Securities and Exchange Commission and establish common control under
the second mechanism. However, there is a contract between Coors and TriGen that creates a
support/dependency relationship: TriGen's power plant supports the Coors brewery by providing
not less than 100 percent of its power needs. With no other customers at present, the power plant
is a wholly dedicated support facility for the brewery. For its part, the brewery depends on the
TriGen facility for electrical power, as well as for pollution control under the settlement
agreement between the Division and Coors. Both the product (power) provided by Tri-Gen and
the use of its equipment for pollution control are integral to the operation of the brewery.
Thus the third mechanism, establishing control through a support/dependency relationship,
appears to apply. See, John S. Seitz Memorandum, page 8. In addition to the evidence already
discussed, the power plant is located not just adjacent to the brewery, but "on" the brewery site."
If the power plant is located on Coors property, that fact alone creates a presumption of common
control. See letter from William Spratlin, Air, RCRA and Toxies Division Director, Region 7, to
State and Local Air Directors (September 18, 1995) (enclosed), discussing how a company may
be able to rebut the presumption that locating on another company's land establishes a "control"
relationship. Among the criteria for "common control" of co-located sources discussed in that
letter are sharing pollution control equipment, limiting sales of one source's products, and using
operation of one source to support the operation of the other. Each of these criteria support a
finding of common control for Coors and TriGen.
Just as the Coors-TriGen contract establishes common control, the contract also makes
the TriGen power plant a "support facility" for purposes of determining major industrial grouping
under the Standard Industrial Classification Manual. As the manual explains, the SIC code is a
system for classifying facilities according to type of economic activity. Here, the power plant lacks
'See John S. Seitz Memorandum, "Major Source Determinations for Military Installations
under the Air Toxies, New Source Review, and Title V Operating Permit Programs of the Clean
Air Act" (August 2, 1996) (enclosed)(also available on EPA's Technology Transfer Network).
a primary economic activity of its own; instead, it serves to support the activity of another facility.
Therefore, the power plant is properly classified under the same SIC code as the brewery, which
is the primary economic activity on the site.
We conclude, as you did, that the power plant and the brewery should be treated as a
single source, because they are a "group of stationary sources that are located on one or more
contiguons or adjacent properties, and are under common control of the same person (or persons
nnder common control) belonging to a single major industrial grouping" (40 C.F.R. § 70.2). The
power plant has always been a support facility and a part of the larger stationary source. When
Coors owned the power plant, the single source determination was without question. The source
should not be separated into two separate sources now, when Coors has only divested itself of
ownership of the power plant, not of control over its operation and output.
If you have any questions, please contact Meredith Bond of my staff, at (303) 312-6438 or
Terry Lukas at (303) 312-6898 ..
Sincerely,
[Original signed by Richard R. Long]
Richard R. Long
Director
Air Program
Enclosures
cc:
Jim King, Colorado APCD
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION VIII
999 18th STREET - SUITE 500
DENVER, COLORADO 80202-2466
May 21. 1998
Ref: 8P2-A
Lynn Menlove, Manager
New Source Review Section
Utah Division of Air Quality
P.O. Box 144820
Salt Lake City, UT 84114-4820
Re:
Response to Request for Guidance in
Defining Adjacent with Respect to Source
Aggregation
Dear Mr. Menlove:
This is in response to your letter of January IS, 1998, to Mike Owens of my staff,
requesting guidance and/or specific recommendations in the matter of Utility Trailer
Manufacturing Company. For the purpose of determining if two Utility Trailer facilities should
or should not be aggregated into a single source under Clean Air Act Title V and New Source
Review permitting programs, you asked what is the specific physical distance associated with the
definition of "adjacent." The word" adjacent" is part of the definition of "source" in the Utah
SIP regulations, at R307-1-1. The SIP definition follows the Federal definition found in 40 CFR
51.166.
In brief. our answer is that the distance associated with "adjacent" must be considered
on a case-by-case basis. This is explained in the preamble to the August 7, 1980 PSD rules,
which says" EPA is unable to say precisely at this point how far apart activities must be in order
to be treated separately. The Agency can answer that question only through case-by-case
determinations." After searching the New Source Review Guidance Notebook, and after querying
the other Regions and EPA's Office of Air Quality Planning and Standards, we have found no
evidence that any EPA office has ever attempted to indicate a specific distance for "adjacent" on
anything other than a case-by-case basis. We could not find any previous EPA determination for
any case that is precisely like Utility Trailer, i.e., two facilities under common control, with the
same primary 2-digit SIC code, located about a mile apart, both producing very similar products,
but claimed by the company to be independent production lines.
