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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

84) ll-C-26 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:50:55 AM Sheet 84 of 276 
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II-C-26 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGION IX 

215 Fremont Street 

San Francisco. Ca 9410 5 

November 6, 1987 

Robert T. 

Holland & 

P. 0. Box 

Connery, 

Hart 

8749 

Esq. 

Denver, Colorado 80201 

Re: Supplemental PSD Applicability Detemnination 

Cyprus Casa Grande Corporation Copper Mining and 

Processing Facilities 

Dear Mr. Connery: 

This is a supplemental determination regarding the 

applicability of prevention of significant deterioration (PSD) 

provisions under sections 160-169 of the Clean Air Act, 42 

U.S.C §§ 7470-7479, and EPA's PSD regulations, 40 C.F.R. 

§ 52.21 to the above-referenced facility, located near Casa 

Grande, Arizona. This determination supplements the determination set forth in a May 27, 1987 Memorandum from John S. 

Seitz, Director, Stationary Source Compliance Division, EPA and 

in my May 29, 1987 letter to Roger M. Ferland, Streich, Long, 

Weeks and Cardon, Phoenix, Arizona, attorney for Noranda Lakeshore 

Mines, Inc., which formerly controlled the Casa Grande facility. 

For the reasons discussed below, EPA today (1) reaffirms and 

incorporates by reference herein its earlier determination that 

reactivation of the Roaster/Leach/Acid (RLA) plant at the Casa 

Grande facility would constitute a major new source within the 

meaning of Part C of the Clean Air Act and EPA's regulations 

issued thereunder; and (2) determines that even if the reactivated 

RLA plant would not be subject to PSD as a new source, the start-up 

would also constitute a major modification for PSD purposes. 

Accordingly, Cyprus Casa Grande Corporation (Cyprus) must 

obtain a PSD permit before beginning construction on any of the 

rehabilitation activities necessary for start-up of the RLA 

plant. 

I. TEE NEED FOR THIS SUPPLEMENTAL DETERMINATION 

The earlier applicability determination by Mr. Seitz and 

myself was in response to requests by Noranda that focused 

exclusively on the question whether start-up of the RLA plant 

would render the facility subject to PSD as a major new source 

pursuant to EPA's shutdown/reactivation policy. My review of 
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the administrative record of that matter has confirmed that 

Noranda did not request EPA to consider, and EPA did not consider, 

whether the RLA plant would be subject to PSD upon reactivation 

as a major modification under the Act and the PSD regulations. 

Following EPA's earlier determination, Noranda transferred 

its interest in the facility in question, including the RLA plant, 

to Cyprus. Cyprus then sought review of EPA's determination in 

the court of appeals. Cyprus Casa Grande Corp. v. EPA, No. 

87-7322 (9th Cir.). In a Civil Appeals Docketing Statement 

filed with the Ninth Circuit on July 30, 1987, Cyprus identified 

under category I., "Issues to be Raised on Appeal," the following item: 

(2) Whether Petitioner's existing RLA plant has beer. 

subject to a "major modification," 40 C.F.R. § 52.21(b)(2), 

which would require a PSD preconstruction permit. 

Thus, it is clear that if this matter is adjudicated by the court 

of appeals, it likely would raise issues beyond the scope of the 

consideration previously given by EPA and Noranda. This in turn 

raises the distinct possibility that litigation based on EPA's 

prior determination would not finally resolve the question of 

whether PSD applies to the start-up of the RLA plant, and that 

a subsequent round of judicial review would be necessary. Such 

a scenario would waste the resources of the court, EPA, and 

Cyprus, and would be contrary to Cyprus' stated interest in a 

quick resolution of environmental requirements for the project. 

Accordingly, I believe it is appropriate at this time for 

EPA to determine whether the prospective start-up of the RLA 

plant by Cyprus would constitute a major modification for PSD 

purposes. This determination can be made on the basis of the 

record created in conjunction with the earlier reactivation 

determination by Mr. Seitz and myself. In addition, because 

that earlier determination was directed to Noranda in response 

to requests by that company, and in view of the evident controversy 

surrounding that determination, it is also appropriate to 

reconsider its application to Cyprus, as the new owner of the 

facility. 

