environmental protection agency pt. 57legismex.mty.itesm.mx/secc_inter/40cfr/40cfrpart057.pdf131...

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Environmental Protection Agency Pt. 57

State’s performance in implementingand enforcing the act is performed.

(b) Within 60 days after comment isdue from each State grantee on theevaluation report required by § 35.538 ofthis chapter, the Regional Adminis-trator shall incorporate or include anycomments, as appropriate, and publishnotice of availability of the evaluationreport in the FEDERAL REGISTER.

PART 57—PRIMARY NONFERROUSSMELTER ORDERS

Subpart A—General

Sec.57.101 Purpose and scope.57.102 Eligibility.57.103 Definitions.57.104 Amendment of the NSO.57.105 Submittal of required plans, pro-

posals, and reports.57.106 Expiration date.57.107 The State or local agency’s trans-

mittal to EPA.57.108 Comparable existing SIP provisions.57.109 Maintenance of pay.57.110 Reimbursement of State or local

agency.57.111 Severability of provisions.

Subpart B—The Application and the NSOProcess

57.201 Where to apply.57.202 How to apply.57.203 Contents of the application.57.204 EPA action on second period NSOs

which have already been issued.57.205 Submission of supplementary infor-

mation upon relaxation of an SO2 SIPemission limitation.

Subpart C—Constant Controls and RelatedRequirements

57.301 General requirements.57.302 Performance level of interim con-

stant controls.57.303 Total plantwide emission limitation.57.304 Bypass, excess emissions and mal-

functions.57.305 Compliance monitoring and report-

ing.

Subpart D—Supplementary Control SystemRequirements

57.401 General requirements.57.402 Elements of the supplementary con-

trol system.57.403 Written consent.57.404 Measurements, records, and reports.

57.405 Formulation, approval, and imple-mentation of requirements.

Subpart E—Fugitive Emission Evaluationand Control

57.501 General requirements.57.502 Evaluation.57.503 Control measures.57.504 Continuing evaluation of fugitive

emission control measures.57.505 Amendments of the NSO.

Subpart F—Research and DevelopmentRequirements

57.601 General requirements.57.602 Approval of proposal.57.603 Criteria for approval.57.604 Evaluation of projects.57.605 Consent.57.606 Confidentiality.

Subpart G—Compliance ScheduleRequirements

57.701 General requirements.57.702 Compliance with constant control

emission limitation.57.703 Compliance with the supplementary

control system requirements.57.704 Compliance with fugitive emission

evaluation and control requirements.57.705 Contents of SIP Compliance Schedule

required by § 57.201(d) (2) and (3).

Subpart H—Waiver of Interim Requirementfor Use of Continuous Emission Reduc-tion Technology

57.801 Purpose and scope.57.802 Request for waiver.57.803 Issuance of tentative determination;

notice.57.804 Request for hearing; request to par-

ticipate in hearing.57.805 Submission of written comments on

tentative determination.57.806 Presiding Officer.57.807 Hearing.57.808 Opportunity for cross-examination.57.809 Ex parte communications.57.810 Filing of briefs, proposed findings,

and proposed recommendations.57.811 Recommended decision.57.812 Appeal from or review of rec-

ommended decision.57.813 Final decision.57.814 Administrative record.57.815 State notification.57.816 Effect of negative recommendation.APPENDIX A TO PART 57—PRIMARY NON-

FERROUS SMELTER ORDER (NSO) APPLICA-TION

AUTHORITY: Secs. 110, 114, 119, 301, CleanAir Act, as amended (42 U.S.C. 7410, 7414,7419, and 7601); sec. 406 of Pub. L. 95–95.

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40 CFR Ch. I (7–1–00 Edition)§ 57.101

SOURCE: 50 FR 6448, Feb. 15, 1985, unlessotherwise noted.

Subpart A—General§ 57.101 Purpose and scope.

(a) Applicability of the regulations. Theregulations in subparts A through Hgovern:

(1) The eligibility of smelters for aPrimary Nonferrous Smelter Order(NSO) under section 119 of the CleanAir Act;

(2) The procedures through which anNSO can be approved or issued by EPA;and

(3) The minimum contents of eachNSO required for EPA issuance or ap-proval under section 119. Subpart I etseq., will contain NSOs in effect for in-dividual smelters.

(b) State authority to adopt more strin-gent requrements. Nothing in this partshall preclude a State from imposingmore stringent requirements, as pro-vided by section 116 of the Clean AirAct.

§ 57.102 Eligibility.(a) A primary copper, lead, zinc, mo-

lybdenum, or other nonferrous smelteris eligible for an NSO if it meets thefollowing conditions:

(1) The smelter was in existence andoperating on August 7, 1977;

(2) The smelter is subject to an ap-proved or promulgated sulfur dioxide(SO2) State Implementation Plan (SIP)emission limitation which is adequateto ensure that National Ambient AirQuality Standards (NAAQS) for SO2 areachieved without the use of any unau-thorized dispersion techniques; and

(3) The Administrator determines,based on a showing by the smelterowner, that no means of emission limi-tation applicable to the smelter whichwould enable it to comply with its SIPstack emission limitation for SO2 hasbeen adequately demonstrated to bereasonably available (taking into ac-count the cost of compliance, nonairquality health and environmental im-pact, and energy considerations) in ac-cordance with § 57.201(d)(1).

(b) For the purposes of these regula-tions:

(1) The following means of emissionlimitation shall be considered ade-

quately demonstrated for nonferroussmelters. (Taking into account nonairquality health and environmental im-pact and energy considerations, butnot the cost of compliance).

(i) Retrofit control technologies.(A) Sulfuric acid plant in conjunction

with an adequately demonstrated re-placement technology or process modi-fication;

(B) Magnesium oxide (concentration)scrubbing;

(C) Lime/limestone scrubbing; and(D) Ammonia scrubbing.(ii) Replacement or process modifica-

tions.(A) Flash smelting;(B) Oxygen enrichment;(C) Supplemental sulfur burning in

conjunction with acid plant;(D) Electric Furnace;(E) Noranda process;(F) Fluid bed roaster;(G) Continuous smelting (Mitsubishi)

process; and(H) Strong stream/weak stream gas

blending.(2) Each adequately demonstrated

means of emission limitation whichwould enable a smelter to comply withits SIP emission limitation for SO2

shall be considered applicable to thesmelter unless the smelter operatordemonstrates that the use of a par-ticular system at that smelter is tech-nically unreasonable, for reasons spe-cific to that site.

(3) An applicable means of emissionlimitation which would enable a smelt-er to comply with its SIP emission lim-itation for SO2 shall be considered ade-quately demonstrated to be reasonablyavailable to the smelter (taking intoaccount the cost of compliance) if theinformation submitted under§§ 57.107(a) and 57.203(b) (plus any nec-essary supplemental information)shows, according to the criteria, proce-dures, and tests contained in appendixA to this part and in accordance with§ 57.201(d)(1), that both of the followingtwo tests are met.

(i) The rate of return test. The presentvalue of the smelter’s future net cashflow (during and after investment inconstant control technology) is morethan book value of the smelter’s net in-vestment in constant dollars.


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Environmental Protection Agency § 57.103

(ii) The profit protection test. The con-stant control technology expenditurereduces the present value of the smelt-er’s forecast pretax profits by less than50%.

(c) When applying for an NSO, asmelter must establish, for purposes ofapplying the financial eligibility tests,which adequately demonstrated con-stant control technology applicable tothat smelter is the most economicallyfeasible for use at that smelter.

[50 FR 6448, Feb. 15, 1985, as amended at 51FR 10211, Mar. 25, 1986]

§ 57.103 Definitions.(a) The Act means the Clean Air Act,

as amended.(b) Active use refers to an SO2 con-

stant control system installed at asmelter before August 7, 1977 and nottotally removed from regular serviceby that date.

(c) Adequate SO2 emission limitationmeans a SIP emission limitation whichwas approved or promulgated by EPAas adequate to attain and maintain theNAAQS in the areas affected by thestack emissions without the use of anyunauthorized dispersion technique.

(d) Administrative Law Judge means anadministrative law judge appointedunder 5 U.S.C. 3105 (see also 5 CFR part930, as amended by 37 FR 16787), and issynonymous with the term ‘‘HearingExaminer’’ as formerly used in Title 5of the U.S. Code.

(e) The Administrator means the Ad-ministrator of the U.S. EnvironmentalProtection Agency, or the Administra-tor’s authorized representative.

(f) Ambient air shall have the meaninggiven by 40 CFR 50.1(e), as that defini-tion appears upon promulgation of thissubpart, or as hereafter amended.

(g) Ambient air quality refers only toconcentrations of sulfur dioxide in theambient air, unless otherwise specified.

(h) An approved measure refers to onecontained in an NSO which is in effect.

(i) Assistant Administrator for Air andRadiation means the Assistant Admin-istrator for Air and Radiation of theU.S. Environmental Protection Agen-cy.

(j) Constant controls, control tech-nology, and continuous emission reduc-tion technology mean systems whichlimit the quantity, rate, or concentra-

tion, excluding the use of dilution, andemissions of air pollutants on a contin-uous basis.

(k) Effective date of an NSO means theeffective date listed in the FEDERALREGISTER publication of EPA’sissuance or approval of an NSO.

(l) EPA and the Agency means the Ad-ministrator of the U.S. EnvironmentalProtection Agency, or the Administra-tor’s authorized representative.

(m) Fugitive emissions means any airpollutants emitted to the atmosphereother than from a stack.

(n) Issuance of an NSO means thefinal transmittal of the NSO pursuantto § 57.107(a) by an issuing agency(other than EPA) to EPA for approval,or the publication of an NSO issued byEPA in the FEDERAL REGISTER.

(o) Issuing agency, unless otherwisespecifically indicated, means the Stateor local air pollution control agency towhich a smelter’s owner has applied foran NSO, or which has issued the NSO,or EPA, when the NSO application hasbeen made to EPA. Any showings ordemonstrations required to be madeunder this part to the issuing agency,when not EPA, are subject to inde-pendent determinations by EPA.

(p) Malfunction means any unantici-pated and unavoidable failure of airpollution control equipment or processequipment or of a process to operate ina normal or usual manner. Failuresthat are caused entirely or in part bypoor design, poor maintenance, care-less operation, or any other prevent-able upset condition or preventableequipment breakdown shall not be con-sidered malfunctions. A malfunctionexists only for the minimum time nec-essary to implement corrective meas-ures.

(q) Maximum production capacitymeans either the maximum dem-onstrated rate at which a smelter hasproduced its principal metallic finalproduct under the process equipmentconfiguration and operating proceduresprevailing on or before August 7, 1977,or a rate which the smelter is able todemonstrate by calculation is attain-able with process equipment existingon August 7, 1977. The rate may be ex-pressed as a concentrate feed rate tothe smelter.


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40 CFR Ch. I (7–1–00 Edition)§ 57.104

(r) NAAQS and National Ambient AirQuality Standards, unless otherwisespecified, refer only to the NationalPrimary and Secondary Ambient AirQuality Standards for sulfur dioxide.

(s) Scheduled maintenance means anyperiodic procedure, necessary to main-tain the integrity or reliability ofemissions control performance, whichcan be anticipated and scheduled in ad-vance. In sulfuric acid plants, it in-cludes among other items the screen-ing or replacement of catalyst, the re-tubing of heat exchangers, and the rou-tine repair and cleaning of gas han-dling/cleaning equipment.

(t) Smelter owner and operator meansthe owner or operator of the smelter,without distinction.

(u) Supplementary control system (SCS)means any technique for limiting theconcentration of a pollutant in the am-bient air by varying the emissions ofthat pollutant according to atmos-pheric conditions. For the purposes ofthis part, the term supplementary con-trol system does not include any dis-persion technique based solely on theuse of a stack the height of which ex-ceeds good engineering practice (as de-termined under regulations imple-menting section 123 of the Act).

(v) Unauthorized dispersion techniquerefers to any dispersion techniquewhich, under section 123 of the Act andthe regulations promulgated pursuantto that section, may not be used to re-duce the degree of emission limitationotherwise required in the applicableSIP.

(w) Unless otherwise specified in thispart, all terms shall have the samemeaning given them by the Act.

[50 FR 6448, Feb. 15, 1985, as amended at 57FR 5328, Feb. 13, 1992]

§ 57.104 Amendment of the NSO.An NSO shall be amended whenever

necessary for compliance with the re-quirements and purposes of this part.

(a)(1) Issuance of amendment. A Stateor local issuing agency may issue anamendment of any NSO it has issued.Any amendment issued by a State orlocal issuing agency shall be subject toapproval by EPA to the same extent aswas the original NSO. Any smelterowner may apply to the agency whichoriginally issued its NSO for an amend-

ment of the NSO at any time. Such anapplication shall be accompanied bywhatever documentation is required bythat agency (or EPA) to support the re-quested amendment.

(2)(i) Notwithstanding the require-ments of paragraph (a)(1) of this sec-tion, amendments to SIP complianceschedule interim compliance dates inState-issued NSO’s need not be sub-mitted for EPA approval if the amend-ment does not delay the interim dateby more than three months from thedate as approved by the Administratorand if the final compliance date is un-changed. Delays longer than 3 monthsshall be handled according to the provi-sions of § 57.104(a)(1).

(ii) Changes made in accordance withthis subparagraph may be effective im-mediately but must be submitted toEPA within seven days. EPA will givepublic notice of receipt of such changesby publication of a Notice in the FED-ERAL REGISTER.

(3) In any case in which the issuingagency fails to issue an amendmentnecessary for compliance with the re-quirements and purposes of this part,EPA may, after first giving the issuingAgency notice, issue such amendment.

(b) Revision of SCS Manual. Operationin accordance with the revised provi-sions of an SCS operational manual(see § 57.402(e)) shall not be considered aviolation of an NSO while the applica-tion for approval of those revisions asNSO amendments is pending before theissuing agency (or EPA) for approval:Provided, that:

(1) No violations of NAAQS occur inthe smelter’s Designated LiabilityArea during that time; and

(2) The smelter operator has not beeninformed by the issuing agency or EPAthat its application is not adequatelydocumented, unless such deficiency hasbeen remedied promptly.

(c) Notice and opportunity for hearing.Notice and opportunity for public hear-ing shall be provided before issuance ofall major amendments.

§ 57.105 Submittal of required plans,proposals, and reports.

(a) The failure of a smelter owner tosubmit any plan, report, document orproposal as required by its NSO or by


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this part shall constitute a violation ofits NSO.

(b) If the Administrator determinesthat a nonferrous smelter is in viola-tion of a requirement contained in anNSO approved under these regulations,the Administrator shall, as provided bysection 119(f) of the Act:

(1) Enforce such requirement undersection 113 (a), (b), or (c) of the Act;

(2) Revoke the order after notice andopportunity for hearing;

(3) Give notice of noncompliance andcommence action under section 120 ofthe act; or

(4) Take any appropriate combina-tions of these actions.

(c) Under section 304 of the Act, anyperson may commence a civil actionagainst an owner or operator of asmelter which is alleged to be in viola-tion or any order approved under thispart.

§ 57.106 Expiration date.Each NSO shall state its expiration

date. No NSO issued under this regula-tion shall expire later than January 1,1988.

§ 57.107 The State or local agency’stransmittal to EPA.

(a) Content and bases of the State orlocal agency’s NSO. Issuance of an NSOby a State or local agency shall becompleted by the issuing agency’stransmittal to the appropriate EPARegional Office of:

(1) The text of the NSO;(2) The application submitted by the

smelter owner, except for appendix Ato this part, all correspondence be-tween the issuing agency and the appli-cant relating to the NSO, and any ma-terial submitted in support of the ap-plication;

(3) A concise statement of the Stateor local agency’s findings and theirbases; and

(4) All documentation or analysesprepared by or for the issuing agencyin support of the NSO.

(b) The State or local agency’s enforce-ment plan. The transmittal under para-graph (a) of this section shall be ac-companied by a description of theissuing agency’s plans for monitoringcompliance with and enforcement ofthe NSO. The transmittal shall also in-

clude a description of the resourceswhich will be used to implement thoseplans. If the enforcement plans appearinadequate, EPA may require that theNSO be modified such that the NSOwill be adequately enforced.

§ 57.108 Comparable existing SIP pro-visions.

Notwithstanding any other provisionof this part, an NSO may contain pro-visions to which the affected smelter issubject under the applicable EPA-ap-proved State Implementation Plan(SIP) for sulfur dioxide in lieu of thecorresponding provisions which wouldotherwise be required under this part ifthe Administrator determines thatthose SIP provisions are substantiallyequivalent to the corresponding NSOprovisions which would otherwise berequired, and if the Administrator de-termines that the smelter is in sub-stantial compliance with those SIPprovisions. For the purposes of thissection, provisions to which the af-fected smelter is subject under the ap-plicable EPA-approved State Imple-mentation Plan are those which be-came effective before the smelterowner applied for the NSO.

§ 57.109 Maintenance of pay.The Administrator will not approve

or issue an NSO for any smelter unlesshe has approved or promulgated SIPprovisions which are applicable to thesmelter and which satisfy the require-ments of section 110(a)(6) of the CleanAir Act.

§ 57.110 Reimbursement of State orlocal agency.

As a condition of issuing an NSO, anyissuing agency may require the smelteroperator to pay a fee to the State orlocal agency sufficient to defray theissuing agency’s expenses in issuingand enforcing the NSO.

§ 57.111 Severability of provisions.The provisions promulgated in this

part and the various applicationsthereof are distinct and severable. Ifany provision of this part or the appli-cation thereof to any person or cir-cumstances is held invalid, such inva-lidity shall not affect other provisions,or the application of such provisions to


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40 CFR Ch. I (7–1–00 Edition)§ 57.201

other persons or circumstances, whichcan be given effect without the invalidprovision of application.

Subpart B—The Application andthe NSO Process

§ 57.201 Where to apply.Any eligible smelter may apply for

an NSO to the appropriate EPA Re-gional Office or to the appropriateState or local air pollution controlagency.

(a) When application is made to EPA,all parts of the application required tobe submitted under this subpart shallbe sent directly to the Director, Sta-tionary Source Compliance Division(EN–341), U.S. Environmental Protec-tion Agency, 401 M Street SW., Wash-ington, DC 20460, Attention: Confiden-tial Information Unit. In addition, thesmelter owner shall send a copy of theapplication, except that part requiredto be submitted under § 57.203(b) (eligi-bility), directly to the appropriate EPARegional Office.

(b) When application is made to theappropriate State or local agency, thesmelter owner shall submit one com-plete copy of all parts of the applica-tion required to be submitted underthis subpart to that agency, in additionto the application requirements con-tained in paragraph (a) of this section.If the smelter owner is requesting anadvance eligibility determination pur-suant to § 57.203(b), such request mustbe made in writing and shall accom-pany the copy of the application beingsent to the Director of the StationarySource Compliance Division of the En-vironmental Protection Agency.

(c) If the smelter owner is requestinga waiver of the interim constant con-trol requirement of § 57.301, such re-quest must be sent directly to the Di-rector, Stationary Source ComplianceDivision, at the time of application, inaccordance with § 57.802.

(d) The NSO Process. (1) A smelter de-siring an NSO shall apply for an NSOby submitting an application undersubpart B including the financial infor-mation required in appendix A and in-cluding the information necessary tomake the determinations required bythis subparagraph and § 57.201(d)(2). Theissuing agency shall analyze the finan-

cial information according to the fi-nancial eligibility test prescribed bysubpart A and described in appendix A.The issuing Agency shall then deter-mine whether the smelter is able tocomply with its SIP on or before thedate required in the SIP by installingadequately demonstrated technologywhich is reasonably available. See also§ 57.102(a)(3). If the test demonstratesthat adequately demonstrated tech-nology is not reasonably available tothe smelter to allow it to comply withthe SIP by the required compliancedate, the smelter is eligible for an NSO.

(2)(i) If the smelter is determined tobe eligible for an NSO under paragraph(d)(1) of this section, the issuing Agen-cy shall apply the appendix A financialeligibility tests again before issuing anNSO in order to determine if the smelt-er can comply with its SIP require-ments on or before January 1, 1988 byinstalling adequately demonstratedtechnology which is reasonably avail-able.

(ii) If application of the tests showsthat the smelter could comply by orbefore January 1, 1988, the issuingagency shall notify the smelter of thisdetermination, and shall not issue anNSO to the smelter unless the NSOcontains a SIP compliance schedulemeeting the requirements of § 57.705.Such a compliance schedule must pro-vide for compliance with the smelter’sSO2 SIP as expeditiously as practicableand in no case later than January 1,1988. A smelter must submit to theissuing agency information necessaryto determine a compliance schedulemeeting the requirements of § 57.705.This information shall be submitted bya smelter within thirty days after thesmelter is notified by the issuing agen-cy that a SIP compliance schedule isrequired. The Administrator may con-sider an NSO application to be with-drawn for SIP enforcement purposes ifa smelter fails to submit such informa-tion within the time required underthis paragraph.

(iii) If no adequately demonstratedtechnology is found to be reasonablyavailable to enable a smelter to complyby January 1, 1988, it would be excusedfrom the compliance schedule require-ment in § 57.201(d)(2)(ii), but it would besubject to reevaluation of its ability to


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comply by that date at any time dur-ing the term of the NSO. (See§ 57.201(d)(3)).

(3) At any time during the term of anNSO which does not contain a SIPcompliance schedule, EPA or theissuing agency may reevaluate theavailability of technology to the smelt-er. If EPA or the issuing agency deter-mines that adequately demonstratedtechnology is reasonably available topermit the smelter to comply with itsSIP by or before January 1, 1988, theNSO shall be amended within 3 monthstime after such determination. Theamendment shall require compliancewith all SIP requirements by or beforeJanuary 1, 1988, and shall include acompliance schedule meeting the re-quirements of § 57.705. The determina-tion that adequately demonstratedtechnology is reasonably availableshall be made by reapplying the sameappendix A financial eligibility testsrequired by subpart B, updated by eco-nomic data reflecting current oper-ating conditions and currently dem-onstrated control technology. Anysuch determination and amendmentshall be governed by the provisions ofthis part and section 119 of the CleanAir Act.

