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Texas Natural Resource Conservation Commission
             Austin                       Texas

To:  Permit Engineers
From:  Lawrence Pewitt, P.E., Permits Program Director
Date:  August 9, 1990, Updated September 27, 1994
Subject:  Prevention of Significant Deterioration (PSD) and
          Nonattainment Review Implications for Relaxation of
          Permit conditions

This is to alert you to some obscure situations in which EPA
may require PSD and nonattainment review.  See 40 CFR 52.21
(r)(4), 52.21(b)(2)(iii)(e) and (f) in the PSD rules and 40
CFR 51.165 (a)(5)(ii) and 51.165 (a)(1)(v)(C)(5) and (6) in
the nonattainment rules.  Generally the issue in these rules
is if the facility has the capability to be major, there was
a "federally enforceable state permit condition" which
resulted in the source being minor and then "relaxation of the
standard" (e.g., when removed or changed during a state
permit/amendment review) results in the source becoming major
then the permit unit is reviewed as if it were originally
built major.  The areas where the rules are focused are raw
material and fuel changes and increases in throughputs or
operating hours such as adding an additional shift.

For example,

1.  A company proposes to build a 10 million standard cubic
    feet per day (MMSCFD) gas sweetening unit which will emit
    220 tons per year (TPY) sulfur dioxide (SO2).  The TACB
    issues a state permit limiting them to 220 TPY SO2.  One
    year later the company wants to process a slightly higher
    throughput, no construction is required and emissions will
    increase by 35 TPY to 255 TPY SO2.  EPA would consider
    this a relaxation of a permit limit which if it had not
    been there the company would have had to get a PSD permit
    to start the process.  So a PSD permit is now required as
    if the plant was being built as a grassroots plant unless
    the company limits their increase so that the total plant
    emission rate is less than 250 TPY after the relaxation.

2.  Similarly, the same gas sweetening plant which did not
    have a throughput increase but had a hydrogen sulfide
    (H2S) concentration increase (an alternative raw material)
    resulting in the same increase in emissions would be
    subject to PSD review.

3.  The same thing would be true for nonattainment review. 
    If the company built a plant and represented 20 TPY of VOC
    in a nonattainment county and then came in with no
    construction and requested an increase of 10 TPY of VOC
    emissions, this would be considered as all one project. 
    Nonattainment review and offsets for the entire 30 TPY
    would be required.  This assumes the permit was received
    and issued after the November 15, 1992 deadline for the
    new ozone nonattainment requirements of the 1990 Federal
    Clean Air Act Amendments.  

4.  An existing major source modifies a plant and increases
    throughput (with or without construction), which results
    in an increase of 35 TPY.  The TACB issues a state permit
    or amendment which limits the emissions.  Then later the
    company discovers that they can operate at a slightly
    higher throughput with no construction and requests a 
    permit amendment to increase emissions another 6 TPY. 
    This will require a PSD permit as a major modification
    since the total increase would have been 41 TPY if the 
    company had come in for the total allowable at the 
    beginning.  This is also the case for nonattainment
    review in a nonattainment county.

5.  If any of these cases required the addition of significant
    equipment then it would not be an increase solely as a
    result of a relaxation of a federal permit condition. 
    However, EPA may consider it phased construction and PSD
    review may be required.  We need to proceed very
    cautiously in these cases.  This separate, but related
    concern arises from construction of related units over a
    short period of time in separate projects where it may be
    suspected that a company is trying to circumvent the
    PSD/nonattainment regulations by keeping each individual
    project below major.  It is difficult to prove 
    circumvention, so it is best to remind permit applicants
    that phased construction projects have to be evaluated as
    a single project when determining PSD/nonattainment 

Key issues in making these applicability decisions are:

1.  Is the only thing that is holding the facility below major
    a permit condition?  In other words is the already
    permitted equipment capable of emitting at a "major rate"
    with no physical modifications?

2.  Is the proposed change resulting in increased emissions at
    the previously permitted facility the result of the use of
    alternate fuel or raw material, increased operating hours,
    or increased throughput?

3.  Does the proposed change not require any significant
    construction?  Changing out a little pipe and a few pumps
    would not be considered significant construction.

4.  After the proposed change will the total permitted
    facility emissions be increased to above major?

If the answers to all of these are yes, then PSD or
nonattainment review is probably required for the original and
proposed project due to relaxation of a permit condition.

There is no official guidance from EPA on a time frame over
which the relaxation of a permit condition causes the total
increases for all the projects to be added together to
determine major status.  However, after discussion with Merrit
Nicewander and staff at EPA Region 6 on August 1, 1990, we
came to the conclusion that clearly we need to be especially
alert to any relaxations within two to three years after start
of operation of the facilities.  But even changes that may
occur outside that two to three year boundary may very well be
considered a relaxation when looking at all the facts.  The
final decision on all these situations should be made on a
case-by-case basis with your Division Director or myself.

cc:  Steve Spaw, P.E., Executive Director 
     Bill Campbell, Deputy Executive Director
     James C. Myers, P.E., Deputy Director, Regulatory
     Regional Directors