Utah SIP regulations do not define "adjacent." The definition in the 1995 edition of
Webster's New College Dictionary is: 1. Close to; nearby, or 2. Next to; adjoining. We realize
this leaves considerable gray area for interpretation; however, since the term "adjacent" appears
in the Utah SIP as part of the definition of "source," any evaluation of what is "adjacent" must
relate to the guiding principle of a common sense notion of "source." (The phrase "common
sense notion" appears on page 52695 of the August 7, 1980 PSD preamble, with regard to how
to define "source. ") Hence, a determination of "adjacent" should include an evaluation of
whether the distance between two facilities is sufficiently small that it enables them to operate as
a single "source." Below are some types of questions that might be posed in this evaluation, as
it pertains to Utility Trailer. Not all the answers to these questions need be positive for two
facilities to be considered adjacent.
Was the location of the new facility chosen primarily because of its proximity to the
existing facility, to enable the operation of the two facilities to be integrated? In other
words, if the two facilities were sited much further apart, would that significantly affect
the degree to which they may be dependent on each other?
Will materials be routinely transferred between the facilities? Supporting evidence for this
could include a physical link or transportation link between the facilities, such as a
pipeline, railway, special-purpose or public road, channel or conduit.
Will managers or other workers frequently shuttle back and forth to be involved actively
in both facilities? Besides production line staff, this might include maintenance and repair
crews, or security or administrative personnel.
Will the production process itself be split in any way between the facilities, i.e., will one
facility produce an intermediate product that requires further processing at the other
facility, with associated air pollutant emissions? For example, will components be
assembled at one facility but painted at the other?
One illustration of this type of evaluation involved Great Salt Lake Minerals in Utah,
which we wrote to you about on August 8, 1997, in response to your inquiry. (See enclosure # 1.)
We recommended, as EPA guidance, that you treat the two GSLM facilities as a single source
(i.e., "adjacent"), despite the fact that they are a considerable distance apart (21.5 miles). We
based that advice on the functional inter-relationship of the facilities, evidenced in part by a
dedicated channel between them. We wrote that the lengthy distance between the facilities" is not
an overriding factor that would prevent them from being considered a single source. "
Another illustration is ESCO Corporation in Portland, Oregon, which operates two metal
casting foundries (a "Main Plant" and a "Plant 3"), a couple of blocks apart. All castings
produced by foundries at both facilities are coated, packaged and shipped at the "Main Plant".
EPA Region 10 wrote to the State of Oregon on August 7, 1997 (see enclosure #2), that the
guiding principle in evaluating whether the two facilities are "adjacent" is "the common sense
notion of a plant. That is, pollutant emitting activities that comprise or support the primary
product or activity of a company or operation must be conSidered part of the same stationary
source." EPA determined that the two ESCO facilities must be considered a single major
stationary source, since they function together in that manner, even though the Plant 3 foundry
operates independently from the Main Plant foundry.
2
Another illustration is Anheuser-Busch in Fort Collins, Colorado, which operates a
brewery and landfarm about six miles apart. A memo from OAQPS to our Regional Office, dated
August 27, 1996 (see enclosure #3), stated that with regard to "contiguous or adjacent," the
facilities shoUld be treated as one source, due to their functional inter-relationship (land farm as
an integral part of the brewery operations), evidenced in part by a disposal pipeline between them.
The fact that they are a considerable distance apart "does not support a PSD determination that
the brewery proper and the land farm constitute separate sources for PSD purposes."
Another illustration is Acme Steel Company, which operates an integrated steel mill
consisting of coke ovens and blast furnaces at a site in Chicago, Illinois, along with basic oxygen
furnaces, casting and hot strip mill operations at a site in Riverdale, Illinois, about 3.7 miles
away. The blast furnace in Chicago produces hot metal that is transported via commercial rail to
the BOF shop in Riverdale for further processing into steel. EPA Region 5 wrote to the State of
Illinois on March 13,1998 (see enclosure #4), that "Although the two sites are separated by Lake
Calumet, landfills, 1-94, and the Little Calumet River, USEPA considers that the close proximity
of the sites, along with the interdependency of the operations and their historical operation as one
source, as sufficient reasons to group these two facilities as one. "
Therefore, in the matter of Utility Trailer, we recommend you evaluate, using questions
such as those we posed above, whether the two facilities (one existing and one proposed for
construction) will, in fact, operate independently of each other, as the company has claimed.
Athough Utility Trailer writes that "The present facility is not capable of conversion to the new
trailer manufacturing process," they also write that the existing facility is "an inefficient
manufacturing process which has made this facility less cost-competitive." This suggests to us
the possibility that the existing facility could become a support facility for the new one. The
company should be advised that if the two facilities are later discovered by the State and/or EPA
to be actually operating as a single major source, and no Title V or PSD permit applications have
been submitted where required by regulation, the company could become subject to State or EPA
enforcement action or citizen suit.
Finally, please be aware that if the facilities are treated as two separate sources, no
emission netting between them can be allowed, to avoid major source NSR permitting at either
facility, in the event of future facility modifications.
