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Texas Natural Resource Conservation Commission
           Austin                      Texas

From:  Lawrence E. Pewitt, P.E., Director, Permits Division  
To:  All Permit Engineers
Date:  August 5, 1987
Subject:  Prevention of Significant Deterioration (PSD)
          Applicability Issues

In determining PSD applicability, there are three interrelated
factors to consider:   

1.  federal enforceability
2.  potential to emit and 
3.  contemporaneous reductions.  

This memo will discuss the definition and use of these three

Federal Enforceability - 

Only items in the State Implementation Plan (SIP) are
federally enforceable.  Construction permits are in the SIP;
special permits and exemptions (special and standard) are in
the SIP.  Construction permits can be used as a suitable
vehicle to define or limit potential to emit, equipment
removal, contemporaneous reductions, etc. for use in PSD
applicability determinations.

Potential to Emit - 

Potential to emit is defined as the capability at maximum
design capacity and continuous operation to emit a pollutant,
before air pollution control equipment is applied, unless the
capability is limited by federally enforceable permit
restrictions that limit utilization, hours of operation,
amount of material used, etc.

Contemporaneous Reduction - 

Only those reductions accomplished as a condition on a permit
are federally enforceable.  Conditions on special permits and
exemptions do not count, nor does the physical removal of a
piece of equipment count.  The only benefit of removing
equipment would be in determining the "major source" status of
a site.  For example, assume a compressor station has three
engines and each engine emits 100 TPY NOx.  Since total NOx
emissions are 300 TPY (i.e., > 250 TPY) the site is a major
source.  The company wants to replace one engine under
standard exemption (SE) number six with one that emits 60 TPY
NOx.  By removing one engine, the site drops to 200 TPY and is
no longer a major site.  The new engine can be installed under
SE No. 6, and the site is major again at 260 TPY.  Now suppose
there were four old engines at 100 TPY each.  If one is
removed, the site emissions are 300 TPY and is still major. 
Therefore, the addition of 60 TPY (> 40 TPY) triggers PSD and
requires a permit (since standard exemptions can't be used
when PSD applies).  However, the permit can now be used to
mandate the removal of an old engine thereby making the
contemporaneous reduction federally enforceable, after which
PSD is no longer applicable.  Note:  if the site had an active
permit, then that permit could have been amended to remove the
old engine, after which the new engine could be authorized by
SE No. 6 since PSD did not apply.  

In accumulating insignificant increases, only the potential to
emit of the project needs to be considered in determining PSD
applicability; insignificant increases are not accumulated. 
If, however, an applicant proposes contemporaneous decreases,
all contemporaneous increases and decreases must be

If a contemporaneous reduction is proposed, the applicant will
need to document the portion of the decrease being used and
the portion that remains available for any future
contemporaneous reduction; otherwise EPA will assume that the
entire reduction has been relied upon and is not available for
further reductions.

cc:  Mr. Steve Spaw, P.E., Deputy Executive Director
     Mr. James C. Myers, P.E., Director, Enforcement Program
     Regional Directors