***DR FT***Jnae 11, 1991***

Table of Contents

:.0 INTRODUCTION .

2.0 ENVIRONMENTAL PROTECTION AGENCY J RIS :CTICN

3.0 TYPES OF PERMIT CHANGES

0 CLASSIFICATION AND REVIEW OF CHANGES 4-1

4.1 STAGE OF SOURCE DEVELOPMENT 4-1

4.1.1 Pre-operational Sources 4-2

4.1.2 PSD Sources Already in Op eratics . . 4-3

4.2 LEVELS OF REVIEW 4-4

4.2.1 Amendment 4-4

4.2.2 Revision 4-5

4.2.3 Ma-ior Modification 4-10

4.2.4 New Permit . . . 4-11

5.0 CIRCUMVENTION . . 5-1

6.0 INCREMENT ALLOCATION AND PRESERVATION . 6-1

7.0 EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE 7-1

7.1 BACT REVIEW 7-3

7.2 ADDITIONAL PSD REVIEW REQUIREMENTS 7-4

7.3 DURATION OF EXTENSION 7-5

7.4 PUBLIC COMMENT 7-5

7.5 PHASED MULTI-UNIT PROJECTS 7-5

8.0 AMBIENT IMPACT CHANGES 8-1

9,0 BEST AVAILABLE CONTROL TECHNOLOGY CHANGES 9-1

APPENDIX A . A-1

APPENDIX B . . B-1

APPENDIX C C-1
***DRAFT***Juno 11, 1991***

1.0 INTRODUCTION

When the Environmental Protection Agency (EPA) revised its

prevention of significant deterioration (PSD) regulations in

August 1980, the EPA deferred the development of guidance

governing its PSD "permit modification" process (i.e., the

procedures by which proposed changes to a source, application or

permit would be handled). Since then, the Regions and States

have handled requests for such changes on a case-by-case basis.

These involve a broad variety of re-determinations of exemptions

from permit requirements and permit changes arising from sources

which are already operating as well as those on which

construction has not yet commenced. In the absence of guidelines

promoting a uniform approach to handling change requests, a

variety of decisions were made across the country, creating

confusion and inefficiency in the permitting process for

industry, States, and the EPA. Also, the Clean Air Act

Amendments (CAAA) of 1990 do not specifically address the process

necessary to modify PSD permits already issued and provides the

EPA with the flexibility and discretion to deal with this issue.

Thus guidance is necessary to assist all parties in dealing with

PSD source changes and the need for consistency in PSD permit

revisions. Such guidance should serve to establish a guideline

to assist in resolving questions of legal risk when a judgment is

made that a new permit is not required.

Guidance is needed to maintain the basic inte grity of the

PSD permitting process required by the CAAA of 199C when requests

are received to revise, add to, or delete conditions in issued

permits or information contained in a complete application. A

rigorous preconstruction review for PSD would ultimately not be

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***D ***JUaa 11, 1941***

effective if sources could readily obtain subsequent relaxations

to their permit conditions under a lax policy for permit

revisions. For example, the CAAA of 1990 clearly intends

state-of-the-art ap p lication of best available control technology

(BACT) by PSD sources, but a lax policy for subsequent prop osed

changes could undercut the environmental protection offered by

the original BACT determinations. Thus, the purpose of this

document is to provide guidance on PSD permit changes to permit

applicants and permitting agencies.

Guidance presented in this document provides a new and less

cumbersome route for sources subject to PSD by which chan ges can

be accommodated while ensuring the equivalent environmental

protection required under the CAAA of 1990. , In doing so, it

extends the Alabama Power Com pany v. Costle concept of de

minimis to include changes with such small ambient impacts that

such changes could be excluded from the full rigors of permit

review. It also provides guidance for: (1) re-examining

EPA-granted permit exemptions; (2) revising any EPA-issued PSD

permit or PSD application, including those administered by States

which have since obtained jurisdiction for PSD; and (3) the

development of State and local agency permit revision regulations

or policies. The EPA encourages States with approved PSD

programs in their state implementation plan (SIP) to adopt this

guidance concernin g source changes and the processin g of

State-issued PSD permits which need revision or extension.

For the purpose of determining the type of procedures that

will be used when a proposed change requires permit revisions, a

distinction is made between sources which have commenced

operation and those which have not. A permit revision for a

source already operating generally can be treated like any other

emissions increase or decrease at a major source.using

established procedures. It should be noted that in no case can a

source operate at emission levels higher than those in its

1-2
***DRAPT***JUno 11, 1991***

approved permit. For a source not yet operating, EPA proposes to

group the range of possible changes to a PSD permit into three

categories, based on their potential significance to the p rogram:

(1) those which can be expedited without detailed review

(administrative changes), (2) those which can be processed as

permit revisions after appropriate analysis (minor and

significant changes) and, (3) those which should be treated

through issuance of a new PSD permit (fundamental changes). The

required analysis for permit revisions typically would involve

reconsideration of the basic decisions involved in the issuance

of the original permit for the units that would be affected by

the proposed change.

This guidance also addresses the criteria for extending the

18-month commencement of construction deadline applicable to all

PSD permits, and handling requests for changes toBACT following

PSD permit issuance for sources already operating.

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2.0 ENVIRONMENTAL PROTECTION AGENCY JURISDICTION

All PSD applicability decisions and all PSD permits

originally issued by EPA are covered by this guidance. This

includes those PSD applicability decisions and permits which are

still under EPA jurisdiction, as well as the applicability

decisions and permits issued by EPA which subsequently come under

State jurisdiction as a part of PSD program delegation or SIP

approval.

The EPA also intends for this guidance to be used as a model

for States developing their own permit revision processes for

PSD,• nonattainment area (Part D of the CAAA of 1990) and other

new source review purposes. The EPA believes that regulations

governing proposed changes to sources, permits or applications

are, needed as a legal alternative to having to issue a new permit

for all except certain administrative changes. As a minimum, EPA

believes that state-of-the-art BACT should be guaranteed by any

State reevaluation of PSD applications and permits.
•••DRAF2•••Juam 11,:1991•••

3 .0 TYPES OF PERMIT CHANGES

It is currently accepted p ractice to re quire a new p ermit if

a proposed change constitutes: (1) a major modification; (2) a

difference in construction or desi gn from what was Lriginally

planned, when an increase in emissions or ambient impact would

result; (3) a fundamental alteration of an emissions unit or

source; or (4) a difference in applicability, such as_a source no

longer being exempt from PSD review. This guidance offers a new

and less cumbersome route by which changes can be accommodated

while ensuring equivalent environmental protection. In doing so,

it extends the Alabama Power concept of de min_mis to include

changes which are so small in terms of impacts that such chan ges

could be excluded from the full rigors of permit processing.

Due to the similarity between major and minor "source

modification" and "permit modification," it is important to

establish a terminolo gy which will not be confused with existing

PSD terms and which can be used consistently and precisely to

describe the situations and actions regarding this proposal.

Therefore, the term "permit modification" will not be used. The

terms used instead are explained below.

A "change" refers to the proposed or actual alteration of an

application, p ermit, or source, or some combination of the three.

An application for a proposed change initiates agency action if

the application is complete. When the proposed change has

actually been made, the altered source, permit, or application is

referred to as "changed." or "revised." Changes are classified

according to the effect they would have on the reviewing agency's

assessment of the source. In order of increasing importance or

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magnitude, changes are considered: administrative, minor,

significant and fundamental.

An administrative chan ge involves no increase in either

emissions or ambient impacts and no fundamental change in either

the source or one of the emission units at that source.

Application or permit revisions may be necessary, but additional

review or analysis would not normally be required. Examples are

typographical and company name changes (provided that a careful

evaluation is made to ensure that no circumvention or fraud is

intended by these changes).

Minor changes require revisions to permit applications or

issued permits and a certain amount of additional review and

analysis, but do not constitute either a fundamental or

significant change. Emissions or ambient impacts increase as a

'result of minor changes, but not above the significance levels

defined in 40 CFR 51.166(b) and 40 CFR 51.160(b) (2) respectively.

[check prior to printing to insure that the definitions are still ,

in the cited portion of the CFR]

Significant changes are those where emission increases

resulting from the change for one or more pollutant exceed the

applicable significance level(s) but which do not constitute a

fundamental change. If the affected source is operational, this

constitutes a major modification and the source. must obtain a PSD

permit for the change. Significant changes at pre-operating

sources are considered application or permit revisions and do not

necessarily require the source to restart full PSD review.

A fundamental change is so essential (change of size, type,

or location of source or emissions unit), regardless of the net

emissions or impact differences, that the changed source or

emissions unit is considered a new source or emissions unit, and

thus triggers a totally new permit review. A fundamental change

could even result in an emissions decrease but still require a

new permit. Examples include proposing a 500 tpy (tons-per-year)

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emissions unit in place of a 100 tpy emissions unit, a kiln

instead of a dryer, and proposing a different location for the

source than the one on the original applicaticf or permit.

The effect of a change depends in part on the status of a

project. Project status milestones are:

a. exempted from PSD review,

b. preconstruction PSD permit application submitted,

c. preconstruction PSD permit issued, but source is

not operational (also, the applicability of new

PSD rules is affected by whether construction of

the source has commenced), and

d. preconstruction PSD permit issued and source in

operation.

The results of various combinations of changes and source

status are summarized in Table 1 (Appendix B). A flow chart for

determining which result is applicable to a specific source is

provided in Figure 1 (Appendix B). Note that both Table 1 and

Figure 1 can bnly summarize this policy. More detailed

information appears in the text and in a step-by-step decisionmaking guide provided in Appendix B.
***DAAt3***Jun• 11, 1991***

4.0 CLASSIFICATION AND REVIEW OF CHANGES

There are two primary factors to consider in determining the

scope of review to be imposed upon a source in response to a

proposed change. The first of these involves the magnitude of

the proposed change. The greater the magnitude of the change,

the more involved the review will be. Four levels of change have

been described in Chapter 3 (administrative, minor, significant,

and fundamental), leading to the same number of (but not always

corresponding) levels of review stringency: amendment, revision,

major modification and new permit. A second factor, stage of

source development (whether the source has been issued a permit,

whether the source is operating and, in certain cases, whether

construction has commenced), is critical in determining what

action is required and whether any of the original increment

allocation (for particulate matter, sulfur dioxide or nitrogen

oxides) is preserved. For reasons explained below, various

changes made by a source that is not yet operating can reasonably

be treated in a more stringent manner than if the same changes

were made at a source already in operation.

4.1 STAGE OF SOURCE DEVELOPMENT

This. guidance classifies some PSD-related source changes

differently depending on whether the change is for a source that

has already begun the operation authorized in its PSD p ermit.

This difference in treatment between sources not yet o p erating

and those already doing so is based on several factors: (1) a

project in its earlier phases is much more flexible than one

already operating, (2) the company's commitment to the p roject

prior to operation is less clear and its position regarding

further changes at a plant which is not yet in operation differs

4-1
***DRAFT***J1ina 11, 1991***

from that of most existing sources, and (3) the test of whether a

source can operate and produce a product under the original

construction plans eliminates a great many possibilities of

obvious circumvention of the regulations. Treating an operating.

source as essentially having completed the permitting process

eliminates the burden of uncertainty on the company of constantly

having to evaluate proposed projects in light of changes made

years ago. This guidance acknowledges these factors by typically

imposing a different process for proposed changes at operating

PSD sources. It should be noted that commencement of

construction already confers an exempt ("grandfather") status to

a source in CFR Parts 51, 52, and 60.

