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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

23) ll-A-7 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:50:52 AM Sheet 23 of 276 
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HEPA 

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information for 

Promulgated 

Standards 
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EPA-450/3-80-033b 

VOC Fugitive Emissions 

in Synthetic Organic Chemicals 

Manufacturing IndustryBackground Information 

for Promulgated Standards 

Emission Standards and Engineering Division 

U.S. ENVIRONMENTAL PROTECTION AGENCY 

Office of Air, Noise, and Radiation 

Office of Air Quality Planning and Standards 

Research Triangle Park, North Carolina 27711 

June 1982 
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9. MODIFICATION AND RECONSTRUCTION 

Comments received concerning modification and reconstruction provisions 

(40 CFR 60.14 and 60.15) as they apply to the standards have been divided 

into six main subject areas: (1) Clarification,(2) Suggestions for Emission 

Criteria for Modifications, (3) Suggestions for Changes in the Affected 

Facility Definition for Modifications, (A\ Technical Problems with Retrofit; 

(5) The Capital Expenditure Criterion; (6) Coverage of Reconstructions. 

9.1 CLARIFICATION 

Comment: 

Several commenters requested clarification of the modification and 

reconstruction provisions. (IV-D-26; IV-F-1, No.9; IV-F-1, No.6) 

Response: 

Section 111 of the Clean Air Act directs the Administrator to establish 

standards of performance for any new stationary source which causes or 

contributes significantly to air pollution which may reasonably be anticipated to endanger public health or welfare. Linder Section 111(a)(2) and 

40 CFR 60.14 and 60.15 a new source is defined as any stationary source, the 

new construction, reconstruction or modification of which is commenced after 

the date of proposal of the standards (January 5, 1981). For purposes of 

these standards, the stationary source is the group of fugitive emission 

sources within a SOCMI process unit. Each such group of fugitive emission 

sources on which new construction, reconstruction, or modification commences 

after proposal is subject to the standards, i.e. is an affected facility. 

An existing facility is the group of fugitive emission sources within a 

SOCMI process unit on which construction has not commenced after proposal. 

The General Provisions (40 CFR Part 60, Subpart A) outline the 

procedures for implementing the Act, including the rules governing modification and reconstruction (40 CFR 60.14 and 60.15). With some exceptions, a 

modification is defined as any physical or operational change to an existing 

facility which results in an increase in emissions from that facility. The 

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exceptions include changes such as routine maintenance, repair, and replacement; an increase in production rate accomplished without a capital expenditure; and an increase in the hours of operation. The preamble to the 

proposed standards pointed out that these standards are not intended to 

cover existing process units making routine and minor additions. The 

standards (40 CFR 60 Supart VV) exclude such process improvements, .>uch 

routine changes and additions at existing SOCMI units would not cause an 

existing facility to become an affected facility if the changes and 

additions are made without incurring a capital expenditure. The General 

Provisions define "capital expenditure" (40 CFR 60.2); the capital 

expenditure criterion is discussed in a subsequent comment and response. 

Section 60.15 defines reconstruction as replacement of components of an 

existing facility to such an extent that the fixed capital cost of the new 

components exceeds 50 percent of the fixed capital cost that would be 

required to construct a comparable entirely new facility. It must also be 

determined that compliance is technologically and economically feasible. 

The General Provisions allow for the Administrator's case-by-case determination of whether proposed replacements constitute reconstruct on. 

Both of these provisions apply to existing facilities that would, if 

affected by these provisions, become affected facilities. Increases in 

emissions will be determined based, in general, on the number of fugitive 

emission sources; if the number of fugitive emission sources increases, 

emissions increase unless an owner or operator takes specific actions o 

offset the increase due to the additional fugitive emission sources. e 

capital costs associated with replacing an existing facility is lii"te ° 

the costs associated with replacing the fugitive emission sources only. 

Emissions and capital costs associated with other sources, such as proce 

vent emissions, are not considered when evaluating the applicability o 

these provisions. 