(4) Notice and opportunity for publichearing in accordance with section 119of the Clean Air Act must be providedbefore issuance of any NSO.

(e) A smelter that does not have anyconstant SO2 controls or whose exist-ing constant SO2 controls when in fulloperation and optimally maintainedare not sufficient to treat all strongSO2 streams may apply for a waiver ofthe requirements of subpart C to in-stall interim constant controls by sub-mitting an application under subpartH. A waiver may be granted only withrespect to the requirement to elimi-nate bypass of constant controlsthrough the installation of new con-stant control equipment, not with re-spect to the requirements for optimummaintenance and operation of existingequipment. EPA shall then determinethe smelter’s ability to afford installa-tion of the required additional interimconstant SO2 control equipment at thesmelter based on financial eligibilityinformation analyzed according to thefinancial test prescribed in appendix A.

A waiver of the requirement for addi-tional interim constant controls willbe granted if EPA determines in ac-cordance with the procedures of sub-part H that imposition of this require-ment would necessitate closure of thesmelter for at least one year.

§ 57.202 How to apply.

(a) Letter of intent. To initiate an ap-plication for an NSO, the owner or op-erator of a smelter shall send a letterof intent to an appropriate air pollu-tion control agency. The letter of in-tent shall contain a statement of theowner’s intent to apply for an NSO, andan agreement to provide any informa-tion required under this part. The let-ter of intent shall be signed by a cor-porate official authorized to make suchcommitments. Upon receipt of any let-ter of intent by the issuing agency, theSIP emission limitation for sulfur di-oxide, as to that applicant, shall bedeemed suspended for 60 days. The 60day suspension may be extended forgood cause at the discretion of the Ad-ministrator.

(b) Complete application. (1) Withinthe period referred to in paragraph (a)of this section, the smelter owner shallsubmit its completed application pur-suant to § 57.201. Receipt of all parts ofa substantially complete applicationpostmarked within the original or ex-tended application period shall bedeemed to continue the suspension ofthe SIP emission limitation for SO2

until the issuing agency issues or de-clines to issue an NSO. This suspensionshall in all cases terminate, however,90 days after receipt of the substan-tially completed application, unless ex-tended for good cause at the discretionof the Administrator. If, in the Admin-istrator’s judgment, good faith efforthas been made to submit a completeapplication, additional time may begranted to allow for correction ofminor deficiencies.

(2) If an issuing agency transmits anNSO to EPA for approval before the ex-piration of the suspension of the Fed-eral SIP emission limitation, the sus-pension shall continue until EPA ap-proves or disapproves the NSO.


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40 CFR Ch. I (7–1–00 Edition)§ 57.203

§ 57.203 Contents of the application.(a) Claim of confidentiality. The smelt-

er owner may make a business con-fidentiality claim covering all or partof the information in the NSO applica-tion in accordance with 40 CFR part 2,subpart B (41 FR 36906 et seq., Sept. 1,1976 as amended by 43 FR 39997 et seq.,Sept. 8, 1978). A claim is effective onlyif it is made at the time the material issubmitted to the issuing agency orEPA. A claim shall be made by attach-ing to the information a notice of con-fidentiality. Information claimed asconfidential will be handled by EPAunder the provisions of 40 CFR part 2,subpart B. If no claim accompanies theinformation, it may be made availableto the public without further notice.

(b) Each smelter owner shall makethe showing required by § 57.102(a)(3) bycompleting and submitting appendix Ato this part and any necessary supple-mental information to the issuingagency as a part of its application.Each smelter shall also submit as partof its application the informationwhich, in conjunction with the infor-mation required by appendix A, is nec-essary for the issuing agency to makethe determination required by§ 57.201(d)(2). Any smelter owner orState may, at its option, simulta-neously submit this material to EPAfor an advance eligibility determina-tion.

(c) Current operating information. Acomplete NSO application shall alsocontain the following information:

(1) A process flow diagram of thesmelter, including current process andinstrumentation diagrams for all proc-esses or equipment which may emit oraffect the emission of sulfur dioxide;the characteristics of all gas streamsemitted from the smelter’s processequipment (flow rates, temperature,volumes, compositions, and variationsover time); and a list of all monitoringdata and strip charts, including alldata, charts, logs or sheets kept withrespect to the operation of any processequipment which may emit or affectthe emission of sulfur dioxide;

(2) The smelter’s maximum daily pro-duction capacity (as defined in§ 57.103(r)), the operational rate (inpounds of concentrate charged to thesmelting furnace per hour) of each

major piece of process equipment whenthe smelter is operating at that capac-ity; and the smelter’s average and max-imum daily production rate for eachproduct, co-product, or by-product, byyear, for the past four years;

(3) The optimal conversion efficiency(defined in terms of percent of totalSO2 removed from the input flowstream) of any acid plant or other sul-fur dioxide control system under thenormal process operating conditions(excluding malfunctions) most condu-cive to optimal conversion efficiency;

(4) The average conversion efficiencyof any acid plant or other sulfur diox-ide control system during normal proc-ess operations (excluding malfunc-tions), by month, during the past fouryears.

(5) The percent of the time the acidplant or other control system wasavailable for service during eachmonth for the past four years, exclud-ing downtime for scheduled mainte-nance, and a full explanation of anymajor or recurring problems with thesystem during that time;

(6) The frequency and duration oftimes during the past four years whenthe SO2 system was unavailable be-cause of scheduled maintenance of thesystem;

(7) A description of all scheduled,periodic, shutdowns of the smelter dur-ing the past four years, including theirpurpose, frequency and duration; andthe same information with respect tounscheduled shutdowns;

(8) The gas volume, rates, and SO2

concentration which the control sys-tem was actually designed to accom-modate, taking into account any modi-fications made after its installation;

(9) The average monthly sulfur bal-ance across the process and controlequipment, including fugitive emis-sions, for the past 4 years; and

(10) A description of engineeringtechniques now in use at the smelter toprevent the release of fugitive emis-sions into the atmosphere at low ele-vations.

(d) The smelter owner’s proposals. Thesmelter owner shall submit as part ofits application, draft NSO provisionswhich would implement the require-ments of subparts C through G of thispart. The issuing agency may use these


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proposals as the basis for any NSO thatmay be granted, or may modify theseproposals in any way it deems nec-essary in order to comply with the re-quirements of this part.

(e) A smelter may submit as part ofits application, information necessaryto determine any SIP complianceschedule which might be requiredunder § 57.201(d)(2).

(f) Additional information. The smelterowner shall designate in its applicationa corporate officer responsible and au-thorized to supply supplemental tech-nical and economic information andexplanations as required by the issuingagency during the formulation of theNSO. Failure to supply such informa-tion and explanations shall constitutea failure to submit a complete applica-tion.

(g) Request for a waiver of constantcontrols. Any request for a waiver ofthe requirement interim constant con-trol of all strpmg streams of § 57.301shall be made in accordance with§ 57.802. The criteria and procedures forgranting the waiver are governed bysubpart H of this part.

(h) Unless a smelter applies for awaiver in accordance with subpart H, asmelter shall submit as part of its ap-plication a proposed schedule for com-pliance with the interim constant con-trol requirements of subpart C whichsatisfies the requirements of § 57.702.

§ 57.204 EPA action on second periodNSOs which have already beenissued.

(a) EPA may approve a second periodNSO issued by a State before the dateof publication of these regulations inthe FEDERAL REGISTER, without requir-ing a complete reapplication under thissubpart and new State proceedings,provided:

(1) The second period NSO was issuedby the State consistent with the proce-dural requirements of section 119 of theClean Air Act;

(2) EPA can make a determinationthat the smelter is eligible for a secondperiod NSO and whether the smeltercan comply with its SO2 SIP limits onor before January 1, 1988 under the fi-nancial eligibility tests in these regu-lations on the basis of available infor-mation and such supplementary infor-

mation as the Agency may request thesmelter to submit; and

(3) The provisions of the NSO areconsistent with the requirements ofthese regulations.

(b) Should EPA require a smelter tosubmit information before taking finalaction on an NSO referred to in para-graph (a), of this section, it shall speci-fy a reasonable period for submission ofsuch information in light of the natureof the information being required. Theduration of such period shall not ex-ceed the period allowed for submissionof a complete application under § 57.202(a) and (b).

(c) The Agency shall consider the SIPemission limitation for SO2 to be sus-pended with respect to a smelter whichreceived an NSO described in subpart Auntil EPA takes final action on suchNSO. Such suspension shall terminateif the smelter does not submit supple-mentary information within the timespecified under paragraph (b).

§ 57.205 Submission of supplementaryinformation upon relaxation of anSO2 SIP emission limitation.

(a) In the event an SO2 SIP limit isrelaxed subsequent to EPA approval orissuance of a second period NSO, thesmelter issued the NSO shall submit tothe issuing agency and EPA such sup-plementary information that EPA con-siders appropriate for purposes of de-termining whether the means of com-pliance with the new SIP limit are ade-quately demonstrated to be reasonablyavailable under the financial eligibilitytests specified in § 57.102(b)(3). Thesmelter shall submit such informationwithin sixty days of notification byEPA. This time limit may be extendedby EPA for good cause.

(b) Upon receipt of any supple-mentary information required underparagraph (a), the issuing agency shallpromptly reevaluate the availability ofthe means of compliance with the newSIP limit under the NSO eligibilitytests specified in § 57.102(b)(3). If theissuing agency determines that thedemonstrated control technology nec-essary to attain the new SO2 SIP limitis adequately demonstrated to be rea-sonably available under the eligibilitytests, so as to permit the smelter tocomply with the new SIP limit on or


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before January 1, 1988, the NSO shall beamended within the time contemplatedby § 57.202(a) after receipt of the supple-mentary information. Such amend-ment shall require compliance with thenew SO2 SIP limit as expeditiously aspracticable in accordance with§ 57.201(d)(3). The issuing agency, if notEPA, shall promptly submit its deter-mination and any necessary NSOamendments to EPA.

(c) EPA shall take action to approveor disapprove the issuing agency’s de-termination and NSO amendment, ifany, within a reasonable time after re-ceipt of such determination andamendment.

(d) If EPA disapproves the issuingagency’s determination or NSO amend-ment, or if a smelter fails to submitany supplementary information as re-quired under paragraph (a), EPA and/orthe issuing agency shall take appro-priate remedial action. EPA shall takeappropriate remedial action if theissuing agency does not make any de-termination and amendment requiredby this section within the time con-templated by § 57.202(a).

Subpart C—Constant Controls andRelated Requirements

§ 57.301 General requirements.Each NSO shall require an interim

level of sulfur dioxide constant con-trols to be operated at the smelter, un-less a waiver of this requirement hasbeen granted to the owner under sub-part H of this part. Except as otherwiseprovided in § 57.304, the interim con-stant controls shall be properly oper-ated and maintained at all times. TheNSO shall require the following gasstreams to be treated by interim con-stant controls:

(a) In copper smelters, off-gases fromfluidized bed roasters, flash furnaces,NORANDA reactors, electric furnacesand copper converters;

(b) In lead smelters, off-gases fromthe front end of the sintering machineand any other sinter gases which arerecirculated;

(c) In zinc smelters, off-gases frommult-hearth roasters, flash roastersand fluidized bed roasters; and

(d) In all primary nonferrous smelt-ers, all other strong SO2 streams.

(e) In all primary nonferrous smelt-ers, any other process streams whichwere regularly or intermittently treat-ed by constant controls at the smelteras of August 7, 1977.

§ 57.302 Performance level of interimconstant controls.

(a) Maximum feasible efficiency. EachNSO shall require: that the smelter op-erate its interim constant control sys-tems at their maximum feasible effi-ciency, including the making of anyimprovements necessary to correct theeffects of any serious deficiencies; thatthe process and control equipment bemaintained in the way best designed toensure such operation; and that processoperations be scheduled and coordi-nated to facilitate treatment of processgas streams to the maximum possibleextent. Maximum feasible efficiencyshall be expressed in the NSO in theform of a limitation on the concentra-tion of SO2 in the tail gas of each indi-vidual control system in combinationwith an appropriate averaging period,as provided below in paragraphs (b) and(c) of this section.

(b) The limitation level for SO2 con-centration in the control system tail gas.The level at which the concentrationlimitation is set shall take into ac-count fluctuations in the strength andvolume of process off-gases to the ex-tent that those fluctuations affect theSO2 content of the tail gas and cannotbe avoided by improved scheduling andcoordination of process operations. Thelimitation shall exclude the effect ofany increase in emissions caused byprocess or control equipment malfunc-tion. The limitation shall take into ac-count unavoidable catalyst deteriora-tion in sulfuric acid plants, but mayprescribe the frequency of catalystscreening or replacement. The NSOshall also prohibit the smelter ownerfrom using dilution air to meet thelimitation.

(c) Averaging period. (1) The averagingperiod shall be derived in combinationwith the concentration limitation andshall take into account the same fac-tors described in paragraph (b). Theaveraging period established under thisparagraph should generally not exceedthe following:


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(i) For sulfuric acid plants on coppersmelters, 12-hour running average;

(ii) For sulfuric acid plants on leadsmelters, 6-hour running average;

(iii) For sulfuric acid plants on zincsmelters, 2-hour running average;

(iv) For dimethylaniline (DMA)scrubbing units on copper smelters, 2-hour running average.

(2) A different averaging period maybe established if the applicant dem-onstrates that such a period is nec-essary in order to account for the fac-tors described in paragraph (b) of thissection: Provided, that the period is en-forceable and satisfies the criteria ofparagraph (a) of this section.

(d) Improved performance. (1) The per-formance level representing maximumfeasible efficiency for any existing con-trol system (e.g., a sulfuric acid plantor a DMA scrubber) shall require thecorrection of the effects of any seriousdeficiencies in the system. For the pur-pose of this paragraph, at least the fol-lowing problems shall constitute seri-ous deficiencies in acid plants:

(i) Heat exchangers and associatedequipment inadequate to sustain effi-cient, autothermal operation at the av-erage gas strengths and volumes re-ceived by the acid plant during routineprocess equipment operation;

(ii) Failure to completely fill allavailable catalyst bed stages with suf-ficient catalyst;

(iii) Inability of the gas pre-treat-ment system to prevent unduly fre-quent plugging or fouling (deteriora-tion) of catalyst or other componentsof the acid plant; or

(iv) Blower capacity inadequate topermit the treatment of the full vol-ume of gas which the plant could oth-erwise accommodate, or in-leakage ofair into the flues leading to the plant,to the extent that this inadequacy re-sults in bypassing of gas around theplant.

(2) Notwithstanding any contraryprovisions of § 57.304(c) (malfunctiondemonstration), no excess emissions(as defined in § 57.304(a)) shall be con-sidered to have resulted from a mal-function in the constant control sys-tem if the smelter owner has not up-graded serious deficiencies in the con-stant control system in compliancewith the requirements of § 57.302(d)(1),

unless the smelter owner demonstratesunder § 57.304(c) that compliance withthose requirements would not have af-fected the magnitude of the emission.

(e) Multiple control devices. (1) At anysmelter where off-gas streams aretreated by various existing control sys-tems (e.g., multiple acid plants or aDMA scrubber and an acid plant), theNSO shall require the use of those sys-tems in the combination that will re-sult in the maximum feasible net SO2

removal.(2) To the extent that compliance

with this requirement is demonstratedby the smelter operator to result in ex-cess emissions during unavoidablestart up and shut down of the controlsystems, those excess emissions shallnot constitute violations of the NSO.

§ 57.303 Total plantwide emission limi-tation.

(a) Calculation of the emission limita-tion. Each NSO shall contain a require-ment limiting the total allowableemissions from the smelter to the levelwhich would have been associated withproduction at the smelter’s maximumproduction capacity (as defined in§ 57.103(r)) as of August 7, 1977. Thislimitation shall be expressed in unitsof mass per time and shall be cal-culated as the sum of uncontrolledprocess and fugitive emissions, andemissions from any control systems(operating at the efficiency prescribedunder § 57.302). These emission ratesmay be derived from either directmeasurements or appropriately docu-mented mass balance calculations.

(b) Compliance with the emission limita-tion. Each NSO shall require the use ofspecific, enforceable testing methodsand measurement periods for deter-mining compliance with the limitationestablished under paragraph (a) of thissection.

§ 57.304 Bypass, excess emissions andmalfunctions.

(a) Definition of excess emissions. Forthe purposes of this subpart, any emis-sions greater than those permitted bythe NSO provisions established under§ 57.302 (performance level of interimconstant controls) or § 57.303 (plantwideemission limitation) of this subpartshall constitute excess emissions.


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Emission of any gas stream identifiedunder § 57.301 (a), (b), (c), (d) or (e) ofthis subpart that is not treated by asulfur dioxide constant control systemshall also constitute an excess emis-sion under this subpart.

(b) The excess emission report. EachNSO shall require the smelter to reportall excess emissions to the issuingagency, as provided in § 57.305(b). Thereport shall include the following:

(1) Identity of the stack or otheremission points where the excess emis-sions occurred;

(2) Magnitude of the excess emissionsexpressed in the units of each applica-ble emission limitation, as well as theoperating data, documents, and cal-culations used in determining the mag-nitude of the excess emissions;

(3) Time and duration of the excessemissions;

(4) Identity of the equipment causingthe excess emissions;

(5) Nature and cause of such excessemissions;

(6) Steps taken to limit the excessemissions, and when those steps werecommenced;

(7) If the excess emissions were theresult of a malfunction, the stepstaken to remedy the malfunction andto prevent the recurrence of such mal-function; and

(8) At the smelter owner’s election,the demonstration specified in para-graph (c) of this section.

(c) Malfunction demonstration. Exceptas provided in § 57.302(e)(2) or in para-graph (d) or (e) of this section, any ex-cess emission shall be a violation of theNSO unless the owner demonstrates inthe excess emissions report requiredunder paragraph (b) of this section thatthe excess emission resulted from amalfunction (or an unavoidable startup and shut down resulting from a mal-function) and that:

(1) The air pollution control systems,process equipment, or processes wereat all times maintained and operated,to the maximum extent practicable, ina manner consistent with good practicefor minimizing emissions;

(2) Repairs were made as expedi-tiously as practicable, including theuse of off-shift labor and overtime;

(3) The amount and duration of theexcess emissions were minimized to the

maximum extent practicable duringperiods of such emissions; and

(4) The excess emissions were notpart of a recurring pattern indicativeof serious deficiencies in, or inadequateoperation, design, or maintenance of,the process or control equipment.

(d) Scheduled maintenance exception.Excess emissions occurring duringscheduled maintenance shall not con-stitute violations of the NSO to the ex-tent that:

(1) The expected additional annualsulfur dioxide removal by any controlsystem (including associated processchanges) for which construction hadnot commenced (as defined in 40 CFR60.2 (g) and (i)) as of August 7, 1977 andwhich the smelter owner agrees to in-stall and operate under subpart F,would have offset such excess emis-sions if the system had been in oper-ation throughout the year in which themaintenance was performed;

(2) The system is installed and oper-ated as provided in the NSO provisionsestablished under subpart F; and

(3) The system performs at substan-tially the expected efficiency and reli-ability subsequent to its initial break-in period.

(e) An NSO may provide that excessemissions which occur during acidplant start-up as the result of the cool-ing of acid plant catalyst due to theunavailability of process gas to an acidplant during a prolonged SCS curtail-ment or scheduled maintenance are notexcess emissions. If the NSO does soprovide, it shall also require the use oftechniques or practices designed tominimize these excess emissions, suchas the sealing of the acid plant duringprolonged curtailments, the use of aux-iliary heat or SO2 injected during thecurtailment, or the preheating of theacid plant before start-up of the proc-ess equipment it serves.

(f) Requirements for a smelter withconstant controls that applies for awaiver.

(1) If a smelter that has some interimconstant controls applies for a waiverin accordance with subpart H, the fol-lowing requirements shall apply pend-ing action on the waiver applicationand following final action granting orapproving a waiver:


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(i) The NSO shall require the smelterto implement maintenance and oper-ation measures designed to reduce tothe maximum extent feasible the po-tential for bypass of existing interimconstant controls.

(ii) Upon application for a waiverunder subpart H, the smelter shall sub-mit to the issuing agency for its ap-proval and to EPA proposed mainte-nance and operation measures for com-pliance with the requirements of para-graph (i).

(iii) The remainder of this subpartshall apply except that: (A) The emis-sion limitations required under thissubpart shall be based only on existingconstant control equipment as up-graded through the improved mainte-nance and operation required by thisparagraph, and (B) bypass of existingcontrols shall not constitute excessemissions, provided the maintenanceand operation requirements and emis-sion limitations prescribed by the NSOare satisfied.

(2) After any denial of a waiver bythe issuing Agency, or any disapprovalby EPA of a waiver granted by theissuing agency, the NSO shall beamended consistent with the require-ments of this subpart and § 57.702.

§ 57.305 Compliance monitoring andreporting.

(a) Monitoring. (1) Each NSO shall re-quire compliance with the control sys-tem performance requirements estab-lished pursuant to this subpart to bedetermined through the use of contin-uous monitors for measuring SO2 con-centration.

(i) Such monitors must be installed,operated and maintained in accordancewith the performance specificationsand other requirements contained inappendix D to 40 CFR part 52 or part 60.The monitors must take and record atleast one measurement of SO2 con-centration from the effluent of eachcontrol system in each 15-minute pe-riod. Failure of the monitors to recordat least 95% of the 15-minute periods inany 30-day period shall constitute aviolation of the NSO.