4.1.1 Pre-operational Sources

An application for a change to either an application or

permit for a source not yet is operation would generally prompt

reanalysis of,the proposed project as if the original application

had been submitted in that form. However, some changes would be

considered sufficiently unimportant that they could be treated as

application or permit amendments; these are termed administrative

changes. Other changes would be important enough to prompt the

need for a revised or new application or permit, and could

require additional review actions. These various levels of

change are discussed in detail in the next section.

Application and hermit changes requested prior to operation

are to be handled as part of the initially permitted project,

rather than-as new projects. The EPA is concerned that

individually small changes would be accumulated such that a

cumulative significant change would not be given the full review

-,that such a change should receive. Thus, even a de minimis

increase in a pollutant can be subject to PSD review if that

pollutant would be significant when added to previous increases

(this is further explained below). In order for EPA to treat

such a change as a new project, and not as part of the already

4-2
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p ermitted project, the applicant would be required to make a

demonstration that the two projects are physically independent

and were considered to be separate projects for planning

purposes. If the reviewing agency concurs that the new project

is a separate project, the change can then be treated as such.

These criteria are identical to those used for judging separation

of projects already constructed (see. below). The only difference

is that EPA initially presumes that a change at the site of a

nonoperating source is not a new project.

4.1.2 PSD Sources Already in Operation

Applications for changes to sources which have already been

issued PSD permits and been placed in operation have generally

been treated the same as applications to change any existing

major stationary source. That is, if the change is significant

it constitutes a major modification, as defined at

40 CFR Part 52.21, and a complete PSD review is re quired. If the

change is not significant, it does not constitute a major

modification and no PSD review applies. Under this guidance,

changes will instead be processed in the manner described in the

next section.

The only exception to the approach described in section 4.2

arises from the need to avoid circumvention [see Chapter 5] of

the regulations: if the proposed change should reasonably have

been part of the initial project rather than a separate project,

it should be evaluated as part of a new total source impact

rather than as a separate action. At times, such proposed

changes take the form of "separate" sources or even projects

involving more than one source. However, if the reviewing agency

judges that such sources or projects are part of the same project

covered in a previous PSD application, the changes should be

treated identically to changes for sources which have not yet

begun operation. This must be determined by the reviewing agency

on a case-by-case basis, taking into account whether the proposal

4-3
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represents changes at the source which are physically independent

of the original project, and whether the applicant can provide

documentation to show that planning of the second project

occurred after the planning for the first project. Thus, if a

PSD-permitted boiler has been constructed, and the owner applies

for a de minimis increase in SO2 emissions from the boiler which,

in the judgment of the review agency, should have been a part of

the original permit application, the requested change cannot be

treated as a new application (and therefore be exempt from review

because it is de minimis). It will instead be subject to each

PSD review element within the permit revision process as

described is section 4.2. Conversely, if the applicant applies

for a new processing unit to be used in a completely separate

production area of a chemical plant, this application can be

treated as a new project and exempted from review, if de minimis.

4.2 LEVELS OF REVIEW

4.2.1 Amendment

Changes to a permit or application are classified as

amendments if they are administrative and result in no increase

in either the emissions or the air quality impact of a PSD

source. In addition, neither the nature nor the size of the

source or emissions unit can be altered to the extent that the

change would be considered fundamental. Amendments may be

processed quickly without any major reevaluation of the decisions

originally made in permitting the source. Examples of the types

of changes which would often be treated as an amendment include

company name or operator changes, requirements for more frequent

monitoring or reporting by the permittee, correction of

typographical errors (except errors involving emission rates or

levels), emission decreases (although to be used in netting or

trading, such decreases must be carefully documented and made

Federally-enforceable), changes in the type or location of

nonemitting equipment and buildings (So long as there is no

4-4
***DPAFT***Juna 11, 1991***

resulting increase in emissions), and minor wording

clarifications. It should be noted that a fundamental change

(see below) may also result in no increase in emissions or

ambient impact, but cannot be treated as an amendment.

The lack of emissions and impact increases for an amendment

results in little or no review. Proposed amendments (which are

nearly always administrative changes) to applications and permits

do not require any reanalysis of the basic review originally

submitted and need not be subject to public participation

requirements as a general rule. However, the EPA emphasizes that

there may be instances where changes which are normally

administrative may be sufficiently important that the reviewing

authority determines that review or public participation is

necessary, e.g., a change of ownership of a proposed source to a

company which has been involved in highly controversial projects

or has received public attention as a result of the manner in

which other air pollution sources owned by this company were

operated.

4.2.2 Revision

The term "revision" encompasses the review level required

for the large majority of minor and significant changes at all

pre-operational sources and at existing (operating) major

stationary sources which do not qualify as "major modifications,"

as defined by the PSD regulations, or as fundamental changes. In

the case of operating sources, revisions include most changes

involving construction or changes in the method of operation of a

source, including control equipment, that do not produce a net

significant emissions increase. A net significant emissions

increase resulting from a physical change or change in the method

of operation at an operating source. usually constitutes a major

modification as defined in the rules and is processed as such.

It should be noted that there is a distinction between

modifications (as defined in the PSD rules) which are not subject

4-5
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to NSR, and changes (whether requested or necessary) to a permit

or permit application. A change which does not result in a

significant net increase in emissions is not considered a "major

modification" and is not subject to PSD; however, the change may

require (or the owner may request) •a revision of the source

permit (or application).. For instance, the extension of commence

construction dates is a change that should be handled as a

revision. In such cases, the reviewing agency may consider some

level of reanalysis and review necessary before revising the

permit or accepting an application revision because there could

have been significant deterioration in air quality since the

original commence construction dates were established. In

addition, it is usually appropriate to seek public comment on the

proposed extension, since other potential new sources may be

affected. Another example is, a source may want to change a

solvent used in one of its processes, with no increase in

emissions, but the permit specifies the solvent to be used.

Before revising the permit to allow use of the new solvent, the

reviewing agency may decide to repeat the impact analysis and/or

the public comment if the new solvent is more odorous or toxic

than the current solvent, or revise some other component of the

existing analysis. The impact analysis should also be repeated

if the change in solvents results in new requirements being

applied, such as VOC regulations or MACT standards.

Despite the possibility of a revised analysis, nonsignificant emission increases do not constitute the type and

degree of review to which major modifications are subject. In

many cases, it is anticipated that little or no revised analysis

will be required of nonsignificant emissions increases. On the

other hand, changes to permit (or application) parameters which

the review agency considered important enough to include on the

permit (or rely upon in the application) should certainly be

subject to review before those parameters are revised.

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***DRATT***Juno 11, 1991***

The term "revision also encomp asses the level of review of

most candidate application and p ermit changes proposed at nonoperational sources with respect to construction approved in

their PSD permit. The only exceptions are administrative changes,

or changes so great that they re quire a totally new PSD review

(fundamental changes).

Once a change is classified as requiring the revision level

of review, it is screened to determine which elements of PSD

review now apply and to what extent. A revision will first

require a screening analysis to determine whether existing

analyses addressing the PSD requirements are still accurate or

whether there is a need for revised analyses. Major components

of the new source review analysis include BACT, ambient impact

analysis, monitoring requirements, additional impacts analysis,

Class I area protection, and public participation. A full

description and explanation of these review components is

contained in the August 7, 1980 Federal Register (45 FR 52676)

which is located in Appendix C. Depending upon what change is

proposed, this screening may be very simple, as in the case of a

very small increase in the size of an emissions unit, or very.

involved, as in the case of the addition or replacement of a new

unit at a pre-operational source.

The proposed change must be examined not ' only to see if any

existing analyses should be revised, but also to see if any new

analyses should be performed. The criterion for requiring

additional review elements is whether the original new source or

major modification application underwent all of the review which

would have applied had the application been submitted in its

revised form originally. In addition, any new requirements added

to the PSD regulations since the time that the original permit

was issued also could apply, unless construction had commenced so

as to qualify for an exemption (as discussed below). If there is

no circumvention of the permit requirements, the revision review

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would focus on only that portion of the source immediately

involved in the proposed change, rather than all of those units

previously reviewed.

An example is a proposed change prior to permit issuance to

add a unit emitting 15 tons per year of SO2 to an application for

a source which originally provided for 800 tons per year of

particulate matter and 35 tons per year of SO 2 . This would

constitute a minor change. Since the change is combined with the

original application, both the new unit and the already permitted

units must undergo each PSD review element for SO 2 . This is

because the original permitted level of SO2 was de minimis,

thereby exempting SO2 from BACT review, but the total new level

of SO2 is significant (35 tpy and 15 tpy together exceed the 40

tpy threshold). However, the original application date is used

in allocating increment for the original 35 tpy SO2 emissions

level unless circumvention of the SO2 review had been intended.

As another example, suppose a permit for a new PSD source

allows 60 tpy of S02 emissions and the source was not required to

gather preconstruction monitoring data because it created a de

minimis ambient impact. The source owner wishes to lower the

stack which emits SO 2 , making total.S0 2 impact significant. The

source owner would therefore be required to conduct a new

modeling analysis and obtain representative preconstruction

monitoring data before the change could be approved.

In processing a revision, whether for a minor or a

significant change, the reviewing authority must follow the same

public participation procedures noted in 40 CFR 52.21(q). The

EPA believes that the reconsideration of the conditions and

review of an existing permit undergoing revision should receive

no less an opportunity for public involvement than did the

original permit application. This includes public notification by

newspaper advertisement in the area of the source. The notice

would contain information regarding the agency's preliminary

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determination, the expected ambient imp act of the p roposed

change, the 30-day o pp ortunity for written comment, and an

opportunity for a public hearing.

A proposed change qualifyin g as a revision, rather than as a

new permit, receives certain benefits. As mentioned previously,

a revision can be exempted from any new ?SD re quirements that

were added between the time of the origina permit issuance and

the submission of the proposed change if the source had commenced

construction prior to the adoption of the new PSD requirement and

had met its original PSD permit conditions. "Commence

construction" is defined in terms of the owner cr operator having

all the necessary preconstruction approvals or permits and either

having (1) begun, or caused to begin, a continuous pro g ram of

actual on-site construction of the source, to be completed within

a reasonable time, cr (2) entered into binding agreements or

contractual obligations, which cannot be canceled or modified

without substantial loss to the owner or operator, to undertake a

program of actual construction of the source to be completed

within a reasonable time. The purpose of subjecting revisions to

new requirements for sources not having commenced construction is

to remove the potential benefit a source,migh_t obtain by

submitting a questionable a pplication to reserve increment or

avoid new PSD provisions.

Another major advantage a scurce gains by qualifying for a

revision, rather than having to obtain a new permit, is that the

source retains the increment rights afforded by the ori g inal

application or permit. Neither new perm: is nor fundamental

changes to an original p roposal (which by definition change the

very character or nature of a source) preserve the original

increment allocation because that allocation was for a specific

type and size of source at a sec_fic location. An allocation is

not automatically conferred to, for examp le, a cement plant which

is proposed in lieu of a p ermitted power p lant.

