.

2 

### Do the facilities share equipment, other property, or pollution control equipment? What does the contract specify with regard to pollution control responsibilities of the contractee? Can the managing entity of one facility make decisions that affect pollution control at the other facility?

Do the facilities share common payroll activities, employee benefits , health plans, retirement funds, insurance coverage , or other administrative functions?
Do the facilities share intermediates, products, byproducts, or other manufacturing equipment? Can the new source purchase raw materials from and sell products or byproducts to other customers? What are the contractual arrangements for providing goods and services?
Who accepts the responsibility for compliance with air quality control requirement s ? What about for violations of the requirements?
What is the dependency of one facility on the other? If one shuts down , what are th e limitations on the other to pursue outside business interests?
Does one operation support the operation of the other? what are the financial arrangements between the two entities?
The list of questions is not exhaustive; they only serve as a screening tool. If facilities can provide information showing that the new source has no ties to the existing source, or vice versa, then the new source is most likely a separate entity under its own control. However, if the facilities respond in the positive to one or more of the major indicators of control (e.g. management structures, plant managers, payroll, and other administrative functions), then the new company is likely under the control of the existing source , or under common control by both companies , and cannot be considered a separate entity for permitting purposes. Absent any facility may still be considered existing source if a significant to common control. major relationships, the new to be under the control of the number of the indicators point

If after asking the obviou s control questions the permit authority has any remaining doubts , it may be necessary to look at contracts, lease agreements , and other relevant information. EPA's Dun and Bradstreet Retrieval System, available to anyone with mainframe access , is also useful for exploring an y parentsubsidiary relationships and common corporate management3

structures. Using these tools, we have found at least one case where a company set up an "unrelated" corporation in the middle of their property to split the property into multiple, distinct sites. After concluding that these "distinct" sites were in fact under th e common control of the companion company's president, the split was later disallowed for permitting purposes.
The permit authority should be cautious of any short term or interim contracts that establish separate operating companies or separate operations on noncontacting parcels of land. While not likely, it is conceivable that such contracts could be used to shield the company's true intents. For example , a company may seek to avoid major new source review requirements in the short term, but merge later on to take advantage of the netting provisions. If the company's motives are unclear, but the permit authority elects to permit as two sources, we would encourage adding a condition to the permit requiring notification if the two sources merge operations. if the merger occurs within a short time frame, say two years, after permit issuance, the department may want to investigate such activities as circumvention of the major source permitting requirements and take th e appropriate action.
If the affected sources are reluctant or refuse to provide documentation satisfactory to the permit authority, and the company's permit application is pending, then the permit authority may elect to find the permit application incomplete. If an application has not been submitted, then we recommend that the permit authority seek the necessary information under its statutory authorities.
Our approach to looking at control is based in part on regulatory background information , prior EPA guidance materials,
common sense , and limited formal decisions on the matter. While no one single document answers the questions at hand, we encourage you and your staff to review the references listed in Table 1. Most are available on the New Source Review portion of the Technology Transfer Network Bulletin Board System.
We seriously urge you to consider the principles found in the various guidance documents and in this letter when evaluating requests t o split properties for permitting purposes. We realize that in many cases it is easier not to second guess a company's motives. However , we also believe this administratively expedient approach can result in allowing circumvention of the permit requirements and ultimately jeopardize the goals and effectiveness of the permitting programs. This guidance has been reviewed by the Information Transfer and Program Integration Division , Office of Air Quality Planning and Standards, and4
incorporates their suggestions and concerns. If you have any questions or need further advice , please contact our New Source Review team ; Dan Rodriguez 913-551-7616, Ward Burns 913-551-7960, or Jon Knodel 913-551-7622.
Sincerely,

illiam A. Sp

Air , RCRA, and Toxics Division

Enclosure

cc : Christine Spackman, IDNR Chuck Layman, KDHE Randy Raymond, MDNR Shelly Kaderly, NDEQ David Solomon, OAQPS Michele Dubow, OAQPSTable 1. References on Common Control

"Definitio n o f Source," Marc h 16, 1979 The preambl e t o the August 7, 198 0 PS D regulations, 4 5 FR 52693-52695 "PSD Applicability Request (General Motors)," June 30, 1981
"PSD Applicability Request , Valero Transmission Company," November 3, 1986 "PSD Applicability Determination for Multiple Owner/Operator Point Sources Within a Single Facility (Denver Airport)

," August 11, 1989 "Comments on Draft Permit for Conoco Coker and Sulfur Recovery Facility," March 22, 1990 "Definition of Source for PSD Purposes," August 22, 1991 "PSD Permit Remand , Reserve Coal Properties," July 6, 1992 "Temporary and Contracted Activities at Stationary Sources," John Seitz letter to Minnesota, November 16, 1994 "Watts Bar Nuclear Plant Title V Applicability," Region 4, June 5, 1995 "Site Specific Determination of Common Control for United Technologies Corporation," Region 4, July 20, 1995 "Georgetown Cogeneration Project," Westy McDermid Memorandum, date unknown