We hope this letter will be helpful. It has been written only as guidance, as it remains the
State's responsibility to make source aggregation determinations under EPA-approved State
programs and regulations. This letter has been reviewed by specialists at OAQPS, by our Office
of Regional Counsel. and by Office of General Counsel at EPA Headquarters. We apologize for
the delay in getting our response to you.
3
If you have questions, please contact Mike Owens. He is at at (206) 553-6511 until late
June, after which he may be reached at (303) 312-6440.
Sincerely,
Richard R. Long
Director
Air Program
Enclosures (4)
cc:
Rick Sprott, Utah DAQ
Scott Manzano, Utah DAQ
Jose Garcia, Utah DAQ
4
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&EPA
Prolectlon Agency
5 - Air and Radiation Division
U.S. Enviromriemal
Re~lon
Correspondence
=====================~92=====================
March 13, 1998
Donald Sutton, Manager
Permits Section
Division of Air Pollution Control
Illinois Environmental Protection Agency
P.O. Box 19506
Springfield, Illinois 62794-9506
Dear Mr. Sutton:
The'purpose of this letter is to provide further guidance on the major modification
provisions of the federal rules for Prevention of Significant Deterioration (PSD), 40 CFR
52.21, as applied to a proposed "re-permitting" of the integrated steel mill (Application
93040047) at the Acme Steel Company (Acme) located in Chicago and Riverdale, Illinois.
While the U. S. Environmental Protection Agency (US EPA) has had many discussions
with your staff at the Illinois Environmental Protection Agency (IEPA) regarding the
proposed Acme permit actions, we would like to clarify our position.
According to the information we have received, since approximately
1964, Acme has operated the facilities in Chicago and Riverdale as one
integrated steel mill [with coke ovens and blast furnace operations in
Chicago together with basic oxygen furnace (BOF), casting and hot
strip mill operations in Riverdale].
The Acme integrated steel mill
operates in a series of four batch processes. At the Chicago portion
of the plant, coke from the coke plant is sent to the blast furnace.
The blast furnace produces hot metal that is transported via
commercial rail to the BOF shop in Riverdale. With the addition of
scrap steel, the BOF shop produces liquid steel that is formed into
steel coils in the continuous caster/hot strip mill.
Both portions of
Acme steel mill are located in the chicagoland severe non-attainment
area for ozone and the Lake Calumet non-attainment area for
particulate matter less than 10 microns (PM-10).
In their recent proposal, Acme would like to revise a construction
permit issued on March 4, 1994, that authorized the replacement of its
old steel processing (teeming, soaking, reheating, and hot strip mill
operations at the Riverdale site) with a new, more efficient
1 of 3
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continuous caster/hot strip mill. The 1994 permit necessitated the
limiting of all major operations (i.e., production of coke, iron,
steel, and fuel usage) such that the continuous caster/hot strip mill
project would not be considered a major modification for emissions of
PM-10 or sulfur dioxide.
Acme now believes that the project was permitted incorrectly.
Specifically, Acme requests that the Riverdale and Chicago portions
of the plant be considered two separate sources for New Source Review
(NSR) permitting. Due to their belief that debottlenecking of the
production line, as considered in the 1994 permit, did not occur with
the addition of the new continuous caster/hot strip mill, Acme also
requests the removal of all the 1994 permit conditions and limitations
associated with the coke ovens, blast furnace and the BOF.
The primary issue presented is whether the Chicago and Riverdale
facilities can be considered separate sources or one source.
Secondary is the issue of "re-permitting" the 1994 netting analysis
based on different assumptions and limits. with respect to the first
issue, the PSD regulations in 40 CFR 52.21(b)(5) and (6) and the Title
V operating permit regulations in 40 CFR 70.2 define a stationary
source as any building, structure, facility, or installation whose
pollutant-emitting activities belong to the same industrial grouping,
are located on contiguous or adjacent properties, and are under the
control of the same person or entity (or entities under common
control). The common control and industrial grouping factors
important in determining whether operations should be aggregated as a
single source are clearly satisfied. The integrated steel mill
operations in Riverdale and Chicago have the same 2-digit SIC code and
they are both owned and operated as single source by Acme.
The
remaining factor to consider in case-by-case single source
determinations is consideration of the contiguity and/or adjacency of
the Riverdale and Chicago operations. The Riverdale portions of the
steel mill are located approximately 3.7 geographic miles from the
closest part of the coke plant at the Chicago portion of the mill.
Although the two sites are separated by Lake Calumet, landfills,
1-94, and the Little Calumet River, USEPA considers that the close
proximity of the sites, along with the interdependency of the
operations and their historical operation as one source, as sufficient
reasons to group these t\~O facilities as one.