(ii) The sampling point shall be lo-cated at least 8 stack diameters (di-ameter measured at sampling point)downstream and 2 diameters upstream

from any flow disturbance such as abend, expansion, constriction, or flame,unless another location is approved bythe Administrator.

(iii) The sampling point for moni-toring emissions shall be in the duct atthe centroid of the cross section if thecross sectional area is less than 4.645m2

(50 ft2) or at a point no closer to thewall than 0.914m (3 ft) if the cross sec-tional area is 4.645m2 (50 ft2) or more.The monitor sample point shall be inan area of small spatial concentrationgradient and shall be representative ofthe concentration in the duct.

(iv) The measurement system(s) in-stalled and used pursuant to this para-graph shall be subject to the manufac-turer’s recommended zero adjustmentand calibration procedures at leastonce per 24-hour operating period un-less the manufacturer specifies or rec-ommends calibration at shorter inter-vals, in which case such specificationsor recommendations shall be followed.Records of these procedures shall bemade which clearly show instrumentreadings before and after zero adjust-ment and calibration.

(2) Each NSO shall require the moni-toring of any ducts or flues used to by-pass gases, required under this subpartto be treated by constant controls,around the smelter’s sulfur dioxideconstant control system(s) for ultimatedischarge to the atmosphere. Suchmonitoring shall be adequate to dis-close the time of the bypass, its dura-tion, and the approximate volume andSO2 concentration of gas bypassed.

(b) Reporting. (1) Each NSO shall re-quire that the smelter maintain arecord of all measurements requiredunder paragraph (a) of this section. Re-sults shall be summarized monthly andshall be submitted to the issuing agen-cy within 15 days after the end of eachmonth. The smelter owner shall retaina record of such measurements for oneyear after the NSO period terminates.

(2) Each NSO shall require that thesmelter maintain a record of all meas-urements and calculations requiredunder § 57.303(b). Results shall be sum-marized on a monthly basis and shallbe submitted to the issuing agency at6-month intervals. The smelter owner


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40 CFR Ch. I (7–1–00 Edition)§ 57.401

shall retain a record of such measure-ments and calculations for at least oneyear after the NSO terminates.

(3) The report required under§ 57.304(b) shall accompany the reportrequired under paragraph (b)(1) of thissection.

(c) Quality assurance and continuousdata—(1) Quality assurance. Each NSOshall require that the smelter submit aplan for quality assurance to theissuing agency for approval and thatall monitoring performed by contin-uous monitors shall be verified forquality assurance by the smelter. Suchplans must follow current EPA guide-lines for quality assurance, in order tobe approvable.

(2) Continuous data. Manual sourcetesting methods equivalent to 40 CFRpart 60, appendix A shall be used to de-termine compliance if the continuousmonitoring system malfunctions.

Subpart D—SupplementaryControl System Requirements

§ 57.401 General requirements.Except as provided in subpart E, each

NSO shall require the smelter owner toprevent all violations of the NAAQS inthe smelter’s designated liability area(DLA) through the operation of an ap-proved supplementary control system(SCS).

§ 57.402 Elements of the supplemen-tary control system.

Each supplementary control systemshall contain the following elements:

(a) Air quality monitoring network. Anapprovable SCS shall include the use ofappropriate ambient air quality mon-itors to continuously measure the con-centration of sulfur dioxide in the airin the smelter’s DLA.

(1) The monitors shall be located atall points of expected SO2 concentra-tions necessary to anticipate and pre-vent possible violations of NAAQS any-where in the smelter’s DLA. The deter-mination of the locations where suchconcentrations may occur shall takeinto account all recorded or probablemeteorological and operating condi-tions (including bypassing of controlequipment), as well as the presence of

other sources of SO2 significantly af-fecting SO2 concentrations in the DLA.

(2) The number and location of sitesshall be based on dispersion modeling,measured ambient air quality data,meteorological information, and theresults of the continuing review re-quired by paragraph (f) of this section.The system shall include the use of atleast 7 fixed monitors unless theissuing agency determines, on the basisof a demonstration by the smelterowner, that the use of fewer monitorswould not limit coverage of points ofhigh SO2 concentration or otherwisereduce the capability of the smelterowner to prevent any violations of theNAAQS in the smelter’s DLA.

(3) All monitors shall be continu-ously operated and maintained andshall meet the performance specifica-tions contained in 40 CFR part 53. Themonitors shall be capable of routinereal time measurement of maximumexpected SO2 concentrations for theaveraging times of SO2 NAAQS.

(b) Meteorological network. The SCSmust have a meteorological assessmentcapability adequate to predict andidentify local conditions requiringemission curtailment to prevent pos-sible violations of the NAAQS. The me-teorological assessment capabilityshall provide all forecast and currentinformation necessary for successfuluse of the SCS operational manual re-quired by paragraph (e) of this section.

(c) Designated liability area. The sys-tem shall be required to prevent allviolations of the NAAQS within thesmelter’s DLA. The DLA of any smelt-er is the area within which the smelt-er’s emissions may cause or signifi-cantly contribute to violations of theNAAQS for SO2 when the smelter is op-erating at its maximum production ca-pacity under any recorded or probablemeterological conditions. The bound-aries of that area shall be specified inthe NSO.

(1) Unless an acceptable demonstra-tion is made under paragraph (c)(2) ofthis section, the DLA shall be a circlewith a center point at the smelter’stallest stack and a minimum radius asgiven in the following table:


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RADIUS FOR SO2 EMISSIONS AT MAXIMUMPRODUCTION CAPACITY 1

Emissions ratein tons per hour Emission rate in grains per sec.

Radiusin kilo-meters

16 or less ......... 4,000 or less ............................... 1124 ..................... 6,000 ........................................... 1632 ..................... 8,000 ........................................... 2440 ..................... 10,000 ......................................... 3248 or more ........ 12,000 or more ........................... 40

1 Maximum emission rates for periods not to exceed 24hours. Minimum radii may be determined from the table by lin-ear interpolation.

(2) The NSO may provide for a DLAwith different boundaries if the smelterowner can demonstrate through theuse of appropriate dispersion modelingand ambient air quality monitoringdata that the smelter’s controlledemissions could not cause or signifi-cantly contribute to a violation of theNAAQS beyond the boundaries of sucha different area under any recorded orprobable meteorological conditions.

(3) A violation of the NAAQS in theDLA of any smelter shall constitute aviolation of that smelter’s NSO, unlessthe issuing agency determines on thebasis of a showing by the smelterowner that the smelter owner hadtaken all emission curtailment actionindicated by the SCS operational man-ual and that the violation was causedin significant part by:

(i) Emissions of another source(s)which were in excess of the maximumpermissible emissions applicable tosuch source(s),

(ii) Fugitive emissions of anothersource(s), or

(iii) The smelter’s own fugitive emis-sions: Provided, that the smelter is incompliance with all requirements of orunder subpart E of this part.

(4) For the purposes of this section,maximum permissible emissions forother sources are the highest of:

(i) SIP emission limitation;(ii) Orders in effect under section

113(d) of the Clean Air Act; or(d) Overlapping designated liability

areas. Notwithstanding any other pro-visions of this subpart, the followingrequirements shall apply whenever thedesignated liability areas of 2 or moresmelters do, or may, overlap:

(1) In the case of any NSO applicantthat would have a DLA which wouldoverlap with the DLA of any othersmelter that has applied for an NSO or

has an NSO in effect, the NSO appli-cant shall include in its application anenforceable joint plan, agreed to bysuch other smelter(s). In determiningwhether a joint plan is required, theNSO applicant shall calculate its DLAaccording to the table in paragraph(c)(1) of this section. The DLA of theother smelter shall be calculated ac-cording to the table in paragraph (c)(1)unless the other smelter has an NSO ineffect, in which case the boundaries inthat NSO shall be used. The enforce-able joint plan shall provide for:

(i) Emission curtailment adequate toensure that the NAAQS will not be vio-lated in any areas of overlapping DLAs;and

(ii) Conclusive prospective allocationof legal liability in the event that theNAAQS are violated in the area ofoverlapping DLAs.

Such plans may, but need not, includethe operation of a joint SCS system.Each NSO shall require adherence bythe NSO applicant owner to the jointplan for emission curtailment and allo-cation of liability, unless the issuingagency determines, pursuant to theprovisions of paragraph (c)(2) of thissection, that the NSO applicant’s DLAdoes not overlap with that of any othersmelter.

(2) In the case of any NSO applicantthat would have a DLA which wouldoverlap with the DLA of any othersmelter whose owner has not appliedfor an NSO (and does not have an NSOin effect), the NSO applicant’s sub-mittal shall contain a written consent,signed by a corporate official empow-ered to do so. The consent shall statethat if, at any time thereafter, theowner of the other smelter applies foran NSO, and the other smelter’s DLAwould overlap with the NSO applicant’sDLA, the NSO applicant will negotiateand submit an enforceable joint planfor emission curtailment and alloca-tion of liability (as described in para-graph (d)(1) of this section). In deter-mining whether it is necessary to sub-mit such a consent, each smelter’sDLA shall be calculated according tothe table set forth in paragraph (c)(1)of this section. The consent shall statethat a joint plan shall be submittedwithin 90 days of the issuing agency’s


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notification to the NSO applicant of re-ceipt of the other smelter’s letter of in-tent, unless the issuing agency deter-mines that the DLAs do not overlap.Failure of the NSO applicant to submitsuch a plan shall constitute groundsfor denial of its NSO application or aviolation of an effective NSO, as appli-cable.

(e) The SCS operational manual. EachNSO shall require the smelter to be op-erated in accordance with the provi-sions of an SCS operational manual ap-proved by the issuing agency. The SCSoperational manual shall describe thecircumstances under which, the extentto which, and the procedures throughwhich emissions shall be curtailed toprevent violations of the NAAQS in thesmelter’s DLA. Failure to curtail emis-sions when and as much as indicated bythe manual or to follow the provisionsof the manual implementing the re-quirements of paragraph (e)(3) of thissection shall constitute a violation ofthe NSO.

(1) The operational manual shall pre-scribe emission curtailment decisionsbased on the use of real time informa-tion from the air quality monitoringnetwork dispersion model estimates ofthe effect of emissions on air quality,and meteorological observations andpredictions.

(2) The operational manual shall alsoprovide for emission curtailment toprevent violation of the NAAQS withinthe smelter’s DLA which may becaused in part by stack emissions, andto the extent practicable fugitive emis-sions, from any other source (unlessthat other source is a smelter subjectto an NSO).

(3) The SCS operational manual shallinclude (but not be limited to):

(i) A clear delineation of the author-ity of the SCS operator to require allother smelter personnel to implementthe operator’s curtailment decisions;

(ii) The maintenance and calibrationprocedures and schedules for all SCSequipment;

(iii) A description of the proceduresto be followed for the regular acquisi-tion of all meteorological informationnecessary to operate the system;

(iv) The ambient concentrations andmeteorological conditions that will beused as criteria for determining the

need for various degrees of emissioncurtailment;

(v) The meteorological variables asto which judgments may be made inapplying the criteria stated pursuantto paragraph (e)(3)(iv) of this section;

(vi) The procedures through whichand the maximum time period withinwhich a curtailment decision will bemade and implemented by the SCS op-erator;

(vii) The method for immediatelyevaluating the adequacy of a particularcurtailment decision, including thefactors to be considered in that evalua-tion;

(viii) The procedures through whichand the time within which additionalnecessary curtailment will imme-diately be effected; and

(ix) The procedures to be followed toprotect the NAAQS in the event of amechanical failure in any element ofthe SCS.

(f) Continuing review and improvementof the SCS. Each NSO shall require thesmelter owner to conduct an activeprogram to continuously review the de-sign and operation of the SCS to deter-mine what measures may be availablefor improving the performance of thesystem. Among the elements of thisprogram shall be measures to locateand examine possible places both insideand outside the DLA whereunmonitored NAAQS violations may beoccurring. Such measures shall includethe use of modeling as appropriate andmobile ambient air quality monitors,following up on information and com-plaints from members of the public,and other appropriate activities. TheNSO shall also require the submissionof a semi-annual report to the issuingagency detailing the results of this re-view and specifying measures imple-mented to prevent the recurrence ofany violations of NAAQS.

§ 57.403 Written consent.

(a) The consent. The NSO shall in-clude a written consent, signed by acorporate official empowered to do so,in the following form:

As a condition of receiving a Primary Non-ferrous Smelter Order (NSO) under Section119 of the Clean Air Act, for the smelter op-erated by (name of company) at (location),


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the undersigned official, being empowered todo so, consents for the company as follows:

(1) In any civil proceeding (judicial or ad-ministrative) to enforce the NSO, the com-pany will not contest:

(a) Liability for any violation of the Na-tional Ambient Air Quality Standards forsulfur dioxide in the smelter’s designated li-ability area (DLA), except on the groundthat a determination under 40 CFR57.402(c)(3) was clearly wrong; or

(b) The conclusive allocation of liabilityunder NSO provisions satisfying 40 CFR57.402(d)(1) between the company’s smelterand any other smelter(s) for any violation ofthe National Ambient Air Quality Standardsfor sulfur dioxide in an area of overlappingDLAs.

(2) The issuing agency (as defined in 40CFR 57.103) will be allowed unrestricted ac-cess at reasonable times to inspect, verifycalibration of, and obtain data from ambientair quality monitors operated by the com-pany under the requirements of the NSO.

(b) Rights not waived by the consent.This consent shall not be deemed towaive any right(s) to judicial review ofany provisions of an NSO that are oth-erwise available to the smelter owneror operator under section 307(b) of theClean Air Act.

§ 57.404 Measurements, records, andreports.

(a) Measurements. Each NSO shall re-quire the smelter owner to install, op-erate, and maintain a measurementsystem(s) for continuously monitoringsulfur dioxide emissions and stack gasvolumetric flow rates in each stack(except a stack used exclusively for by-passing control equipment) whichcould emit 5 percent or more of thesmelter’s total potential (uncontrolled)hourly sulfur dioxide emissions.

(1) Such monitors shall be installed,operated, and maintained in accord-ance with the performance specifica-tions and other requirements containedin appendices D and E to 40 CFR part52. The monitors must take and recordat least one measurement of sulfur di-oxide concentration and stack gas flowrate from the effluent of each affectedstack in each fifteen-minute period.(The NSO shall require the smelter op-erator to devise and implement anyprocedures necessary for compliancewith these performance specifications.)

(2) The sampling point shall be lo-cated at least eight stack diameters

(diameter measured at sampling point)downstream and two diameters up-stream from any flow disturbance suchas a bend, expansion, constriction, orflame, unless another location is ap-proved by the Administrator.

(3) The sampling point for moni-toring emissions shall be in the duct atthe centroid of the cross section if thecross sectional area is less than 4.645m2 (50 ft 2) or at a point no closer to thewall than 0.914m (3 ft) if the cross sec-tional area is 4.645 m2 (50 ft2) or more.The monitor sample point shall be inan area of small spatial concentrationgradient and shall provide a samplewhich is representative of the con-centration in the duct.

(4) The measurement system(s) in-stalled and used pursuant to this para-graph shall be subject to the manufac-turer’s recommended zero adjustmentand calibration procedures at leastonce per 24-hour operating period un-less the manufacturer specifies or rec-ommends calibration at shorter inter-vals, in which case such specificationsor recommendations shall be followed.Records of these procedures shall bemade which clearly show instrumentreadings before and after zero adjust-ment and calibration.

(5) The results of such monitoring,calibration, and maintenance shall besubmitted in the form and with the fre-quency specified in the NSO.

(b) Records. Each NSO shall requirethe smelter owner to maintain recordsof the air quality measurements made,meteorological information acquired,emission curtailment ordered (includ-ing the identity of the persons makingsuch decisions), and calibration andmaintenance performed on SCS mon-itors during the operation of the SCS.These records shall be maintained forthe duration of the NSO.

(c) Reports. Each NSO shall requirethe smelter owner to:

(1) Submit a monthly summary indi-cating all places and times at whichthe NAAQS for SO2 were violated inthe smelter’s DLA, and stating the SO2

concentrations at such times;(2) Immediately notify EPA and the

State agency any time concentrationsof SO2 in the ambient air in the smelt-er’s DLA reaches 0.3 part per million(800 micrograms/cubic meter), 24-hour


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average, or exceed the warning stage inany more stringent emergency plan inthe applicable State ImplementationPlan; and

(3) Make such other reports as maybe specified in the NSO.

§ 57.405 Formulation, approval, andimplementation of requirements.

(a) SCS content of the application. Therequirements of § 57.203(d) shall be sat-isfied with respect to this subpart asfollows:

(1) Each NSO application shall in-clude a complete description of anysupplementary control system in oper-ation at the smelter at the time of ap-plication and a copy of any SCS oper-ational manual in use with that sys-tem.

(2) Each NSO application shall con-tain proposed NSO provisions for com-pliance with the requirements of§§ 57.401, 57.402 (c), (d), and (f), 57.403,57.404, and 57.405 (b)(2).

(3) Each NSO application shall in-clude a specific plan for the develop-ment of a system fulfilling the require-ments of § 57.402(a), (b), and (e) (cov-ering air quality monitoring network,meteorological network, and the SCSoperational manual).

(b) SCS content of the order. (1) EachNSO shall include an approved versionof the plan described in paragraph(a)(3) of this section and shall provideincrements of progress towards itscompletion. Each NSO shall require,upon completion of the measures speci-fied in the approved plan, submission ofa report which describes each elementof the SCS and explains why the ele-ments satisfy the requirements of theplan and submission of a copy of theSCS operational manual developedunder the plan.

(2) Each NSO shall require the sub-mission of a final report, within 6months of the required date for com-pletion of the measures specified in theapproved plan evaluating the perform-ance and adequacy of the SCS devel-oped pursuant to the approved plan.The report shall include:

(i) A detailed description of how thecriteria that form the basis for par-ticular curtailment decisions were de-rived;

(ii) A complete description of eachSCS element listed in § 57.402 (a)through (d) (covering monitoring, me-teorology, and the DLA), and an expla-nation of why the elements fulfill therequirements of those sections;

(iii) A reliability study dem-onstrating that the SCS will preventviolations of the NAAQS in the smelt-er’s DLA at all times. The reliabilitystudy shall include a comprehensiveanalysis of the system’s operation dur-ing one or more three-month seasonalperiods when meteorological condi-tions creating the most serious risk ofNAAQS violations are likely to occur.Where it is impossible, because of timerestraints, to include in such a studyand analysis of the three month sea-sonal period with meteorological con-ditions creating the most serious riskof NAAQS violations, the study shallanalyze the system’s operation on thebasis of all available information. TheNSO shall provide that in such case, asupplemental reliability study shall besubmitted after the end of the worstcase three-month period as a part ofthe next semi-annual report requiredunder § 57.402(f).

(iv) A copy of the current SCS oper-ational manual.

(c) Amendment of the NSO. Each NSOshall be amended, if necessary, within 3months of completion of the measuresrequired under the SCS developmentplan and also, if necessary, withinthree months of submission of the finalreport or any supplement to the finalreport required under paragraph (b)(2)of this section, to reflect the most cur-rent approved elements of the SCS and,as appropriate, to fulfill all other re-quirements of this subpart. Each NSOshall also be subsequently amended (asprovided in § 57.104) whenever necessaryas a result of the program required by§ 57.402(f) or to reflect improved SCSoperating procedures or other systemrequirements.

Subpart E—Fugitive EmissionEvaluation and Control

§ 57.501 General requirements.

(a) Each NSO shall require the smelt-er owner to use such control measuresas may be necessary to ensure that the


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smelter’s fugitive emissions do not re-sult in violations of the NAAQS for SO2

in the smelter’s DLA.(b) A smelter which is operating

under an NSO containing a SIP compli-ance schedule established in accord-ance with § 57.705 is required to be mak-ing progress toward compliance withany fugitive control requirements con-tained in its respective SIP and neednot meet the other requirements con-tained in this subpart.

(c) A smelter which is subject to anNSO which does not contain a SIPcompliance schedule must meet theprovisions of §§ 57.502 and 57.503.

§ 57.502 Evaluation.

(a) Evaluation at the time of applica-tion. Any smelter owner may dem-onstrate at the time of application foran NSO that the smelter’s SO2 fugitiveemissions will not cause or significantcontribute to violations of the NAAQSin the smelter’s DLA. If such dem-onstration is not made, the smelterowner shall submit the design andworkplan for a study adequate to as-sess the sources of significant fugitiveemissions from the smelter and theireffects upon ambient air quality.

(b) Evaluation during the first 6months of the NSO. The design andworkplan of the study shall be ap-proved, if adequate, by the issuingagency and included in the NSO. Thestudy shall commence no later thanthe date when the NSO becomes effec-tive and an analysis of its results shallbe submitted to the issuing agencywithin 6 months of the effective date ofthe NSO. The study shall include anappropriate period during which theambient air shall be monitored to de-termine the impact of fugitive emis-sions of sulfur dioxide, arsenic (at cop-per smelters only), lead (at lead andzinc smelters only), and total sus-pended particulates on the ambient airquality in the smelter’s DLA.

§ 57.503 Control measures.

