UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

JUN 2 3 1993 

MEMORANDUM 

SUBJECT: Applicability of New Source Review Circumvention 

Guidance to 3M - Maplew 

FROM : John B. 

Stationary 

Office of-~ir Quality Planning and Standards 

TO : George T. Czerniak, Chief 

Air Enforcement Branch 

Region V 

This is in response to your memorandum dated March 16, 1992, 

requesting guidance on New Source Review (NSR) permitting for the 

Minnesota Mining and Manufacturing (3M) Center located in 

Maplewood, Minnesota. Specifically, you requested guidance on the 

applicability of the circumvention guidance to this source and 

other sources in similar situations. We also received from your 

staff more information about the modifications at 3M and we 

suggested that you issue a §I14 request to the source for more 

information. In early November, we received a copy of the 

response to the §I14 request dated October 30, 1992. We hope this 

memorandum provides sufficient guidance on permitting this source 

and other sources in similar situations. 

Backsround 

In your memorandum of March 16, 1992, you notified us that 

the 3M Center in Maplewood, Minnesota received four synthetic 

minor permits for modifications between October 1991 and March 

1992. The permits for the four modifications combined allow 

emission increases of 33.6 tons per year (tpy) of particulates, 

39.8 tpy of sulfur dioxide, 39.4 tpy of nitrogen dioxide, 22.0 tpy 

of carbon monoxide, and 119.2 tpy of volatile organic compounds. 

You learned during the Region's discussions with Minnesota that in 

18 months, the source received 12 minor permits, and applied for 

several other minor permits. As a result, you indicated to the 

Minnesota Pollution Control Agency (MPCA) that 3M may be 

circumventing the Prevention of Significant Deterioration (PSD) 

regulations through these small projects. The MPCA, however, felt 

that these modifications were justified as separate modifications 

based on each 3M division pursuing its own research schedule. 

@ Printed on Recycled Paper 
Although it is somewhat unclear, the response to the §I14 request 

arguably supports 3M1s justification. Yet in light of criteria 

for identifying circumvention situations, as further explained 

below, the Stationary Source Compliance Division (SSCD) believes 

the source may not have been permitted properly for its 

modifications. 

EPA Policv and Authoritv 

EPA stated in the June 28, 1989 Federal Reffister notice on 

the definition of federally enforceable (54 FR 27274) and in its 

June 13, 1989 guidance on "Limiting potential to Emit in New 

Source Permitting" that it is not only improper but also in 

violation of the Clean Air Act to construct a source or major 

modification with a minor source permit when there is intent to 

operate as a major source or major modification. Permits with 

conditions that do not reflect a source's planned mode of 

operation are sham permits, are void & initio, and cannot shield 

a source from the requirement to undergo preconstruction review. 

40 CFR §52.21(r) (4) requires application of NSR requirements to a 

source that asks for a relaxation of permit limits which would 

make the source major. EPA stated that it will require 

application of §52.21(r) (4) even where a source legitimately 

changes a project after finding it cannot comply with the 

operating restrictions which were taken in good faith. 

Generally in "sham" permitting, a source attempts to 

expedite construction by securing minor source status through 

permits containing operational restrictions from which the source 

intends to free itself shortly after completion of construction 

and commencement of operation. Such attempts are treated as 

unlawful circumvention of the preconstruction review requirements. 

Similarly, attempts to expedite construction by securing several 

minor source permits and avoiding major modification requirements 

should be treated as circumvention. A memorandum dated 

September 18, 1989 from John Calcagni to William Hathaway stated 

this position (see Memorandum 4.42 in the NSR Guidance Notebook). 

EPA stated in the 1989 Federal ~effister notice that it is not 

possible to set forth, in detail, the circumstances in which EPA 

considers an owner or operator to have evaded preconstruction 

review through minor permits, and thus subject itself to 

enforcement sanctions under §§I13 and 167 from the beginning of 

construction. However, EPA will look to objective indicia to 

identify circumvention situations. For example, EPA provided 

examples of objective criteria in the June 13, 1989 guidance on 

limiting potential to emit. EPA also stated some criteria in the 

Federal Reffister notice which include: the filing of an 

application for a federal PSD permit at or near the same time as a 

state minor source permit; the economic realities surrounding a 

transaction; and projected levels of operation as portrayed to 
lending institutions and other records of projected demand and 

output. EPA stated that where it appears obvious that a proposed 

source or modification, by its physical and operational design 

characteristics, could not economically be run at minor source 

levels for an appreciable length of time, EPA will consider minor 

source limits taken by the source unrealistic and sham. 

Snecific Criteria 

Similar to the 1989 guidance, this memorandum provides 

criteria to permitting and enforcement authorities to apply when 

making determinations whether a source is circumventing major NSR 

through the minor modification process. 