II. RECONSIDERATION OF WHETHER START-UP OF THE RLA PLANT 

IS SUBJECT TO PSD AS A MAJOR NEW SOURCE UNDER EPA'S 

REACTIVATION POLICY. 

After reviewing the administrative record in this matter, 

I find no reason to disagree with EPA's longstanding shutdown/ 

reactivation policy or its application to the set of circumstances presented by Noranda. Hence, EPA has no basis to change 

its earlier determination that start-up of the RLA plant would 

be subject to PSD requirements as a "reactivation," except 

insofar as the intervening transfer of the facility to Cyprus 
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would require a different result. 

There is one key point that emerges from the transfer to 

Cyprus: It represents a further attenuation, both in the chair, 

of ownership and in time, between shutdown of the RLA plant in 

1977 and its prospective reactivation. A change in ownership 

does not, standing alone, render a stationary source subject to 

PSD provisions. See 40 C.F.R. § 52.21(b)(2)(iii)(g). However, 

the circumstances surrounding a change in ownership may be 

probative of whether the shutdown of the source should be 

deemed permanent, which is the key analysis that must be made 

under EPA's reactivation policy. 

In this case, the inference that the shutdown was permanent is even stronger after the transfer to Cyprus than it was 

when Noranda was in control. This is so because by the time 

Cyprus gained control, the RLA plant had already been shut down 

for ten years, as opposed to two years when Noranda entered the 

scene. In addition, by the time Cyprus took over, the RLA 

plant was no longer in the state's emission inventory and did 

not possess operating permits. Thus, from the inception of 

Cyprus' ownership, every indication is that Arizona considered 

the facility to be permanently closed. 

The transfer to Cyprus serves to strengthen the reactivation determination EPA made as to Noranda. Accordingly, my 

determination is that the start-up of the RLA plant by Cyprus 

would constitute a reactivation subject to PSD requirements 

as a new source. " ; ~

, VT*% 

III. WHETHER START-UP OF TfiE'^RLA PLANT IS SUBJECT TO PSD 

REQUIREMENTS AS A MAJOR MODIFICATION. 

Even if the RLA plant were not subject to PSD as a new 

source under the reactivation policy, it would be subject 

anyway if the start-up were deemed to be a "major modification" 

within the meaning of the Act and 40 C.F.R. § 52.21. 

The central thrust of the Clean Air Act's PSD major modification provisions is that significant actual emissions increases 

— i.e., those which have substantial consequences for ambient 

pollution concentrations and, hence, the states' need to account 

for such pollution — should be brought under PSD review. See 

Alabama Power Co. v. Costle, 636 F.2d 323, 400 (D.C. Cir. 

1979). EPA followed the lead of the court in formulating the 

major modification provisions of the PSD regulations by focusing 

the regulatory definitions on actual emissions rather than a 

source's potential to emit. See 45 Fed. Reg. 52700, col. 2-3. 

EPA also promulgated a narrow and limited set of exclusions in 

its major modification regulations, but only to allow for 

routine changes in the normal course of business, where PSD 
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review would be unduly disruptive. See 40 C.F.R. §52.21(b)(2) 

(iii)(a) and (f). 

Determining whether a major modification will occur at a 

particular source requires a sequential analysis of several 

factors. These factors are discussed in the preamble to the 

PSD regulations at 45 Fed. Reg. 52676, 52698 (August 7, 1980). 

The factors may be grouped under two basic questions: Would the 

start-up entail a "physical change in or change in the method 

of operation of a major stationary source"? If so, would the 

change "result in a significant net emissions increase of any 

pollutant subject to regulation under the Act"? See 40 C.F.R. 

§ 52.21 (b)(2)(i). 

A. Physical Change or Change in the Method of Operation 

of the RLA Plant. 

This requirement of a major modification is satisfied if 

either a physical or operational change would occur. In this 

case, the start-up would constitute both a physical and an 

operational change. 

