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Correspondence



January 4, 1995
(AR-18J)

Richard Martin
Assistant Administrator
Air Pollution Control Section
Department of Public Works
City of Indianapolis
2700 South Belmont Avenue
Indianapolis, Indiana 46221-2097

Dear Mr. Martin:

This is in response to your letter requesting a source definition determination for a new 28.5 megawatt (MW) cogeneration plant. The cogeneration plant will be located on property adjacent to Citizens Gas and Coke Utility (CG&CU), will be fired by coke oven gas obtained from CG&CU, and will fire natural gas only as a backup. The coke oven gas which will be provided to the cogeneration plant is a by-product of the CG&CU coking process. The cogeneration plant will provide 25 MW of power to the Indianapolis Power and Light grid and 3 MW in steam to CG&CU. CG&CU will be a limited partner in the cogeneration plant. The Standard Industrial Codes (SIC) for CG&CU and for the proposed cogeneration plant are 4925 and 4911, respectively. Your office has requested a United States Environmental Protection Agency (USEPA) determination of whether or not the cogeneration plant and the CG&CU plant are considered a single source for Prevention of Significant Deterioration permitting purposes.

According to 40 CFR 52.21(b)(6), the definition of a building, structure, facility, or installation means "all of the pollution-emitting activities which belong to the same industrial grouping, are located on one or more contiguous or adjacent properties, and are under the control of the same person (or persons under common control) except the activities of any vessel" (emphasis added). Pollutant-emitting activities shall be considered as part of the same industrial grouping if they belong to the same "Major Group," which have the same first 2 digit SIC code. The proposed cogeneration plant will be located on property adjacent to CG&CU and shares the same first 2 digit SIC code with CG&CU. Therefore, the issue requiring clarification is whether or not the cogeneration plant and the CG&CU plant are considered under "common control."

According to the March 16, 1979, USEPA memorandum titled "Definition of a Source," determinations of what entities are under common control with the applicant will be made on a case-by-case basis. A number of factors could decide common control status. For example, if 2 sources are under common ownership, they would be considered under common control. Also, if 2 sources are under different ownership, but one company has some decision-making ability in the second facility through a contractual agreement or a voting interest, the sources would be considered under common control.

These are not the only factors which may determine common control. Adjacent sources under different, independent ownership, may still be considered under common control due to the nature of their operations. In the case of the proposed cogeneration plant and CG&CU, the cogeneration plant provides only 3 MW of energy to CG&CU and 25 MW of energy to the power grid. However, the cogeneration plant is fired almost exclusively by coke oven gas from CG&CU. Natural gas is used only as a backup fuel. But for the existence of CG&CU, there would be no cogeneration plant. That is, the CG&CU plant is an integral part of the cogeneration process since the cogeneration plant is dependent on CG&CU coke oven gas for operation. Although the cogeneration plant may be independent in ownership, its operations appear to be entirely dependent upon agreements or contracts with CG&CU which place them under common control. Therefore, USEPA considers the cogeneration plant and CG&CU to be under common control for 40 CFR 52.21(b)(6) purposes.

I hope this information is useful. If you have any questions concerning this issue, please call Sam Portanova, of my staff, at (312) 886-3189.

Sincerely yours,

/s/


Cheryl Newton, Chief
Permits and Grants Section