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***DRAFT***June 11, 1991***

If a revision being considered by EPA would cause additional

increment to be consumed beyond that originally allocated, this

guidance would allow the additional increment consumption only

when increment is available after prior complete applications

have been processed. If new increment consumption beyond the

significance amounts identified in the 1978 preamble to the final

PSD regulations (43 FR 26388) would result at any point, such

increment consumption must also be authorized by the State in

which the source would locate or is located. In addition, if

Class I areas are impacted, the new impacts must be authorized by

the Federal Land Manager (FLM).

An especially significant issue arises from situations in

which there is competition for the available air resource, that

is, where other permit applications and changes are pending such

that the ambient ceiling imposed by the National Ambient Air

Quality Standards (NAAQS) or increment would prevent the granting

of all of the applications. In such circumstances, EPA would

take a first come, first served approach to allocating the growth

rights, subject to State approval. This means that the original

emissions growth rights would be preserved but that the remaining

growth rights would be awarded to intervening applicants filing

applications prior to the filing of the proposed change. When

EPA is implementing this policy, it will recognize the rights of

complete PSD applications filed with States which have the

responsibility under their own PSD program for future permit

applicants. Any State taking jurisdiction of EPA-issued permits

may develop alternatives to first come, first served allocation

of air resources to which EPA would generally defer. Of course,

no such alternative system may allow an increment violation to

result.

4.2.3 Major Modification

Operating units which propose changes that constitute a

"major modification," within the meaning of the NSR regulations

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are subject to those requirements. Generally, this review is

equivalent to the re quirements for a new source (see below), but

the review is conducted only for the modification, not for the

entire existing source. The term "major modification" is defined

as "any physical change in or change in the method of operation

... that would result in a net significant emissions

increase...." Physical changes are, in general, readily

identifiable, but changes in the method of operation are often

more subtle. The latter includes such activities as the removal

of pollution control equipment (although improvement tc pollution

control systems, as discussed elsewhere are usually not

considered modifications since such a change results in an

emissions decrease). For a source not yet operating, however,

proposals which would normally be considered major modifications

would generally, under this policy, be treated as an application

or permit revision (see above).
***pp J' ***J.jr 11, 1991***

4.2.4 New Permit

Some changes are sufficiently important such that a separate

new application or permit is required, rather than a revision to.

the existing application or permit. These are of three types.

First, a change to an application or a permitted source which

affects the fundamental nature of the source triggers the need

for a new permit. A general guide to whether the fundamental

nature of a source is bein g changed is whether 'the proposed

changes would result in either a different 2-digit SIC Code for

the source or a significant increase in size. However, the

reviewing authority must use good judgment and make this decision

on a case-by-case basis.

A new application or permit is required for fundamental

changes because the proposed change would be of such major

importance to source operation that the basic permitting process

should be repeated, with nc increment rights reserved. For

example, a change from a dryer to a kiln may affect a review such

that different emissions control system or product recovery

operation would be found to be feasible for the kiln where they

were not for the dryer under the original analysis.

Since it is often inappropriate to apply SIC codes to

portions of sources, this procedure cannot easily be used when

the proposed action would affect only a part of an existing

source. The reviewing authority should therefore decide on a

case-by-case basis whether the fundamental nature of the

permitted portion of the source is being changed. The SIC codes

could be used as a guide tc do this. For example, if a new

boiler is planned or permitted at a kraft pulp mill, and the

applicant wishes to construct a lime kiln instead of a boiler, it

is clear that the fundamental nature of the unit (the boiler) is

being changed, even thou gh she source (the kraft pulp mill) is

not. Therefore, the lime kiln would require a new permit as a

4-12
***DRAi'T***7tino 11, 1991***

major modification (assuming that the kiln would cause a

significant net emissions increase).

The second type of change considered is a fundamental chan g e

in the size of a permitted emissions unit or source. A proposed

change which would increase the capacity (or output) of a unit by

50 percent or more would be considered a fundamental change.

The third type of fundamental change is a change in the

location of a stationary source from the original location

identified in the application or permit, and the new proposed

location is too far from the original location to be considered a

contiguous or adjacent property.

A decision to review a change as a new permit application

would generally entail the same data development as would the

original permit application, although the review would focus on

the proposed changes. In many instances, data from the original

permit application could be used to expedite the new permit

review process. Additional data would be required for the new or

changed units and all units affected by them. If the new or

changed units affect the original BACT, air quality, or modelin g

analyses, these analyses would need to be revised accordingly.

One area where the processing of certain significant and all

fundamental changes may differ greatly from that of many

significant and all minor changes concerns the awarding of new

increment rights. As noted above, sources or emissions units

involved in application and permit revisions (which assumes no

fundamental change) retain their original increment rights during

the revision process. In contrast, a change that is processed as

a new permit must compete for available air resources behind any

complete applications filed before the complete application for

the change is filed. It is important to note that, while the

permit as previously issued entitles the original project design

to be built, the permit does not award equivalent increment

4-13
***DAAfr***Juno 11, 1991***

rights to the source for any substantial shift in configuration,

type, or size of units that it might wish to construct.

If there has been significant growth in an area or if the

area is heavily industrialized, air quality may have deteriorated

so as to be near the ceiling imposed by the increments or NAAQS.

In such a case, a new source permit may not be issuable.

Consequently, either the one-year deadline for processin g a

complete application will be controlling (EPA must disapprove a

permit if insufficient increment is available within a one-year

timetable) or, if the original permit has already been issued,

the 18-month deadline for commencing construction (assuming no

extension) will force the source attempting to change its PSD.

permit to finish its original construction plans or withdraw its

proposed change and not construct at all.

Figure 1 (Appendix B) outlines the process that a reviewing

agency can follow in classifying an application for a change.

Table 1 (Appendix B) summarizes guidance on which of the above

described levels of review should be applied to various types of

permit changes. Table 1 lists a wide range of ways in which a

source might be changed and indicates the EPA's proposed

conclusions on which forms of review would apply. It should be

noted that both Figure 1 and Table 1 are presented for purposes

of illustration; other types\of changes may occur and, in

addition, special circumstances may arise which prompt the review

authority to address a change differently.
***DRAFT***JUne 11,.1991***

5.0 CIRCUMVENTION

Circumvention means an attempt by a source to avoid PSD

permit review by misrepresenting the scope, emissions level, or

nature of a p roposed change or project. A determination by a

review agency that a proposed change to a source constitutes

circumvention (the source may be located in either an attainment

or nonattainment area), results automatically in a requirement

that a new permit application be filed. The a pplicant would be

unable to preserve any of the increment (if ap p licable) allocated_

to the original permit. A reviewing agency may discover

attempted circumvention a number of ways, including the

applicant's original project design or financial data.

An example of circumvention would be the p roposed addition

of a 15 tpy NOx emissions unit to a permit for a source

originally proposed to emit 200 tpy of particulate matter and 35

tpy of NOx (which is less than the NOx significance level of 40

tpy and which if exceeded, triggers PSD review). The reviewing

agency then discovers that a 50 tpy NOx unit had been planned for

that source from the beginning, but that the a pplicant had

attempted to avoid NOx PSD review (including BACT) by applying in

two stages. In such a case, the original permit is valid only

for the source exactly as specified. If the a pplicant wants to

change the source, a new permit application must be filed. None

of the original increment allocation is p reserved, and the

"complete application" date for the source would be the date the

proposed change application was considered complete. This is

intended to discourage the submission of deliberately incomplete

or misleading applications.
***DRAFT***J`una 11, 1991***

However, EPA would still intend, , even in cases of

circumvention, that any portion of the original application and

review which are still applicable be retained, and that

subsequent actions concentrate on the changes tc ' the source that

result in a need for additional review.
***DRAFT***Jme 11, 1991***

6.0 INCREMENT, ALLOCATION AND PRESERVATION

States that have adopted their own PSD programs are not

bound by the following, and are free to allocate increment

according to their own policy. Currently, EPA allocates .

increments on a first-come, first-served basis, using the date a

complete application was submitted to determine an applicant's

place in line. The allocated increment is assigned to the

specific source (or emissions unit) and location described in the

permit and application; it cannot be used by the applicant for

another source, even if the second source is planned at the same

location, nor can it be used for the same type of source at a

different location.

For example, assume a permit has been issued for a gas

turbine used to power a cement plant at Location A, with a

maximum Class II 24-hour sulfur dioxide (SO2 ) impact of 25

micrograms per cubic meter (ug/m 3 ) and a nearby Class I 24-hour

SO2 impact of 1 ug/m 3 . The increments reserved for the cement

plant are the 1 and 25 ug/m3 Class I and II impacts. If the

owner decides instead to construct an asphalt plant at

Location A, the increments assigned to the cement plant are not

"preserved" for use by the as phalt plant. The owner must submit

a new application for the asphalt plant, receive a new date of

submittal of a complete application, and try again for an

increment allocation. (In fact, without this guidance even minor

changes that need to be made to the original cement plant

application could result in loss of the allotted increment, since

the increment use is assigned to the source and location exactly

as specified in the original p ermit and application.)

Similarly, if the cement plant owner decides that Location B

(which is not contiguous with or adjacent to Location A) would be

6-1
***DRAS'T***June 11, 1991***

a better p lace to construct than Location A, the increment

allocated to the cement plant at Location A cannot be

"transferred" to Location B. The owner must submit a new

application for Location B and this new date of submittal of a

complete application is used to establish the first-come,

first-served increment allocation.

In addition, current policy does not provide any increment

allocation for proposed sources which at first are exempt from

PSD review but become subject to PSD review at a later date due

to a proposed change. For example, assume a listed Source A

(major at 100 tpy). is estimated to emit 85 tpy of SO 2 . The owner

submits an application to the reviewing agency, is told that the

source is exempt from PSD review, and proceeds to obtain all the

necessary State and local agency permits and commences

construction. At this point, the owner discovers that SO2

emissions from this source will be 115 tpy SO2 rather than

85 tpy. Assuming that there is no indication of attempted

circumvention, the source under current policy must still reapply

and, even though already under construction, the new application

date is used to allocate increment. If another application for a

large SO2 source had been submitted between the first and second

Source ..A applications, Source A may be denied a permit despite

the construction costs already committed to the project. Today's

proposal, in contrast, provides in certain cases for the

"preservation" of increment that had previously been allocated to

a source if (1) the proposed change is not fundamental, and (2.)

there was no intent to circumvent new source review provisions.

Preservation of increment refers to the retention by a

review agency of the original complete application filing date in

determining allocation of increment on a first-come, first-served

basis. In other words, for administrative, minor, and

significant changes, the original complete application submittal

date is used to allocate increment. However, the preserved

6-2
***DRA$'T***Jnne 11, 1991***

increment is based on no more than the original emission rates

and ambient imp acts. If the revised emission rates or ambient

impacts increase, only the "original" portions of the total new

rates and impacts are p reserved; the increases are allocated on

the basis of the date a complete application for the proposed

change was submitted. If the revision results in emission rates

or impacts less than the original levels, the remaining portions

of the original rates or impacts are no longer preserved. This

policy is not intended to provide trading or netting credits to a

proposed source. The only intent is to reserve a qualifying

source's p lace in line for increment allocation.

As an example, assume Source B submitted an original

complete application for 275 tpy SO2 on January 20, 1991. On

August 15, 1991, before a permit has been issued, Source B files

a complete application for a change which would increase SO2

emissions by 55 tpy, to a total 330 tpy SO 2 . On a first-come,

first-served basis, increment from Source B is allocated using

the following dates:

January 20, 1991 - 275 tpy SO2

August 15, 1991 - 55 tpy SO2

Note that the source's place in line for the original

increment is based on the original application date, but that

subsequent increases in emissions are allocated based on the date

the application for the increase was filed. Source B, under this

guidance, would not be competing for all 330 tpy SO2 emissions on

the basis of an August 15, 1991, increment allocation date as

would have been the case under current policy. Instead, Source\B

competes for only the 55 tpy SO2 additional increment on the

basis of the later August 15, 1991, application filing date.