1. Physical Change. 

The rehabilitation work necessary to make the Cyprus RLA 

plant operational would constitute a "physical change" at a 

major stationary source. ^J 

EPA is aware of three i-F^orts addressing the rehabilitation work necessary to restart-^e~"RLA plant. By letter dated 

March 20, 1987, Noranda submitted the most recent evaluation of 

the minimum rehabilitation work necessary to start up the 

plant. The evaluation was prepared in March 1987 by E & C 

International ("E & CI") for the Cyprus Minerals Company and 

was based upon a three day inspection of the plant and review 

of equipment, support installation and existing piping, instruments 

and electrical switchgear. Noranda also submitted a June 1986 

report prepared by the Ralph M. Parsons Company, also for 

Cyprus, which estimated "nominal costs" of $1,836,000 for 

refurbishing the RLA plant, plus "worst case add-on" costs of 

$906,000. However, the Parsons report was an "order of magnitude" 

^J As noted in Noranda's original Request for Opinion dated 

September 12, 1986, sulfur emissions from the plant are 

4.3 tons per day, equivalent to approximately 1500 tons per 

year, and thus greatly exceeding both the 100 ton per year 

threshold limit applicable to the primary copper smelter 

category or the 250 ton per year threshold for an "unlisted" 

major stationary source under 40 C.F.R. 52.21(a)(1). 
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scoping report, and based these cost estimates upon the Company's 

experience rehabilitating similar processing facilities rather* 

than upon a detailed plant inspection. In addition, Noranda's 

original September 12, 1986 Request for Opinion contained a 

February 1982 survey of rehabilitation work estimating a total 

cost of $347,000 and monthly maintenance reports for April-July 

1982 indicating that some rehabilitation work occurred in this 

period. From among these three estimates of necessary rehabilitation work, the E & CI evaluation can most reasonably be 

relied upon. It is the most current and comprehensive and was 

based upon an actual plant inspection by outside consultants. 

The E & CI report called for the following rehabililitation: 

1) replacing of the thickener tanks in the roaster plant's 

Counter Current Decantation (CCD) circuit and repairing 

the "significantly" damped foundation for the CCD thickener 

foundation; 

2) installing new external insulation for both fluid bed 

roasters and gas cyclones; 

3) "minor" refractory repairs in one roaster; 

4) "minor" structural repairs and painting throughout 

the roaster plant's steel structure to address "significant" 

corrosion damage; 

5) replacing a "moderate" amount of piping and valves 

in the roaster plant; 

6) restoring or replacing of stainless steel pumps at the 

acid plant; 

7) installing a pressure sand filter; 

8) rebuilding the underflow pumps in the CCD circuit. 

The E ft CI report concluded that the work necessary to 

prepare the facility for operation could be done in three to 

four months at a cost of $905,000, without any contingency 

calculated. Contingency costs could significantly exceed this 

amount.^/ Even without factoring in contingent costs, $905,000 

represents roughly 10% of the replacement cost of a new roaster. 

See Attachment 2 of March 27, 1987 letter from Roger Ferland. 

^J The E ft CI report recommended adding on a 15% contingency for 

craft labor and materials and the Parsons report estimated 

$900,000 for "worst case" add-on costs. Information obtained 

during an EPA site visit confirmed that rehabilitation would 

require four months of double shifts. 
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Under the PSD definition of "major modification", a physical 

change does not include "routine maintenance, repair and replacement." 40 C.F.R. § 52.21(a)(2)(iii)(a). Although the E & CI 

report notes the good condition of the acid plant and characterizes 

some of the needed work as "minor" or "moderate," viewed as a 

whole, the minimum necessary rehabilitation effort is extensive, 

involving replacement of key pieces of equipment (e.g., the CCC 

thickener tanks, pumps, external insulation), and substantial time 

and cost. In an operating plant some of the individual items of 

the planned rehabilitation, e.g. painting, if performed regularly 

as part of standard maintenance procedure while the plant was 

functioning or in full working order, could be considered routine. 