Comment: 

One commenter (IV-D-51) wrote that the proposed NSPS is unique in the 

NSPS subparts because it applies not to a process but rather to equipment 

within a category of processes. Because of this unique difference, t e 

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commenter said it is difficult to connect the content of 40 CFR 60.14 in the 

General Provisions with the proposed rules. He recommended the following 

addition to §60.480: 

Modification of a-process unit accomplished with 

no net increase in emissions from the group of 

fugitive emission sources within the process unit 

shall not be considered a modification under this 

subpart. 

Response: 

The commenter is correct in his interpretation of the modification 

provisions. A change must indeed increase emissions to be considered a 

modification. By definition, if a change is accomplished without an 

emissions increase, it is not a modification. Certain changes must also 

require a capital expenditure to be considered a modification. 

The affected facility regulated by the standards is the group of 

fugitive emission sources within a SOCMI process unit. The definition of 

the affected facility is clearly stated in the regulation [§60.480(a)]. The 

General Provisions (40 CFR 60.14) use the same term, "affected facility," 

(and the corresponding term, "existing facility") in explaining the provisions for modification. Therefore, EPA has concluded that there is no 

need to clarify the modification provisions specifically in Subpart VV. 

Comment: 

While supporting the provision in the proposed rules that process 

improvements achieved without a capital expenditure are not considered 

modifications, one commenter (IV-D-51) offered one suggestion to improve 

this provision. He asked that the definition of Capital Expenditure in the 

General Provisions be restated in the proposed subpart with changes to make 

it clear for this subpart. The commenter expressed the understanding that a 

facility's basis used to calculate the modification investment limit [sic, 

"capital expenditure"] is only the affected facility and not the entire 

orocess unit. He said the present definition of "capital expenditure" in 

the General Provisions only fits cases where the affected facility is the 

same as the entire facility. 

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Response: 

The function of the General Provisions is to define terms and list 

requirements that are common to all new source performance standards. The 

standards use the definition of "capital expenditure" as intended in the 

General Provisions and, therefore, it is neither necessary nor appropriate 

to redefine that term in Subpart VV. The definition of "capital expenditure" in the General Provisions uses the term "existing facility" and does 

not imply that, in the case of Subpart VV, this term means the entire 

process unit, and it is this facility to which the capital expenditure 

criterion would be applied. Subpart VV defines a "facility" (which is 

either an affected facility or an existing facility) as the group of all 

fugitive emission sources within a SOCMI unit. Thus, the General Provisions 

definition of "capital expenditure" fits the case of fugitive emission 

sources within SOCMI. A comment related to this one concerning capital 

availability is presented in Section 7.3. 

9.2 EMISSION CRITERIA FOR MODIFICATION 

Comment: 

EPA was urged in three sets of comments (IV-D-7; IV-D-17; IV-F-1, No.l, 

p.12) to consider an allowance for a de minimis emissions increase criterion 

in its revisions of the proposed regulations. It was suggested that it 

would be reasonable to exempt sources increasing emissions by 10-20 tons per 

year from coverage under the modification provisions. The 10-20 tons per 

year cutoff was said to be supported by data contained in an EPA contractor 

study: Impact of Proposed and Alternative De Minimis Levels for Criteria 

Pollutants, June, 1980. One- commenter recommended setting the cutoff at 

either 10 tons per year or 10 percent of the baseline emissions, whichever 

is greater. In one of the. sets of comments (IV-D-17) further arguments for 

establishing an emission increase criterion were given. PSD and nonattain- 2J%M 

ment reviews for permits were said to provide ample opportunity for __%§_ 

stringent control of modified sources. According to the comment, all net 

increases in emissions from existing major sources must be accumulated. 

Then, when a 40 tons per year level is reached, a review for a permit is 

required. The commenter continued, saying that either BACT or LAER would be 

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required on the last changed unit triggering review. This commenter and 

another commenter (IV-D-15) basically requested that EPA consider an 

amissions increase criterion as a possible solution to the problem of 

covering plants making small changes. 