Sources which had previously been exempted from PSD review

present a particularly difficult situation. These non-major

sources consume increment in baseline areas where the minor

source baseline date has been established but, unlike major

6-3
***DR11TT•**JUne 11, 1991•**

sources, are not allocated increment. This guidance, however,

allows increment allocation preservation for sources which, as a

result of a proposed minor or significant (but not a fundamental)

change, would become major as long as no circumvention was

intended. Such sources would have increment allocated for the

original emission rates on the basis of the original complete

application date and the additional emission rates on the basis -

of the complete app lication date of the proposed change. Thus,

the original source, even though exempted from PSD review, is

eligible for some degree of increment preservation. This policy

is intended to apply to sources which have not yet comp leted

construction. The PSD rules provide that exempted ;",incr")

sources not subject to PSD do not become subject to PSD until

their emissions exceed the threshold limits and they then propose

a major modification (with one exception: a modification to a

minor source which would in itself qualify as a major source will

result in PSD review), but this does not address p roposed changes

to a source prior to completion of that source.

Because increment preservation on a first come, first-served

basis relies to a great extent on the date of submission of the

original application, this is a particularly important date to

document. Owners and operators who feel that a source is exempt

from PSD review are nevertheless encouraged to promptly submit

complete applications. for the State permit or for the record,

even if they have already been informed verbally that a source is

exempt, because the submission date establishes increment

allocation priorities. Without a clearly documented original

complete application date, this policy would be difficult to

apply. In cases where the date a complete original application

was filed cannot be determined, EPA will use the date

construction is commenced.
***DRAJT***Juao 11, 1991***

7.0 EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE

One permit revision topic that deserves special attention is

extension of the 18-month commencement of construction deadline.

The subject regulation, 40 CFR 52.21(r) (2), states, "Approval to

construct becomes invalid if construction Is not commenced within

18 months after receipt of such approval, if construction is

discontinued for a period of 18 months or more, or if

construction is not completed within a reasonable time. The

Administrator may extend the 18-month period upon a satisfactory

showing that an extension is justified. This provision does not

apply to the time period between construction of the approved

phases of a phased construction project; each phase must commence

construction within 18 months of the projected and approved

commencement date."

It is important to note that the CAAA of 1990 and 40 CFR

Part 51 (which contains the minimum requirements for a State PSD

program) regulations do not expressly include the 18-month

deadline. Therefore, those States that have taken over the PSD

program through SIP development are not required to have the

particular 18-month deadline in question. However, EPA and those

States to whom the PSD program has been delegated are required to

implement the 18-month deadline, since a delegate State is

implementing the Federal regulations (40 CFR Part 52).

Often it is difficult to determine in the preconstruction

phase how all aspects of the construction plan will develop.

Consequently, the EPA has received several industry,requests for

various adjustments to their permits and construction schedules.

These requests are usually based upon changes in the economy,

weather, or consumer consumption in areas such as energy. The

7-1
***DRAk'T***June 11, 1991***

EPA is responding to this need by interpretin g the regulation and

proposing the policy articulated here for reviewing extension

requests. Effective implementation of these p rovisions is

especially important in view of the prospects for economic

growth.

The showing which a source must make in order to receive a

permit extension has been a longstanding p roblem. Various

approaches have been advocated, ranging from a stringent

standard, such as impossibility in the legal sense (e.g. a source

having difficulty securing patent rights would be unable to

construct), to such lesser showings as economic impracticality.

Each of those approaches presented varying degrees of

subjectivity and certain difficulties of factual analysis.

Today's proposal avoids those difficulties by providing

extensions to virtually all good faith applications for

extensions tc which the affected States do not object. A good

faith effort must include a certification that the company

currently plans to commence construction by a specific date that

falls within the requested extension period. If construction

does not commence within the last extension period, the applicant

will have to submit a new application which may require a new

BACT analysis, increment consumption analysis, and analysis of

the potential threat to the NAAQS if significant changes in

source growth, air quality, or control technology have occurred.

Another opportunity for public participation may also be

necessary. The intent of this is to discourage situations where

a source may not plan to actually commence construction for a

number of years but continues to tie up increment and

consequently prevent growth which could occur immediately.

Previous decisions often allowed a source making the

threshold showing of justification of an extension to proceed

without further analysis. There are persuasive reasons for

reopening certain portions of the permit review, such as BACT,

7-2
***DRAiP***JUne 11, 1991***

when a permit is extended. As described below, this guidance

expressly provides for this further analysis. Providing

extensions more readily but requiring more substantive review of

those extensions is a reasonable compromise that simplifies the

policy while assuring important environmental protection.

The CAAA of 1990 requires review of new sources to be

timely. This is especially important for key elements of review

such as BACT determinations and ambient impact assessments.

Consequently, there must be limitations. on the period granted in

which a source can construct without an updated review. In

particular, BACT is an independent requirement under the CAAA of

1990 and the CAAA of 1990 contemplates that the FACT

determination be current for the period in which the source's

construction is actually commenced. Similarly, ambient air

quality can change considerably, rendering inadequate an

assessment performed at an earlier time. This guidance generally

outlines a method which addresses concerns about the consistency

of extension requirements across the country, while complying

with the CAAA'of 1990 requirement that certain PSD determinations

be timely. It is emphasized that timely requests for extensions

or other modifications are the responsibility of the source. A

permit is automatically invalid if construction does not commence

or a request for extension is not received before its expiration

date. In the case of a later request, a new permit application

must be filed.

This guidance requires that candidate permit extensions must

meet the tests for substance and processing described below in

order to be issued.

7.1 BACT REVIEW

The EPA believes that in many cases the original BACT

determination may still qualify as BACT if it were reviewed.

This is especially the case since consideration during a BACT

reevaluation is given to the costs that would be incurred in

7-3
***DRAi"T***Juna 11, 1991***

changing plans and equipment purchases if a different technology

were employed. These costs and time delays may be prohibitive if

construction had already commenced and the source was not

designed to accommodate new state-of-the-art control technology,

but EPA notes that there will also be cases in which alteration

of construction p lans is feasible. This could well be true of

long-term, multi-unit projects for which major improvements in

BACT have occurred and. the expanded construction time frame has

proven conducive to such project alterations. However, EPA will

require a BACT reevaluation for the first extension request to

the extent of reviewing various sources of BACT information

(e.g., EPA's BACT/LAER Clearinghouse, other pollution control

agencies, current technical literature, EPA Regional Office) to

ensure that the original BACT determination is still current.

The original BACT determination can be assumed to remain

appropriate, even if construction has not commenced, if no

significant state-of-the-art advancement in BACT is noted from

the applicant's review, or from the subsequent public comment

period, and not more than three years has elapsed from the time

of the original BACT determination. On a second extension

request, EPA will require a full BACT analysis.

7.2 ADDITIONAL PSD REVIEW REQUIREMENTS

Other aspects of PSD review, such as increment consumption

and air quality impacts will remain valid since any subsequent '

major source growth in the area should have considered the

impacts of the permitted source (NOTE: If the reviewing agency

feels that minor source growth or other factors have adversely

affected air quality and/or increment consumption, it should

require a revised assessment of these aspects of the analysis).

Adverse comments, if not reasonably addressed by the applicant,

will typically trigger the need for a conference with EPA, the

applicant, the affected State(s), and other interested parties

such as FLM. The conference may be combined with the public

7-4
***DEtAFP***Jtrno 11, 1991***

participation requirements for extensions. The State is

responsible for ensuring that interim source growth in the area

of the permitted source has not caused degradation of air quality

to the extent that operation of the source requesting the

extension would cause or contribute to increment or NAAQS

exceedances; neither extensions of issued permits nor issuance of

additional permits is allowed when they would cause or contribute

to such exceedances. If the reviewing agency inadvertently fails

in this regard, it is responsible for addressing any subsequent

violations. The reviewing agency is also responsible for

indicating whether an extension consumes all remaining increment,

thereby prohibiting issuance of permits to other possible sources

in the area. A source will not be subject to any other as p ects

of PSD review beyond those mentioned, above.

7.3 DURATION OF EXTENSION

The EPA's regulations do not state the maximum length of

extension which can be granted. In practice, EPA's Regional .

Offices have used 18 months as the norm and, in certain

instances, have allowed longer extensions. Due to concerns of

growth rights and public participation, EPA will presumptively

limit extensions to durations of 18 months, or less, with a

maximum of two 18-month extensions per applicant (or if shorter

extensions are granted, the sum of all extensions must not exceed

36 months). This allows applicants the possibility of multiple

extensions if they can be justified, but ensures that the

impacted State(s) and public have control of their air resource

and growth rights, and that state-of-the art BACT will be

employed.

7.4 PUBLIC COMMENT

The CAAA of 1990 particularly emphasizes the importance of

public comment on matters affecting air resource consumption.

Therefore, EPA will require the same public participation

7-5
***DRAFT***Juna 11, 1991***

extension requests as noted above for permit

including a minimum 30-day public comment period.

PROJECTS

projects are considered either dependent

In a footnote in the 1978 preamble, EPA

between these types of phased projects:

"The dependence of facilities within a source will be

determined on an individual basis. Two or more

facilities will generally be considered dependent if

the construction of one would necessitate the

construction of the other facility(ies) at the same

site in order to complete a given project or provide a

given type (not level of) service. A kraft pulp mill

is an example of a source with dependent facilities,

whereas a three-boiler power plant is a typical example

of a source with major independent facilities."

The purpose of this approach was. to differentiate between

those phased projects which would be "grandfathered" (i.e., not

subjected to new PSD rules) and those which would not. Dependent

phased projects were considered fully committed as soon as

construction began, so all of the dependent facilities were

accorded the same status; if construction on the first phase of a

dependent phased project commenced by an applicable grandfather

date, then all of the dependent facilities were considered

grandfathered even if construction of those phases of the project

had not yet commenced. Conversely, each phase of an independent

phased construction project had to commence construction

individually by the grandfather date to be grandfathered. This

approach to phased projects was upheld in Alabama Power Co. v.

Costle.

The 1978 preamble also states that EPA does not generally

intend to limit the time for construction of phased projects; but

does intend to re quire commencement of construction of the first

phase within, 18 months of permit approval and of subsequent

phases within 18 months of the date approved in the permit.

Breaks in construction, as with single-phase projects,

procedures for

modifications,

7.5 PHASED MULTI-UNIT

Phased multi-unit

or independent by. EPA.

defined the difference

7-6
***DRAFT***Jnna 11, 1991***

cannot exceed 18 months. These requirements appear in

40 CFR 52.21(r) (2), where extensions of the time period between

construction of different phases of phased construction projects

are not allowed.

The Utilities Air Regulatory Group (UARG) has petitioned EPA

to delete the portion of the regulation limiting extensions of

permitted construction intervals between phases at phased

construction projects. Since the regulation could be interpreted

as allowing for extension of the construction commencement

deadline only for the first phase of independent, multi-unit

projects, and since most utility construction projects are phased

independent multi-unit projects, UARG is concerned that the

regulations prohibit extensions for later phases of these utility

independent multi-phase projects.

