UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

Office of Air Quality Planning and Standards

Research Triangle Park, North Carolina 27711

OCT 21, 1986 

MEMORANDUM 

SUBJECT: Applicability of PSD to Portions of a Plant Constructed in Phases 

Without Permits 

FROM: Darryl D. Tyler, Director 

Control Programs Development Division (MD-15) 

TO: David Kee, Director 

Air Management Division, Region V (5AR-26) 

This is in response to your correspondence, dated September 30, 1986, regarding the 

applicability of prevention of significant deterioration (PSD) review to a minor source that 

becomes major through a series of modifications. 

Your memo describes a series of modifications to an initial minor source. With the first 

modification (A), the original source maintains its minor status. The second modification (B) puts 

the source over the major source threshold, and the third modification (C) results in an emissions 

increase greater than the PSD significance levels. To complicate matters, the original source was 

not required to obtain a permit under the State implementation plan (SIP) and all subsequent 

modifications were constructed without SIP permits. The source is then discovered at the point 

modification (C) is made. 

You present two schools of thought with respect to the applicability of PSD review to the 

source. 

1) PSD review is applicable only to modification (C) or, 

2) the State should view the plant as it first appeared to them, i.e. as a major source 

without a PSD permit. This option would require that best available control 

technology (BACT) be applied to the total plant. 

In general, the first determination is correct. The fact that the initial minor source and 

subsequent modification were not subject to, or failed to receive, a SIP permit has no bearing 

on applying the rules of PSD applicability. Except under the provisions of 40 CFR 52.21 

(r) (4), the PSD regulations do not contemplate the retroactive application of PSD 
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review to previously minor sources. A BACT review applies only to the emissions units which 

define a major modification to an existing major source or a new major source. However, the air 

quality impact portion of a PSD review must consider, as either baseline or increment consuming, 

the emissions from all emissions units at the source. 

In the extreme case where the source has made a deliberate effort to circumvent PSD 

review (by the systematic construction of carefully sized emissions units which only in the 

aggregate would trigger review) a permitting agency may, however, make a finding that PSD 

applies to the total plant. Such a finding would have to be based on clear evidence that the source 

made a conscious effort to escape review by knowingly misrepresenting the intended source size 

through the calculated juggling of actual and scheduled construction of emission units. For such 

evidence, the permitting agency may require that the source provide detailed information 

regarding original construction plans, timing and construction contracts, emission unit purchase 

orders, and project financing. The source should be compared to similar facilities to determine the 

industrial norm regarding final source size and configuration and construction scheduling. 

If you have any questions regarding this matter, please have your staff contact David 

Solomon of the New Source Review Section at 8-629-5591.