Response: 

Under the definition in Section 111(a)(4), any physical or operational 

change resulting in an increase in emissions constitutes a "modification." 

EPA has exempted certain small emissions increases from consideration in 

deciding whether there has been an increase in emissions constituting a 

"modification" for purposes of PSD applicability (40 CFR 52.21(b)(2) and 

(b)(231)). This action followed the decision in Alabama Power Co. v. 

Costle, 635 F.2d 323 (D.C. Cir. 1979), in which the D.C. Circuit held that 

EPA has authority to interpret the definition of "modification" so as to 

exempt sources with small emissions increases from PSD review on grounds of 

administrative necessity (Id. at 400). 

As explained in a previous response, the Alabama Power decision does 

not require EPA to provide a de minimis exemption from application of the 

"modification" definition for NSPS applicability purposes. Nor has EPA's 

experience in implementing the NSPS program suggested an administrative need 

for relieving existing sources from NSPS applicability when they undergo 

changes resulting in only a small increase in emissions. This differs 

somewhat from EPA's implementation of the definition of "modification" for 

^SD applicability purposes. In that area, the Agency has determined that 

the administrative burden of applying the full preconstructicn review 

process to a source with only a small emissions increase may be unreasonable 

(45 Federal Register 52705 (Aug. 7, 1980)). The administrative burden 

associated with the NSPS program, however, is relatively minimal. In 

contrast to PSD requirements, NSPS's are categorically applicable 

technology-based reguirements only; they do not involve an assessment of 

ambient effects and do not require case-by-case review. 

Furthermore, EPA believes that the current straightforward application 

of the "modification" definition for NSPS purposes best serves Section Ill's 

intent. One key purpose of the NSPS program is to prevent new pollution 

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problems from arising. One way that the statute seeks to achieve this is by 

requiring application of the best demonstrated tecnnology at, and thereby 

minimizing emissions from, existing facilities with increased emissions. 

The current NSPS approach of not providing an exemption from the "modification" provision based on the size of the emissions sources are not intended 

to cover existing plants making routine and minor additions. The "modificationi: provisions in the General Provisions of 40 CFR Part 60 exempt changes 

such as additions made to increase production rate (if they can be accomplished without capital expenditure, as defined in the General Provisions) 

and routine replacements (40 CFR 60.14(e)). In addition, these standards 

would exemp: additions made for process improvements if they are made 

without incurring a capital expenditure. 

9.3 AFFECTED FACILITY DEFINITION FOR MODIFIED SOURCES 

Comment: 

One commenter (IV-D-15) was concerned that the financial guidelines 

provided by EPA to define a capital expenditure could result in inappropriate application of performance standards. The commenter thought this 

might especially be a problem for small production facilities with limited 

assets. He cited an example. If a distillation column were added to an 

existing unit, the entire unit, and all associated equipment would be subject 

to the NSPS. The situation appeared unreasonable to him in view of the fact 

that the fugitive emissions sources associated with the new column would 

contribute only a small incremental increase in the overall VOC emissions 

from the unit. He further commented that upgrading and retrofitting all the 

fugitive emission sources within the unit would substantially increase the 

capital required for the project and could possibly result in abandoning it 

altogether. As a solution, the commenter suggested limiting the scope of 

the affected facility to individual equipment being added or replaced for 

modified facilities. He offered another alternative: an emissions increase 

criterion (see Section 9.2). 

Response: 

The Clean Air Act requires that standards of performance be applied to 

existing sources which increase emissions. EPA has carefully analyzed the 

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modification and reconstruction provisions which might apply to existing 

SOCMI units. The Agency has concluded that the provisions offer sufficient 

flexibility for continued productive operation and reasonable protection 

against inappropriate coverage of existing facilities within the context of 

the Clean Air Act. In developing the standards, EPA considered retrofit 

costs which would be incurred if an existing unit were covered under modification provisions. In selecting the final standards, EPA selected standards 

based on cost-effectiveness considerations. Furthermore, the economic 

analysis for this regulation showed no capital availability problem, nor did 

it show any unreasonable economic impact.' 