In response, EPA provides the following clarifications.

First, it is EPA policy that both dependent and independent

phased projects may obtain a single comprehensive PSD permit for

all phases of the project. A single permit offers an applicant

the advantages of reduced paperwork and assurance that the entire

project (rather than only a portion of it) is permitted. Since

comprehensive permits apply to projects which are often large and

complex, such permits should specify at least two items that are

not needed in permits for single-phase projects. These items

are:

(1) Which BACT determinations will be reassessed prior to

commencement of construction, and

(2) The date by which later phases (but not necessarily. the

initial phase) of the project must commence construction.

BACT review (and re-determinations of BACT as appropriate) -

is required by 40 CFR 52.21(j)(4) at the latest reasonable time

which occurs no later than 18 months prior to commencement of

construction of each independent phase of a project, so inclusion

in a permit of the BACT determinations which will be reassessed

7-7
***DRAtT***Juna 11, 1991***

is not a requirement conducti ng such. a reassessment. However, the

inclusion of this information in the hermit provides the

owner/operator, the inspector, and the Public advance notice of

which appears in the permit, a date which can be changed by

revising the permit. The procedure for changing commence

construction dates which are embodied in a permit is the same

procedure used for any other permit change, as previously

outlined here. The initial phase commence construction date is

extendable using the, 40 CFR Part 52.21(r)(2) procedure unless

that date is also embodied in the permit. When embodied in a

permit, even the initial phase commence construction date can be

changed only through a permit change.

The above policy concernin g the initial phase commence

construction date may appear to conflict with 40 CFR 52.21(r) (2);

it does not. The intent of 40 CFR 52.21(r)(2) is to establish an

automatic 18-month expiration date for permits, with provisions

for extending the expiration date on a case-by-case basis. For

phased projects with a sin gle comprehensive permit, EPA presumed

that commencement dates for each phase of the p roject, except the

initial phase commencement date, would be incor p orated into the

permit. Therefore, initial phase commencement date changes would

be handled with a 40' CFR 52.21(r) (2) extension, and subsequent

phase commencement dates would be handled through permit changes.

'the intent of the

The commence

extended using the

this does not mean

those dates can be

extensions. Since

to the dates

considered a

commencement

review agency to conduct suc a reassessment.

construction sates in the oermi.t cannot be

mechanism embodied in 40 CFR 52.21(r) (2), but

that such dates are unchangeable. In fact,

changed, but not by the granting of

these dates are a p art of the permit,

require a permit change, which will usually

minor change. The "pro:ected and ap p roved

date" referred to in 40 CFR 52.21 (r) (2). is the

changes

be

date
***DRArT***SUna 11, 1991***

This acknowledges and preserves the validity and legality of the

conditions specified in a permit.

If for some reason, such as a long planning lead time on a

complex project, the initial phase commencement date is longer

than 18 months but still within a reasonable period of time

(e.g., 2 years and 6 months), the review agency may specify the

initial phase commencement date in the permit, keeping in mind

that the source is granted 18 months beyond this date to actually

commence construction. Alternatively, the review agency may

specify the permit expiration date in the permit. The expiration

date simply includes the. initial .18-month grace period; it is

determined by adding 18 months to the commence. construction date

and avoids the confusion that could result when dealing with the

commence construction date alone. The specified date in the

permit takes precedent over the "automatic" 18-month expiration

based on the permit issuance date, but in doing so renders the

permit ineligible for the 18-month extension process described in

40 CFR 52.21(r) (2); a permit change is required to change a

commencement (or expiration) date that appears in a permit.

There is an exception to this: if the date specified in the

permit for the initial phase of a project is simply the

expiration date of the permit (the commence construction date

plus the 18-month grace period); then that date is assumed to be

in the permit for information purposes, does not make the source

ineligible for 40 CFR 52.21(x)(2) extensions, and does not need

to be changed to grant extensions of the expiration date.

For some projects, the commence construction dates for each

phase may have been included in the application or other

materials, but may not appear in the permit. In such cases, the

commencement dates for each phase are those dates which the

review agency used in evaluating the impact the source would

have. Nearly always these will be the dates submitted by the

applicant in the application, and these commencement dates are

7-9
***DRAF'T***Jhna 11, 1991***

changed by following this guidance on changing applications and

permits. As a part cf any such change, review agencies should

not only revise the dates in the application, but also include

the extended commencement or expiration dates in a revised

permit.

Independent phased multi-unit projects have the option of

having separate permits for each phase; dependent phased projects

do not have this option, because all phases of a dependent

project must be completed for that project to operate as

intended. Separate permits for each phase of an independent

phased project are treated for processing purposes as if each

permit was for a separate facility, with independent commencement

dates, BACT determinations, enforcement actions, etc. Separate

permits may increase paperwork, but in return provide an

applicant with the option of proceeding with planning on a

project one. phase at a time.

The concept of "separate" permits versus a single

comprehensive permit is. more a matter of the manner in which the

phases are treated than the physical manner in which the permit

is issued. A single comprehensive permit, for example, could

consist of a number of permits for various emission units and

phases of the project, with possibly a general permit to address

conditions common to all the project facilities. Conversely,'

"separate" permits for an independent phased project may

physically consist of a "single" permit which nevertheless treats

each phase separately. Of course, EPA would presume that single

and multiple permits were what they appeared to be unless there

actually existed some clear basis for treating a single permit.as

a set of separate permits, and vice versa.

The reason for distinguishing between dependent and

independent phased projects lies in the applicability

determinations when new or revised PSD rules become effective

after construction commences on the initial phase, but before

7-10
***DRAFT***Jnne 11, 1991***

construction commences on the last phase. All chases of dependent

phased p rojects are oran.dfathered not subject new or revised

PSD rules if construction on the project (usuall y the first

phase) had commenced prior tc the effective date of the rule

change and no invalidity lapses in construction had occurred] In

contrast, each phase cf indep endent phased construction

project must individually commence construction by the prescribed

grandfather :ate (s) . Any phases which had commenced construction

would not be subject to the new rules.

Since the concern expressed by UA_RG appears to be addressed

coward multi-unit power p lants which may have been permitted as

dependent, rather than independent, multi-phased projects, this

guidance offers independent phased project ap p licants an

opportunity to convert (or otherwise obtain acknowledgement from

the review a gency of such change in project classification) a

dependent multi-phased project permit for that project into

independent multi-phased project permits with full preservation

of the increment allocated by the original permit, as long as no

increment or NAAQS exceedances would result. This conversion

(but not any simultaneous or subsequent requests fcr other

actions, such as extensions) would be carried out without

additional PSD review requirements, such as review of BACT,

although such conversion does not abrogate any other authority

either EPA or other review agencies have to reassess permit

analyses. In particular, this conversion would not allow

circumvention of the BCT review p rior to construction cf each

independent phase which is required in 40 CFR 52.2(j) (4).

The UARG also expressed concern regardin g the time taken by

review agencies to decide whether to grant construction date

extensions, citin g a case where an a pplicant felt forced to

initiate constructi'en sim p ly to protect the validity of the

permit because no response to the request for an extension had

been received. Althou g h the new p c_icy described above of
***DRAFT***Juna 11, 1991***

providing extensions to virtually all good faith applications

should resolve this problem, EPA shares the ccncern of UARG that

such "forced construction" be prevented. Therefore, the

following approach has been instituted to handle such requests:

(1) A source has an obligation to provide sufficient time

for an agency to review requests for extension of a commencement

of construction date. Therefore, such requests (including

adequate documentation) should be submitted to the review agency

at least 6 months prior to the date on which the permit would

become invalid (the scheduled commencement of construction date -

plus 18 months).

(2) The EPA will make every effort to respond to such

requests within 3 months of the date the request for an extension

is submitted.

(3) If a request was submitted in accordance with paragraph

(1) above, and EPA has not responded within the 3-month time

period indicated in paragraph (2) above, then the permit

invalidation date will be considered extended automatically in

such a manner that an applicant will always have at least

3 months between the date on which EPA does respond and the new

permit invalidation date. The 3 months provides the applicant

time to either commence construction or take other action. This

policy does not apply if the applicant does not meet the

obligation expressed in paragraph (1); in such cases, there is no

automatic extension of the invalidation date.

For example, assume a permit was issued for a large project

with an anticipated commencement of construction date of

February 1, 1991. The date the permit would become invalid

(unless construction had commenced) is 18 months after this date,

August 1 1992. On January 30, 1992, the source applies for an

18-month extension, meeting the 6-months-in-advance source

obligation. If EPA agrees to the extension, then the extension

is for'18 months from either the =nvalidation date (August 1,

7.-12
•.M( ` rY •.Z--ne 11, :391 ♦ Y •

1992) or the date EPA responded, whichever is _ater. :f EPA

disapproves any extension, the invalidation date is either

August I, 1992 or 3 months frc' the dace of EPA's response,

whichever is later.
***DRJ ***June 11, 1991***

8.0 AMBIENT IMPACT CHANGES

A proposed change to a source can affect the ambient air

quality impacts of a source's emissions without changing the

level of emissions from the source. For example, a shorter stack

could increase ground level ambient im p acts; so could relocation

of a planned emissions unit closer to the source's restricted

access boundary. Proposed changes of this type must also be

taken into account, and this gui-dance toes so by recommending

that reviewing agencies analyze new source configurations on a

case-by-case basis to determine whether and how much additional

modeling is necessary in order to determine if the change in the

source's ambient impact is minor or significant. The source's

ambient impact, as determined by modeling, should be compared to

the significance levels in 40 . CFR 51.160(b) (2), and if such

impact is less than or equal to the appropriate significance

level the requested change to the source will be processed as a

minor change according to the procedures previously set forth.

When , the predicted impact is greater than the appropriate

significance level it is by definition an impact which could

cause or contribute to a violation of the NAAQS, and if this is

the case, the requested change' must be denied. Also, if the

proposed change to a source or emissions unit will result in an

exceedance of the applicable PSD increment this too is grounds

for denying the change.
***DRAFT***JUna 11, 1991***

9.0 BEST AVAILABLE CONTROL TECHNOLOGY CHANGES

The guidelines for handling BACT changes for already

o p erating sources is in most cases a less rigorous approach than

the strict legal alternative of requiring an owner or operator to

submit to an entirely new review regardless of the significance

of the proposed change. Under this approach, only those portions

of the permit review process which the change affects will be

re peated, and in all but fundamental changes to the source, the

increment allocation of the source is preserved. This approach

also is intended to prevent attempts to circumvent part or all of

the review process without discouraging genuinely needed changes.

For these reasons, it is essential that requests for changes to

less stringent BACT levels be evaluated cautiously and completely

before they are granted.

There is some concern that this'approach could be

interpreted in such a way as to weaken enforcement actions.

Since such is definitely not the intent of this approach, the

following additional guidance is provided.

First, this process for BACT changes provides no relief from

the obligation an applicant has to meet all applicable permit

conditions. Conditions on the existing permit remain in effect

and can 'be enforced until such time as a revised permit is

issued. If circumstances surrounding the request appear suspect,

then the situation should be studied to determine whether an

enforcement action would be justified.