The NSO of any smelter subject tothe requirements of § 57.502(b) shall beamended, if necessary, within 6 monthsof EPA’s receipt of the analysis speci-fied in § 57.502(b), as provided in§ 57.704(c) to implement the require-

ment of § 57.501. Measures required tobe implemented may include:

(a) Additional supplementary control.The use of the supplementary controlsystem, if the additional use of the sys-tem does not interfere with the smelterowner’s ability to meet the require-ments of subpart D; and

(b) Engineering and maintenance tech-niques. The use of engineering andmaintenance techniques to detect andprevent leaks and capture and vent fu-gitive emissions through appropriatestacks. These techniques include butare not limited to:

(1) For reactors, installation andproper operation of primary hoods;

(2) For roasters, installation andproper operation of primary hoods onall hot calcine transfer points;

(3) For furnaces, installation andproper operation of primary hoods onall active matte tap holes, matte laun-ders, slag skim bays, and transferpoints;

(4) For converters, installation andproper operation of primary hoods forblowing operations, and where appro-priate, secondary hoods for chargingand pouring operations;

(5) For sintering machines, installa-tion and proper operation of primaryhoods on the sinter bed, all hot sinterignition points, all concentratelaydown points, and all hot sintertransfer points;

(6) For blast furnaces, installationand proper operation of primary hoodson all active slag and lead bullion fur-nace tap holes and transfer points;

(7) For dross reverberatory furnaces,installation and proper operation ofprimary hoods on all active chargingand discharging points;

(8) Maintenance of all ducts, fluesand stacks in a leak-free condition tothe maximum extent possible;

(9) Maintenance of all process equip-ment under normal operating condi-tions in such a fashion that out-leak-age of fugitive gases will be preventedto the maximum extent possible;

(10) Secondary or tertiary hooding onprocess equipment where necessary;and

(11) Partial or complete buildingevacuation as appropriate.


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§ 57.504 Continuing evaluation of fugi-tive emission control measures.

Each NSO shall require the smelterowner to conduct an active program tocontinuously review the effectivenessof the fugitive emission control meas-ures implemented pursuant to § 57.503in maintaining the NAAQS and, if suchmeasures are not sufficiently effective,to evaluate what additional measuresshould be taken to assure that theNAAQS will be maintained with a rea-sonably degree of reliability. The NSOshall also require submission of a semi-annual report to the issuing Agency de-tailing the results of this review andevaluation. Such a report may be sub-mitted as part of the report requiredunder § 57.402(f).

§ 57.505 Amendments of the NSO.

An NSO shall be amended withinthree months of submission of any re-port required under § 57.504 so as to re-quire additional fugitive emission con-trol measures if such report establishesthat such additional measures are nec-essary to assure that the NAAQS willbe maintained with a reasonable degreeof reliability.

Subpart F—Research andDevelopment Requirements

§ 57.601 General requirements.

(a) This subpart is not applicable toNSOs which contain a SIP complianceschedule in accordance with § 57.705.

(b) The requirements of this subpartmay be waived with respect to a smelt-er if the owner of that smelter submitswith its NSO application a written cer-tification by a corporate official au-thorized to make such a certificationthat the smelter will either complywith its SO2 SIP limits by January 2,1988 or close after January 1, 1988 untilit can comply with such limits.

(c) Except as provided in paragraphs(a) and (b), each NSO shall require thesmelter to conduct or participate in aspecific research and development pro-gram designed to develop more effec-tive means of compliance with the sul-fur dioxide control requirements of theapplicable State Implementation Planthan presently exist.

§ 57.602 Approval of proposal.(a) The smelter owner’s proposal. The

smelter owner’s NSO application shallinclude a proposed NSO provision forimplementing the requirement of§ 57.601, a fully documented supportinganalysis of the proposed program, andan evaluation of the consistency of theproposed program with the criterialisted in § 57.603. The application shallalso specify:

(1) The design and substantive ele-ments of the research and developmentprogram, including the expectedamount of time required for their im-plementation;

(2) The annual expected capital, oper-ating, and other costs of each elementin the program;

(3) The smelter’s current productionprocesses, pollution control equipment,and emissions which are likely to be af-fected by the program;

(4) Potential or expected benefits ofthe program;

(5) The basis upon which the resultsof the program will be evaluated; and

(6) The names, positions, and quali-fications of the individuals responsiblefor conducting and supervising theproject.

(b) EPA approval. (1) If the issuingagency will not be EPA, the smelterowner or the issuing agency may alsosubmit to EPA the information speci-fied in paragraph (a) of this section atthe same time the information is sub-mitted to the issuing agency. As soonas possible after the receipt of the in-formation described in paragraph (a) ofthis section, EPA shall certify to theissuing agency and to the applicantwhether or not in the judgment of theAdministrator the smelter owner’sfinal proposals are approvable. If EPAdoes not receive an advance copy of theproposal, the ultimate approval willoccur when the NSO is approved ratherthan in advance of receipt of the NSO.

(2) A prerequisite for approval of anR&D proposal by EPA and any issuingagency is that the planned work mustyield the most cost effective tech-nology possible.

(c) Optional preproposal. The smelterowner may, at its option, submit toEPA for its approval and comment apreproposal generally describing theproject the owner intends to propose


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under paragraph (a) of this section. Apreproposal may be submitted to EPAany time prior to the submission of aproposal under paragraph (a) of thissection. As soon as possible after thereceipt of a preproposal, EPA shall cer-tify to the applicant (and to any otherissuing agency, as applicable) whetheror not the project would be approvable.This certification may include com-ments indicating necessary modifica-tions which would make the project ap-provable.

§ 57.603 Criteria for approval.The approvability of any proposed re-

search and development program shallbe judged primarily according to thefollowing criteria:

(a) The likelihood that the projectwill result in the use of more effectivemeans of emission limitation by thesmelter within a reasonable period oftime and that the technology can beimplemented at the smelter in ques-tion, should the smelter be placed on aSIP compliance schedule at some fu-ture date when adequately dem-onstrated technology is reasonablyavailable;

(b) Whether the proposed funding andstaffing of the project appear adequatefor its successful completion;

(c) Whether the proposed level offunding for the project is consistentwith the research and development ex-penditure levels for pollution controlfound in other industries;

(d) The potential that the projectmay yield industrywide pollution con-trol benefits;

(e) Whether the project may also im-prove control of other pollutants ofboth occupational and environmentalsignificance;

(f) The potential effects of theproject on energy conservation; and

(g) Other non-air quality health andenvironmental considerations.

§ 57.604 Evaluation of projects.The research and development pro-

posal shall include a provision for theemployment of a qualified independentengineering firm to prepare written re-ports at least annually which evaluateeach completed significant stage of theresearch and development program, in-cluding all relevant information and

data generated by the program. All re-ports required by this paragraph shallbe submitted to EPA and also to theissuing agency if it is not EPA.

§ 57.605 Consent.Each NSO shall incorporate by ref-

erence a binding written consent,signed by a corporate official empow-ered to do so, requiring the smelterowner to:

(a) Carry out the approved researchand development program;

(b) Grant each issuing agency andEPA and their contractors access toany information or data employed orgenerated in the research and develop-ment program, including any process,emissions, or financial records whichsuch agency determines are needed toevaluate the technical or economicmerits of the program;

(c) Grant physical access to rep-resentatives and contractors of eachissuing agency to each facility atwhich such research is conducted;

(d) Grant the representatives andcontractors of EPA and the issuingagency reasonable access to the per-sons conducting the program on behalfof the smelter owner for discussions ofprogress, interpretation of data and re-sults, and any other similar purposesas deemed necessary by EPA or anyissuing agency.

§ 57.606 Confidentiality.The provisions of section 114 of the

Act and 40 CFR part 2 shall govern theconfidentiality of any data or informa-tion provided to EPA under this sub-part.

Subpart G—Compliance ScheduleRequirements

§ 57.701 General requirements.This section applies to all smelters

applying for an NSO. Each NSO shallrequire the smelter owner to meet allof the requirements within the NSO asexpeditiously as practicable but in nocase later than the deadlines containedin this subpart or any other section ofthese regulations. For requirementsnot immediately effective, the NSOshall provide increments of progressand a schedule for compliance. Eachschedule must reflect the extent to


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40 CFR Ch. I (7–1–00 Edition)§ 57.702

which any required equipment or sys-tems are already in place and the ex-tent to which any required reports orstudies have already been completed.Requirements for smelters to submitcompliance schedules and the proce-dures which they must follow are out-lined below.

§ 57.702 Compliance with constantcontrol emission limitation.

(a) This section applies to all smelt-ers which receive an NSO, but only tothe extent this section is compatiblewith any SIP compliance schedule re-quired by §§ 57.201(d)(2) and 57.705.

(b) Any NSO issued to a smelter notrequired to immediately comply withthe requirements of subpart G under§ 57.701 shall contain a schedule forcompliance with those requirements asexpeditiously as practicable but in nocase later than 6 months from the ef-fective date of the NSO, except as fol-lows: Where a waiver is requested inaccordance with subpart H, an NSOmay be issued without a schedule forcompliance with the requirements forwhich a waiver is being considered con-sistent with subpart H, pending a finaldecision on the request under subpartH. If a waiver is requested in accord-ance with subpart H, compliance withthe requirements of subpart C whichwere deferred as a result of such re-quest shall be achieved as expedi-tiously as practicable after, but in nocase later than 6 months from a finaldecision by the issuing agency to denya waiver under subpart H or dis-approval by EPA of a waiver grantedby the issuing agency. The time limitsspecified herein may be extended onlyif a smelter operator demonstratesthat special circumstances warrantmore time, in which case the compli-ance schedule shall require complianceas expeditiously as practicable. AnNSO which does not contain a schedulefor compliance with all the require-ments of subpart C because a waiverhas been requested in accordance withsubpart H shall be amended in accord-ance with § 57.104 within three monthsafter a final decision under subpart Hso as to either grant a waiver of any re-maining requirements of subpart C, ordeny such a waiver and place thesmelter on a compliance schedule for

meeting those requirements. If theissuing agency grants a waiver andsuch waiver is disapproved by EPA, theissuing agency shall promptly amendthe NSO so as to place the smelter ona compliance schedule meeting any re-maining requirements of subpart C.

(c) Any schedule required under thissection shall contain the following in-formation and increments of progressto the extent applicable:

(1) Description of the overall designof the SO2 control system(s) to be in-stalled;

(2) Descriptions of specific processhardware to be used in achieving com-pliance with interim SO2 constant con-trols including gas capacity values;

(3) The date by which contracts willbe let or purchase orders issued to ac-complish any necessary performanceimprovements;

(4) The date for initiating on-siteconstruction or installation of nec-essary equipment;

(5) The date by which on-site con-struction or installation of equipmentis to be completed; and

(6) The date for achievement of finalcompliance with interim emission limi-tations.

§ 57.703 Compliance with the supple-mentary control system require-ments.

This section applies to all nonferroussmelters applying for an NSO.

(a) Schedules for smelters with exist-ing SCS. Each NSO shall require imme-diately upon issuance of the NSO oper-ation of any existing supplementarycontrol system and immediately uponthe effective date of the NSO the as-sumption of liability for all violationsof the NAAQS detected by any monitorin the SCS system. Each NSO shall re-quire that within six months of the ef-fective date of the NSO the smeltercomplete any measures specified in thesmelter’s approved SCS developmentplan not implemented at the time theNSO is issued, and assume liability forall violations of the NAAQS detectedanywhere in the DLA (except as pro-vided in subpart D of these regula-tions). Other requirements of subpart Dsuch as the requirements for submis-sion of reports records, and for ongoing


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evaluation of the SCS shall be com-plied with at the times specified in sub-part D and § 57.701.

(b) Compliance schedule for smelterswith no existing SCS system. Where asmelter has no SCS at the time ofissuance of the NSO, the NSO shall re-quire compliance with the require-ments of subpart D according to thefollowing schedule:

(1) Within six months after the effec-tive date of the NSO the smelter shallinstall all operating elements of theSCS system, begin operating the sys-tem, complete all other measures spec-ified in its approved SCS developmentplan, begin compliance with the re-quirements of § 57.404, and assume li-ability for any violations of theNAAQS within its designated liabilityarea (except as provided by subpart D),detected by the SCS monitors in place.

(2) Within nine months thereafter thesmelter shall submit the SCS Report,assume liability for all violations ofthe NAAQS detected anywhere withinits designated liability area, and com-ply with all other requirements of sub-part D, except for those which subpartD specifies are to be satisfied at orafter the close of such nine-month pe-riod, including requirements for sub-mission of studies, reports, andrecords, and the requirements for con-tinued review and evaluation of theSCS.

§ 57.704 Compliance with fugitiveemission evaluation and control re-quirements.

This section applies only to smeltersnot required to submit SIP ComplianceSchedules under § 57.705. Each NSOshall require that smelters satisfy eachof the requirements of subpart E as ex-peditiously as practicable, taking intoaccount the extent to which those re-quirements have already been satisfied,and in any event, within any deadlinesspecified below.

(a) Plan for fugitive emission control.The NSO shall provide that within areasonable period after the submissionof the report on the fugitive emissioncontrol study required by § 57.502, butwithin a period allowing sufficienttime for compliance with the require-ment of § 57.503 for amendment of theNSO, the smelter owner shall submit to

the issuing agency for its approval aproposed fugitive emission controlplan, including increments of progress,for compliance with the requirementsof §§ 57.501 and 57.503.

(b) SCS Report. If the fugitive emis-sion control plan submitted underparagraph (a) of this section proposesto meet the requirements of §§ 57.501and 57.503 through the additional use ofa supplementary control system, theplan shall demonstrate that the use ofsupplementary controls at that smelterto prevent violations of the NAAQS re-sulting from fugitive emissions is prac-ticable, adequate, reliable, and enforce-able. The plan shall contain incrementsof progress providing for completion ofthe implementation of each additionalmeasure, and for corresponding compli-ance with the requirements ofpararaphs (b) and (c) of § 57.404, withinfour months of approval of the plan bythe issuing agency. The plan shall alsoprovide that within three months aftercompletion of implementation of thoseadditional measures, the smelter shallfully comply with the requirements of§§ 57.401 and 57.501 (including the as-sumption of liability for violations ofNAAQS within its designated liabilityarea), and shall submit and additionalSCS report for the approval of theissuing agency. This additional finalreport shall correspond to that sub-mitted under § 57.405(b)(2), except thatit need not contain the 3-month studydescribed in § 57.405(b)(2)(iii).

(c) NSO amendment. The amendmentsof the NSO required under § 57.503 shallbe affected by the issuing agency asfollows:

(1) With respect to the additional useof SCS, upon approval or promulgationof the plan submitted under paragraph(a) of this section and upon approval orpromulgation of the requirements forthe system described in the additionalSCS Report under paragraph (b) of thissection;

(2) With respect to the additional useof engineering techniques, upon ap-proval or promulgation of the compli-ance schedule required by paragraph(a) of this section.


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40 CFR Ch. I (7–1–00 Edition)§ 57.705

§ 57.705 Contents of SIP ComplianceSchedule required by § 57.201(d) (2)and (3).

This section applies to smelterswhich are required to submit a SIPCompliance Schedule as discussedbelow.

(a) Each SIP Compliance Schedulerequired by § 57.201(d) (2) and (3) mustcontain the following elements:

(1) Description of the overall designof the SO2 control system(s) to be in-stalled;

(2) Descriptions of specific processhardware to be used in achieving com-pliance with the SIP emission limita-tion including gas capacity values;

(3) The date by which contracts willbe let or purchase orders issued to ac-complish any necessary performanceimprovements;

(4) The date for initiating on-siteconstruction or installation of nec-essary equipment;

(5) The date by which on-site con-struction or installation of equipmentis to be completed;

(6) The date for achievement of finalcompliance with SIP emission limita-tions; and

(7) Any other measures necessary toassure compliance with all SIP require-ments as expeditiously as practicable.

(b) Operations of SCS. Smelters towhich § 57.705 is applicable must com-ply with all elements of § 57.703.

Subpart H—Waiver of Interim Re-quirement for Use of Contin-uous Emission ReductionTechnology

§ 57.801 Purpose and scope.(a) This subpart shall govern all pro-

ceedings for the waiver of the interimrequirement that each NSO provide forthe use of constant controls.

(b) In the absence of specific provi-sions in this subpart, and where appro-priate, questions arising at any stageof the proceeding shall be resolved atthe discretion of the Presiding Officeror the Administrator, as appropriate.

§ 57.802 Request for waiver.(a) General. (1) Each smelter owner

requesting a waiver shall complete,sign, and submit appendix A (Test for

Eligibility for Interim Waiver). Copiesof appendix A may be obtained fromany EPA Regional Administrator, orfrom the Director, Stationary SourceCompliance Division (EN–341), U.S. En-vironmental Protection Agency, 401 MStreet, SW., Washington, DC 20460.Claims of confidentiality shall be madeas provided in § 57.203.

(2) The smelter owner shall append tothe completed and signed appendix Afull copies of all documents, test re-sults, studies, reports, scientific lit-erature and assessments required byappendix A. To the extent that the ma-terial consists of generally availablepublished material, the smelter ownermay cite to the material in lieu of ap-pending it to appendix A. The smelterowner shall specificially designatethose portions of any documents reliedupon and the facts or conclusions inappendix A to which they relate.

(b) Effect of submitting incomplete ap-plication. (1) The Administrator, or aperson designated by him to review ap-plications for waivers, may advise thesmelter owner in writing whenever hedetermines that additional informationis needed in order to make the waivereligibility determinations required bysection 119(d)(2) of the Act. The smelterowner shall promptly supply such in-formation. All additional informationrequested under this paragraph andfiled in the manner required by para-graph (d) shall be deemed part of ap-pendix A.

(2) Failure to comply with the re-quirements of paragraphs (a) and (b)(1)of this section shall be grounds for de-nial of the requested waiver.

(c) Time for requesting waivers. Any re-quest for a waiver must be submittedto the Administrator by the smelterowner at the time of the applicationfor an NSO from the State or the Ad-ministrator, as the case may be. Wherea smelter was issued a second periodNSO by a State before these regula-tions went into effect, a request for awaiver shall be made and a completedappendix A shall be submitted, withinsixty days of the effective date of theseregulations, unless an extension isgranted by the Administrator, or hisdesignee, for good cause.

(d) Submission of request. A copy of ap-pendix A (plus attachments) which has


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been completed for the purpose of re-questing a waiver of constant controlrequirements shall be filed with theAdministrator, addressed as follows:Director, Stationary Source Compli-ance Division (EN–341), U.S. Environ-mental Protection Agency, 401 MStreet, SW., Washington, DC 20460,Attn: Confidential Information Unit.

(e) Eligibility. A smelter shall be eligi-ble for consideration under this sub-part only if it establishes that (1) itsexisting strong stream controls, if any,lack the capacity while in full oper-ation to treat all strong stream sulfurdioxide emissions and (2) bypass ofstrong stream controls due to excessstrong stream sulfur dioxide emissionscannot be avoided with improved oper-ation and maintenance of existingstrong stream controls and processequipment.

(f) Criteria for decision. The Adminis-trator shall grant or approve a waiver,whichever is appropriate, for any eligi-ble smelter as to which he finds, in ac-cordance with the methods and proce-dures specified in appendix A, that:

(1) The higher of the two net presentvalues of future cash flows completedunder the two alternative sets of as-sumptions set forth in the instructionsto schedule D.6 in appendix A in lessthan liquidation (salvage) value; or

(2) The smelter’s average variablecosts at all relevant levels of produc-tion (after installation of interim con-stant control equipment) would exceedthe weighted average price of smelteroutput for one year or more.

§ 57.803 Issuance of tentative deter-mination; notice.

(a) Tentative determination. (1) TheEPA staff shall formulate and prepare:

(i) A ‘‘Staff Computational Anal-ysis,’’ using the financial informationsubmitted by the smelter owner under§ 57.802 to evaluate the economic cir-cumstances of the smelter for whichthe waiver is sought;

(ii) A tentative determination as towhether an interim requirement forthe use of constant controls would beso costly as to necessitate permanentor prolonged temporary cessation ofoperations at the smelter for which thewaiver is requested. The tentative de-termination shall contain a ‘‘Proposed

Report and Findings’’ summarizing theconclusions reached in the Staff Com-putational Analysis, discussing the es-timated cost of interim controls, andassessing the effect upon the smelter ofrequiring those controls. The tentativedetermination shall also contain a pro-posed recommendation that the waiverbe granted or denied, based upon theProposed Report and Findings, andstating any additional considerationssupporting the proposed recommenda-tion. This tentative determinationshall be a public document.

(2) In preparing the Proposed Reportand Findings, the EPA staff shall at-tempt to the maximum extent feasibleto avoid revealing confidential infor-mation which, if revealed, might dam-age the legitimate business interests ofthe applicant. The preceding sentencenotwithstanding, the tentative deter-mination shall be accompanied by alisting of all materials considered byEPA staff in developing the tentativedetermination. Subject to the provi-sions of § 57.814(a), full copies of allsuch materials shall be included in theadministrative record under § 57.814, ex-cept that, to the extent the materialconsists of published material which isgenerally available, full citations tothat material may be given instead.

(b) Public notice. Public notice ofEPA’s tentative determination togrant or deny an application for awaiver shall be given by:

(1) Publication at least once in adaily newspaper of general circulationin the area in which the smelter is lo-cated; and

(2) Posting in the principal office ofthe municipality in which the smelteris located.

(c) Individual notice. Individual noticeof EPA’s tentative determination togrant or deny an application for awaiver shall be mailed to the smelterowner by certified mail, return receiptrequested, and to the air pollution con-trol agency for the State in which thesmelter is located.

(d) Request for individual notice. EPAshall mail notice of its tentative deter-mination to grant or deny an applica-tion for waiver to any person upon re-quest. Each such request shall be sub-mitted to the Administrator in writ-ing, shall state that the request is for


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individual notice of tentative deter-mination to grant or deny any applica-tion for a waiver under section 119(d) ofthe Clean Air Act, and shall describethe notice or types of notices desired(e.g., all notices, notices for a par-ticular Region, notices for a particularState, notice for a particular city).

