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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 requirements ? What about for violations of

the requirements?

What is the dependency of one facility on the other? If one

shuts down, what are the 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 obvious 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 any parentsubsidiary relationships and common corporate management
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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 the 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 the 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 to 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, and
4

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, OAQPS
Table 1. References on Common Control

"Definition of Source," March 16, 1979

The preamble to the August 7, 1980 PSD regulations, 45 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