Second, it is EPA's intent to recognize and ensure that

enforcement actions have and will retain the primary role in

ensuring compliance. For that reason, the BACT change process

described herein is applicable only if there is no enforcement

9-i
***DAAF'T***June 11, 1991***

action or consent decree directly related to this requested BACT

change. In addition, if enforcement action or a consent decree

directly related to a requested BACT change occurs during the .

processing of the requested BACT change under this policy, then

all authority for the requested BACT change reverts to the

enforcement action, and any change to BACT must be embodied in

the consent decree resulting from the enforcement action. The

intent of this process is to provide means other than enforcement

action for sources which are--and remain-in compliance with

their originally issued permits to obtain relief from an

untenable permit condition. Sources may elect to cease operation

until a revised permit is issued, or to reduce process rates, or

incur higher. control system operating costs to ,remain in

compliance during the processing of a requested BACT change, but

operation at emissions levels higher than allowed * by the existing

BACT requirement in anticipation of a revised BACT level

constitutes noncompliance that can result in an enforcement

action which terminates this administrative procedure. For

sources subject to enforcement. action, permit modifications

(including BACT changes) may still be possible, but are handled

as a part of the consent decree.

For this BACT change process to apply, all of the following

additional conditions must be met:

(1) the change requested must be a BACT change only,

(2) the source must have been constructed exactly as the

permit and application indicated,

(3) the source must be an operating source, and

(4) the source must have made a good faith effort to

achieve the level of control specified in the permit.

A flow chart in (Figure 2 in Appendix B) summarizes the

decisions and actions involved in processing proposed revisions

of BACT limits for PSD sources which have begun operation.

Although it may appear that decisions using the flow diagram are

9-2
***OR711Z***Jnna 11, 1991***

cut and dried, this is not really true. Common sense and good

engineering judgment will be the determining factor in almost

every case.

Since BACT change requests from a source seldom ask for a

more stringent BACT limit, this proposed process concentrates o

re quests which would result in increased emissions of at least

one pollutant. It does not matter whether the emissions limit is

part of the actual permit (although it should be); if the

emissions would increase over the level used in the original

permit analysis (usually, this is the level given in the permit

application), then that increase is of concern to the EPA. Put

more concisely, the reviewing agency will determine:

(1) whether a modification to the permitted BACT level is

justified, and then, if justified,

(2) whether such a modification is legal.
***DRAF`T***JUn® 11, 1991***

APPENDIX A
***DRAFT***Juao 11, 1991***

MODEL PSD PERMIT MODIFICATIONS REGULATIONS

(a) (1) (Applicable to State programs, see Appendix B to this

part). Any request by the permittee for modification to an

existing PSD permit or application shall be processed in

accordance with all requirements set forth under this subsection.

Appendix B to this part contains supplemental materials which

amplify and explain the procedures set forth in this subsection.

(2) Termination. PSD permits may be terminated only by

rescission under § 52.21(w) or by automatic expiration under §

52.21(r). Applications for rescission shall be processed under §

52.21(w) and are not subject to this part.

(3) Definitions. Whenever PSD permit modification requests

are processed under this subsection, the following terms shall

have the following meanings:

(i) "Administrative change" means a change involving no

increase either of the emissions or the ambient air quality

impacts, and no fundamental change in either the source or the

emission units at the source.

(ii) "Minor change" means a chance which results in an

emissions or ambient air quality impact increase, but such

increase is less than the significance levels in 40 CFR

51.165(b) (2Y.

(iii) "Significant change" means a change which involves an

emissions or ambient air quality impact increase equal to or

greater than the significance levels in 40 CFR 51.165(b)(2)

Major modification review level is triggered for the emissions

increase, unless the affected source is not yet operating.

(iv) "Fundamental change" means a change that is so great

that regardless of the net emissions change, or the ambient air

A-2
***DAAFT***Juna 11, 1991***

quality impact differences, the source is considered a new source

(Or emissions unit) and a totally new p ermit is necessary. There

are three types of fundamental changes:

(A) Changes in the nature of the source which result in a

new "Major Group" SIC code (sources which belong to the same

industrial grouping have the same two-digit code as described in

the Standard Industrial Classification (SIC) Manual, 1972, as

amended by the 1977 Supplement (U.S. Government Printing Office

stock numbers 4101-0066 and 003-005-00176-0, respectively));

(B) Changes which increase the capacity of an emissions unit

or source by 500 or more;

(C) Changes in the location of a stationary source if the

new proposed location has not been previously identified in the

application or permit, and it is a, sufficient distance from the

original proposed location that it is not considered a contiguous

or adjacent property.

(v) "Circumvention means an attempt by a source to avoid

PSD permit review by misrepresenting the scope, emissions level;,

or nature of a proposed change or project.

(vi) "Grandfathered" means, with respect to a construction

project, that the project is not subject to any new or revised

PSD rules if construction commences prior to the effective date

of the rule change and no invalidity lapses in construction have

occurred.

(vii) "Dependent phased project" for the purposes of this

section means a project which is considered fully committed as

soon as construction begins, so that all of the dependent units

of the project are accorded the same status.

(viii) "Independent phased project" for the purposes of this

section means a project, each phase of which, must commence

construction individually by the grandfather date to be

considered grandfathered.

A-3
***DRAFT***June 11, 1991***

The date by which construction is to commence (or else the

permit becomes invalid) shall be extended only if the

requirements of 1:0 CFR 124.5(g) (10) are met.

(6) Minor Changes. Minor changes shall be made only after

the appropriate analyses and reviews have been completed and the

result of such analyses and reviews is that the change is

acceptable. The reviewing agency determines what is appropriate,

including whether public participation is warranted, in

accordance with the guidance. in Appendix B.

(7) Significant Changes. Significant changes which

constitute a major modificatas defined in 40 CFR 52.21 and

51.166 must be processed as such. All other significant changes

shall be made only after the appropriate analyses and reviews

have been completed and the result of such analyses and reviews

is chat the change is acceptable. The reviewing agency

determines what is appropriate, including whether public

participation is warranted, in accordance with the guidance in

Appendix B.

(8) Fundamental Changes. Fundamental changes shall be

processed as new permit applications.

(9) Increment Allocation and Preservation . Preservation of

increment refers to the retention by a review agency of the

original complete application filing date in determining

allocation of increment on a first-come, first-served basis

(provided there was no intent to circumvent new source review

provisions and provided there is no alternate SIP increment

allocation and preservation system in effect, in which case the

SIP system takes precedent). For administrative, minor, and

significant changes, the original complete application submittal

date is used to allocate increment. In cases where the date a

complete original application was filed cannot be determined, the

Regional Administrator shall use the date construction is

commenced. The preserved increment shall be based on no more

A-5
***DRAFT***JUnw 11, 1991***

(ix) "Permit modification" means a request cr action to

revise a permit application and permit (if already issued) to

conform to a change in plans or alteration to the source that an

applicant proposes to make.

(x) "Revision" means a change to a permit or permit

application. Application revisions usually refer to the addition

of supplemental or revised information to the original

application. Permit revisions consist of issuance of a revised

(or new) permit which supersedes (or supplements) the original

permit.

(4) Changes. Changes to a complete PSD application or to a

PSD permit must be documented so that the public, enforcement

personnel, and the source itself are able to determine the

location , configuration, and type of emissions units (and other

facilities and activities) being reviewed or permitted. Proposed

changes shall be classified as administrative, minor, significant

or fundamental within 30 days of receipt of the proposed change

by the reviewing agency. Changes shall be processed at least

within the same period of time that a new permit application is

required to be processed.

Requests for changes shall be reviewed by the reviewing

agency within 30 days of receipt of the request to determine to

what extent additional review and analyses are required by the

change, whether the request contains the information and analyses

needed for the review, and whether public participation is

warranted. If all the information is contained in the request,

the request is considered complete. Applicants shall be notified

of these determinations within 45 days of receipt of the request.

(5) Administrative Changes. Except for an extension of the

commence construction date, administrative changes do not require

additional analyses by the applicant, additional review by the

reviewing agency, or public participation. The reviewing agency

shall, however, revise the application and permit accordingly.

A-4
***DRAFT***Juno 11, 1991***

than the original emission rates and ambient impacts. If the

revised emission rates or ambient impacts increase, only the

"original" portions of the total new rates and impacts shall be

preserved; the increases shall be allocated on the basis of the

date a complete application for the proposed change was

submitted. If the revision results in emission rates or impacts

less than the original levels, the remaining portions of the

original rates or impacts will no longer be preserved. The only

intent of this subsection is to reserve a qualifying source's

place in line for increment allocation. It is not intended to

provide trading or netting credits to a proposed source.

Sources which had previously been exempted from PSD review,

unlike major sources, shall not be allocated increment.

Increment allocation preservation, however, is allowed for

sources which, as a result of a proposed minor or significant

(but not a fundamental) change, would become major as long as no

circumvention was intended. Such sources would have increment

allocated for the original emission rates on the basis of the

original complete application date and the additional emission

rates on the basis of the complete application date of the

proposed change. Thus, the original source, even though exempted

from PSD review, is eligible for some degree of increment

preservation. This increment preservation shall not apply to

non-major sources which have not completed construction.

(10) Extension of 18-Month Commence Construction Date(s).

Extensions shall be granted to virtually all good faith

applications for extensions to which the affected States do not

object. A good faith effort shall include a certified statement

that the applicant currently plans to commence construction by a

specific date that falls within the requested extension period.

If construction does not commence within the last extension

period, the applicant shall submit a new applicationwhich may

require a newBACT analysis, increment consumption analysis, and

A-6
***DRAFT***JUne 11, 1991***

analysis of the potential threat to the NAAQS if significant

changes in source growth, air quality, or control technology have

occurred. Candidate permit extensions shall meet the following

requirements for substance and processing in order to be

federally enforceable:

(i) An applicant shall. conduct a BACT reevaluation for the

first extension request, which at a minimum shall include a

review of various sources of BACT information (e.g. EPA's

BACT/LAER Clearinghouse, other pollution control agencies, EPA

Regional Office) to ensure that the original BACT determination

is still current. The original BACT determination can be assumed

to remain appropriate, even if construction has not commenced, if

no significant state-of-the-art advancement in BACT is noted from

the applicant's review, or from the subsequent public comment

period, and not more than three years has elapsed from the time

of the original BACT determination. On a second extension

request, EPA shall require a full BACT analysis.

(ii) Other aspects of PSD review, such as increment

consumption and air quality impacts can be assumed to remain

valid unless comments indicating otherwise are received from

affected State(s), Federal Land Managers, or other interested

parties during the public comment period, since any subsequent

major source growth in the area should have considered the

impacts of the permitted source. Adverse comments, if not

reasonably addressed by the applicant, will typically trigger the

need for a conference with EPA, the applicant, the affected

State(s), and other interested parties such as Federal Land

Managers. The conference may be combined with the public

participation requirements for extensions.

(iii) If the reviewing agency feels that minor source growth

or other factors have adversely affected air quality and/or

increment consumption, it may require a revised assessment of

these aspects of the analysis.

A-7
***DRAFT***Juna 11, 1991***

(iv) The reviewing agency is responsible for ensuring that

interim source growth in the area of the permitted source has not

caused degradation of air quality to the extent that operation of

t:.e source requesting the extension would cause or contribute to

increment or NAAQS.exceedances; neither extensions of issued

p ermits nor issuance of additional p ermits is allowed when they

would cause or contribute to such exceedances. :f the reviewing

agency inadvertently fails in this regard, it is responsible for

remedying any subsequent violations by obtaining sufficient

emissions reductions in the area. The reviewing agency, is also

responsible for indicating whether an extension consumes all

remaining increment, thereby prohibiting issuance of permits to

other possible sources in the area. A source shall not be

subject to any other aspects of PSD review beyond those mentioned

above.