(e) Form of notice. The notice of ten-tative determination required to bedistributed under paragraphs (b), (c),and (d) of this section shall include, inaddition to any other materials, thefollowing:

(1) A summary of the informationcontained in appendix A;

(2) The tentative determination pre-pared under paragraph (a) of this sec-tion: Provided, that except in the caseof the smelter owner, a summary of thebasis for the grant or denial of thewaiver may be provided in lieu of theformal determinations required byparagraph (a)(1) of this section;

(3) A brief description of the proce-dures set forth in § 57.804 for requestinga public hearing on the waiver request,including a statement that such re-quest must be filed within 30 days ofthe date of the notice;

(4) A statement that written com-ments on the tentative determinationsubmitted to EPA within 60 days of thedate of the notice will be considered byEPA in making a final decision on theapplication; and

(5) The location of the administrativerecord and the location at which inter-ested persons may obtain further infor-mation on the tentative determination,including a copy of the index to therecord, the tentative determinationprepared under paragraph (a) of thissection, and any other nonconfidentialrecord materials.

§ 57.804 Request for hearing; requestto participate in hearing.

(a) Request for hearing. Within 30 daysof the date of publication or receipt ofthe notice required by § 57.803, any per-son may request the Administrator tohold a hearing on the tentative deter-mination by submitting a written re-quest containing the following:

(1) Identification of the person re-questing the hearing and his interest inthe proceeding;

(2) A statement of any objections tothe tentative determination; and

(3) A statement of the issues whichsuch person proposes to raise for con-sideration at such hearing.

(b) Grant or denial of hearing; notifica-tion. Whenever (1) the Administratorhas received a written request satis-fying the requirements of paragraph (a)of this section which presents genuineissues as to the effect on the smelter ofthe requirement for use of constantcontrols, or (2) the Administrator de-termines in his discretion that a hear-ing is necessary or appropriate the Ad-ministrator shall give written notice ofhis determination to each person re-questing such hearing and the smelterowner, and shall provide public noticeof his determination in accordancewith § 57.803(b). If the Administratordetermines that a request filed underparagraph (a) of this section does notcomply with the requirements of para-graph (a) or does not present genuineissues, he shall be given written noticeof his decision to deny a hearing to theperson requesting the hearing.

(c) Form of notice of hearing. Each no-tice of hearing disseminated underparagraph (b) of this section shall con-tain:

(1) A statement of the time and placeof the hearing;

(2) A statement identifying the placeat which the official record on the ap-plication for waiver is located, thehours during which it will be open forpublic inspection, and the documentscontained in the record as of the dateof the notice of hearing;

(3) The due date for filing a writtenrequest to participate in the hearingunder paragraph (d) of this section;

(4) The due date for making writtensubmissions under 57.805; and

(5) The name, address, and office tele-phone number of the hearing Clerk forthe hearing.

(d) Request to participate in hearing.Each person desiring to participate inany hearing granted under this section,including any person requesting such ahearing, shall file a written request toparticipate with the Hearing Clerk bythe deadline set forth in the notice ofhearing. The request shall include:

(1) A brief statement of the interestof the person in the proceeding;


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(2) A brief outline of the points to beaddressed;

(3) An estimate of the time required;and

(4) If the request is submitted by anorganization, a nonbinding list of thepersons to take part in the presen-tation. As soon as practicable, but inno event later than two weeks beforethe scheduled date of the hearing, theHearing Clerk shall make available tothe public and shall mail to each per-son who asked to participate in thehearing a hearing schedule.

(e) Effect of denial of or absence of re-quest for hearing. If no request for ahearing is made under this section, orif all such requests are denied underparagraph (b) of this section, the ten-tative determination issued under§ 57.803 shall be treated procedurally asif it were a recommended decisionissued under § 57.811(b)(2), except thatfor purposes of §§ 57.812 and 57.813 theterm ‘‘hearing participant’’ shall beconstrued to mean the smelter ownerand any person who submitted com-ments under § 57.803(e)(4).

§ 57.805 Submission of written com-ments on tentative determination.

(a) Main comments. Each person whohas filed a request to particpate in thehearing shall file with the HearingClerk no later than 30 days before thescheduled start of the hearing (or suchother date as may be set forth in thenotice of hearing) any comments whichhe has on the request for waiver andEPA’s tentative determination, basedon information which is or reasonablycould have been available to that per-son at the time.

(b) Reply comments. Not later thantwo weeks after a full transcript of thehearing becomes available (or suchother date as may be set forth in thenotice of hearing), each person who hasfiled a request to participate in thehearing shall file with the HearingClerk any comments he may have on:

(1) Written comments submitted byother participants pursuant to para-graph (a) of this section;

(2) Written comments submitted inresponse to the notice of hearing;

(3) Material in the hearing record;and

(4) Material which was not and couldnot reasonably have been availableprior to the deadline for submission ofmain comments under paragraph (a) ofthis section.

(c) Form of comments. All commentsshould be submitted in quadruplicateand shall include any affidavits, stud-ies, tests or other materials relied uponfor making any factual statements inthe comments.

(d) Use of comments. (1) Written com-ments filed under this section shallconstitute the bulk of the evidencesubmitted at the hearing. Oral state-ments at the hearing should be brief,and restricted either to points thatcould not have been made in writtencomments, or to emphasizing pointswhich are made in the comments, butwhich the participant believes can bemore forcefully urged in the hearingcontext.

(2) Notwithstanding the foregoing,within two weeks prior to either dead-line specified by paragraph (a) of thissection for the filing of main com-ments, any person who has filed a re-quest to participate in the hearing mayfile a request with the Presiding Offi-cer to submit all or part of his maincomments orally at the hearing in lieuof submitting written comments. ThePresiding Officer shall, within oneweek, grant such request if he findsthat such person will be prejudiced ifhe is required to submit such com-ments in written form.

§ 57.806 Presiding Officer.(a) Assignment of Presiding Officer. (1)

The Administrator shall, as soon aspracticable after the granting of a re-quest for hearing under § 57.803, requestthat the Chief Administrative LawJudge assign an Administrative LawJudge as Presiding Officer. The ChiefAdministrative Law Judge shall there-upon make the assignment.

(2) If the parties to the hearing waivetheir right to have the Agency or anAdministrative Law Judge preside atthe hearing, the Administrator shallappoint an EPA employee who is an at-torney to serve as presiding officer.

(b) Powers and duties of Presiding Offi-cer. It shall be the duty of the Pre-siding Officer to conduct a fair and im-partial hearing, assure that the facts


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are fully elicited, and avoid delay. ThePresiding Officer shall have authorityto:

(1) Chair and conduct administrativehearings held under this subpart;

(2) Administer oaths and affirma-tions;

(3) Receive relevant evidence: Pro-vided, that the administrative record,as defined in § 57.814, shall be receivedin evidence;

(4) Consider and rule upon motions,dispose of procedural requests, andissue all necessary orders;

(5) Hold conferences for the settle-ment or simplification of the issues orthe expediting of the proceedings; and

(6) Do all other acts and take allmeasures necessary for the mainte-nance of order and for the efficient, fairand impartial conduct of proceedingsunder this subpart.


§ 57.807 Hearing.(a) Composition of hearing panel. The

Presiding Officer shall preside at thehearing held under this subpart. AnEPA panel shall also take part in thehearing. In general, the membership ofthe panel shall consist of EPA employ-ees having special expertise in areas re-lated to the issues to be addressed atthe hearing, including economists andengineers. For this reason, the mem-bership of the panel may change as dif-ferent issues are presented for discus-sion.

(b) Additional hearing participants. Ei-ther before or during the hearing, thePresiding Officer, after consultationwith the panel, may request that a per-son not then scheduled to participatein the hearing (including an EPA em-ployee or a person identified by anyscheduled hearing participant as hav-ing knowledge concerning the issuesraised for discussion at the hearing)make a presentation or make himselfavailable for cross-examination at thehearing.

(c) Questioning of hearing participants.The panel members may question anyperson participating in the hearing.Cross-examination by persons otherthan panel members shall not be per-mitted at this stage of the proceedingexcept where the Presiding Officer de-

termines, after consultation with thepanel, that circumstances compel suchcross-examination. However, persons inthe hearing audience, including otherhearing participants, may submit writ-ten questions to the Presiding Officerfor the Presiding Officer to ask the par-ticipants, and the Presiding Officermay, after consultation with the panel,and in his sole discretion, ask thesequestions.

(d) Submission of additional material.Participants in the hearing shall sub-mit for the hearing record such addi-tional material as the hearing panelmay request within 10 days followingthe close of the hearing, or such otherperiod of time as is ordered by the Pre-siding Officer. Participants may alsosubmit additional information for thehearing record on their own accordwithin 10 days after the close of thehearing.

(e) Transcript. A verbatim transcriptshall be made of the hearing.

§ 57.808 Opportunity for cross-exam-ination.

(a) Request for cross-examination. Afterthe close of the panel hearing con-ducted under this part, any participantin that hearing may submit a writtenrequest for cross-examination. The re-quest shall be received by EPA withinone week after a full transcript of thehearing becomes available and shallspecify:

(1) The disputed issue(s) of materialfact as to which cross-examination isrequested. This shall include an expla-nation of why the questions at issueare factual, rather than of an analyt-ical or policy nature; the extent towhich they are in dispute in the lightof the record made thus far, and the ex-tent to which and why they can reason-ably be considered material to the de-cision on the application for a waiver;and

(2) The person(s) the participant de-sires to cross-examine, and an estimateof the time necessary. This shall in-clude a statement as to why the cross-examination requested can be expectedto result in full and true disclosure re-solving the issue of material fact in-volved.

(b) Order granting or denying requestfor cross-examination. As expeditiously


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as practicable after receipt of all re-quests for cross-examination underparagraph (a) of this section, the Pre-siding Officer, after consultation withthe hearing panel, shall issue an ordereither granting or denying each suchrequest, which shall be disseminated toall persons requesting cross-examina-tion and all persons to be cross-exam-ined. If any request for cross-examina-tion is granted, the order shall specify:

(1) The issues as to which cross-ex-amination is granted;

(2) The persons to be cross-examinedon each issue;

(3) The persons allowed to conductcross-examination;

(4) Time limits for the examinationof witnesses; and

(5) The date, time and place of thesupplementary hearing at which cross-examination shall take place. Inissuing this ruling, the Presiding Offi-cer may determine that one or moreparticipants have the same or similarinterests and that to prevent undulyrepetitious cross-examination, theyshould be required to choose a singlerepresentative for purposes of cross-ex-amination. In such a case, the ordershall simply assign time for cross-ex-amination by that single representa-tive without identifying the represent-ative further.

(c) Supplementary hearing. The Pre-siding Officer and at least one memberof the original hearing panel shall pre-side at the supplementary hearing.During the course of the hearing, thePresiding Officer shall have authorityto modify any order issued under para-graph (b) of this section. A verbatimtranscript shall be made of this hear-ing.

(d) Alternatives to cross-examination.(1) No later than the time set for re-questing cross-examination, a hearingparticipant may request that alter-native methods of clarifying the record(such as the submittal of additionalwritten information) be used in lieu ofor in addition to cross-examination.The Presiding Officer shall issue anorder granting or denying such requestat the time he issues (or would haveissued) an order under paragraph (b) ofthis section. If the request is granted,the order shall specify the alternativeprovided and any other relevant infor-

mation (e.g., the due date for submit-ting written information).

(2) In passing on any request forcross-examination submitted underparagraph (a) of this section, the Pre-siding Officer may, as a precondition toruling on the merits of such request,require that alternative means of clari-fying the record be used whether or nota request to do so has been made underthe preceding paragraph. The personrequesting cross-examination shallhave one week to comment on the re-sults of utilizing such alternativemeans, following which the PresidingOfficer, as soon as practicable, shallissue an order granting or denying suchperson’s request for cross-examination.

§ 57.809 Ex parte communications.

(a) General. (1) No interested personoutside the Agency or member of theAgency trial staff shall make or know-ingly cause to be made to any memberof the decisional body an ex parte com-munication relevant to the merits ofthe proceedings.

(2) No member of the decisional bodyshall make or knowingly cause to bemade to any interested person outsidethe Agency or member of the Agencytrial staff an ex parte communicationrelevant to the merits of the pro-ceedings.

(b) Effect of receipt of ex parte commu-nication. (1) A member of the decisionalbody who receives or who makes orknowingly causes to be made a commu-nication prohibited by this subsectionshall place in the record all writtencommunications or memoranda statingthe substance of all oral communica-tions together with all written re-sponses and memoranda stating thesubstance of all responses.

(2) Upon receipt by any member ofthe decisionmaking body of an ex partecommunication knowingly made orknowingly caused to be made by aparty or representative of a party inviolation of this section, the personpresiding at the stage of the hearingthen in progress may, to the extentconsistent with justice and the policyof the Clean Air Act, require the partyto show cause why its claim or interest


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in the proceedings should not be dis-missed, denied, disregarded, or other-wise adversely affected on account ofsuch violation.

(c) Definitions. For purposes of thissection, the following definitions shallapply:

(1) Agency trial staff means thoseAgency employees, whether temporaryor permanent, who have been des-ignated by the Agency as available toinvestigate, litigate, and present theevidence arguments and position of theAgency in the evidentiary hearing ornon-adversary panel hearing. Appear-ance as a witness does not necessarilyrequire a person to be designated as amember of the Agency trial staff;

(2) Decisional body means any Agencyemployee who is or may be reasonablyexpected to be involved in thedecisional process of the proceeding in-cluding the Administrator, PresidingOfficer, the Regional Administrator (ifhe does not designate himself as amember of the Agency trial staff), andany of their staff participating in thedecisional process. In the case of a non-adversary panel hearing, the decisionalbody shall also include the panel mem-bers whether or not permanently em-ployed by the Agency;

(3) Ex parte communication means anycommunication, written or oral, relat-ing to the merits of the proceeding be-tween the decisional body and an inter-ested person outside the Agency or theAgency trial staff which was not origi-nally filed or stated in the administra-tive record or in the hearing. Ex partecommunications do not include:

(i) Communications between Agencyemployees other than between theAgency trial staff and the member ofthe decisional body;

(ii) Discussions between thedecisional body and either:

(A) Interested persons outside theAgency, or;

(B) The Agency trial staff if all par-ties have received prior written noticeof such proposed communications andhave been given the opportunity to bepresent and participate therein.

(4) Interested person outside the Agencyincludes the smelter owner, any personwho filed written comments in the pro-ceeding, any person who requested thehearing, any person who requested to

participate or intervene in the hearing,any participant or party in the hearingand any other interested person notemployed by the Agency at the time ofthe communications, and the attorneyof record for such persons.


§ 57.810 Filing of briefs, proposed find-ings, and proposed recommenda-tions.

Unless otherwise ordered by the Pre-siding Officer, each hearing participantmay, within 20 days after reply com-ments are submitted under § 57.805(b),or if a supplementary hearing for thepurpose of cross-examination has beenheld under § 57.808(c), within 20 daysafter the transcript of such supple-mental hearing becomes available or ifalternative methods of clarifying therecord have been used under § 57.808(d),within 20 days after the alternativemethods have been employed, file withthe Hearing Clerk and serve upon allother hearing participants proposedfindings and proposed recommenda-tions to replace in whole or in part thefindings and recommendations con-tained in the tentative determination.Any such person may also file, at thesame time, a brief in support of his pro-posals, together with references to rel-evant pages of transcript and to rel-evant exhibits. Within 10 days there-after each participant may file a replybrief concerning alternative proposals.Oral argument may be held at the dis-cretion of the Presiding Officer on mo-tion of any hearing participant or suasponte.

§ 57.811 Recommended decision.As soon as practicable after the con-

clusion of the hearing, one or more re-sponsible employees of the Agencyshall evaluate the record for prepara-tion of a recommended decision andshall prepare and file a recommendeddecision with the Hearing Clerk. Theemployee(s) preparing the decision willgenerally be members of the hearingpanel and may include the PresidingOfficer. Such employee(s) may consultwith and receive assistance from anymember of the hearing panel in draft-ing a recommended decision and mayalso delegate the preparation of the


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recommended decision to the panel orto any member or members of it. Thisdecision shall contain the same ele-ments as the tentative determination.After the recommended decision hasbeen filed, the Hearing Clerk shallserve a copy of such decision on eachhearing participant and upon the Ad-ministrator.

§ 57.812 Appeal from or review of rec-ommended decision.

(a) Exceptions. (1) Within 20 days afterservice of the recommended decision,any hearing participant may take ex-ception to any matter set forth in suchdecision or to any adverse order or rul-ing of the Presiding Officer prior to orduring the hearing to which such par-ticipant objected, and may appeal suchexceptions to the Administrator by fil-ing them in writing with the HearingClerk. Such exceptions shall containalternative findings and recommenda-tions, together with references to therelevant pages of the record and rec-ommended decision. A copy of eachdocument taking exception to the rec-ommended decision shall be servedupon every other hearing participant.Within the same period of time eachparty filing exceptions shall file withthe Administrator and shall serve uponall hearing participants a brief con-cerning each of the exceptions beingappealed. Each brief shall include pagereferences to the relevant portions ofthe record and to the recommended de-cision.

(2) Within 10 days of the service of ex-ceptions and briefs under paragraph(a)(1) of this section, any hearing par-ticipant may file and serve a replybrief responding to exceptions or argu-ments raised by any other hearing par-ticipant together with references tothe relevant portions of the record, rec-ommended decision, or opposing brief.Reply briefs shall not, however, raiseadditional exceptions.

(b) Sua sponte review by the Adminis-trator. Whenever the Administrator de-termines sua sponte to review a rec-ommended decision, notice of such in-tention shall be served upon the partiesby the Hearing Clerk within 30 daysafter the date of service of the rec-ommended decision. Such notice shallinclude a statement of issues to be

briefed by the hearing participants anda time schedule for the service and fil-ing of briefs.

(c) Scope of appeal or review. The ap-peal of the recommended decision shallbe limited to the issues raised by theappellant, except when the Adminis-trator determines that additionalissues should be briefed or argued. Ifthe Administrator determines thatbriefing or argument of additionalissues is warranted, all hearing partici-pants shall be given reasonable writtennotice of such determination to permitpreparation of adequate argument.

(d) Argument before the Administrator.The Administrator may, upon requestby a party or sua sponte, set a matterfor oral argument. The time and placefor such oral argument shall be as-signed after giving consideration to theconvenience of the parties.

§ 57.813 Final decision.(a) After review. As soon as prac-

ticable after all appeal or other reviewproceedings have been completed, theAdministrator shall issue his final de-cision. Such a final decision shall in-clude the same elements as the rec-ommended decision, as well as any ad-ditional reasons supporting his deci-sions on exceptions filed by hearingparticipants. The final decision mayaccept or reject all or part of the rec-ommended decision. The Administratormay consult with the Presiding Officer,members of the hearing panel or anyother EPA employee in preparing hisfinal decision. The Hearing Clerk shallfile a copy of the decision on all hear-ing participants.

(b) In the absence of review. If no partyappeals a recommended decision to theAdministrator and if the Adminis-trator does not review it sua sponte, heshall be deemed to have adopted therecommended decision as the final de-cision of the Agency upon the expira-tion of the time for filing any excep-tions under § 57.812(a).

(c) Timing of judicial review. For pur-poses of judicial review, final Agencyaction on a request for a waiver of theinterim requirement that each NSOprovide for the use of constant controlsshall not occur until EPA approves ordisapproves the issuance of an NSO tothe source requesting such a waiver.


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40 CFR Ch. I (7–1–00 Edition)§ 57.814

§ 57.814 Administrative record.(a) Establishment of record. (1) Upon

receipt of request for a waiver, an ad-ministrative record for that requestshall be established, and a Record andHearing Clerk appointed to supervisethe filing of documents in the recordand to carry out all other duties as-signed to him under this subpart.

(2) All material required to be in-cluded in the record shall be added tothe record as soon as feasible after itsreceipt by EPA. All material in therecord shall be appropriately indexed.The Hearing Clerk shall make appro-priate arrangements to allow membersof the public to copy all nonconfiden-tial record materials during normalEPA business hours.

(3) Confidential record material shallbe indexed under paragraph (a)(2). Con-fidential record material shall, how-ever, be physically maintained in aseparate location from public recordmaterial.

(4) Confidential record material shallconsist of the following:

(i) Any material submitted pursuantto § 57.802 for which a proper claim ofconfidentiality has been made undersection 114(c) of the Act and 40 CFRpart 2; and

(ii) The Staff ComputationalAnaylsis prepared under § 57.803

(b) Record for issuing tentative deter-mination. The administrative record forissuing the tentative determination re-quired by § 57.803 shall consist of thematerial submitted under § 57.802 andany additional materials supportingthe tentative determination.

(c) Record for acting on requests forcross-examination. The administrativerecord for acting on requests for cross-examination under § 57.808 shall consistof the record for issuing the tentativedetermination, all comments timelysubmitted under §§ 57.803(e)(4) and57.805, the transcript of the hearing,and any additional material timelysubmitted under § 57.807(d).

(d) Record for preparation of rec-ommended decision. The administrativerecord for preparation of the rec-ommended decision required by § 57.811shall consist of the record for acting onrequest for cross-examination, thetranscript of any supplementary hear-ing held under § 57.808(c), any materials

timely submitted in lieu of or in addi-tion to cross-examination under§ 57.808(d), and all briefs, proposed find-ings of fact and proposed recommenda-tions timely submitted under § 57.810.

(e) Record for issuance of final decision.(1) Where no hearing has been held, theadministrative record for issuance ofthe Administrator’s final decision shallconsist of the record for issuing thetentative determination, any com-ments timely submitted under§ 57.803(e)(4), any briefs or reply briefstimely submitted under § 57.812 (a)through (c), and the transcript of anyoral argument granted under § 57.812(d).

