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2.17
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
DATE: June 12, 1981
SUBJECT: PSD Determination: Sun Oil Company and the Definition
of Major Modification
FROM: Director, Division of Stationary Source Enforcement
TO: Julio Morales-Sanchez, Director,
Enforcement Division Region II
This is in response to your memo dated April 21, 1981, concerning the
Sun Oil Company in Yabucou, Puerto Rico and the definition of major
modification as that term is used in the context of the Prevention of
Significant Deterioration (PSD) regulations. The source in question
received a permit to construct in 1974, which limited the boiler to 300
million Btu/hr heat input. The source now proposes to increase the boiler's
heat input to 475 million Btu/hr and claim an exemption from PSD review
under 40 CFR 52.21 (b) (iii) (f). Specifically you seek clarification of
this exemption in Section 52.21 (b) (2) (iii) (f) which provides that an
increase in the hours of operation or in the production rate shall not
constitute a physical change or change in the method of operation unless
such change would be prohibited under any federally enforceable permit
condition which was established after January 6, 1975, pursuant to 40 CFR
52.21 or under regulations approved pursuant to 40 CFR 51.18 or 40 CFR
51.24.
This exclusion is interpreted to mean that any major source seeking to
increase its hours of operation or its production rate shall be allowed to
do so without the need of a PSD permit provided that such source was not
limited by an enforceable permit condition which was established after
January 6, 1975. In the instant case at hand, this would mean that the
boiler could increase its rate of operation from 300 MM Btu/hr heat input to
475 MM Btu/hr without the need for a PSD permit.
The preamble to the August 7, 1980 PSD regulations states at page
52704:
"It (the exclusion) would exclude any increase in hours
or rate of operation, as long as the increase would not
require a change in any preconstruction permit condition
established under the SIP (including PSD permits) after
the relevant date of concern.".
2
For the purposes of PSD the relevant date of concern is January 6, 1975.
This is the date when EPA initiated its PSD program and began tracking
changes in air quality impact. Action taken prior to that time could not
have been undertaken with any prior knowledge or prejudice toward the PSD
requirements.
While it is true that increase in production and operation may result
in significant emission increases they are not obligated to obtain prior
approval under PSD. This is explained in the preamble also at page 52704.
"This exclusion stems largely from EPA's decision that
the definitions of major "modification" should focus on
changes in "actual emissions." While EPA has concluded
that as a general rule Congress intended any significant
net increase in such emissions to undergo PSD or
nonattainment review, it is also convinced that Congress
could not have intended a company to have to get a NSR
permit before it could lawfully change hours or rate of
operation. Plainly, such a requirement would severely
and unduly hamper the ability of any company to take
advantage of favorable market conditions."
Although such changes will not be required to get PSD approval, they will
consume air quality increment provided the baseline date has been
established. Subsequent applicants should take such effects into account.
This response has been prepared with the concurrence of OAQPS and OGC.
Any questions or comments you have concerning it should be directed to Janet
Littlejohn Farella of my staff. She can be reached at 755-2564.
Edward E. Reich
cc: Mike Trutna
Peter Wyckoff
Gerald De Gaetano.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
DATE: APR 21, 1981
SUBJECT: Clarification of PSD Definition of Major Modification
FROM: Julio Morales-Sanchez, Director
Enforcement Division
TO: Edward E. Reich, Director
Division of Stationary Source Enforcement
The purpose of this memorandum is to request clarification with respect to
the definition of "major modification" as that term is used in the context
of the Prevention of Significant Deterioration of Air Quality ("PSD")
regulations, codified at 40 CFR Section 52.21 (45 FR 52676, August 7, 1980),
because a case being considered by the Region II Office may be affected by
the definition of that term.
"Major modification" is defined in the PSD regulations as "any physical
change in or change in the method of operation of a major stationary source
that would result in a significant net emissions increase of any pollutant
subject to regulation under the [Clean Air] Act." 40 CFR Section 52.21(b)
(2) (i). The regulations further state: "A physical change or change in the
method of operation shall not include: ...An increase in the hours of
operation or in the production rate, unless such change would be prohibited
under any federally enforceable permit condition which was established after
January 6, 1975, pursuant to 40 CFR 52.21 or under regulations approved
pursuant to 40 CFR 51.18 or 40 CFR 51.24." 40 CFR section 52.21(b) (2)
(iii) (f) (emphasis added).
The situation in question involves a proposed increase in an existing
boiler's allowable capacity. The original permit to construct was issued by
the State in 1974 pursuant to the New Source Review ("NSR") procedures
promulgated by that State and approved by EPA as part of the SIP on May 31,
1972 pursuant to 40 CFR Section 51.18. The construction permit is,
therefore, federally enforceable.
That permit limited the boiler in question to a capacity of 300 million
British thermal units per hour ("MMBtu/hour") heat input although the boiler
was rated in excess of 500 MMBtu/hour. In December of 1980 the source
applied to the State for a permit to increase the capacity of the boiler to
475 MMBtu/hour; this permit was issued in February of 1981. The source now
contends that it should be exempt from PSD review pursuant to the definition
of "major modification" because its permit to construct was issued before
January 6, 1975..
2
The definition itself is not clear with respect to whether the January 6,
1975 date applies only to the regulations codified at 40 CFR section 52.21
or, in the alternative, to regulations approved pursuant to 40 CFR Section
51.18 and 40 CFR 51.24 in addition to those codified at 40 CFR Section
52.21.
Region II notes that the preamble to the August 7, 1980 PSD regulations
gives some guidance on this issue. Specifically, the preamble states that
the phrase "change in the method of operation" does not encompass "any
increase in the hours or rate of operation of a source, so long as the
increase would require no change in any preconstruction permit condition
established after January 6, 1975 under the SIP." 45 FR 52698. This
guidance would tend to support the interpretation that the January 6, 1975
date is intended to apply to all regulations referenced in the definition in
question. This would, in turn, support the argument that, in the instant
case, the intended increase in the rate of operation would not be subject to
PSD review because the source's Section 51.18 or preconstruction permit was
issued before January 6, 1975.
The Region, however, recognizes that there is an argument for interpreting
the January 6, 1975 limitation as applicable only to those federally
enforceable permit conditions established after January 6, 1975 pursuant to
40 CFR Section 52.21. In the instant case, this would lead to a
determination that the source would be subject to PSD review. This argument
can be summarized as follows:
- While January 6, 1975 is the effective date of the first PSD
regulations, it apparently has no relevance to permits issued
pursuant to Section 51.18. As the January 6, 1975 date was not
factored into the definition of "major modification" codified
under the June 19, 1978 PSD regulations, it is unclear why it
would be a factor under the current regulations (if such is indeed
the case). A case can be made that a significant emissions
increase at an emissions unit which was limited under a federally
enforceable (Section 51.18 NSR permit) permit condition is
comparable to a significant emissions increase which results from
the addition of a new emissions unit at a source..
3
- This is a modification of an existing major source which would
potentially (a) increase emissions in significant amounts, (b)
consume increment, and (c) degrade the ambient air quality.
An expeditious reply to this request would be appreciated. Should you
require additional information relative to this proposal please contact Mr.
Gerald DeGaetano at (212) 264-4726.
cc: F. Giaccone, 2AIR-AF
K. Eng, 2PM-PA
R. Stein, 2ENF-GE |