Furthermore, it would now be inappropriate to divide the activities of
the steel mill into two sources, because it appears that the netting
analysis supporting the 1994 permit depended on the whole facility
being one source. The netting analysis performed for PM-10
demonstrated that Acme needed PM-10 emission reductions at the Chicago
portion of the plant to offset the increases at the Riverdale portion
of the plant due to the continuous caster/hot strip mill addition and
resulting debottlenecking. Although Acme would now like to choose a
different netting scenario, such that the 1994 operational
restrictions would not be necessary to avoid major NSR, this
"re-permitting" request is not possible because of the timing of the
proposed emission reduction credits. As 40 CFR 52.21(b)(3)(vi)
2013
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states:
A decrease in actual emissions is creditable only to the extent that:
(a)
...
(b) It is federally enforceable at and after the time that actual
construction on the particular change begins; and
(c) It has approximately the same qualitative significance for public
health and welfare as that attributed to the increase from the
particular change.
Although USEPA does not consider Acme's business choices to constitute
mistakes that warrant permit review, if Acme feels that they need more
flexibility or capacity than provided by the 1994 permit, USEPA will
work with the IEPA to evaluate that request following the proper
modification procedures provided by NSR.
We understand that Illinois EPA has been working closely with Acme to
update the PM-10 attainment demonstration for the Lake Calumet PM-10
non-attainment area.
Yet, the proposed use of some of those
"voluntary reductions" for netting credits is questionable due to
pending enforcement consent decrees which require those reductions.
We applaud your efforts to work cooperatively to bring this area into
attainment for PM-10, but such efforts cannot be made, such that they
violate the principles of the PSD and NSR regulations.
I hope you will find this information useful. We will consider any further
information submitted by Illinois EPA with regard to the issues
presented in this matter. If we can answer any questions regarding these
comments, or if we can provide any further guidance, please contact Keary Cragan, of my
staff, at (312) 353-5669. Once again, thank you for your commitment to working with us
to improve the permitting process.
Sincerely yours,
/s/
Cheryl L. Newton, Chief
Permits and Grants Section
AtR AND R'AtHJ:','rION ,OtVUnOH
77.WJlBT- JACKSON SOUl-EVA"D (A·t BJ]
C"lt-AGO, Il,.l.dH614-.606t)4
(600) 621-8431 OR (312.) 3t>3"2212
30f3
412219912:52 PM
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION B
999 18TH STREET - SUITE 500
DENVER, CO 80202-2466
hltp:!lwww.epa.gov/regionOB
August 8, 1997
Ref:
8P2-A
Lynn R. Menlove, Manager
New Source Review Section
Division of Air Quality
Utah Department of Environmental Quality
P.O. Box 144820
Salt Lake City, UT 84114-4820
Dear Mr. Menlove:
This letter is in response to your letter dated May 23, 1997, about Great Salt Lake
Minerals and whether their operations should be considered a single source or two sources under
the Prevention of Significant Deterioration of Air Quality (PSD) regulations. We also received a
letter from Mr. Jim Wolf with the Harris Chemical Group, dated June 30, 1997, that contained the
June 16, 1997 letter that was sent to Utah, which discussed these issues about the Great Salt Lake
Minerals plant.
After reviewing the information submitted and previous applicability determinations that
have been made regarding the definition of stationary sources, we feel compelled to recommend
that the subject pump station be considered part of the Great Salt Lake Minerals plant as a single
source, despite the fact that the pump station is on one side of the Great Salt Lake while the
production operations are on the other side of the lake. The underlying facts indicate that the
pump station operates solely as a support facility to the plant. Guidance in the Standard Industrial
Classification (SIC) Manual (Appendix B) states that the SIC code is a system for classifying
establishments by type of economic activity. Each establishment is classified according to its
primary activity. The pump station activity does not have its own primary economic activity but
only supports the activity of the main facility. As such, we believe it would be incorrect to
consider the pump station operation as a separate source.
The letter fi'om Mr. Wolf contained a statement that said "The pump station merely
supports brine transfer activities and has no production function or potential." The very fact that
the pump station provides support to the production activities of the plant by brine transfer clearly
provides justification that the pump station acts as a· support facility to the plant. To our general
knowledge, previous determinations, which have been made by EPA and states, have always
determined that activities which support the primary activities of a source are considered to be
part of the source to which they provide support. Distance between the operations is not nearly
as important in determining if the operations are part of the same source as the possible support
'0
Printed on Recycled Paper
that one operation provides for another. We believe that Utah has at least one example of this in
your definition of a source at Kennecott Copper, where the Bingham Canyon Mine and the
Copperton Concentrator are considered to be one source connected by a slurry pipeline. The only
written national guidance found in the New Source Review Guidance Notebook was numbered
3.18, dated 6/30/81, which dealt with two operations, separated one mile apart, that had a
dedicated railroad line between them, and together produced one line of automobiles. The
resulting determination was that they are one source.
We have coordinated our response with EPA New Source Review contacts in North
Carolina and they agree that our guidance regarding this determination is consistent with
statements that EPA has made about long-line operations, such as a pipeline or electrical power
lines. EPA would not treat all of the pumping stations along a multi-state pipeline as one source.