(2) Where a hearing has been held,the administrative record for issuanceof the Administrator’s final decisionshall consist of the record of prepara-tion of the recommended decision, anybriefs or reply briefs submitted under§ 57.812 (a) through (c), and the tran-script of any oral argument grantedunder § 57.812(d).

§ 57.815 State notification.The Administrator shall give notice

of the final decision in writing to theair pollution control agency of theState in which the smelter is located.

§ 57.816 Effect of negative recom-mendation.

No waiver of the interim requirementfor the use of constant controls shallbe granted by the Administrator or aState unless the Administrator or aState first takes into account the Ad-ministrator’s report, findings, and rec-ommendations as to whether the use ofconstant controls would be so costly asto necessitate permanent or prolongedtemporary cessations of operation ofthe smelter.

APPENDIX A TO PART 57—PRIMARY NON-FERROUS SMELTER ORDER (NSO) AP-PLICATION

INSTRUCTIONS

1. General Instructions1.1 Purpose of the Application1.2 NSO Financial Tests1.3 Confidentiality2. NSO Financial Reporting Overview2.1 Revenue and Cost Assignment2.2 Transfer Prices on Affiliated Party

Transactions2.3 Forecasting Requirements2.4 EPA Furnished Forecast Data


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Environmental Protection Agency Pt. 57, App. A

2.5 Applicant Generated Forecasts2.6 Weighted Average Cost of Capital for

Nonferrous Metal Producers2.7 Horizon Value2.8 Data Entry2.9 Use of Schedules2.10 Use of Exhibits

DETAILED INSTRUCTIONS FOR EACH SCHEDULE

A.1 Historical Revenue DataA.2 Historical Cost DataA.3 Historical Profit and Loss SummaryA.4 Historical Capital Investment SummaryB.1 Pre-Control Revenue ForecastB.2 Pre-Control Cost ForecastB.3 Pre-Control Forecast Profit and Loss

SummaryB.4 Constant Controls Revenue ForecastB.5 Constant Controls Cost ForecastB.6 Constant Controls Forecast Profit and

Loss Summary for the Profit ProtectionTest

B.7 Profit Protection TestC.1 Constant Controls Forecast Profit and

Loss Summary for the Rate of ReturnTest

C.2 Constant Controls Sustaining Capital In-vestment Forecast

C.3 Historical Capital Investment in Con-stant Dollars

C.4 Rate of Return TestC.5 Horizon Value of Cash Flows for the Rate

of Return TestD.1 Interim Controls Revenue ForecastD.2 Interim Controls Cost ForecastD.3 Interim Controls Forecast Profit and

Loss SummaryD.4 Interim Controls Sustaining Capital In-

vestment ForecastD.5 Cash Proceeds from LiquidationD.6 Permanent Waiver from Interim Controls

TestD.7 Horizon Value of Cash Flows for the In-

terim Controls Test

1. General Instructions

1.1 Purpose of the application. This appli-cation provides financial reporting schedulesand the accompanying instructions forEPA’s determination of eligibility for a non-ferrous smelter order (NSO), and for a waiverof the interim constant controls requirementof an NSO. Although the determination ofeligiblity for an NSO is prequisite for the de-termination of a waiver, appendix A, as amatter of convenience to applicants, in-cludes both the NSO and waiver tests and re-porting schedules.

In order to support an NSO eligibility de-termination, the applicant must submit op-erating and financial data as specified by theschedules included in this application. Spe-cific instructions for completing each sched-ule are provided in subsequent sections ofthe instructions. In general, applicants mustprovide:

(a) Annual income statements, balancesheets and supporting data covering the fivemost recent fiscal years for the smelter forwhich the NSO requested.

(b) Forecasts of operating revenues, oper-ating costs, net income from operations andcapital investments for the firm’s smelteroperations subject to this application, on thebasis of anticipated smelter operations with-out any sulfur dioxide air pollution controlfacilities that have not been installed as ofthe NSO application date.

(c) Forecasts of operating revenues, oper-ating costs, net income from operations andcapital investments for the firm’s smelteroperations subject to this application, on thebasis of anticipated smelter operations withexpected additional sulfur dioxide control fa-cilities required to comply with the smelt-er’s SIP emission limitation.

(d) For smelters applying for a waiver ofinterim constant controls, forecasts of oper-ating revenues, operating costs, and capitalinvestments for the firm’s smelter oper-ations prepared on the basis of two alter-native assumptions: (1) Installation of addi-tional pollution control facilities required tocomply with interim constant control re-quirements, no installation of any additionalSO2 controls that the smelter would other-wise be required to install but for theissuance of an NSO, and closure of the smelt-er after January 1, 1988; and (2) installationof additional pollution control facilities re-quired to comply with interim constant con-trol requirements, installation of any addi-tional SO2 controls required to comply withthe smelter’s SIP emission limitation byJanuary 2, 1988, and continued operation ofthe smelter after January 1, 1988.

1.2 NSO financial tests. EPA will use sepa-rate tests to determine eligibility for an NSOand to evaluate applications for a waiver ofthe interim constant control requirement.The two tests for NSO eligibility employ apresent value approach for determining thereasonable availability of constant controltechnology that will enable an applicant toachieve full compliance with its SIP sulfurdioxide emission limitation. The tests forthe waiver of the interim constant controlrequirements employ variable costing anddiscounted cash flow standards for evalu-ating an applicant’s economic capability toimplement those requirements.

1.2.1 NSO Eligibility Tests. Each applicantmust establish that the system of productionand/or constant control technology that willenable the smelter to achieve full compli-ance with its SIP SO2 emission limitationstandard is not reasonably available. An ap-plicant will determine financial eligibilityfor an NSO by passing at least one of the fol-lowing two tests.

(a) Profit Protection Test. The smelter willexperience a reduction in pre-tax profits of 50


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percent or more after undertaking the re-quired installation of constant controls.

(b) Rate of Return Test. The smelter willearn a rate of return on historical net invest-ment, expressed in constant dollars, belowthe industry average cost of capital after un-dertaking the required installation of con-stant controls.

1.2.2 Temporary Waiver from Interim Controls.Applicants that do not have an existing con-stant control system or whose constant con-trols are not sufficient when in operationand optimally maintained to treat all strongstreams in accordance with subpart C, mayapply for a waiver of the requirements ofsubpart C with respect to any interim con-stant controls not already installed. Appli-cants will be eligible for a temporary waiverof the requirement for interim constant con-trols not already installed, if they can estab-lish pursuant to the procedures in this appli-cation that the imposition of such controlrequirements would economically neces-sitate closure of the smelter facility for a pe-riod of one year or longer. The economic jus-tification for a non-permanent closure underthis temporary waiver test is defined as asituation in which the smelter’s projectedoperating revenues for one or more yearsduring which the NSO is in effect are inad-equate to cover variable operating costs an-ticipated after installing the required in-terim control technology. Temporary waiv-ers will be granted for only the period oftime over which applicants can establish aninability by the firm to cover its variable op-erating costs. Interim control waiver re-quests based on the smelter’s projected in-ability to earn adequate income after instal-lation of interim pollution control equip-ment will be subject to the permanent waiv-er test.

1.2.3 Permanent Waiver from Interim Con-trols. Applicants that do not have an exist-ing constant control system or whose con-stant controls are not sufficient when in op-eration and optimally maintained to treatall strong streams in accordance with sub-part C, may apply for a waiver of the re-quirements of subpart C with respect to anyinterim constant controls not already in-stalled. Applicants will be eligible for a per-manent waiver of the requirement for in-terim constant controls not already in-stalled, if they can establish pursuant to theprocedures in this application that an impo-sition of such control requirements wouldnecessitate permanent closure of the smelt-er. Economic justification for a permanentclosure is defined as a situation in which thepresent value of future cash flows antici-pated from the smelter after installing therequired interim control technology is lessthan the smelter’s current salvage valueunder an orderly plan of liquidation. Futurecash flows are determined under two alter-native assumptions. The higher present

value of cash flows computed under these as-sumptions is then compared to salvagevalue.

1.2.4 EPA Contact for NSO Inquiries. In-quiries concerning this portion of the re-quirements for NSO application should beaddressed to Laxmi M. Kesari, Environ-mental Protection Agency, EN 341, 401 MStreet SW., Washington, DC 20460.

1.2.5 Certification. The NSO CertificationStatement must be signed by an authorizedofficer of the applicant firm.

1.3 Confidentiality. Applicants may requestthat information contained in this applica-tion be treated as confidential. Agency regu-lations concerning claims of confidentialityof business information are contained in 40CFR part 2, subpart B (41 FR 36902 et seq.,September 1, 1976, as amended by 43 FR 39997et seq., September 8, 1978). The regulationsprovide that a business may, if it desires, as-sert a business confidentiality claim cov-ering part or all of the information furnishedto EPA. The claim must be made at the sametime the applicable information is sub-mitted. The manner of asserting such claimsis specified in 40 CFR 2.203(b). Informationcovered by such a claim will be handled bythe Agency in accordance with proceduresset forth in the subpart B regulations. EPAwill not disclose information on a businessthat has made a claim of confidentiality, ex-cept to the extent of and in accordance with40 CFR part 2, subpart B. However, if noclaim of confidentiality is made when infor-mation is furnished to EPA, the informationmay be made available to the public withoutnotice to the business.

2. NSO Financial Reporting Overview

2.1 Revenue and Cost Assignment. Theamounts assigned to operations of the smelt-er subject to this NSO application should in-clude (1) revenues and costs directly attrib-utable to the smelter’s operating activitiesand (2) indirect operating costs shared withother segments of the firm to the extent thata specific causal and beneficial relationshipcan be identified for the allocation of suchcosts to the smelter. Do not allocate reve-nues and costs associated with central ad-ministrative activities for which specifccausal and beneficial relationships to the ac-tivities of the smelter cannot be established.Nonallocable items include, but are not re-stricted to, amounts such as dividend and in-terest income on centrally administeredportfolio investments, central corporate ad-ministrative office expenses and, except forschedules supporting the Profit ProtectionTest, interest on long-term debt financingarrangements. Provide a detailed expla-nation of amounts classified as nontraceableon a separate schedule and attach as part ofExhibit B.

2.2 Transfer Prices on Affiliated PartTransactions. Certain transactions by the


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1 The derivation of this figure is explainedin two memoranda to EPA (Item Nos. II–A–1 and IV–A–6a in EPA Docket No. A–82–35).

smelter subject to an NSO application mayreflect sales to or purchases from ‘‘affili-ated’’ customers or suppliers with whom thesmelter has a common bond of ownershipand/or managerial control. In preparing thisapplication, affiliated party transactionsshall be defined as transactions with any en-tity that the firm, or its owners, controls di-rectly or indirectly either through an owner-ship of 10 percent or more of the entity’s vot-ing interests or through an exercise of mana-gerial responsibility. Applicants must attachas part of Exhibit B supporting schedules ex-plaining the pricing policies established onaffiliated party transactions incorporated inthe financial reporting schedules.

Prices on inter-segment material and prod-uct transfers within a firm, or on externalpurchases from and sales to other affiliatedsuppliers and customers, may differ from theprices on comparable transactions with unaf-filiated suppliers and customers. In thisevent, applicants also must present in theExhibit B supporting schedules and incor-porate in the NSO financial reporting sched-ules appropriate adjustments for restatingaffiliated party transactions. Affiliatedparty transactions must be restated at ei-ther (a) equivalent prices on comparabletransactions with unaffiliated parties if suchprice quotations can be obtained or (b) pricesthat provide the selling entity with a normalprofit margin above its cost of sales if ameaningful comparison with unaffiliatedtransaction prices cannot be established.

A ‘‘normal’’ profit margin is defined as thegross operating profit per dollar of operatingrevenue that will provide an average after-tax rate of return on permanent capital(total assets less current liabilities). This av-erage rate of return is defined differently forthe historical and forecast periods. The ap-plicant must use a rate of return of 8.0 per-cent for the historical period. This figure isbased on a historoical average earned rate ofreturn for the nonferrous metals industry.1

EPA may update this figure periodically.The updates will be available in the rule-making docket or from the INFORMATIONCONTACT noted in the FEDERAL REGISTER.For the forecast period, the applicant mustuse a rate of return equal to the currentweighted average cost of capital for the non-ferrous metals industry, as computed in Sec-tion 2.6.

Forecast smelting charges for integratedsmelters can be computed from forecast mar-ket smelting charges. Integrated coppersmelters may use as the basis of their fore-cast revenues the forecast copper smeltingcharges provided by EPA, adjusted as de-scribed in Section 2.4.1. An applicant may

submit other forecasts, providing the fore-cast methodology is in accordance with theguidelines in Section 2.5 and fully docu-mented as part of Exhibit B.

2.3 Forecasting Requirements. NSO appli-cants must provide the Agency with finan-cial forecasts in Schedules B.1 through B.6and C.1 through C.2. Applicants requestingeither a temporary or permanent waiverfrom interim constant control requirementsalso must provide an additional set of finan-cial forecasts in Schedules D.1 through D.4.

2.3.1 Forecast Period. The forecast periodmust include at least two full years fol-lowing completion and startup of the re-quired pollution control system. The fore-cast period shall be from 1984 through 1990for an NSO application filed in 1984. If an ap-plication is filed in a later year, the 1984through 1990 period should be adjusted ac-cordingly. All references in this appendix tothe period 1984 through 1990 should be inter-preted accordingly.

2.3.2 Forecast Adjustment by Control Case.Some line items that have the same title inseveral schedules may contain different in-formation because they are based on dif-ferent assumptions regarding pollution con-trols. Production interruptions or curtail-ments due to the installation of pollutioncontrol facilities may require adjustmens tocertain revenue and cost estimates in therepective control cases. For example, pro-duction curtailments associated with supple-mentary control systems may be the basisfor the pre-control case, yet are eliminatedwhen constant controls replace supple-mentary control systems in the constantcontrols case. The application of pollutioncontrol techniques that involve processchanges in the smelter’s operations (e.g.,conversion to flash smelting) also may re-quire specific forecasts by applications of as-sociated impacts on incremental operatingrevenues and costs.

2.3.3 Nominal Dollar Basis. Applicantsmust make their financial forecasts in termsof nominal dollars. Forecasts of selected pa-rameters provided by EPA will furnishquidelines to an applicant in preparing therequired cost and revenue estimates. In par-ticular, copper smelting charges provided innominal-dollar terms must be used dierctlyby the applicant as given; i.e., the stipulatedcharge estimates should not be inflated.

2.3.4 Tolling Service Equivalent Basis. Ap-plicants must express all revenue forecastson a tolling service equivalent basis. Thus,forecast revenues are computed as the prod-uct of the forecast quantity of processed con-centrate, the forecast average product gradeof the concentrate (the percent of metal inthe concentrate), and the forecast smeltingcharge. Smelters that are not tolling smelt-ers and that do not use the copper smeltingcharges provided by EPA (as described inSection 2.4.1) can forecast a smelting charge


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from forecast product grade of the con-centrate, percent recovery, and product andconcentrate prices. The forecast prices andderivation of the smelting charge must be inaccordance with the guidelines in Section2.5, and the methodology must be fully docu-mented in Exhibit B.

2.4 EPA Furnished Forecast Data. In mak-ing projection for the period 1984 through1990, applicants must, except as noted below,use the indices provided by EPA. The table

below presents yearly values for each index(expressed as annual percentage rates ofchange) to be used by smelters applying foran NSO before January 1, 1985. If forecastsare needed for 1991 and EPA has not providednew forecasts, applicants should use theData Resources, Inc. forecasts for 1991 (Dock-et Item No. IV–A–6c) and the average ofCRU’s forecasts for 1989 and 1990 (expressedin 1991 dollars).

1984 1985 1986 1987 1988 1989 1990

Copper smelting charge 1 (cents per pound) ...................................... 14.5 14.6 16.0 15.3 15.3 15.5 15.4Annual Percentage Rates of Change

Wages ................................................................................................. 5.0 5.7 5.8 6.1 6.4 6.7 7.0Energy prices:

Electricity .............................................................................. 7.0 8.8 8.1 8.3 7.1 4.9 5.5Natural gas ........................................................................... 3.6 5.7 9.3 8.7 9.2 8.0 8.4Coal ...................................................................................... 5.1 7.0 8.9 9.0 9.7 9.7 9.7Fuel oil .................................................................................. 1.6 4.2 7.7 6.8 9.8 9.5 9.9

GNP price deflator .............................................................................. 4.8 5.0 5.0 5.2 5.8 5.8 5.9

1 Reference charge for calculating smelter-specific copper smelting charges as described in Section 2.4.1.

2.4.1 Copper smelting charge. EPA will sup-ply a forecast of reference copper smeltingcharges. These charges, which are f.o.b. U.S.mine, are based on an estimate of exportsmelting charges and on the differentialvalue of copper in the U.S. and the worldmarket. They must be used in forecastingunaffiliated party revenues for the periodfollowing the expiration of existing con-tracts and in forecasting affiliated party rev-enues for the entire forecast period. The ap-plicant may submit its own smelting chargeforecast for the post-contract period, pro-vided that such forecast is in accordancewith the guidelines in Section 2.5 and fullydocumented and substantiated as part of Ex-hibit B.

The EPA forecast export charge representsthe world market copper smelting chargewith copper valued at the London Metal Ex-change (LME) copper price. This chargeserves as the reference charge for the appli-cant copper smelter in calculating its smelt-ing charges. Applicant copper smelters mustderive their smelting charges from thisworld market charge as described in para-graph (a) below.

The applicant may adjust the derivedsmelter-specific smelting charge to accountfor other factors, provided the adjustmentsare fully documented as part of Exhibit B.An example of such a factor is the unit de-duction for metallurgical losses in smelting.Adjustment for this factor is discussed inparagraph (b) below.

(a) The derivation of a smelter-specificsmelting charge from the world marketcharge is based on assumptions regardingtransportation costs and the U.S. producer-world copper price differential. The EPAforecast export charge is the forecast smelt-

ing charge available at a Japanese smelter,with copper valued at the London Metal Ex-change copper price. The charge includes nofreight costs, which must be paid by themine. A U.S. smelter determines its smeltingcharge to a mine by meeting the combinedworld market smelting charge, adjusted toreflect copper valued at the U.S. producerprice, and the transportation charge fromthe mine to the Japanese smelter. This com-bined price is the highest that a mine is will-ing to pay for smelting.

The smelter’s net smelting charge is equalto the combined world smelting charge, ad-justed to the U.S. producer price for copper(i.e., the export forecast charge plus the U.S.producer price premium), and the transpor-tation cost between the mine and a Far Eastsmelter, minus the cost of transporting theconcentrate between the mine and the appli-cant smelter.

The applicant smelter’s net smeltingcharge for concentrate from an individualmine is computed by first adding the U.S.producer Price-LME world price differentialto the EPA-supplied forecast. The cost oftransporting copper from the U.S. mine tothe Far East is then added to this figure. Thenet smelting charge is obtained by sub-tracting from this total the cost of trans-porting copper from the mine to the appli-cant smelter. In making these calculations,an applicant must supply (and fully docu-ment in Exhibit B), the freight cost betweenthe mine and the Far East and between themine and the smelter. This freight cost mustbe converted to nominal dollars of the re-spective forecast years by applying the GNPpercentage price change forecasts suppliedby EPA or smelter-provided forecasts oftransportation price changes. The smelter-


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2 Documentation of the EPA forecasts isprovided as part of Item NO. IV–A–2 in EPADocket No. A–82–35.

provided forecasts of transportation pricechanges must comply with guidelines regard-ing such forecasts in Section 2.5.

An applicant must use a 3 cent per poundU.S. producer price premium (relative to theLME price) in calculating the smelter’s netsmelting charge. The applicant may sub-stitute its own forecasts of the U.S. producerprice premium if it can substantiate suchforecasts in accordance with the guidelinesin Section 2.5 regarding applicant-providedsmelting charge forecasts of principal prod-ucts. All supporting documentation for suchapplicant-supplied forecasts must be sup-plied in Exhibit B. Any updates of the pro-ducer price premium will be available in therulemaking docket or from the INFORMA-TION CONTACT noted in the FEDERAL REG-ISTER.

The following two representative examplesillustrate this methodology for making thetransportation and U. S. producer price pre-mium adjustment.

(1) The applicant smelter, located in Ari-zona, obtains concentrate from an adjacentmine. The freight charge from mine tosmelter is zero. The mine is willing to paythe applicant smelter an amount no higherthan the sum of the world market smeltingcharge (adjusted for the copper value dif-ferential) and the transportation cost ofshipping copper from the mine to the FarEast. This combined cost is the net chargereceived by the applicant smelter. If the ex-port smelting charge is 12 cents per poundand the freight cost between the mine andthe Far East is 13 cents per pound, the appli-cant smelter would calculate a net smeltingcharge equal to 28 cents: 12 cents plus 3 cents(for the U.S. producer price premium) plus 13cents (for the freight cost between the mineand the Far East).

(2) The applicant smelter obtains con-centrate from a nonadjacent mine. The minewill pay a charge no higher than the totalmarket smelting charge, valued at the U.S.producer price, and the transportation costsbetween the mine and a Far East smelter.The applicant’s net smelting charge is equalto this combined cost minus the transpor-tation costs for shipping the concentrate be-tween mine and applicant smelter.

Suppose that the mine to Far East freightcharge is 13 cents per pound and the mine toapplicant smelter freight charge is 4 centsper pound. If the export smelting charge is 12cents per pound, the net smelting charge isequal to 24 cents per pound: 12 cents plus 3cents (for the U.S. producer price premium)plus 13 cents (for the freight cost to the FarEast) minus 4 cents (for the freight cost tothe applicant smelter).

(b) The EPA forecast charges are based ona one unit deduction for metallurgicallosses. This means that if a concentrategrades 25 percent copper, the mine is onlycredited with 24 percent for metal return.