The commenter's example and interpretation of the modification and 

reconstruction provisions which would apply shows some confusion about the 

provisions themselves and the affected facility to which they apply. 

Because the determination of a capital expenditure is based on a percentage 

of the purchase price of the existing facility, small and large production 

facilities should be affected equally. The commenter may be referring to a 

production facility owned by a small business instead of a small production 

facility. Still, as shown in Section 7.3, the economic analysis showed no 

adverse impact on small businesses. 

Furthermore, the affected facility to which the standards apply is the 

group of all fugitive emission sources (pumps, compressors, sampling 

connections, safety/relief valves and open-ended lines) within a process 

unit. If a new distillation column were added to an existing process unit, 

the cost basis used to determine whether a capital expenditure had been made 

is the cost of the added fugitive emission sources compared to the cost of 

the existing fugitive emission sources. The cost basis does not include the 

cost of the column or the entire process unit. 

The existing modification provisions in 40 CFR 60.14 and the process 

improvement exemption in the SOCMI standards prevent small increases in 

emissions due to routine activities from causing modification to occur. 

Finally, it is important to note that to be considered a modification, a 

change made must increase emissions from the existing facility. If a change 

is made that would increase emissions, but-that potential emissions increase 

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is offset so there is no net increase, then the change is not considered a 

modi fication. 

The preamble to the proposed regulation (40 CFR 1136, January 5, 1981) 

explained that the commenter's suggestion of limiting the scope of the 

affected facility to the individual equipment being added or replaced was 

considered. However, such a designation would mean that replaced equipment 

components in existing units would be subject to the new source standards, 

while adjacent components would not be subject to the standards. Determining which components were subject to the requirements of the standard 

would be impracticable for the owner/operator and for EPA. Therefore, the 

individual equipment definition was not selected for the affected facility. 

The commenter's suggestion of an emissions increase criterion was also 

considered at proposal. This issue is discussed in Section 9.2. 

9.4 TECHNICAL PROBLEMS WITH RETROFIT 

Comment: 

One commenter (IV-D-24) wrote that some existing SOCMI plants might be 

subject to the rule by virtue of modification or reconstruction. In these 

cases an enclosed combustion device would be required. For safety reasons, 

the combustion, device should be located at a distance from the process area. 

However, the commenter said there might not be enough space to install a 

combustion device in an appropriate location. For this reason, he said 

modified and reconstructed facilities should be relieved of the requirement 

to install a combustion device. 

Another commenter (IV-D-15) cited the same problem of space 

limitations. He said existing plants often would not have room for barrier 

fluid systems and combustion devices. He added that locating these pieces 

of equipment at a distance from pumps and compressors would increase 

construction and operating costs by requiring more piping to interconnect 

the systems and increasing the energy costs to run the system. 

Response: 

Regardless of whether a unit is a new or existing unit, EPA expects 

that an existing control device will be used. The control device need not 

be a combustion device. Furthermore, since proposal, some of the provisions 

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which would have required a control device have been changed. The changes 

effectively mean that a control device is not necessarily required; in fact, 

most units will not require a control device. 

The proposed standards required that pumps and compressors be 

controlled with a barrier fluid/dual seal system. The vent streams from 

this system were to be destroyed in an enclosed combustion device or 

95 percent efficiency vapor recovery system. However, the final standards 

allow an owner or operator of an affected facility to choose among several 

methods for compliance with the final standards for pumps and compressors. 

First, the final standards for pumps do hot require a control device. An 

owner/operator may choose to comply with a work practice standard for pumps 

instead of the equipment standard as originally proposed. The work practice 

standard eliminates the need for a control device. The standards allow ven; 

streams from pump and compressor barrier fluid systems to be controlled by 

•Hares, enclosed combustion devices, or any other control device designed 

and operated for 95 percent efficiency. The provision for allowing flares 

means that if a control device is required, additional pptions are available 

to the owner or operator. The provision for allowing flares also means that 

a control device will most assuredly be present in all SOCMI process units. 