(v) Duration of Extension. Extensions shall be limited to

durations of 18 months, or less, with a maximum of two 18-month

extensions per applicant (or if shorter extensions are granted,

the sum of all extensions shall not exceed 36 months).

(vi) Public Comment. The public participation procedures

required in § 124.10 shall also a pply for extension requests,

including a minimum 30-day public comment period.

(11) Extension of Later Units of Phased Multi-Unit Projects.

The commence construction dates in any permit cannot. be extended

using the mechanism embodied in 40 CFR 52.21(r)(2), because these

dates are a part of the permit. The intent of 40 CFR 52.21(r)(2)

is to establish an automatic 18-month expiration date for

permits, with provisions for extending the expiration date on a

case-by-case basis. Changes to the dates embodied in a permit

require a permit change, which shall usually be considered an

administrative change (albeit one which normally should include

BACT review and public participation).
***DRAFT***Juna 11, 1991***

(i) For phased projects with a single comprehensive. permit,

the initial phase commence construction date is extendable using

the 40 CFR Part 52.21(r)(2),procedure unless that date is also

embodied in the permit. The specified date in the permit, with

one exception, takes precedent over the "automatic" 18-month

expiration based on the permit issuance date, but in doing so

renders the permit ineligible for the 18-month extension process

described in 40 CFR 52.21(r)(2).

(A) The exception occurs if the date specified in the permit

for the initial phase of a project is simply the expiration date

of the permit (the commence construction date plus the 18-month

grace period), if this is the case, that date is assumed to be in

the permit for information purposes, does not make the source

ineligible for 40 CFR 52.21(r) (2) extensions, and does not need

to be changed to grant extensions of the. expiration date.

(ii) For phased projects with a single comprehensive permit,

EPA presumes that commencement dates for each phase of the

project, except the initial phase commencement date,. are

incorporated into the permit. Therefore, initial phase

commencement date changes should be handled with a 40 CFR

52.21(r) (2) extension, and subsequent phase commencement dates

should be handled through permit changes. This acknowledges and

preserve's the validity and legality of the conditions specified

in a permit.

(iii) If the commence construction dates for each phase do

not appear in the permit, but are included in the application or

other materials, the reviewing agency shall consider the

commencement dates for each phase to be those dates which were

used in evaluating the impact the source would have. .Nearly

always these will be the dates submitted by the applicant in the

application, and these commencement dates can be changed by

following the procedures set forth previously in this section

concerning changes to applications and permits.

A-9
***DRAF"T***JUna 11, 1991***

(iv) As a part of any such change, review agencies shall not

Only revise the dates in the application, but also include the

extended commencement or expiration dates in a revised permit.

(v) Independent phased multi-unit p rojects shall have the

option of having separate permits for each phase; dependent

phased projects shall not have this option, because all phases of

a dependent project must be completed for that project to operate

as intended. Separate permits for each phase of an independent

phased project shall be treated for processing purposes as if

each permit was for a separate facility, with, e.g., independent

commencement dates, BACT determinations, and enforcement actions.

(vi) Both dependent and independent phased projects may

obtain a single comprehensive PSD permit for all phases of a

project. Since comprehensive permits apply to projects which are

often large and complex, such permits shall specify at least two

items that are not needed in permits for single-phase projects.

These items are:

(A) Which BACT determinations will be reassessed prior to

commencement of construction, and

(B) The date(s) by which later phases (but not necessarily

the initial phase) of the project must commence construction.

(vii) PSD Applicability. The reason for distinguishing

between dependent and independent phased projects lies in the

applicability determinations when new or revised PSD rules become

effective after construction commences on the initial phase, but

before construction commences on the last phase. All phases of

dependent. phased projects are grandfathered. In contrast, each

phase of an. independent phased construction project must

individually ccmmence construction by. the prescribed grandfather

date(s). Any phases which had commenced construction would not

be subject to the new rules. Independent phased project

applicants may convert (or otherwise obtain acknowledgement from

the reviewing agency of such change in project classification) a

A-20
***DRAFT***JUao , 11, 1991***

dependent multi-phased project permit into independent multiphased project permits with full preservation of the increment

allocated by the original permit, as long as no increment or

NAAQS exceedances would result. This conversion (but not any

simultaneous or subsequent requests for other actions, such as

extensions) would be carried out without additional PSD review

requirements, such as review of'BACT, although such conversion

does not abrogate any other authority either the EPA or other

review agencies have to reassess permit analyses. In particular,

this conversion would not allow circumvention of the BACT review

prior to construction of each independent phase which is required

in 40 CFR 52.21(j;(4).

(viii) Source Obligations and Processing Schedule.

Extension requests (including adequate documentation) shall be

submitted to the reviewing agency at least six months prior to

the date on which the permit would become invalid (the scheduled

commencement of construction date plus 18 months). The reviewing

agency shall make every effort to respond to such requests within

three months of the date the request for an extension is

submitted. If a request was submitted in accordance with the

paragraph above, and the reviewing agency does not respond within

three months, the permit invalidation date shall be considered

extended automatically in'such a manner that an applicant will

always have at least three months between t1 date on which the

reviewing agency does respond and the new pe.it invalidation

date. The three months provides the applicant time to either

commence construction or take other action. If the applicant

does not meet the six month obligation expressed above, the

invalidation date shall not be automatically extended.

(12) Attempts at Circumvention. If a source attempts to

avoid PSD permit review by circumvention, the original permit is

valid only for the source exactly as specified. If the applicant

wants to chan ge the source, a new permit application must be

A-11
***DAAPT***Juna 11, 1991***

filed. None of the original increment allocation is preserved,

and the "complete application" date for the source would be the

date the proposed change application was considered complete.

This is intended to discourage the submission of deliberately

incomplete or misleading applications. However, EPA would still

intend, even in cases of circumvention, that any portion of the

original application and review which are still applicable be

retained, and that subsequent actions concentrate on the changes

to the source that result in a need for additional review.

(13) Ambient Impact Changes. When a change to a source or

emissions unit is proposed which changes its configuration or

location without a change in emissions, the following procedure

shall apply:

(i) Use appropriate dispersion modeling to determine the

magnitude of the ambient impacts of the proposed change to the

source or emissions unit, and;

(A) If the predicted impact is less than or equal to the

appropriate significance level in 40 CFR 51.160(b) (2), the impact

change is considered minor and the proposed change to the source

or emissions unit shall be processed as a minor change.

(B) If the predicted impact is greater than the appropriate

significance level in 40 CFR 51.160(b) (2), the impact change is

by definition considered to be one which could cause or

contribute to a violation of any national ambient air quality

standard, and therefore the proposed change to the source or

emissions unit shall be denied.

(C) In no case shall the proposed change to the source or

emissions unit be approved if the modeling demonstration reveals

a violation of any national ambient air quality standard, or any

exceedance of the applicable PSD increment.

(14) Completeness Determinations. A complete permit

application is one that the permitting authority has determined

to contain all the necessary data needed to begin processing the

A-12
***DRAFT***Junw 11, 1991***

applicaticn. This data must include information which identifies

a source, its applicable air pollution control requirements, the

current comp liance status of the source, the source's intended

operating regime, emissions levels, a certification of truth,

accuracy, and completeness by a responsible corporate official,

and a compliance plan which describes how the source plans to

achieve and/or maintain all applicable NSR/PSD air quality

requirements. Some of these data requirements may not apply to

sources not yet operating.
***DpJ$ ***Juno 11, 1991***

APPENDIX B
***DRAFT***JUao 11, 1991***

GUIDE TO PROCESSING PSD PERMIT MODIFICATIONS

This Appendix is resigned to assist in the decision making

process reviewing agencies must follow when processing PSD permit

modification requests and when making BACT change determinations.

It consists of step-by-step directions, two flow charts and a

table. The results of various combinations of changes and source

status are summarized in Table 1. Figure 1 is a flow-chart for

determining which result is applicable to a specific source.

Figure 2 summarizes the decisions and actions involved in

processing proposed revisions in BACT limits for PSD sources

which have begun operation.

Combined Discussion for Table 1 and Figure 1

1. If the source is not operational and was previously exempt

from PSD permit review, and the proposed change is:

A. Administrative: Revise records as needed. No further--

action is required.

B. Minor: Review exemption to make sure it is still

appropriate. If so, no further action is required. If not,

initiate full PSD review process. The original increment

allocation is preserved, but the changed source is not

allowed to construct until permit is issued. A new PSD

permit is required.

C. Significant: Review exemption to make sure it is still

appropriate. If so, no further action is required. If not,

initiate full PSD review process. The original increment

allocation is preserved, but the changed source is not

allowed to construct until permit is issued. A new PSD

permit is required.

B-2
***DRAFT***June 11, 1991***

D. Fundamental: Review exemption to make sure it is still

appropriate. If so, no further action is required. If not,

initiate full PSD review process. The original increment

allocation is not preserved. New increment shall be based

on the date the change was submitted. The changed source or

emissions unit is not allowed ' to construct until permit is

issued. A new PSD permit is required.

2. If the source has a complete PSD permit application on file

and the proposed change is:

A. Administrative: Amend application as needed, but no

additional review or re peat of review is required. The

original increment allocation is preserved.

B. Minor: Revise application to reflect the change. BACT

and other review decisions already made should be screened

and revised as needed. 'Public participation is required.

The original increment allocation is preserved. Additional

increment, allocations are based on the date the proposed

change was submitted. The change is subject to any new PSD

rules.

C. Significant: Revise application to reflect the change.

BACT and other review decisions already made should be

screened and revised as needed. Public participation is

required. The original increment allocation is preserved.

Additional increment allocations are based on the date the

proposed change was submitted. The change is subject to any

new PSD rules.

D. Fundamental: The change shall require a new application

and the review process must begin anew. The original

increment allocation is not preserved. New increment shall

be based on the date the change was submitted.

3. If the source has been issued a PSD permit and the proposed

change is:

B-3
***DRAFT***June 11, 1991***

A. Administrative: Change permit as needed, but no

additional review or repeat of review is required. The

original increment allocation is preserved.

B. Minor: ,Revise permit to reflect change. Screen review

decisions and repeat or add reviews as needed. Repeat

public participation. The original increment allocation is

preserved. Additional increment allocations are based on

the date the proposed change was submitted. The source or

emissions unit as originally permitted can begin operation

but the changed source or emissions unit cannot construct

until revised permit is issued. If construction on the

original source or emissions unit has not commenced, the

change is subject to new PSD rules.

C. Significant: Revise permit to reflect the change.

Screen review decisions and repeat or add reviews as needed.

Repeat public participation. The original increment

allocation is preserved. Additional , increment allocations

are based on the date the proposed change was submitted.

The source or emissions unit as originally permitted can

begin operation but the changed source or emissions unit

cannot construct until revised permit is issued. If

construction on the original source or emissions unit has

not commenced, the change is subject to new PSD rules.

D. Fundamental: The 'change shall require a new permit and

the review process must begin anew. The original increment .

allocation is not preserved. New increment shall be based

on the date the change was submitted.

4. If the source has begun operation and the proposed change is:

A. Administrative: Change permit as needed. The original

permit is valid until a new permit is issued. The source

can make the change and operate even before a new permit is

issued. The original increment allocation is preserved.