The one unit deduction on 25 percent con-centrate is equivalent to a 96 percent pay-ment for contained copper. Should a smelterrecover less than 96 percent, its revenuewould be less than the EPA forecast smelt-ing charge. Should a smelter recover morethan 96 percent, its revenue would be greaterthan the EPA forecast smelting charge.

2.4.2 Indices (Annual Percentage Changes).These indices, which are expressed as annualpercentage rate changes in price (wages, en-ergy prices, and GNP price deflator) must beused only for estimating the rate of price in-creases for the forecast period following theexpiration of the applicant’s current con-tracts. The applicant may use alternativeforecasts of annual percentage changes forthe forecast period following the expirationof current contracts, if justification is pro-vided. Any such alternative forecasts mustbe prepared by a widely-recognized fore-casting authority with expertise comparableto that of the forecaster relied upon by EPA.In addition, the documentation of these fore-casts must be comparable to that providedby EPA’s forecaster.

The wage indices are to be applied to wagepaid to manufacturing labor. The energyprice indices are to be applied to prices ofthe respective energy products. The GNPprice deflators are to be applied to prices fornon-metal, non-labor, and non-energy inputs.

2.5 Applicant Generated Forecasts. Withinthe specified limitations, applicants maysubmit a method of forecasting smeltingcharges and by-product, co-product andother prices. The method selected must beexplained and unit prices or costs providedwhere applicable. The forecast elementsmust be compatible with an applicant’s his-torical cost and revenue elements to permitdirect comparisons of historical and forecastdata. Applicants must attach as part of Ex-hibit B appropriate schedules explainingvariances between forecast and historicalunit costs for the smelter.

Forecasts of the smelting charges of thesmelter’s principal product (i.e., copper,lead, zinc, etc.) may be prepared either by anindependent forecasting authority or by thesmelter’s in-house personnel. If the forecastsare prepared by an independent forecastingauthority, the following conditions must besatisfied: (1) The forecasting authority musthave expertise comparable to that of theforecaster relied upon by EPA. (2) As muchdocumentation of the forecasting method-ology as can reasonably be obtained must bemade available to EPA. Such documentationmust, at a minimum, be comparable to thedocumentation supporting EPA smeltingcharge forecasts. 2


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3 The derivation of the formula and thebasis of the parameters are explained in twomemoranda to EPA (Item Nos. II–A–1 andIV–A–6a in EPA Docket No. A–82–35).

If the smelting charge forecasts are pre-pared by in-house personnel, the followingconditions must be met: (1) The in-houseforecasts must be certified as being based onsound methodology by an independent fore-casting authority with expertise comparableto that of the forecaster who prepared theEPA-supplied smelting charges. The inde-pendent forecasting authority shall also pro-vide a brief explanation of the basis for theconclusion reached in the certification. (2)The smelter owner shall provide EPA withthe documentation of the forecasting meth-odology employed, which must at a min-imum be comparable to the extent of docu-mentation supporting EPA’s smelting chargeforecasts. The smelter owner shall also makeavailable upon request by EPA such addi-tional documentation of the methodologyand underlying data as EPA considers appro-priate for evaluation of the forecasts.

Forecasts of freight cost changes, whichare applied to the freight costs used in calcu-lating a smelter’s net smelting charges,must be prepared by a widely-recognizedforecasting authority. The forecaster’s ex-pertise must be comparable to that of theforecaster relied upon by EPA in forecastingthe annual percentage changes in wages, en-ergy prices, and GNP. The documentation ofthese forecasts must be comparable to thatprovided by EPA’s forecaster.

To the maximum extent practicable, by-product, co-product and (when applicable)unaffiliated smelting charges must be statedat market prices adjusted to f.o.b. smelter.Adjustments of these pricing bases must bemade to reflect differences in grades andtypes of production. All adjustments must beconsistent with expected sales, grades andtypes of concentrate processed. Applicantsmust attach as part of Exhibit B schedulesdescribing and explaining the methods usedto forecast these revenue items and the ad-justments required for these revenue fore-casts.

Applicants must explain fully any changesfrom the historical data that are required toforecast labor productivity, ore-concentrategrade and composition, materials and energyconsumption per unit of output, yield ratesand other physical input/output relation-ships.

Existing contractual terms must be used inforecasting those sales or input costs orprices to which the applicant is committedby contracts. The use of contract-dictatedprices must be disclosed and supported by at-taching as part of Exhibit B the terms andduration of labor and other supplier arrange-ments.

Cost of compliance estimates need not beto the accuracy of final design/bid estimates;feasibility grade estimates will be accept-able. Updated cost of compliance estimatesused in internal five year plans or specially

prepared estimates of costs of compliancewill generally be satisfactory.

2.6 Weighted Average Cost of Capital forNonferrous Metal Producers. The industryaverage cost of capital is a weighted averageof the rates of return for equity and debt. Itscomponents are the interest rate and the re-turn on equity specific to the nonferrousmetals industry.

2.6.1 Computation.3 The applicant mustcompute the cost of capital according to thefollowing formula:R = (0.65×E)+(0.182×I)

where

R = weighted average cost of capitalE = return on equityI = interest rate.

The components are calculated as follows.(a) Return on equity for the nonferrous metals

industry. The 20 year Treasury bond yield tomaturity plus a risk premium of 8.6 percent.

(b) Interest Rate. The 20 year Treasury bondyield to maturity plus a risk premium of 3.0percent.

(c) Source of the 20 Year Treasury bond yield.Federal Reserve Bulletin, most recent monthlyissue. Use the average yield for the most re-cent full month.

2.6.2 Discount Factor. The discount factorcorresponding to the weighted average costof capital for any forecast year is computedaccording to the following equation:

DFR

N=+1

1( )where

DF = discount factorR = weighted average cost of capitalN = the number of years in the future (e.g.,

for the applicant applying in 1984, N = forthe forecast year 1985).

The horizon value, which is described inSection 2.7, is computed as of 1990, the end ofthe detailed forecast period. The discountfactor to be applied to the horizon value isthe same as for any other 1990 figure. For ex-ample, if the application is made in 1984, thevalue of N is 7.

2.7 Horizon Value. The horizon value is thepresent value of a stream of cash flows or netincome for 15 years beyond the last forecastyear. Applicants must compute the horizonvalue by capitalizing the average forecastvalue of the last two forecast years using thecurrent real weighted cost of capital. Theline item instructions for schedules having ahorizon value entry will specify the values tobe capitalized.


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The applicant averages the values of thelast two years after expressing both valuesin terms of the last year’s dollars. The two-year average value is then multiplied by 9.6.This is the factor associated with capital-izing a 15 year value stream at the currentreal weighted cost of capital of 6.2 percent.

Applicants must use a separate schedule tocalculate the horizon value for the Rate ofReturn Test and the Interim Controls Test(Schedule C.5 and D.7, respectively). Theseseparate schedules adjust for potential over-statements in the horizon value cash flowsthat may be caused by control equipment de-preciation reported for tax purposes.

2.8 Data Entry2.8.1 Rounding. All amounts (including

both dollar values and physical units) re-ported in the schedules and exhibits accom-panying this application must be rounded tothe nearest thousand and expressed in thou-sands of dollars or units unless otherwise in-dicated in the instructions.

2.8.2 Estimates. Where an applicant’srecords cannot produce the specific data re-quired by this application, the use of esti-mates will be allowed if a meaningful esti-mate can be made without significant distor-tion of the reported results. Data estimatesmust be supported by attaching on a sepa-rate sheet of paper as a part of Exhibit B anexplanation identifying where such esti-mates are used and showing explicitly howthe estimates were made.

2.8.3 Missing Data. Applicants must pro-vide, where applicable, all operating and fi-nancial data requested by this application.Only substantially complete applicationscan be accepted for processing by the Agen-cy. Questions concerning data entries forwhich information is not provided by or can-not reasonably be estimated from the appli-cant’s existing accounting records should beaddressed to the EPA Contact for NSO In-quiries.

2.8.4 Historical Period. The annual data re-quested in the historical schedules, Sched-ules A.1 through A.4, must be reported foreach of the five fiscal years immediately pre-ceding the year in which this application isfiled. The historical period shall be from fis-cal years 1979 through 1983 for an NSO appli-cation filed in 1984. If an application is filedin a later year, the references in this appen-dix to the period 1979 through 1983 should beinterpreted accordingly.

2.9 Use of schedules. All applicants mustcomplete Schedules A.1 through A.4, whichrecord historical revenues, cost, and capitalinvestment data. These schedules will beused by EPA to assist in evaluating forecastdata. Completion of the remaining schedulesdepends on the test required of the applicant.

2.9.1 NSO Eligibility. An NSO applicantmust pass one of the following two tests andcomplete the corresponding schedules.

(a) Profit Protection Test. The applicantmust complete Schedules B.1 through B.7 todetermine eligibility under the Profit Pro-tection Test. Schedules B.1 and B.2 reportthe base case (without constant controls)revenue and cost forecast, respectively, andSchedule B.3 summarizes Schedules B.1 andB.2. Base case production forecasts shouldreflect any production curtailments associ-ated with interim controls currently(preforecast) installed on smelters. Sched-ules B.4 and B.5 report the revenue and costforecast, respectively, for the constant con-trols case, and Schedule B.6 summarizesSchedules B.4 and B.5 for the Profit Protec-tion Test.

Schedule B.7 presents the calculations forthe Profit Protection Test. The applicant en-ters the forecast profits from Schedules B.3and B.6. The present value of the forecastprofits is then computed for each case. If thepresent value of forecast pre-tax profits withconstant controls is less than 50 percent ofthe present value of forecast pre-tax profitswithout controls (base case) the smelterpasses the test and is eligible for an NSO.The smelter also passes the test if thepresent value of forecast pre-tax profitswithout controls (base case) is negative.

(b) Rate of Return Test. The applicant mustcomplete Schedules B.4, B.5, and C.1 throughC.5 to determine eligibility under the Rate ofReturn Test. Schedules B.4 and B.5 reportthe revenue and cost forecast, respectively,for the constant controls case, and ScheduleC.1 summarizes Schedules B.4 and B.5 for theRate of Return Test. Schedule C.2 reportsforecast sustaining capital investment forthe constant controls case. Schedule C.3 re-ports historical net investment for the mostrecent fiscal year expressed in constant dol-lars, i.e., dollars of the year in which the ap-plication is made.

Schedule C.4 presents the calculations forthe Rate of Return Test. The applicant re-ports in Schedule C.4 the forecast cash flowsfrom Schedules C.1 and C.2 and the horizonvalue from Schedule C.5, computes theirpresent value, and subtracts the value of in-vested capital in constant dollars (takenfrom Schedule C.3) to yield net presentvalue. If the net present value is less thanzero, the smelter passes the test and is eligi-ble to receive an NSO. This result indicatesthat the smelter is expected to earn a rate ofreturn less than the industry average cost ofcapital.

2.9.2 Interim Control Waivers. An applicantfor a waiver from interim controls mustcomplete either a portion or all of SchedulesD.1 through D.7, depending on whether theapplication is for a temporary or permanentwaiver.

(a) Temporary Waiver from Interim ControlsTest. The applicant must complete SchedulesD.1 through D.3 to establish eligibility for atemporary waiver from interim controls.


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Schedules D.1 and D.2 report forecast rev-enue and cost data under the assumption ofinstallation of interim constant controlequipment and no installation of any addi-tional SO2 controls that the smelter wouldotherwise be required to install but for theissuance of the NSO. Schedule D.3 summa-rizes Schedules D.1 and D.2 and calculatesgross operating profit. If gross operatingprofit is negative for any year during whichthe NSO is in effect, the applicant is eligiblefor a temporary waiver.

(b) Permanent Waiver from Interim ControlsTest. The applicant must complete SchedulesD.1 through D.7. All schedules except forSchedule D.5 must be completed twice, basedon two alternative assumptions: (1) installa-tion of interim constant control equipment,no installation of any additional SO2 con-trols that the smelter would otherwise be re-quired to install but for the issuance of theNSO, and closure of the smelter after Janu-ary 1, 1988; and (2) installation of interimconstant control equipment, installation ofany additional SO2 controls required to com-ply with the smelter’s SIP emission limita-tion by January 2, 1988, and continued oper-ation of the smelter after January 1, 1988.

Schedules D.1 and D.2 report forecast rev-enue and cost data under each assumption.Schedule D.3 summarizes Schedules D.1 andD.2, and Schedule D.4 reports forecast sus-taining capital under each assumption.Schedule D.5 reports cash proceeds from liq-uidation.

Schedule D.6 presents the calculations forthe permanent waiver test. In Schedule D.6,the applicant reports cash flow projectionsfrom Schedules D.3 and D.4 and the horizonvalue from Schedule D.7, computes theirpresent value and subtracts the current sal-vage value (taken from Schedule D.5) toyield net present value. The higher of thetwo net present value figures computedunder the two alternative assumptions mustbe used in the test. If the higher net presentvalue figure is negative, the applicant is eli-gible for a permanent waiver.

2.10 Use of exhibits. In addition to data re-quired by the schedules included in this ap-plication, the following information must beattached as exhibits.

2.10.1 Exhibit A. Background informationon the firm’s organizational structure andits associated accounting and financial re-porting systems for primary nonferrous ac-tivities. This information must include,where applicable, the firm’s:

(a) Operating association with an owner-ship control in consolidated subsidiaries, un-consolidated subsidiaries, joint ventures andother affiliated companies.

(b) Organizational subdivision of its pri-mary nonferrous activities into profit cen-ters, cost centers and/or related financial re-porting entities employed to control the op-

eration of its mines, concentrators, smelters,refineries and other associated facilities.

(c) Material and product flows among thesmelter subject to this NSO application,other integrated facilities and its affiliatedsuppliers and/or customers. In the case of in-tegrated facilities, applicants must provideprocess flow diagrams depicting the oper-ating interrelationships among its mines,concentrators, smelters, refineries and otherintegrated facilities. For both integrated andnonintegrated facilities, applicants alsomust describe the proportion contributed toits primary nonferrous activities by materialpurchases from and product sales to affili-ated suppliers and customers.

(d) Annual operating capacity over the fivemost recent fiscal years for the smelter sub-ject to this application. Operating capacitymust be defined in terms of the total quan-tity of throughput that could have beenprocessed with the available facilities aftergiving appropriate allowance to normaldowntime requirements for maintenance andrepairs. Operating capacity data also mustconsider both capacity balancing require-ments among processing steps and annualprocessing yield rates attainable for each fa-cility.

(e) Weighted average analysis of con-centrates processed and tonnage producedannually over each of the five most recentfiscal years by the smelter subject to this ap-plication.

(f) Accounting system and policies for re-cording investment expenditures, operatingrevenues, operating costs and income taxesassociated with its primary nonferrous ac-tivities. Applicants also must provide a com-plete description of allocation techniquesemployed for assigning investments, reve-nues, costs and taxes to individual profit,cost of departmental centers for which costsare accumulated. Applicants must furtherindicate the relationship of cost and/or de-partmental accounting entities to the firm’sestablished profit centers.

(g) Annual five-year operating and capitalexpenditure plans (or budgets) by individualnonferrous profit center. These documentsmust include previous plans prepared for thefive preceding fiscal years as well as the cur-rent one-year and five-year operating andcapital expenditure plans. At least the cur-rent one-year and five-year plans must pro-vide a specific breakdown of investment ex-penditures and operating costs associatedwith the operation and maintenance of eachprofit center’s existing and proposed pollu-tion control facilities.

2.10.2 Exhibit B. Supplemental descriptionand explanation of items appearing in the fi-nancial reporting schedules. Other parts ofSection 2 and the detailed instructions forthe Schedules specify the information re-quired in Exhibit B.


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2.10.3 Exhibit C. Financial data documenta-tion. Applicants must document annual bal-ance sheet, income statement and supportingdata reported for the firm’s preceding fivefiscal years or for that portion of the pastfive years during which the firm engaged insmelter operations. This documentationmust be provided by attaching to the appli-cation:

(a) SEC 10–K reports filed by the parentcorporation for each of the preceding five fis-cal years.

(b) Certified financial statements preparedon a consolidated basis for the parent cor-poration and its consolidated subsidiaries.This requirement may be omitted for thoseyears in which SEC 10–K reports have beenattached to this Exhibit.

(c) Business Segment Information reportsfiled with the Securities and Exchange Com-mission by the firm for each of the precedingfive years (as available).

Schedule A.1—Historical Revenue Data

General. Use Schedule A.1 to report annualhistorical revenue data for fiscal years 1979through 1983. Revenues include product salesand associated operating revenues, net of re-turns and allowances, from smelter salesand/or transfers of copper, lead, zinc and mo-lybdenum or other nonferrous metal prod-ucts and tolling services to both unaffiliatedand affiliated customers. The line items inSchedule A.1 are explained in the followinginstructions.

Lines 01, 14, 27 and 40—Primary NonferrousProduct Sales. Report for each year the totalquantity of copper, lead, zinc and molyb-denum or other nonferrous metal productsales.

Lines 02, 15, 28 and 41—Unaffiliated CustomerSales. Report for each year the respectivequantities of copper, lead, zinc and molyb-denum or other nonferrous metal productsales to unaffiliated customers.

Lines 03, 16, 29 and 42—Unaffiliated CustomerRevenues. Report for each year the total op-erating revenues derived from smelter salesof copper, lead, zinc and molybdenum orother nonferrous metals to unaffiliated cus-tomers.

Lines 04, 17, 30 and 43—Unaffiliated CustomerPrices. Report for each year the average unitprice received on smelter sales of copper,lead, zinc and molybdenum or other non-ferrous metals to unaffiliated customers.The prices are computed as operating reve-nues reported on Lines 03, 16, 29 and 42 di-vided by the quantities reported on Lines 02,15, 28 and 41, respectively.

Lines 05, 18, 31 and 44—Average ProductQuality Grade. Report for each year the aver-age quality rating assigned to copper, lead,zinc and molybdenum or other nonferrousmetal products purchased by the smelter’sunaffiliated customers.

Lines 06, 19, 32 and 45—Affiliated CustomersSales. Report for each year the respectivequantities of copper, lead, zinc and molyb-denum or other nonferrous metal productsales to affiliated customers.

Lines 07, 20, 33 and 46—Affiliated CustomerRevenues. Report for each year the total op-erating revenues derived from smelter salesof copper, lead, zinc and molybdenum orother nonferrous metals to affiliated cus-tomers. These revenues should be stated atprices equivalent to those received on com-parable sales to unaffiliated customers as de-scribed in Section 2.2. Attach as part of Ex-hibit B an explanation of the methodologyused to state affiliated customer revenues.

Lines 08, 21, 34 and 47—Affiliated CustomerPrices. Report for each year the average unitprice received on smelter sales of copper,lead, zinc and molybdenum or other non-ferrous metals to affiliated customers. Theprices are computed as operating revenuesreported on Lines 07, 20, 33 and 46 divided bythe quantities reported on Lines 06, 19, 32 and45, respectively.

Lines 09, 22, 35 and 48—Average ProductQuality Grade. Report for each year the aver-age quality rating assigned to copper, lead,zinc and molybdenum or other nonferrousmetal products purchased by the smelter’saffiliated customers.

Lines 10, 23, 36 and 49—Total Primary Prod-uct Revenues. Report for each year total op-erating revenues derived from the smelter’ssales to unaffiliated and affiliated customersof copper (Lines 03+07), lead (Lines 16+20),zinc (Lines 29+33) and molybdenum or othernonferrous metals (Lines 42+46).

Lines 11, 24, 37 and 50—Transfer Price Adjust-ments. Report for each year operating rev-enue adjustments required to equate affili-ated customer transfer prices with unaffili-ated customer market prices on smeltersales of copper, lead, zinc and molybdenumor other nonferrous metals. Attach as part ofExhibit B an explanation of the method usedfor restating transfer prices where such ad-justments are necessary.

Lines 12, 25, 38 and 51—Other Revenue Ad-justments. Report for each year sales returnsand allowances and other adjustments appli-cable to the smelter’s revenues derived fromcopper, lead, zinc and molybdenum or othernonferrous metal product sales. Attach aspart of Exhibit B a schedule reporting thetypes and amounts of such adjustments.

Lines 13, 26, 39 and 52—Adjusted ProductRevenues. Enter for each year the sums ofLines 10 through 12 for adjusted copper sales(Line 13), Lines 23 through 25 for adjustedlead sales (Line 26), Lines 36 through 38 foradjusted zinc sales (Line 39) and Lines 49through 51 for adjusted molybdenum or othernonferrous metal sales (Line 52).

Line 53—Primary Metal Revenues. Enter foreach year the sum of Lines 13, 26, 39 and 52.


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Line 54—Toll Concentrates Processed. Reportfor each year the total quantity of toll con-centrates processed.

Lines 55 to 58—Customer Toll Revenues. Re-port for each year the quantity of toll con-centrates processed for unaffiliated cus-tomers (Line 55), total operating revenuesderived from this processing (Line 56), aver-age price charged per ton of concentrateprocessed (Line 57=Line 56/55) and the aver-age quality rating assigned to toll con-centrates processed for unaffiliated cus-tomers (Line 58).

Lines 59 to 62—Affiliated Customer Toll Reve-nues. Report for each year the quantity oftoll concentrates processed for affiliated cus-tomers (Line 59), total operating revenuesderived from such processing (Line 60), aver-age price charged per ton of concentrateprocessed (Line 61=Line 60/59) and the aver-age quality rating (Line 62) assigned to tollconcentrates processed for affiliated cus-tomers.

Line 63—Tolling Service Revenues. Enter foreach year the total of amounts reported onLines 56 and 60.