The distance between those types of operations is typically hundreds of miles. The supply of
electrical power to a source has never been used to determine that separate operations are part of
the same source. However, the physical relationship between the pump station and the
production operations at the Great Salt Lake Minerals plant (Le., a channel or "pipeline" across
the bottom of the lake) is much more similar to conveying operations that transport raw materials
to a processing plant. This clearly supports the production operation and is routinely considered
to be part of a single stationary source (the production facility plus support operations). This is a
rather unique (one of a kind) operation and our guidance is specific for this unique operation.
The only issue, really is the distance between the two operations. EPA did make a
statement in the preamble to the August 7, 1980 PSD rules that if two operations were 20 miles
apart, they would be too far apart to be considered one source. The rest of the determination was
that because the two operations had different SIC codes, they would be separate sources. Our
belief that the unique operations at the Great Salt Lake Minerals plant should be considered a
single source is somewhat in conflict with the single statement that a 20-mile separation is too far
apart to consider two operations as a single source. However, this distance was not established as
a fixed requirement and involved facilities with different SIC codes, unlike The Great Salt Lake
Minerals case. It remains our opinion that because of the unique relationship between the pump
station and the salt processing plant and the dedicated channel (21.5 miles) between the two that
supplies the pre-concentrated brine, the distance between the operations is not an overriding
factor that would prevent them from being considered a single source.
Our position on this rather unique situation is only provided as guidance, as it remains the
State's primary responsibility to make the final determination under your SIP-approved PSD
regulations. I hope this is the information that you needed. If you have questions about our
determination, please contact John Dale at (303) 312-6934.
Sincerely,
Richard R. Long, Director
Air Program
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
RESEARCH TRIANGLE PARK, NC 27711
OFFICE OF
AIR QUALITY PLANNING
AND STANDARDS
lUi 27 1996
MEMORANDUM
SUBJECT:
Analysis of the Applicability of Prevention of
Significant Deterioration (PSD) to the Anheuser-Busch,
Incorporated Brewery and Nutri-Turf, Incorporated
Landfarm at Fort Collins, Colorado
FROM:
Robert G. Kellam, Acting Director
Information Transfer & Program Integration
Division, OAQPS (MD-12)
TO:
Richard R. Long, Director
Air Program, Region VIII (8P2-A)
This is in response to your April 3, 1996 letter requesting
PSD single stationary source determination for Anheuser-Busch's
Fort Collins, Colorado brewery and Nutri-Turf landfarm. The
Environmental Protection Agency (EPA) Headquarters considered the
applicability of the PSD rules at 40 CFR 52.21 to the AnheuserBusch, Inc. (Anheuser-Busch) brewery and the Nutri-Turf, Inc.
(Nutri-Turf) landfarm in Fort Collins, Colorado.
PSD Applicability
The EPA Headquarters concurs with Region VIII's conclusion
that the brewery and landfarm. are considered a single stationary
source for PSD applicability purposes. Specifically, we conclude
that the brewery and landfarm are commonly owned by AnheuserBusch,
the brewery and landfarm are on contiguous or adjacent properties,
and the landfarm. is a support facility for the brewery. In fact,
the landfarm, which disposes of the brewery's waste water, is part
of the brewery. The background information and details of the
EPA's analysis follow.
Background
Anheuser-Busch received a PSD permit from EPA Region VIII on
March 15, 1984 to construct a new brewery at Fort Collins,
Colorado. The brewery was determined to be a major stationary
source with potential emissions that exceeded significant
emissions rates for nitrogen oxides, sulfur dioxide, and
2
particulates. Potential volatile organic compound (VOC)
emissions from the brewery were reported by Anheuser-Busch to be
less than the PSD significant emissions rate of 40 tons per year.
Anheuser-Busch did not report any air emissions from its NutriTurf landfarm in its original PSD application.
The brewery and landfarm are about 6 miles apart and are
physically connected by a pipeline. Anheuser-Busch owns the
brewery and landfarm. The landfarm was purchased and modified by
Anheuser-Busch during the time the brewery was under construction
for disposing of waste water from the brewery. The brewery waste
water stream, containing hydrocarbons, is piped to the landfarm
and disposed of by land application. The subsequent VOC emissions
at the landfarm are a direct result of brewery operations. Land
application of the waste water stream from the brewery at the
landfarm began concurrently with-brewery production in 1988.
In 1986, the Colorado Department of Health (CDH) became the
PSD permitting authority in Colorado, replacing EPA. In July 1993
the CDH issued a notice of violation to Anheuser-Busch for
constructing VOC emitting units without valid permits at its Fort
Collins brewery. Since the issuance of the PSD permit, the EPA
and CDH determined that Anheuser-Busch did not include all of its
potential VOC emissions at the brewery in its original PSD
application. The VOC emissions from the brewery, excluding
emissions from the landfarm, exceed the 40 tons per year
significant emissions threshold for PSD applicability. An accurate
calculation of potential VOC emissions from the landfarm has not
yet been completed.