As discussed in Section 4.1, smokeless flares are only allowed if they are 

operated within certain exit velocity and gas heat content criteria. 

Another change in the standards was made specifically to avoid retrofit 

problems with existing compressors. If an existing compressor becomes 

subject to the rules by virtue of modification and reconstruction and it 

cannot be vented because vents cannot be provided in the existing hardware 

surrounding the seal area, it is exempt from complying with the compressor 

standards. This provision is discussed more fully in Section 4.12. 

Comment: 

One commenter (IV-D-15) gave another example of a retrofit problem with 

rupture disks. He said the increased bulk and weight of the new pressure 

control system may exceed the stress limits of existing tower welds and 

connections. Increasing the strength of these new connections would be 

costly and would require additional downtime for installation. 

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Another commenter (IV-D-2) offered some solutions to retrofit problems 

for pressure relief devices. He said if a combination rupture-disc/relief 

valve that had been flow-tested by the National Board of the ASME code were 

selected, a larger relief device would not be required. He also offered a 

solution to the problem of having fixed piping upstream and downstream of 

the relief device. This situation prevents the device from being moved up 

several inches to allow space for a rupture disc. He recommended a rupture 

disc welded into a flange that fits down in the piping and has only a 

minimal height of 1/8 to 1/4 inch. The price of the welded disk and holder 

is about half the price of a standard disk and holder. 

Response: 

The standards do not require rupture disks as a control device. The 

standards require "no detectable emissions" (defined as no higher a concentration than 500 ppmv measured by a portable VOC monitor) from safety/relief 

valves except during emergency venting. This standard may be met in any way 

which results in no detectable emissions. Two ways, for example, would be 

by using rupture disks or by piping to a flare header. If rupture disks are 

chosen as the method of control, there are some new methods for overcoming 

some of the retrofit problems as described by the commenter in IV-D-2. 

The problem posed by the commenter regarding strengthening tower welds 

would be an unusual circumstance from an engineering point of view. 

However, if bracing or supporting is required, it can be done while the unit, 

is undergoing modification or reconstruction. No additional downtime would 

be required. EPA recognizes that in retrofit situations more complicated 

installation procedures may be required. These expected complications have 

been accounted for in retrofit installation costs which are higher than 

costs for new installations. 

9.5 CAPITAL EXPENDITURE CRITERION 

Comment: 

One commenter (IV-D-7) described some problems with the capital 

expenditure criterion applied to determine modifications. He said such a 

criterion would be difficult to administer. He commented that a company's 

records may not be detailed enough to reflect the cost basis under Internal 

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Revenue Code 1012. An even bigger complication was seen in the fact that 

the concept of "annual asset guideline repair allowance percentage" is a 

part of the Asset Depreciation Range System (ADR) under the Internal Revenue 

Code. According to the commenter, President Reagan's tax proposals would 

repeal the ADR for property placed in service in 1981 and later years. 

Other proposals would make the ADR optional. However, under any of the new 

proposals, a company would have to maintain additional records for post-1980 

assets, solely for the purpose of the proposed regulation. 

Response: 

This comment describes two possible problems with using a capital 

investment criterion to determine exemptions from the standards for routine 

replacement and additions made to increase the production rate. The first 

problem is that a company may not have kept accounting records that are in 

sufficient detail to reflect the cost basis of the existing facility. This 

cost is necessary to determine if a particular expenditure constitutes a 

capital investment. It is true that this difficulty may be a larger problem 

for the SOCMI fugitive VOC regulation than for many other new source standards. The difficulty arises in the fact that the affected facility is the 

group of fugitive emission sources within the process unit rather than the 

entire unit so that the total cost is composed of many small cost items. 

