www.all4inc.comKimberton, PA | 610.933.5246Columbus, GA | 706.221.7688

Aggregation in Air Permitting – When Two

Sources Become One

Mark Wenclawiak, CCM | mwenclawiak@all4inc.com | 770-213-3468March 26, 2013

Presented to 2013 GAWP Industrial Conference & Expo by All4 Inc.

2 Your environmental compliance is clearly our business.

Why is this topic an issue?• Avoiding major source status• Case-by-case scenarios

What is a “stationary source?”• Three longstanding criteria• Illustrative examples

A new twist • Summit Petroleum Corp v EPA, et. al.

Considerations for your projects Questions and open discussions

Outline

Why Is This Topic An Issue?

Permitting ImplicationsDiverse Operating Scenarios

4 Your environmental compliance is clearly our business.

Two sources are better than one • Avoid major source status!

Companies co-locating on property• Same parent company; subsidiary; joint ventures;

infrastructure sharing Projects related to sustainability creating

symbiotic relationships• Landfill gas-to-energy projects• Combined heat and power• One company’s waste is another company’s raw

material

Why Is This Topic An Issue?

What Is a Stationary Source?

3 Factor TestSingle Source Determination

6 Your environmental compliance is clearly our business.

Core premise of PSD and Title V permitting• Stationary source: “Any building, structure, facility, or

installation which emits or may emit any air pollutant subject to regulation under the CAA.”

• Three decades of applying the “3 factor test”1. under common control; and, 2. located on 1 or more contiguous or adjacent

properties; and,3. in the same two-digit SIC code or 1 of the facilities is

considered a support facility to the other Single source determination

What Is A Stationary Source?

7 Your environmental compliance is clearly our business.

“Common control” – presumed with co-location• Dependency (whether 1 operation can function

without the other)• Landlord-tenant (contract for services)• Common workforce (executives, managers,

maintenance, operators)• Support services (shared administrative services)• Shared equipment (production, maintenance or

support equipment)• Shared pollution controls• Legal responsibility (1 operation responsible for all)

Common Control

8 Your environmental compliance is clearly our business.

“Contiguous or adjacent property”• Not defined in literal terms or through an empirical

formula• McCarthy memo (September 2009)• Distance between operations (“proximity”) AND• Functional interrelatedness

Physical connections (dedicated rail lines, pipe lines, roadways, conveyors, taxiways)

Shared operational relationships (common parking or service areas, workforce, security)

• Oil and gas industry

Contiguous or Adjacent

9 Your environmental compliance is clearly our business.

“Same SIC Code”• Simple when co-located facilities have the same code• Still can be aggregated with different codes if they

meet a primary activity or support facility test• Primary activity based on principal product produced,

services rendered, or revenues• Support activity: “those which convey, store, or

otherwise assist in the production of the principal product;” 50% of output or services

Crude pipeline facility (SIC 4612) for a bulk terminal (SIC 5171) = one source

Same SIC Code

10 Your environmental compliance is clearly our business.

ABC Power Company (ABC) is located next to XYZ Manufacturing Company (XYZ). XYZ purchases power from ABC to support its manufacturing operations. ABC, however, produces power for thousands of customers within the State. In this example, we have two separate facilities. ABC, though supporting XYZ, also provides power to thousands of other customers. Therefore, ABC clearly is an independent power company, whose primary activity goes beyond supporting XYZ's operations.

Example – Common Control

11 Your environmental compliance is clearly our business.

A wood furniture manufacturing plant owns and operates a wood-fired electric generating boiler. The electricity that is generated from this boiler is sold to a power company for use and distribution to its customers throughout the State. The boiler does not directly supply any power to the wood manufacturing plant. However, this boiler does primarily support the wood furniture manufacturing business because its main purpose is to provide an innovative means of disposing of the wood waste from the manufacturing plant. Therefore, in this case, the wood-fired electric generating boiler would be classified as part of the wood furniture manufacturing operations and would be considered to be part of the same facility.

Example – Common Control

12 Your environmental compliance is clearly our business.

Two sources separated by three miles were determined to be adjacent because a significant amount of material is transported between them on a daily basis.

Two sections of a refinery approximately two miles apart were determined to be adjacent because neither section produces products independently due to a connection via pipeline between them.

A landfarm and a brewery are located approximately 6 miles apart. The landfarm disposes of the brewery’s wastewater and is connected to the brewery via pipeline. The brewery and landfarm were determined to be adjacent because the operation of the landfarm is integral to the operation of the brewery.

Example – Contiguous/Adjacent

A New Twist

Summit Petroleum Corp v EPA, et. al.

14 Your environmental compliance is clearly our business.

Summit decision evaluated “adjacent” Oil and gas sweetening plant and related wells Reversed consideration of interrelatedness Adjacent related only to physical proximity Applies only in Michigan, Ohio, Tennessee,

Kentucky Otherwise, continue to apply 3 factor test Or is it the sign of things to come?

A New Twist

Considerations for Your Project

Be Prepared to Support Your Claims

16 Your environmental compliance is clearly our business.

Remember – case-by-case basis Ask yourself questions about your project

• Do facilities share common workforces, intermediates, products, byproducts?

• Is there a contractual arrangement for goods and services? Financial arrangements between entities?

• If 2 facilities were sited farther apart, would that affect the degree to which they are dependent on each other?

• If one shuts down, what are the limitations on the other to pursue outside business interest?

Considerations

17 Your environmental compliance is clearly our business.

Pre-application meeting• EPD buy-in or does it need to get elevated to EPA?• Schedule impacts if a decision is needed from agency

Maintain documentation to support determination that not a single source• Emissions information• Engineering design specifications• Business documentation

Considerations

www.all4inc.comKimberton, PA | 610.933.5246Columbus, GA | 706.221.7688

Questions and Open Discussions

Mark Wenclawiak, CCM| mwenclawiak@all4inc.com | 770-213-3468