In response to an August 19, 1993 request from CDH, the EPA
Region VIII determined in an October 23, 1993 letter that the
brewery and landfarm are considered a single stationary source for
PSD applicability.
In January 31, 1995.and July 6, 1995 letters
to CDH, Anheuser-Busch presented its position that the brewery and
landfarm are two separate sources for PSD applicability purposes.
After reviewing the positions presented by Anheuser-Busch, EPA
Region VIII clarified and reaffirmed its previous single source
determination in a letter to CDH dated September 20, 1995. Since
EPA was the PSD permitting authority at the time the brewery was
permitted, EPA is the responsible Agency for enforcement of any
PSD violations at the brewery and landfarm based on the currentplant configurations.
PSD Definition of Source
The PSD requirements apply to the construction of major
stationary sources and major modifications at major stationary
3
sources.
See 40 CFR 52.21(i). The PSD regulations define
stationary sources as any building, structure, facility, or
installation that emits, or may emit any air pollutant subject to
regulation under the Clean Air Act. See 40 CFR 52.21(b)(5). The
regulations go on to define "building, structure, facility, or
installation" as:
all of the pollutant emitting activities that belong to
the same industrial grouping, are on one or more
contiguous or adjacent properties, and are under the
control of the same person (or persons under common
control) except the activities of any vessel.
Pollutant emitting activities will be considered as
part of the same industrial grouping if they belong to
the same "Major Group" (i.e., which have the same first
two-digit code) as described in the Standard Industrial
Classification Manual, 1972, as amended by the 1977
Supplement (U.S. Government printing Office stock
number 4101-0066 and 003-005-00176-0, respectively)
[40 CFR 52.21(b)(6)].
The regulations do not expressly address how to classify a source
composed of more than one grouping of pollutant emitting
activities.
However, in the preamble to these regulations, EPA
explained that each source is to be classified according to its
primary activity, which is determined by its principal product or
group of products produced or distributed, or services rendered.
Thus, one source classification encompasses both primary and
support facilities, even when the latter includes units with a
different two-digit SIC code. Support facilities are typically
those that convey, store, or otherwise assist in the production of
the principal product or group of products produced or
distributed, or services rendered. Where a unit is used to support
two otherwise distinct sets of activities, the unit is to be
included within the source that , most heavily relies on its
support.
See 45 FR 52676, 52695 (August 7, 1980).
The criteria for defining a stationary source under the PSD
regulations as they apply to the Anheuser-Busch brewery and
landfarm situation are discussed below.
contiguous or Adjacent
A specific distance between pollutant emitting activities has
never been established by EPA for determining when facilities
should be considered separate or one source for PSD purposes.
Whether facilities are contiguous or adjacent is determined on a
case-by-case basis, based on the relationship between the
facilities. The EPA considers the brewery and landfarm, to be
4
contiguous or adjacent since the landfarm operation is an integral
part of the brewery operations, i.e., land application at the
landfarm is the means chosen by Anheuser-Busch to dispose of the
ethanol contaminated process water from the brewery operations.
Without a means of waste water disposal the brewery cannot
operate. The additional fact that a pipeline physically connects
the brewery and landfarm strengthens the conclusion that the
brewery operation is dependent on landfarm operations.
For this
case, the distance between the brewery and landfarm does not
support a PSD determination that the brewery proper and the
landfarm constitute separate sources for PSD purposes.
SIC Code
AS noted, EPA's contemporaneous interpretation of the PSD
regulations is that each source is to be classified according to
its primary activity that is determined by its principal product
or group of products. Thus, one source classification encompasses
both primary and support facilities, even when it includes units
with a different two-digit SIC code. Without an acceptable means
of waste water disposal the brewery cannot produce beer. Land
application at the landfarm is the waste water disposal means
chosen by Anheuser-Busch for the brewery. upon further review of
the October 23, 1993, letter from Region VIII to CDH, the EPA
believes that the landfarm is a support facility to the brewery
since landfarm operations assist in the primary activity of the
brewery.
Even if the landfarm, has a separate two-digit SIC code
from the brewery, the landfarm is still a support facility for the
brewery and considered part of the brewery.
In other words,
support activities are aggregated with their associated primary
activity regardless of dissimilar SIC codes.
Common Control
Both the brewery and landfarm are under common control since
they (as well as the pipeline connecting them) are owned by
Anheuser-Busch.
The landfarm was purchased and modified by
Anheuser-Busch before the operation of the brewery.
This analysis has been reviewed by EPA's Office of
Enforcement and Compliance Assurance and EPA's Office of General
Counsel. If you have any questions please contact Mike Sewell of
the Integrated Implementation Group at (919) 541-0873.
I appreciate this opportunity to be of service and trust
this information will be helpful to you.