However, there are ways to handle this problem. For example, one way to 

estimate the cost of emission sources would be to prorate costs, based on 

the present ratio of fugitive emission source costs to total costs. The use 

of replacement costs with an appropriate adjustment to reflect original 

costs would be considered by EPA. Therefore, because estimation methods can 

provide a sufficiently accurate cost estimate of the existing sources, EPA 

sees no reason to make the suggested change. 

The second problem discussed in this comment with the capital investment criterion is the tax reform which changes the depreciation rules for 

new facilities . The annual asset guideline repair allowance percentage, 

referenced by the General Provisions (40 CFR 60.2) for the purpose of 

defining a capital investment remains in effect for existing units. It was 

included in IRS Publication 534 for 1981 tax returns. Existing units can 

9-11 
still use the allowable percentage for determination of whether a capital 

expenditure has occurred. 

SOCMI units built in the future will use the accelerated depreciation 

system for which there is no allowable repair percentage; however, they will 

be covered by the standards in any case. EPA is currently considering 

changes to the General Provisions which would solve the potential problems 

which would arise with facilities which would become subject to NSPS in 

future years. 

Comment: 

Another comment letter (IV-D-17) stated that the commenter's 

understanding was that process improvements costing up to 12.5 percent 

annually of the original investment would not by themselves be considered a 

modification. 

Response: 

The commenter's statement is correct with some qualifications. The 

figure of 12.5 percent of the original investment for fugitive emissions 

sources represents the maximum expenditure that could be made annually for 

routine replacement and minor additions without triggering application of 

the modification provisions. 

The calculation of this limit is explained in the definition "capital 

expenditure" in 40 CFR 60.2. It is the product of the applicable "annual 

asset guideline repair allowance percentage" specified in the latest edition 

of Internal Revenue Service (IRS) Publication 534 and the existing ^ 

facility's basis. For 1980 and 1981, the annual asset guideline repair 5 

percentage was 12.5 percent; however, this is subject to change annually. i|| 

In 1979, for example, the repair percentage was 5.5. .^Jg 

It is important to note that an increase in emissions is the primary 

test for determining if some physical or operational change to an existing 

facility constitutes a modification. Moreover, changes made for process 

improvements [and other changes as described in 40 CFR 60.14(e)] which 

increase emissions would not be considered a modification if the capital 

expenditure limit has not been exceeded. For example, an owner or operator 

might add a control loop consisting of about 5-10 valves for purposes of 

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improved process efficiency. If the cost of these valves did not exceed the 

12.5 percent allowance of the original fugitive emission source costs, the 

change would not be considered a modification. 

Comment: 

One commenter (IV-D-34) agreed with EPA's expression that "NSPS for 

SOCMI sources are not intended to cover existing plants making routine and 

minor additions." He further agreed that exemptions should apply for 

routine replacement and for additions made for production rate increases if 

such increases can be accomplished without capital expenditures. 

Response: 

The provisions for exempting production rate increases made without 

capital expenditures may be found in 40 CFR 60, Subpart A. 

Comment: 

Another commenter (IV-D-26) favored allowing capital expenditures if 

there were no emissions increase. He said that eliminating the capital 

expenditure criterion would allow updating of existing facilities while 

limiting VOC emissions. Unless some provision is made for capital 

expenditures, he added, older existing plants may not be upgraded into more 

efficient facilities which incorporate current technologies. 

Response: 

Capital expenditures are allowed to some extent under modification and 

reconstruction provisions. Existing facilities may spend up to 50 percent 

of the cost of a comparable new facility and not be covered by the standards 

if emissions are not increased. However, if emissions are increased ajid a 

capital expenditure is made (i.e., is greater than the product of the 

applicable annual asset guideline repair allowance percentage and the 

existing facility's basis), then the facility becomes a modified facility. 

The intent of the Modification and Reconstruction Provisions is discussed in 

a previous comment in Section 9.1. 