1. Filing of more than one minor source or minor 

modification application associated with emissions increases at a 

single plant within a short time period. 

If a source files more than one minor source permit 

application simultaneously or within a short time period of each 

other, this may constitute strong evidence of an intent to 

circumvent the requirements of preconstruction review. 

Authorities should scrutinize applications that relate to the same 

process or units that the source files either before initial 

operation of the unit or after less than a year of operation. The 

September 18, 1989 memorandum from John Calcagni to William 

Hathaway states that two or more related minor changes over a 

short time period should be studied for possible circumvention. 

2. Application of funding. 

Applications for commercial loans or, for public utilities, 

bond issues, should be scrutinized to see if the source has 

treated the projects as one modification for financial purposes. 

If the project would not be funded or if it would not be 

economically viable if operated on an extended basis (at least a 

year) without the other projects, this should be considered 

evidence of circumvention. 

3. Reports of consumer demand and projected production 

levels. 

Stockholder reports, reports to the Securities and Exchange 

Commission, utility board reports, or business permit applications 

should be reviewed for projected operation or production levels. 

If reported levels are necessary to meet projected consumer demand 

but are higher than permitted levels, this is additional evidence 

of circumvention. 
4. Statements of authorized representatives of the source 

regarding plans for operation. 

Statements by representatives of the source to EPA or to 

State or local permitting agencies about the source's plans for 

operation can be evidence to show intent to circumvent 

preconstruction review requirements. 

5. EPArs own analysis of the economic realities of the 

projects considered together. 

EPA may determine that it is reasonable to expect that 

company management would coordinate the planning and execution of 

projects considering their intrinsic relationship with each other 

(physical proximity, stages of production process, etc.) and their 

impact on economic viability of the plant (scheduling down time in 

light of production targets, economies of scale, etc.). 

Analvsis of 3M-Ma~lewood 

Although 3M applied for and received several minor source 

permits within 18 months, in response to the 5114 request, 3M 

stated that independent divisions at the plant made the funding 

decisions for each independent project and that each project is 

independently viable. Thus, they suggest, the projects are not 

part of an attempt to circumvent preconstruction review. 3M and 

Minnesota have indicated that the divisionsr actions should be 

reviewed separately and should not be treated as parts of a whole. 

However, the law plainly treats the Maplewood plant as one major 

emitting facility for NSR purposes. The NSR regulations do not 

provide special treatment because it is a research and development 

plant. Further, given the nature of this source, under normal 

conditions, a certain level of production or research development 

of new products can be expected. Although the NSR program 

generally allows sources to modify below significance levels 

without aggregating other contemporaneous net increases, sources 

cannot use the minor modification process to circumvent major 

modification requirements. 

Where a source is permitted for several minor modifications 

that may in good faith be intended to be separate but result in 

the source's aggregate increases to be major even considering 

decreases over a short time period (e.g., one year or 18 months), 

the modifications may require major new source review. Such 

modifications could require NSR if they are viewed as being 

consistent with the source's overall production goals or plans for 

a short planning period. In other words, 3M should not benefit 

from the absence of a plant-wide production plan. Given the 

nature of the plant's work, 3M may be able to reasonably 

anticipate that modifications will occur within a relatively short 

period of time. 
Reports on consumer demand and projected production or 

emission levels may provide evidence that this plant is expected 

to modify regularly in response to such demands or research needs. 

Some minimum level of research activity and commensurate 

emissions, source-wide, perhaps could be expected from year to 

year, as would be expected to keep the 3M plant productive or 

operable. These emissions and thereby modifications cannot be 

presumed to be independent given the plant's overall basic purpose 

to support a variety of research and development activities. 

Therefore, even though each research project may have been 

individually conceived and separately funded, it is appropriate to 

look at the overall expected research activity in assessing NSR 

applicability and enforcement. 

Without regard to whether 3M intended to circumvent NSR 

requirements, this source and the State should discuss alternative 

permitting that could minimize the uncertainty of intent. 

Although we cannot require aggregation of all de minimis net 

increases, we believe that net increases should be aggregated for 

each "planning period" of the plant. One way to treat this source 

is to set a plant-wide emissions level, that can be raised only by 

going through major NSR. Recently, we worked with you and the 

MPCA to develop a plantwide emissions cap permit for a 3M facility 

in St. Paul. Although there are a number of concerns that must be 

addressed in such an approach, we believe that the source and the 

State would benefit from the certainty that such an approach 

provides. 

If you have any questions regarding this matter, please 

contact Clara Poffenberger at (703) 308-8709. 

cc: Karen Schapiro, OE 

Greg Foote, OGC 

Bill Lamason, AQMD 

Air Division Directors 

NSR contacts