EXHIBIT D
SOAH DOCKET NO. 582-05-0593
TCEQ DOCKET NO. 2004-0049-AIR
APPLICATION OF ASARCO,
INCORPORATED TO RENEW AIR
QUALITY PERMIT NO. 20345
§
§
§
§
§
BEFORE THE STATE OFFICE
OF
ADMINISTRATIVE HEARINGS
PROPOSAL FOR DECISION
I. INTRODUCTION
ASARCO, Incorporated (Applicant or ASARCO) has applied to the Texas Commission on
Environmental Quality (TCEQ or Commission) to renew its Air Quality Permit No. 20345
(permit, Current Permit, Renewal Permit, or Permit 20345). The requested renewal would allow
Applicant to resume its copper smelting operations in El Paso, Texas, which it ceased in 1999.
On April 28, 2004, during its open meeting and public comment period, the Commission
received a request for hearing on the renewal issue. On May 14, 2004, the Commission exercised
its plenary authority to hold a hearing in the public interest and issued an interim order referring
two issues to the State Office of Administrative Hearings (SOAH) for contested case hearing. The
referred issues are:
1. Whether the operation of the El Paso Copper Smelter under the terms of the
proposed permit will cause or contribute to a condition of air pollution; and
2. Whether the Applicant' s compliance history for the last five years of operation
of the E1 Paso Primary Copper Smelter warrant the renewal of Air Quality Permit
No. 20345.'
1 Texas Comm'n on Envtl. Quality, An Interim Order C01Jce1'lling the Application by ASARCO Incorporated
10 Renew Air Qualily Permil No. 20345. TCEQ Docket No. 2004-0049-AIR (May l4, 2004).
SOAR Dkt. No. 582-05-0593
TCEQ Dkt. No. 2004-0049-AIR
Proposal for Decision
Page 66
modeling was done. With a few exceptions, his testimony was very summary and conc1usory.236
Ironically, El Paso pattially proved ASARCO's case concerning the 1992 modeling. It offered two
pages from the 1992 modeling report, which Mr. Cabe agreed summarize that report's results as to
most of the pollutants. 217 Additionally, late in the hearing, at the AUs' request, ASARCO offered
another excerpt from the 1992 modeling report, a map showing the modeled dispersion of lead from
ConTop.2l8 Moreover, through El Paso's cross-examination and redirect, Mr. Cabe also answered
some of the questions concerning the 1992 modeling. 219 The AUs examine that evidence below, but
as they discuss, there still are gaps.
For some pollutants, Mr. Cabe modeled all "contiguous sources"-i.e., all ASARCO sources
at the El Paso site, whether ConTop related or not. For other pollutants, however, he modeled "all
sources," meaning ASARCO and non-ASARCO sources?40 For still others, he only modeled the
ConTop changes. Thus, he modeled all sources for lead, all sources for SO, NAAQS standards, only
ConTop sources for NO, and PM" and contiguous ASARCO sources for everything else. 241 As
discussed below, the AUs cannot always find that modeling less than all the sources was appropriate.
G.
Will ASARCO's PM Emissions Cause or Contribute to Ail' Pollution?
236
ASARCO Ex. No. 38, p. 9. et seq.
237
El Paso Ex. Nos. 8 and 9; Tr. 484 el seq.
238
ASARCO Ex. No. 55; Tr. 2156 et seq.
239
Tr. at 445 et seq.
240
Tr. at 509 et seq. In the transcript, "contiguous" is misreportcd as "continuous,"
241
El Paso Ex. Nos. 8,9, and 23, p. 9; Tr. at 531 etseq.
SOAH Dkt. No. 582-05-0593
TCEQ Dkt. No. 2004-0049-AIR
Proposal fa .. Decision
Page 67
ASARCO notes that it has reduced its authorized PM, PM IO , and PM,., (collectively PM)
emissions after receiving its 1992 permit for ConTop. It then argues that lower emissions obviously
means lower ground level concentrations; hence, its 1992 modeling proves that its lower PM emissions
will not cause or contribute to adverse health or other effects. The ED agrees.
But the Siena Club, the PIC, and El Paso argue that ASARCO failed to properly calculate and
take into account PM emissions from non-Permit 20345 and non-ASARCO sources, which was
required to show that there would be no PM, PM,., or PM,., exceedances. They also argue that
ASARCO has failed to prove that it properly modeled even the PM sources that ASARCO claims to
have modeled. For both these reasons, they argue that ASARCO has not shown that its PM emissions
will not likely cause air pollution.
For a handful of specific PM constituents, the ALJ s agree that ASARCO has sufficiently shown
that it will not cause or contribute to air pollution. Otherwise, the ALJs agree the Protestants that
ASARCO should have modeled all other PM sources at its plant and at an adjacent facility intimately
tied to ASARCO' s plant. BecauseASARCO did not do so, the ALJ s cannot conclude that ASARCO' s
PM emissions would not cause or contribute to air pollution.
1.
Will Emissions of Certain PM Constituents Cause Exceedances of the ESLs or
other Safe Levels?