Here, however, this and other numerous items of repair, as well 

as replacement and installation of new equipment, are needed in 

order for the RLA plant to begin operation. The fact that the 

plant requires four months of extensive rehabilitation work 

despite the adequate maintenance Noranda claims to have undertaken 

during the shutdown underscores the non-routine nature of the 

physical change that will occur at the plant. Thus, given the 

extent and nature of the repair, rebuilding and replacement of 

important equipment necessary to make the RLA plant operational, 

the rehabilitation work simply cannot be considered the "routine 

maintenance, repair and replacement" which is excluded from PSD 

review. 

2. Change in the Method of Operation. 

The prospective start-up of the RLA plant after a ten-year 

shutdown would also constitute a change in the method of operation 

within the meaning of the PSD regulations. 

As discussed above, the PSD major modification rules focus 

on changes in actual emissions. In general, changes at existing 

facilities that significantly increase actual emissions must 

undergo PSD review. Yet, in adopting the PSD rules EPA also 

recognized that Congress did not intend to require preconstruction 

permits for a routine change in the hours or rate of operation. 

EPA believed that "such a requirement would severely and unduly 

hamper the ability of any company to take advantage of favorable 

market conditions." 45 Fed. Reg. 52704, col. 2. Accordingly, 

the PSD regulations exclude from the definition of physical or 

operational change "an increase in the hours of operation or in 

the production rate." 40 C.F.R. § 52.21 (b)(2)(iii)(f). 

However, I believe it is clear that in adopting this exclusion 

EPA did not intend to remove PSD coverage in circumstances such 

as those presented by Cyprus. Rather, EPA limited this exclusion 

to situations where it would not interfere with a state's 

efforts in air quality planning when, in the preamble to the 

PSD regulations, it noted: 

At the same time, any change in hours or 

rate of operation that would disturb a 
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prior assessment of a source's environmental impact should have to undergo 

scrutiny. 

45 Fed. Reg. 52704, col. 2-3. Thus, EPA disallowed the exclusion 

where the increase would not be allowed under a preconstruction 

permit. 40 C.F.R. §52.21(b)(2)(iii)(f). 

In this case, the RLA plant was not required to obtain a 

preconstruction permit when it was originally erected, because 

it predated the PSD program. Thus, the present situation is 

not squarely addressed by the relevant regulatory provision. 

Nevertheless, EPA's original intention to disallow the exclusion 

where it would "disturb a prior assessment of a source's environmental impact" leads me to conclude that the exclusion should 

not be applied here. This is so because our present assessment 

as well as that of the State of Arizona, is that the RLA plant 

in its current non-operating condition has no environmental 

impact. This is evidenced in part by the removal of the plant 

from the state's emission inventory and the surrender of operating 

permits. An additional factor is the simple physical fact that 

the RLA plant has had zero emissions for ten years. I believe 

that this result is a reasonable interpretation of the PSD 

regulations, and in keeping with the statutory purposes. (See 

in particular Clean Air Act section 160(3) and (5)). 

3. Combination. 

In any event, it seems undeniable, when one looks at both 

the physical and operational changes the company is proposing 

to make, that the reactivation constitutes a fundamental alteration 

in the character of the plant, one that is neither everyday nor 

routine. Nor is the reactivation deserving of special treatment 

because of a high frequency of changes at the facility or 

insusceptibility to event-by-event permitting. 

B. Net Emissions Increase. 

Whether a significant "net emissions increase" would 

occur is itself a multistep analysis. The first step is to 

determine whether the particular physical or operational change 

in question would itself result in a significant increase in 

"actual emissions." See §52.2Kb)(3)(i)(a) and (b)(21). If 

so, the second step is to identify and quantify any other prior 

increases and decreases in "actual emissions" that would be 

"contemporaneous" with the particular change and otherwise 

creditable. See S 52.21(b)(3)(i)(b). The third step is to 

total the increase from the particular change with the other 

contemporaneous increases and decreases. See S 52.21(b)(3)(i)(b). 

