January 13, 1997

Paul Dubenetzky
Permit Branch
Office of Air Management
Indiana Department of Environmental Management
100 North Senate Avenue
P.O. Box 6015
Indianapolis, Indiana 46206-6015

Dear Mr. Dubenetzky:

This letter is in response to your request for a source definition determination for Indiana and
Michigan Power (I&M) and American Fly Ash (AFA) operations located in Rockport, Indiana.
As stated in your request, I&M produces electricity and AFA processes flyash on property
owned by I&M. AFA is required by contract to accept 95 percent of the flyash generated by
I&M and AFA receives flyash exclusively from I&M. I&M may terminate the contract if AFA
does not comply with its conditions and I&M requires AFA to meet and comply with all
environmental regulations.

The prevention of significant deterioration regulations in 40 CFR 52.21(b)(5) and (6) and the
Title V operating permit regulations in 40 CFR 70.2 define a stationary source as any building,
structure, facility, or installation that belong to the same industrial grouping, are located on
contiguous or adjacent properties, and are under the control of the same person (or persons
under common control). The Indiana Department of Environmental Management (IDEM)
believes that I&M and AFA should be considered one stationary source. I&M and AFA claim
that they should be considered separate sources because they do not belong to the same
industrial grouping and are not under common control.

The August 7, 1980, Federal Register (45 FR 52695) states that "one source classification
encompasses both primary and support facilities, even when the latter includes units with a
different two-digit SIC code. Support facilities are typically those which convey, store, or
otherwise assist in the production of the principal product." I&M and AFA claim that the support
facility designation does not apply to their operations because AFA does not assist in making
I&M's principal product - electricity. The United States Environmental Protection Agency
(USEPA) concurs with IDEM's position that I&M and AFA are one stationary source. For it is
the USEPA's position that the treatment and/or removal of a waste is essential to the lawful
production process and, therefore, is a support activity.

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,
two sources under common ownership would be considered under common control. If two
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 also 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 I&M and AFA operations, AFA is
required by contract to accept 95% of I&M's flyash and can only accept flyash from I&M. But for
the existence of I&M, there would be no flyash processing plant at this location. Although AFA
may be independent in ownership, its operations appear to be entirely dependent upon
agreements or contracts with I&M which, as a result, place them under common control.
Therefore, USEPA considers I&M and AFA to be under common control for 40 CFR 52.21
and 40 CFR Part 70 purposes.

Based on these considerations, USEPA considers these adjacent operations to be one
source classification and under common control and USEPA concurs with IDEM's positions
that I&M and AFA are to be considered one source under 40 CFR 52.21 and 40 CFR Part 70.
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,


Cheryl L. Newton, Chief
Permits and Grants Section

cc: Loraine Seyfried
Indiana Department of Environmental Management
Office of Legal Counsel