B-4
***DRAFT***Juna 11, 1991***

B. Minor: Revise permit. Unless the change constitutes a

"Major Modification", the review process is not screened or

repeated. The original increment allocation is preserved.

The changed source or emissions unit cannot construct until

revised permit is issued. The changed source or emissions

unit is not subject to any new PSD rules.

C. Significant: Review as "Major Modification" according

to PSD rules (40 CFR 51.166). The original permit remains

valid until a new permit

allocation is preserved.

is issued. The original increment

Additional increment allocations

are based on the date the proposed change was submitted.

D. Fundamental: Review as a new source according to PSD

rules (40 CFR 51.166). The original permit remains valid

until a new permit is issued. The changed source cannot be

constructed until a new permit is issued. The original

increment allocation is not preserved. All, increment

allocations are based on the date the proposed change was

submitted.

Discussion for Figure 2

This Figure summarizes the decisions and actions involved in

processing proposed revisions in BACT limits for PSD sources

which have begun operation.

Operating source requests a change in BACT. Are all

relevant factors (e.g., environmental, economic, and energy

impacts) well-documented and comparable, as recommended in the

Draft NSR Workshop Manual (October 1990) 3 What is the reason for

the requested change; is it a technical or economic reason? Does

the request appear to be justified, or is it possible the source

is attempting to avoid the consequences of a noncompliance

situation? Are there any alternatives to a BACT modification?

If all emissions levels do not increase, then the proposed

BACT change is usually acceptable. A new permit for the

B-5
***DRAFT***Juna 11, 1991***

pollutant should be issued. Such requests are often part of an

emissions netting strategy. If, however, one or more pollutants

increase while other pollutants decrease, the reviewer must

discern whether the source can comply with the permitted emission

limit (s) .

If the permitted BACT level can be met, but the source feels

that continual compliance is too costly and wants a less

stringent BACT, the review should check on the compliance costs.

If costs are reasonable, the request should be denied. A BACT

cost per unit of product much higher than other new similar sized

units of that source category may be unreasonable. The reviewing

agency can also assess costs on a dollars per ton of pollutant

collected basis and compare this to the cost of collecting that

pollutant from other sources and source categories. Keep in mind

that BACT cannot be less stringent than any applicable new source

performance standards (NSPS) or national emission standards for

hazardous air pollutants (NESHAP) limitation.

If the costs are unreasonable, the reviewing agency must

then decide whether the increased emissions are acceptable

environmentally. Before making such a decision, however,

reviewing agencies should carefully document and analyze why a

cost that appeared affordable during permit review now appears

unreasonable. Keep in mind that start-up operating expenses are

generally higher than those during normal production and, in

addition, check to ensure that cost figures are not being

manipulated in an attempt to circumvent the permitted BACT

limitations.

It the control cost is reasonable, model the new total

emissions levels (not just the increase) to see if the impact of

the source at either the point of maximum impact or on a Class I

area is acceptable. If the impact of the source is not

acceptable (e.g., Class I or Class II increment exceedance or

significant nonattainment area impacts would result), deny the

B-6
***DRAF'T***Jhna 11, 1991***

change, unless there is either a variance to, cr combined Federal

Land Manager/EPA approval of, the exceedance.

There may be other new operating sources, new

increment-consuming minor sources, and new applicants ahead of

the source requesting the BACT change. All of these sources have

prior claims to available increments, and must be taken into

account in determining whether the BACT change would cause or

contribute to increment exceedances. The source would retain the

increment allocated to it by the original permit, as long as the

units which were permitted continue to be operated. For this

portion of the review, the reviewing agency would assess the

impact of the emissions increase only, rather than total

emissions, on the remaining increment.

If no, increment violations are likely, the reviewing agency

must decide how much of the permit review process to repeat. The

general rule should be: the greater the increase in emissions,

the more thorough the review process. However, the minimum legal

review requirements must always be met, and the reviewer should

err on the side of caution. The following questions should be

asked: First, does any emissions increase make a nonsignificant

pollutant. significant? If so, the review process is essentially

a "new" permit review, and the source can expect to go through

the entire process, including public comment. It is also

possible for monitoring requirements to be triggered, which could

result in the source having to conduct ambient air monitoring.

Second, are any of the emissions increases by themselves

significant? If so, a thorough review, including public

participation, is called for, but at least there are unlikely to

be any new PSD requirements triggered, since operating sources

under these guidelines are not subject to PSD rule changes which

take effect after operation begins. Finally, if no new ambient

air or emissions significance levels are triggered and the

B-7
***DRAFT***JUna 11, 1991***

increase itself is not significant, the review may not include

public participation and can be less detailed.

When the review is complete, the reviewing agency can decide

if the change is acceptable. A modified permit must be issued if

the change is acceptable.

If the source cannot meet the permitted BACT limit, the

reviewer must take the following steps. First, insure that the

applicant has made every attempt to meet the applicable emission

limits. Such an evaluation would include, but is not limited to:

determining whether the bags in a, fabric filter are the

appropriate material, determining what the pressure drops and

liquid flow rates are in a scrubber, etc. Insure that everything

has been attempted. Secondly, the reviewer must determine

whether similar control systems are used to meet BACT in similar

sources. An indicator is whether the control system selected was

equivalent to systems which are known to be capable of meeting

the required BACT level. A cyclone is not as good as a bag

house, and an undersized bag house is not as good as one sized

properly. Finally, the reviewer must determine whether the

source insisted on the installed control system against the

reviewing agency's advice. Did the source ignore the reviewing

agency's advice and the experience of similar sources in an.

attempt to save money? Did they under-design o.r purchase

substandard equipment? The goal here is to see whether there was

a reasonable effort on the part of the source to meet BACT or an

attempt to circumvent the regulations.
***DRAFT* Juno 11, 1991***

TABLE I. Source, Application, and Permit Changes

Classification of

Proposed Change

Level of

Action

I. Source Is Not Operational and Previously

Exempted from PSD Permit Review

2. Source Submitted a Complete ._PSI) Permit

Application

3. PSI) Permit Issued to the Source 4. Source Is Operational

A. Administrative Amendments IA. Revise records as needed. No further action

required.

2A. Amend application, 3A. Amend permit. 4A. Amend Permit.

No emissions or ambient

impact increase.

Amend application as needed, but no additional

review or repeat of already conducted review is

required. Original increment is preserved.

- Change permit as needed, but no review is

required or need be repeated. Original

increment is preserved.

Change permit as needed. Original permit

is valid until new permit is issued. Source

can make change and operate even before

new permit is issued. Original increment is

preserved.

B. Minor Revisions or

New Permits

1B. Review Exemption. 213. Revise,Application. 313. Revise permit. 4B. Revise Permit.

Emissions or ambient

impact increase, but less

than the significance level.

(NOTE: The significance

levels for emissions

increases are found in 40

CFR 51.166(b)(23?; for

ambient impact increases

in 40 CFR 51.160(b)(2).)

Check to see if source or emissions unit is still

exempt. If so, no further action is required. If

not, initiate full permit review process. The

original "increment" is preserved, but changed

source or emissions unit is not allowed to

construct until permit is issued. Change to source

or emissions unit is processed as a new permit.*

Revise permit to reflect change. Screen

review decisions and repeat or add reviews

as needed. Repeat public participation.

Original increment is preserved.

Additional increment allocations are based

on the, date the proposed change was

submitted. Source or emissions unit as

originally permitted can begin operation

but changed source or emissions unit

cannot construct until revised permit is.

issued. If construction on original source

or emissions unit has not commenced,

change is subject to new PSI) rules.'

Change must be combined with original

application. BACT and other review decisions

already made should be screened and revised as

needed. Public participation is required. Original

increment allocation is preserved. Additional

increment allocations are based on the date the

proposed change was submitted. Change is

subject to any new PSD rules.'

Unless change (or combination of changes)

constitutes a "Major Modification " , review

process is not screened or repeated.

Change is not subject to any new PSD

rules. Changed source or emissions unit

cannot construct until revised permit is

issued. Original increment is preserved.

-C. Significant Revision or

Major

Modification of

New Permit

IC. Review Exemption. 2C. Revise Application. 3C. Revise permit. 4C. Major Modification.

Emissions or ambient

impact increase is

significant. For operating

tourers, this class of

change constitutes a major

modificationProcess according to PSD roles. Original

permit remains valid until new permit is

issued. Original increment is preserved.

Additional increment allocations are based

on she date the modification application

was submitted.'

Same as 2A. Same as 2B. Same as 2C.

D. Fundamental New Permit ID. Review Exemption. 2D. New Application. 3D. New permit. 4D. New source.

Change constitutes a new

source or emissions unit

due to magnitude of

emissions or ambient

impact increase, or to

basic physical or

operational alternations

regardless of net emission

changes

Process according to PSI) rules. Original

increment allocation is not preserved, but

original permit remains valid until change

is made- Changed source or emission unit

cannot be constructed until new permit is

issued. All increment allocations are based

on the date the change was submitted.

Change will require a new permit and the

review process must begin anew. Original

increment allocation is not preserved. New

increment allocations will be based on the

date the change was submitted.

fleck to see if source or emission unit is still

exempt. If so, no further action is required. If

not, initiate full permit review process. The

original " increment" is not preserved. Changed

source or emissions unit is not allowed to

construct until permit is issued and is processed

as a new permit New increment will be based

on date the change was submitted.

Change will require a new application. Review

process begins all over again. Original increment

allocation is not preserved. New increment

allocations will be based on date the change was

submitted.

'Note: Circumvention voids any and all original incmuoent allocations for the entire source. A fundamental change in the nature or the size of a source or an emissions unit will void the original increment allocation for that source or emissions unit.
***DRAFT***June 11, 1991***

Figure 1. Decision Process for Proposed Source, Application and Permit Changes

Revise records as

needed. No further

action required.

Entire source, as changed,

requires a new permit.

Original increment is not

preserved.

Change application or permit as

required. No additional review needed.

Continue processing as before.

Process the source, as changed,

as a major source. Original

increment 'consumption"

allocation based on date of

original application. Additional

increment allocation based on

date changed application submitted.

Process according to PSD regulations for sources which

become major. Original increment 'consumption' allocation

based on date of original application. Additional increment

allocation based on date changed application submitted.

Change is significant.

Process as a major

modificalion in PSD

regulations.

Process as a minor change

(revision). Original increment

is preserved. Change is ppj

subject to any new PSD

regulations.

Process as a minor change

(revision). Original increment

is preserved. Change is subject

to any new PSD regulations.

Process as a permit revision.

Original increment is preserved.

Change is subject to new PSD

regulations.

B-10
Figure 2. BACT Change Determinations for Operating Sources ***DRAFT* **June 11, 1991***

Yes

at

impact \ Yes

_- at new emission

level acceptable?^

Work with source;

try changes in

operating conditions,

feed rates, etc., to

see it limits can

be met.

Administrative change:

issue new permit

for that pollutant

Reanalyze each pollutant

which increased emissions.

Evaluate new total emissions.

Repeat public participation

it change is significant.

/ Source \

insisted on control

system against

Agency advice?

B-11
***DRATT***Juna 11, 1991***

APPENDIX C
***DRAFT***Juna 11, 1991***

Appendix C will be a copy of the August 1980, Federal Register

notice concerning PSD regulations.