If the total would exceed zero, then a "net emissions increase" 

would result from the change. Each of these factors is analyzed 

below in the context of the prospective start-up of Cyprus' RLA 

plant. 
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1. Increase in Actual Emissions 

The sta ":-up of the RLA plant would result in an increase 

in actual emissions within the meaning of the PSD regulations. 

This calculation is made by comparing actual emissions as 

of a "particular date" — i.e., immediately prior to the physical 

or operational change in question -- with the emissions from 

the source after the change is made. The regulations provide 

that actual emissions shall be the rate at which the source 

actually emitted the pollutant during the two-year period 

immediately preceding the particular date (the date of the 

change), unless EPA determines that a different two-year period 

is more representative of normal source operation. 40 C.F.R. 

§ 52.21 (b)(21); see also 45 Fed. Reg. 52718, col. 2. 

In this case, the pollutant in question is sulfur dioxide 

(S02), and emissions during the two-year period preceding 

start-up of the RLA plant are zero. I believe that this period 

is representative of normal source operations, since emissions 

have been zero during each of the last ten years while the 

plant has been shut down. Conversely, given this operational 

history, I do not believe that emissions during the one year in 

which the RLA plant was functioning is more representative of 

normal operations at the Casa Grande facility. After start-up, 

emissions will be approximately 1500 tons per year. Thus, the 

entire amount of emissions after start-up will be considered an 

increase in actual emissions, and it is obviously significant. 

40 C.F.R. § 52.21(b)(23)(i). 

2. Contemporaneous Increases and 

Decreases in Actual Emissions. 

No other increases or decreases in actual emissions that 

would be contemporaneous with the start-up of the RLA plant 

have been brought to EPA's attention. 

The regulations define the contemporaneous period as extending back five years from the physical or operational change, 

40 C.F.R. $ 52.21(b)(3)(ii), and no changes in emissions at the 

RLA plant have been made during this period because it has been 

shut down during this entire period. It should be pointed out 

in this regard that EPA chose the "fairly large" five-year 

contemporaneity period over a shorter period in response to 

industry commenters on the PSD regulations, who had urged that 

no time limit be placed on crediting of prior emissions decreases. 

The Agency believed five years to be adequate to accommodate a 

normal period for corporate planning. See 45 Fed. Reg. 52701, 

col. 1. Thus, EPA specifically considered and rejected an 

arrangement whereby an emissions decrease, such as that represented 

by the ten-year shutdown of the RLA plant, potentially could be 

credited upon start-up for purposes of determining whether a 

major modification would occur. 
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3. Net Emissions Increase. 

Because the actual emissions increase from start-up of the 

RLA plant would be approximately 1500 tons per year, and there are 

no contemporaneous emissions increases or decreases, the net 

emissions increase from start-up would also be approximately 1500 

tons per year. This amount is well above the 40 tons per year 

"significance" level for S02. 40 C.F.R. § 52.21(b)(23)(i). 

Hence, the start-up would constitute a major modification within 

the meaning of the Clean Air Act and 40 C.F.R. § 52.21, and 

Cyprus must obtain a PSD permit prior to construction for this 

reason alone. 

IV. SUMMARY. 

Whether the prospective start-up of the RLA plant is viewed 

under EPA's reactivation policy or under its major modification 

regulations, I conclude that PSD requirements apply. This 

consistency of results is not surprising, because both the 

policy and the regulations address the same general principle 

that significant increases in actual emissions of air pollution, 

not already accounted for in air quality planning or involving 

significant capital investment, be reviewed under the PSD 

provisions of the Clean Air Act. I hope that in light of this 

supplemental determination, Cyprus will better understand EPA's 

insistence that the RLA plant undergo the normal PSD review 

procedures. I am also aware of Cyprus' desire to rehabilitate 

the RLA plant and recommence operations as soon as possible. EPA 

will do its best to accommodate this desire, consistent with its 

need to avoid undue disruption of its other PSD regulatory 

responsibilities. 

Sincerely, 

David P. Howekamp 

Director 

Air Management Division 

cc: Lee Lockie 

John Seitz