9.6 COVERAGE OF RECONSTRUCTIONS 

Comment: 

One set of comments (IV-D-17) said that EPA should revise 40 CFR 

60.15 to limit the applicability of the proposed NSPS requirements to 

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reconstructions. Reconstructions are essentially more comprehensive 

modifications and to be consistent with the definition of modification, 

should not be subject to NSPS unless there is an increase in net emissions 

at the process unit. The comment cited a brief, filed by the steel industry 

in nonattainment litigation, which demonstrates that the Clean Air Act would 

not require application of NSPS to reconstructions where no emission 

increases occur. The comment said that, in apparent recognition of the 

reasonableness and legal support for industry's position, EPA proposed to 

exclude reconstructions from nonattainment area new source review 

•'4o ^R 16280). This argument continued that it is completely within EPA's 

---.-.ority to limit the applicability for reconstruction of existing 

facilities from any new source review requirements. The comment said this 

change would offer the benefit of permitting full use of the bubble concept 

at the process unit without any undue restrictions based on air quality. 

Another commenter (IV-D-48) wrote that the definition of "reconstruction" at 40 CFR 60.15(b) is ambiguous in light of the statement of 

applicability of 40 CFR 60.480(a) and the definition of "process unit" at 

40 CFR 60.481. 

He argued that, as these definitions are written in the proposal, it is 

possible for a facility, over a period of years, to reach the 50 percent of 

capital cost of construction of a new facility and thus become an affected 

facility. Accordingly, the definition of "reconstruction" at 

40 CFR 15(b)(1) is inadequate and should be amended to prevent this 

occurrence. The commenter proposed that one or more of the following 

suggestions be implemented to accomplish this amendment: 

(1) Provide for a specified time limit during which accrual of capital 

expenditures should occur. This time limit would have to be of 

sufficient duration, e.g., two years, to prevent stretching such 

repairs to avoid coverage. 

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(2) Amend the definition to provide that, for purposes of determining 

whether or not the 50 percent test is met, the cost of equipment 

which is accrued be a single piece of process equipment and 

directly related support equipment, e.g.. pumps. Where such 

support equipment is shared in common by two or more pieces of 

process equipment, the capital replacement cost of the support 

piece could be apportioned either equally or according to pro rata 

usage among the various pieces of process equipment served. 

(3) Amend the definition to provide that a repair qualifies as a 

reconstruction only where there is a net increase in emissions 

from the process unit. 

This third approach was said to be, by far, the most desirable approach 

•since it provides a measure of pollution control which is unaffected by 

external forces, such as inflation. 

Response: 

Since in enacting Section 111 Congress did not define the term 

"construction," the question arose whether NSPS would apply to facilities 

being rebuilt. Noncoverage of such facilities would have produced the 

incongruity that NSPS would apply to completely new facilities, but not to 

facilities that were essentially new because they had undergone reconstruction of much of their component equipment. This would have undermined 

Congress's intent under Section 111 to require strict control of emissions 

as the Nation's industrial base is replaced. 

EPA promulgated the reconstruction provisions in 1975, after notice and 

opportunity for public comment (40 FR 58420, December 16, 1975), to fulfill 

this intent of Congress. Since this turnover in the industrial base may 

occur independently of whether emissions from the rebuilt sources have 

increased, the reconstruction provisions do not focus on whether the changes 

that render a source essentially new also result in increased emissions. 

Congress did not attempt to overrule EPA's previous promulgation of 

Section 60.15 in passing the Clean Air Act Amendments of 1977. This 

indicates that Congress viewed the reconstruction provisions' focus on 

component replacement, rather than emissions level, as consistent with 

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Section ill. See, e.g., Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 

(1969); NLRB v. Bell Aerospace Division, 416 U.S. 267 (1974). Nor has any 

. Court questioned the Agency's authority to subject reconstructed sources to 

new source performance standards. In fact, in ASARCo v. EPA, 578 F.2d 319, 

328 n.31 (D.C. Cir. 1978), the D.C. Circuit suggested that the reconstructed 

provisions may not go far enough toward preventing possible abuses by owners 

seeking to avoid NSPS by perpetuating the useful lives of their existing 

facilities indefinitely. Failure to cover facilities that have undergone 

extensive component replacement over a long period of time similarly postpones the enhancement of air quality Congress sought under Section 111. The 

D.C. Circuit recognized this when it expressed' concern in the ASARCo case 

that, absent a provision for aggregating replacement expenditures "over the 

years," owners could evade the reconstruction provisions by continually 

replacing obsolete or worn-out equipment, [578 F.2d 319, 328 n.31 (D.C. Cir. 