PM is a catchall category that includes many particular pollutants.'42 EI Paso contends, and the
ALJ s agree, that one cannot know if operation under the pennit will cause or contribute to air pollution
242
Tr. at 491.
SOAR Dkt. No. 582-05-0593
TCEQ Dkt. No. 2004-0049-AIR
b.
Proposal for Decision
Page 81
The OgJebay Norton PM Source
When ASARCO previously operated under the permit at issue in this case, there was another
PM emission source immediately adjacent to the ASARCO plant. The pollutants were emitted from
slag coming from the ASARCO facility.
Slag is a molten waste that ASARCO pours on the ground and allows to cool and solidify.293
After the slag cooled, Oglebay Norton, another company, bought the slag from ASARC0 294 and used
front-end 10aders29 ' to carry it to property owned by ASARCO and adjacent to ASARCO's plant but
leased by Oglebay Norton.296 There Oglebay Norton processed the slag by crushing and sizing it, then
sold it to a railroad for ballast. 297 Ms. Geran testified that resumption of this slag handling activity
would cause PM emissions that are not included in ASARCO analysis for this case.298 Mr. Cabe also
conceded that Oglebay Norton's slag handling could cause PM emissions. 299
While the only evidence is that Oglebay Norton is a separate company operating a legally
separate facility, it operates on property adjacent to and owned by ASARCO to process the slag from
ASARCO's smelter and generates PM emissions from that processing. 3°O While ASARCO need not
sell slag and could possibly store it, ASARCO cannot operate its smelter without generating slag.
Given the evidence showing a reasonable likelihood of significant PM emissions from Oglebay
Norton, ASARCO's arrangement with that company regarding slag is so interconnected and
interdependent that it seems extremely close to a contrivance. Other contrivances are discussed below.
293
AS ARC a Ex. No. 36, p. 91.
294
Tr at 2042.
295
ASARCO Ex. No. 36, p. 91 e/ seq.
296
ASARCO Ex. No. 36, p. 92.
291
ASARCO Ex. No. 36, p. 93.
298
E1 Paso Ex, No.1, p. 41.
299
Tr. at 2243.
300
Tr. at 637 et seq.
TEXAS COMMISSION ON ENVIRONMENTAL QUALITY
AN ORDER concerning Application of ASARCO, Incorporated to Renew
Air Quality Permit No. 20345, TCEQ Docket No. 2004-0049-AIR, SOAH
Docket No. 582-05-0593
On _ _ _ _ _ _, the Texas Commission on Environmental Quality (Commission or
TCEQ) considered the application of ASARCO, Incorporated, to Renew Air Quality Permit
No. 20345. The application was presented to the Commission with a Proposal for Decision by the
Honorable William G. Newchurchand Veronica S. Najera, Administrative Law Judges (ALJs) with
the State Office of Administrative Hearings (SOAH).
After considering the ALJs' Proposal for Decision (PFD) and the evidence and arguments
presented, the Commission makes the following Findings of Fact (FOF) and Conclusions of Law
(COL):
I. FINDINGS OF FACT
Introduction
I.
On March 28, 2002, ASARCO, Incorporated, (Applicant or ASARCO) applied to the
Commission to renew its Air Quality Permit No. 20345 (Permit, Current Permit, or Permit
20345).
2.
The requested renewal would allow Applicant to resume its copper smelting operations,
which it ceased in 1999.
PM
32.
Based on the above Findings of Fact and Conclusions of Law, ASARCO' s PM!O' and PM,.,
emissions under the renewed permit would not likely exceed the NAAQS.
33.
Based on the above Findings of Fact and Conclusions of Law, ASARCO' s emissions of
arsenic, chromium, chrome VI, copper dust, copper-fume, nickel, zink, iron salts, and
respirable silica will not cause or contribute to air pollution.
34.
Based on the above Findings of Fact and Conclusions of Law, ASARCO has failed to show
that its barium, manganese, or cadmium emissions will not cause or contribute to air
pollution.
35.
Based on the above Findings of Fact and Conclusions of Law, there is substantial evidence that
the PM emissions that ASARCO would emit under Permits 20345 and 4151 combined would
cause an exceedance of the Commission's NGLC mle for particulate matter.
36.
Based on the above Findings of Fact and Conclusions of Law, all of ASARCO PM emissions
from its El Paso plant must be considered to determine whether ASARCO' s renewed operation
under a renewed Permit 20345 would cause or contribute to an exceedance of the standards in
the PM NGLC mle and the NAAQS for PM.
37.
Given the reasonable likelihood of significant PM emissions from Oglebay Norton and
ASARCO' s interconnected and interdependent arrangement with that company regarding
slag, Oglebay Norton's PM emission's must be considered to avoid a circumvention and
determine whether renewal of Permit 20345 will cause or contribute to an exceedance of the
standards in the PM NGLC rule, hence air pollution.
38.
Based on the above Findings of Fact and Conclusions of Law, ASARCO has failed to show
57