1978)]. 

Section 60.15 currently defines "reconstruction" as the replacement of 

components of an existing facility to such an extent that "the fixed capital 

cost of the new components" exceeds 50 percent of the "fixed capital cost" 

that would be required to construct a comparable entirely new facility and 

EPA determines that it is technologically and economically feasible to meet 

the applicable NSPS. Subsection (d) indicates that the "new components" 

whose cost would be counted toward the 50 percent threshold include those 

components the owner "proposes to replace." It is unclear under this 

wording whether a reconstruction has occurred in the case of an owner who 

first seeks to replace components of an existing facility as a cost equal to 

30 percent of the cost of an entirely new facility and then, shortly after 

commencing or completing those replacements, seeks to replace an additional 

30 percent. Specifically, it is uncertain whether the owner should be 

deemed to have made two distinct proposals, or instead a single proposal. 

If EPA would take the former view, owners could avoid NSPS coverage under 

Section 60.15 simply by characterizing their replacement projects as 

distinct proposals, even where the component replacement is completed within 

a relatively short period of time. -T^ 

t-'-lti 

9-16 
EPA did not intend, in promulgating the reconstruction provisions, that 

the term "propose" exclude from NSPS coverage facilities undergoing this 

type of extensive component replacement. Failure to cover these sources 

serves to undermine Congress's intent that air quality be enhanced over the 

long term by applying best demonstrated technology with the turnover in the 

Nation's industrial base. 

To eliminate the ambiguity in the current wording of Section 60.15 and 

to further the intent underlying Section 111 (as described above), the 

Administrator is interpreting proposed replacement components to include all 

replacements which are required by programs of construction of alteration 

which commence (but are not necessarily completed) during any 2-year period 

for determinations of reconstruction. Stated differently, the Agency will 

count toward the 50 percent reconstruction threshold the fixed capital cost 

of all depreciable components (except those described below and elsewhere in 

this document) required for replacement in all continuous programs of 

reconstruction which commence within any 2-year period following 

December 17, 1980. In the Administrator's judgment, the 2-year period 

provides for this industry a reasonable, objective method of determining 

whether an owner is actually proposing extensive component replacement, 

within the Agency's original intent in promulgating Section 60.15. 

The Administrator must decide on a case-by-case basis if proposed 

replacements constitute reconstruction. This decision is based on the 

following: (l) fixed capital cost of replacement and estimated life of the 

facility after replacement compared to the cost and life of a comparable 

entirely new facility, (2) the extent to which the components being replaced 

cause or contribute to emissions from the facility, and (3) economic or 

technical limitations on compliance inherent in the proposed replacements. 

The brief and the Federal Reoister notice cited in one of the comments 

• — • • i i • •!•! m •••»—••• — i — i 

both deal with nonattainment provisions rather than NSPS. The Federal 

Register citation (46 FR 16280, March 12, 1981) proposed to standardize the 

definitions of "source" for new source review in attainment and nonattainment areas. Airpng other changes, the proposal seeks to drop the requirement 

that reconstructions be subject to nonattainment new source review. 

9-17 
P.21 

-I 

However, as part of the rationale for dropping reconstructions ^rom ~nis 

review, EPA stated that NSPS would assure the use of the most uo-to-date 

pollution control techniques, regardless of the applicability of nonattainment area new source review. Thus, it is consistent with the brief and the 

Federal Reaister notice to continue reconstruction as is for these 

standards. 

9-18