Line 64—Transfer Price Adjustments. Reportfor each year operating revenue adjustmentsrequired to equate affiliated customer trans-fer prices with market prices charged to un-affiliated customers on the smelter’s tollingservices. Attach as part of Exhibit B an ex-planation of the method used for restatingtransfer prices where such adjustments arenecessary.

Line 65—Other Revenue Adjustments. Reportfor each year other adjustments applicableto the smelter’s tolling service revenues. At-tach as part of Exhibit B a schedule report-ing the types and amounts of such adjust-ments.

Line 66—Adjusted Tolling Service Revenues.Enter for each year the total of Lines 63through 65.

Line 67—Co-Product Revenues. Report foreach year the net revenues from sales of co-products derived from the smelter’s oper-ations. Attach as part of Exhibit B a sched-ule showing by individual type of co-product,the quantity produced and sold, market priceper unit of sales and total revenues derivedfrom the co-product sales.

Line 68—Pollution Control By-product Reve-nues. Report for each year revenues from thesale of by-products derived from operation ofthe smelter’s pollution control facilities. At-tach as part of Exhibit B a schedule showingby type of by-product produced, the quantityof output, market price received per unit ofoutput sold and total revenue derived fromthe by-product sales.

Line 69—Other By-product Revenues. Reportfor each year revenues from the sales of gold,silver and other by-products derived fromthe smelter’s operations. Attach as part ofExhibit B a schedule providing additional

documentation as specified in the instruc-tion for Line 68.

Line 70—Total Co-product and By-productRevenues. Enter for each year the total ofLines 67 through 69.

Schedule A.2—Historical Cost Data

General. Use Schedule A.2 to report annualhistorical cost and input quantities forsmelter operations for fiscal years 1979through 1983. The line items in Schedule A.2are explained in the following instructions.

Line 01—Total Quantity Purchased. Reportfor each year the total quantity of con-centrates purchased by the smelter. This willbe sum of Lines 02 and 06. Do not include thequantity of toll concentrates.

Line 02—Quantity Purchased. Report foreach year the total quantity of concentratespurchased from unaffiliated suppliers by thesmelter. Attach as a part of Exhibit B a de-scription of the types and grades of theseconcentrates. Do not include the quantity oftoll concentrates.

Line 03—Concentrate Cost. Report for eachyear the outlays paid to unaffiliated sup-pliers for concentrates. Attach as part of Ex-hibit B an explanation of the method(s) usedin determining these outlays and relation-ship between concentrate prices and thetypes and grades of concentrates purchasedfrom unaffiliated suppliers.

Line 04—Average Unit Price. Report for eachyear the average unit price paid for pur-chases of concentrates from unaffiliated sup-pliers. Generally, this value will be equiva-lent to Line 03 divided by Line 02. If thisequivalency does not hold, attach as a partof Exhibit B an explanation of the variance.

Line 05—Average Concentrate Grade. Reportfor each year the average concentrate gradeof concentrates purchased from unaffiliatedsuppliers. Attach as part of Exhibit B an ex-planation of this average. The averageshould correspond to the average price re-ported in Line 04.

Line 06—Quantity Purchased. Report foreach year the total quantity of concentratespurchased from affiliated suppliers by thesmelter. Attach as part of Exhibit B a de-scription of the types and grades of theseconcentrates. Do not include the quantity oftoll concentrates.

Line 07—Concentrate Cost. Report for eachyear the actual outlays paid to affiliatedsuppliers for concentrates. Attach as part ofExhibit B an explanation of the method(s)used in determining these outlays and rela-tionship between concentrate prices and thetypes and grades of concentrates purchasedfrom affiliated suppliers. Do not reflect anyadjustments to market prices here.


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Line 08—Average Unit Price. Report for eachyear the average unit price paid for pur-chases of concentrates from affiliated sup-pliers. Generally, this value will be equiva-lent to Line 07 divided by Line 06. If thisequivalency does not hold, attach as part ofExhibit B an explanation of the variance.

Line 09—Average Concentrate Grade. Reportfor each year the average concentrate gradeof concentrates purchased from affiliatedsuppliers. Attach as part of Exhibit B an ex-planation of this average. The averageshould correspond to the average price re-ported in Line 08.

Line 10—Total Concentrate Cost. Enter foreach year the sum of Lines 03 and 07.

Line 11—Transfer Price Adjustments. Enterfor each year the amounts required to adjustoutlays paid to affiliated suppliers to marketvalue. Refer to Section 2.2 for instructionson the restatement of affiliated party trans-actions. Attach as part of Exhibit B a de-scription and the computations of any re-quired cost adjustments.

Line 12—Other Cost Adjustments. Enter foreach year the amounts of any other cost ad-justments required such as freight or allow-ances. Attach as part of Exhibit B the identi-fication and the derivation of these adjust-ments.

Line 13—Adjusted Concentrate Cost. Enterfor each year the adjusted concentrate costreflecting the adjustments reported in Lines11 and 12.

Line 14—Direct Labor Hours. Report for eachyear the quantity of direct labor hours re-quired to support the processing levels pre-viously reported. Attach as part of Exhibit Ban explanation of the labor productivity fac-tor involved.

Line 15—Average Hourly Wage Rate. Reportfor each year the average wage rate paid perunit of direct labor input. Attach as part ofExhibit B a description of direct labor costsfactors under existing labor contracts and anexplanation of the method(s) used to deter-mine wage rates.

Line 16—Total Wage Payments. Enter foreach year the product of Lines 14 and 15.

Line 17—Supplemental Employee Benefits.Report adjustments required to direct laborcosts for other employee compensation undersupplemental benefit plans. Attach as part ofExhibit B a description of such plans andtheir costs and an explanation of the meth-od(s) used to determine such costs.

Line 18—Total Production Labor Cost. Enterfor each year the total of Lines 16 and 17.

Lines 19, 22, 25, 28 and 31—Energy Quantities.Report for each year the quantity of energyby type required to support the processinglevels reported in the smelter’s revenue. At-tach as part of Exhibit B, an explanation ofenergy use factors and qualities consideredin determining the smelter’s energy require-ments.

Lines 20, 23, 26, 29 and 32—Unit Prices. Re-port for each year a price paid per unit of en-ergy input by type of energy. Attach as partof Exhibit B, a description of the energyprice factors under existing energy contractsand an explanation of the method(s) used todetermine unit energy prices.

Lines 21, 24, 27, 30 and 33—Total Payments.Enter for each year the products of quantityand prices paid for electricity (Lines 19×20),natural gas (Lines 22×23), coal (Lines 25×26),fuel oil (Lines 28×29), and other (Lines 31×32).

Line 34—Total Energy Costs. Enter for eachyear the total of Lines 21, 24, 27, 30 and 33.

Schedule A.3—Historical Profit and LossSummary

General. Use Schedule A.3 to report annualrevenues, cost and income taxes assignableto operation of the smelter subject to thisNSO application for fiscal years 1979 through1983. Assignable revenues and costs shouldinclude only the results of transactions ei-ther (1) directly associated with smelter op-erations or (2) for which the applicant canestablish a causal and beneficial relationshipwith smelter operations pursuant to instruc-tions in Section 2.1. The line items in Sched-ule A.3 are explained in the following in-structions.

Line 01—Primary Metal Sales. Enter the to-tals reported in Schedule A.1, Line 40.

Line 02—Co-Product and By-Product Sales.Report for each year annual revenues, net orreturns and allowances, derived from smeltersales and/or transfers of co-products and by-products to both unaffiliated and affiliatedcustomers. Attach as part of Exhibit B a sup-porting schedule for each major co-productand by-product component of smelter reve-nues. Segregate the revenues reported bymajor co-product and by-product compo-nents into their unaffiliated customer andaffiliated customer elements. Report foreach component’s unaffiliated and affiliatedcustomer revenue elements the (1) averagegrade of product sold, (2) actual quantitysold, (3) average price per unit, and (4) totalsmelter revenues. Also show for each productline any adjustments required to restatetransfer prices and explain the basis for suchadjustments. Refer to Section 2.2 for instruc-tions on the restatement of affiliated cus-tomer revenues.

Line 03—Tolling Service Revenues. Enter thetotals reported in Schedule A.1, Line 53.

Line 04—Other Operating Revenues. Reportfor each year annual revenues directly asso-ciated with smelter operations that have notpreviously been reported on Lines 01 through03. Attach as part of Exhibit B a scheduleshowing the types and amounts of sales re-ported as other operating revenue. The fol-lowing non-operating revenue and incomeitems should not be included as other oper-ating revenue or as a part of revenues re-ported on Lines 01 through 03.


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Royalties, licensing fees and other incomefrom intangibles.

Interest and dividend income on portfolio in-vestments.

Equity in income (loss) of unconsolidatedsubsidiaries and affiliates.

Gain (loss) from discontinued operations anddisposal of property.

Minority interest adjustment to consoli-dated subsidiary income.

Extraordinary items.Line 05—Total Operating Revenue. Enter for

each year the total of Lines 01 through 04.Line 06—Concentrates Processed. Report the

cost of concentrates processed and sold ortransferred to unaffiliated and affiliated cus-tomers from Schedule A.2, Line 13. Con-centrates purchased from unaffiliated sup-pliers should be valued at the actual pricespaid. Concentrates purchased from affiliatedsuppliers should be valued at or, if necessary,restated to equivalent prices quoted by unaf-filiated suppliers. If prices used to reportrevenues are c.i.f. and concentrate costs aref.o.b. smelter, all transportation chargespaid on the smelter’s or buyer’s accountshould be excluded from smelter expense. At-tach as part of Exhibit B supporting sched-ules showing the:Annual value of concentrate purchases clas-

sified according to purchases from unaffili-ated and affiliated suppliers.

Cost of sales adjustments to concentratepurchases for net annual additions to orwithdrawals from concentrate inventories,freight-in on concentrate purchases and in-ventory spoilage.

Impact on cost of sales for restating, whereapplicable, the cost of concentrate pur-chases from affiliated suppliers to theequivalent prices paid to unaffiliated sup-pliers.

Volumes, grades and net prices of con-centrate purchases from unaffiliated andaffiliated suppliers by type of concentratepurchased.

Volumes, grades and net prices associatedwith toll concentrates processed by type ofconcentrate.Line 07—Other Materials Costs. Report for

each year annual costs incurred for flux, re-fractories, coke and other materials used bythe smelter in its processing of concentrates.Materials purchased from unaffiliated sup-pliers should be valued at the actual pricespaid after adjustment for transportationcosts incurred. Materials purchased from af-filiated suppliers should be valued at or, ifnecessary, restated to equivalent pricesquoted by unaffiliated suppliers. Include inExhibit B supporting schedules showing the:Annual value of material purchases classi-

fied according to purchases from unaffili-ated and affiliated suppliers.

Cost of sales adjustments to material pur-chases for net annual additions to or with-

drawals from material inventories, freightcosts on material purchases and inventoryloss.

Impact on cost of sales for restating, whereapplicable, the costs of material purchasesfrom affiliated suppliers to equivalentprices paid to unaffiliated suppliers.

Classification of other material costs bymajor cost factors for each cost componentthat exceeds 20 percent of any line item inthe cost of sales schedule.

Line 08—Production Labor Costs. Report foreach year total direct labor costs incurred bythe smelter for processing purchased and tollconcentrates, Schedule A.2, Line 18. Includein Exhibit B supporting schedules showingthe:

Manhours and wage rates for major laborclassifications.

Potential impact on wage rates of provisionin the smelter’s current labor contracts.

Explanation of major variances observed indirect labor costs over the five-year periodas a result of factors such as strikes or newlabor contracts.

Line 09—Energy Costs. Enter the totals re-ported in Schedule A.2, Line 34.

Line 10—Pollution Control Costs. Report foreach year expenses incurred for operatingand maintaining pollution control facilities.All by-product credits associated with pollu-tion control facility operations should beeliminated and reported on Line 02. Depre-ciation and amortization charges against thesmelter’s pollution control facilities shouldbe reported separately on Line 18. Attach aspart of Exhibit B supporting schedules show-ing the:

Major pollution control cost elements withtheir values classified according to directand indirect cost factors.

Techniques used to allocate indirect pollu-tion control costs to major cost pools.

Line 11—Production Overhead. Report foreach year the total costs for indirect labor,indirect materials and other productionoverhead costs associated with the smelter.Attach as part of Exhibit B a schedule show-ing annual overhead costs by major costcomponents associated with the smelter’soperations. For each cost component, whereappropriate, identify the quantity and unitprice element of overhead costs.

Line 12—Other Production Costs. Report foreach year annual smelter overhead and otherproduction costs not previously reported onLines 06 through 11. By-product credits, ifany, should be eliminated and reported onLine 02 as operating revenues. Attach as partof Exhibit B supporting schedules showingthe:

Major cost elements classified according todirect and indirect production costs.


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Disaggregation of major overhead cost com-ponents into their fixed and variable costelements.

Allocation techniques used in assigning indi-rect overload costs to the major cost com-ponents.

Elements of overhead costs represented bypurchases from affiliated suppliers and ad-justments, if any, required to restate thesecosts on the basis of equivalent prices paidto unaffiliated supplier.Line 13—Total Cost of Sales. Enter for each

year the total of Lines 06 through 12.Line 14—Gross Operating Profit. Enter for

each year the difference between Lines 05and 13.

Line 15—Selling, General & Administrative(SG&A) Expenses. Report for each year SG&Aexpenses attributable to the smelter’s an-nual operating activities. Exclude those op-erating costs to be reported separately onLines 16 through 21 and those costs for whichcausal and beneficial relationships to thesmelter cannot be established. Attach aspart of Exhibit B supporting schedules (1)segregating SG&A expenses by major ex-pense components, (2) classifying the majorexpense components according to those costsincurred directly by smelter operations andcosts allocated to the smelter from indirectcost pools, and (3) explaining the basis usedfor indirect cost allocations.

Line 16—Taxes, Other Than Income Tax. Re-port for each year all taxes (exclusive of Fed-eral, State, local and foreign income taxes)assignable to the smelter’s operations. At-tach as part of Exhibit B, a schedule that (1)segregates these operating taxes by majorcomponent, (2) classifies each component ac-cording to direct and indirect cost elements,and (3) explains the basis used for indirectcost allocations.

Line 17—Research Costs. Report for eachyear research costs (exclusive of capitalizedcosts reported in Schedule A.4) that are as-signable to the smelter’s annual operations.Attach as part of Exhibit B a schedule (1)segregating exploration and research costsby major expense components, (2) classifyingeach expense component according to directand indirect cost elements, and (3) explain-ing the basis used for indirect cost alloca-tions.

Line 18—Pollution Control Depreciation andAmortization. Report for each year annual de-preciation and amortization charges attrib-utable to the smelter’s investment in pollu-tion control facilities and equipment. Re-ported charges should be computed in ac-cordance with depreciation and amortizationmethods adopted for tax reporting purposesby the firm. Attach explanatory supportingschedules as part of Exhibit B.

Line 19—Other Facility Depreciation and Am-ortization. Report for each year annual depre-ciation and amortization charges (exclusiveof charges reported on Line 18) assignable to

the smelter’s operations. Attach explanatorysupporting schedules as part of Exhibit B.

Line 20—Interest on Short-Term Debt. Reportfor each year interest expense and associatedfinancial charges on current liabilities in ac-cordance with the assignment instructionsin Section 2.1. Do not include interest on theportion of long-term debt due within the cur-rent year for each reporting period.

Line 21—Miscellaneous Operating Expenses.Report for each year any additional expensesassignable to the smelter’s annual oper-ations. Attach as part of Exhibit B a sched-ule (1) segregating these additional expensesinto major expense components, (2)classifying each expense component accord-ing to costs incurred directly by the smelterand costs allocated to the smelter from indi-rect cost pools, and (3) explaining the basisused for indirect cost allocations.

Line 22—Total Other Operating Expenses.Enter for each year the total of Lines 15through 21.

Line 23—Income from Operations. Enter foreach year the difference between Lines 14and 22.

Line 24—Gain/(Loss) from Disposition ofProperty. Report net gains or losses recog-nized during each year from disposition ofproperty, plant and equipment. Report suchgains or losses in accordance with the firm’snormal practice for certified financial state-ment reporting. If such gains or losses arenot significant and are classified otherwise,no reclassification need be made. A note tothis effect must be included in Exhibit B.

Line 25—Miscellaneous Income and Expenses.Report minority interest in income, foreigncurrency translation effects, and other non-operating income and expenses directly as-signable to the smelter and not recognizedelsewhere on this schedule. Report suchitems in accordance with the accountingmethods used for certified financial report-ing purposes.

Line 26—Total Other Income and Expenses.Enter for each year the sum of Lines 24 and25.

Line 27—Net Taxable Income. Enter for eachyear the difference between Lines 23 and 26.

Schedule A.4—Historical Capital InvestmentSummary

General. Use Schedule A.4 to report annualend-of-period asset investments and currentliabilities for fiscal years 1979 through 1983.These figures must correspond with the reve-nues and costs associated with operation ofthe smelter subject to this NSO applicationas reported in Schedule A.3.

The amounts assigned to the subjectsmelter should include both (1) investmentsand liabilities directly identifiable with thesmelter’s operating activities and (2) assetinvestments shared with other segments tothe extent that a specific causal and bene-ficial relationship can be established for the


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intersegment allocation of such investments.Do not allocate to the smelter the costs ofassets maintained for general corporate pur-poses. Provide a detailed explanation ofamounts classified as nontraceable on a sep-arate schedule and attach as part of ExhibitB.

Applicants shall also restate trade receiv-ables and payables for transfer price adjust-ments on the smelter’s transactions with af-filiated customers. The line items in Sched-ule A.4 are explained in the following in-structions.

Line 01—Cash on Hand and Deposit. Reportfor each year total cash balances assignableto the smelter’s operations at the end ofeach year on the basis of causal and bene-ficial relationships with total corporate ac-tivities. Attach as part of Exhibit B in expla-nation of the basis used for allocation.

Line 02—Temporary Cash Investments. Re-port for each year temporary cash invest-ments in time deposits or other short-termsecurities. Include only those investmentseither held by the smelter to meet current-period tax payments or other budgeted ex-penditures specifically identifiable with thesmelter’s continued operation. Exclude anytemporary cash investments for which nospecific future outlay requirement can beidentified.

Attach as part of Exhibit B a scheduleclassifying temporary cash investments ac-cording to identifiable budgeted expenditurerequirements.

Lines 03 and 04—Net Trade Receivables. Re-port for each year trade accounts and notes,net of reserves for uncollectible items, as-signable to the smelter in relation to its un-affiliated (Line 03) and affiliated (Line 04)customer sales and transfers. Trade receiv-ables reported by the smelter as due from af-filiated customers should be stated or, if nec-essary, restated on credit terms equivalentto those received by unaffiliated customerson a sale of comparable products. Attach aspart of Exhibit B a schedule showing adjust-ments in the smelter’s receivables invest-ments required to equate trade credit termsextended to affiliated and unaffiliated cus-tomers.

Lines 05 and 06—Inventory Investments. Re-port for each year respective end-of-periodinvestments in raw material, work-in-proc-ess and finished good inventories held to sup-port the smelter’s production and sale ofproducts (Line 05) and associated inventoriesof other materials and supplies (Line 06).These inventories must be valued at currentmarket prices. Inventory purchases from af-filiated suppliers should also be stated atcurrent market prices or, if necessary, re-stated at current market prices prevailingon purchases from unaffiliated suppliers. At-tach explanatory supporting schedules aspart of Exhibit B.

Line 07—Other Current Assets. Report foreach year prepaid expenses, deferred charges,non-trade notes and accounts receivable, andother assets classified as current for cer-tified financial statement reporting purposesthat are assignable to the smelter’s oper-ations. Attach as part of Exhibit B a sched-ule classifying these other current assets ac-cording to their types and amounts.

Line 08—Total Current Assets. Enter for eachyear the total of Lines 01 through 07.

Lines 09 to 14—Property, Plant and Equip-ment. Report for each year by individual lineitem property, plant and equipment invest-ments assignable to smelter operations. In-clude in gross facility investments at the endof each period both (1) property, plant andequipment directly associated with thesmelter’s operations and (2) facilities sharedwith other operating segments to the extentthat a causal and beneficial relationship canbe established for the inter-segment alloca-tion of such facility investments.

Attach as part of Exhibit B a schedule re-porting by individual line item the annualcapital expenditures on additional property,plant and equipment investments in thesmelter’s operations. Further classify theseannual capital expenditures into both (1) in-vestments required to maintain the smelterversus investments in smelter expansion andimprovement and (2) direct facility versusjoint-use facility investments. Explain themethod used for allocating capital expendi-tures on joint-use facilities to the smelter’soperations. Refer to Line 17 instructions foradditional reporting requirements on thesmelter’s facility investments.

Line 15—Total Smelter Investment. Enter foreach year the total of Lines 09 through 14.

Line 16—Accumulated Depreciation and Am-ortization. Report for each year accumulateddepreciation, amortization and other valu-ation charges recorded for certified financialstatement reporting purposes in relation tosmelter investment as reported on Line 15.Other valuation charges are defined in Fi-nancial Accounting Standards Board (FASB)Statement No. 19 as losses recognized in con-nection with an impairment in the value ofan unimproved property below its acquisi-tion cost. Refer to Line 17 instructions foradditional reporting requirements on smelt-er facility investments.

Line 17—Net Smelter Investment. Enter foreach year the difference between Lines 15and 16. Attach as part of Exhibit B a sched-ule classifying gross facility investments,accumulated depreciation, amortizationcharges, and net facility investments bymajor pollution control and non-pollutioncontrol components. Identify for each assetcomponent the direct versus joint-use invest-ments assigned to the smelter and explainthe basis used to allocate amounts associ-ated with joint-use facilities to the smelter.


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Line 18—Other Non-Current Assets. Reportfor each year other assets assignable to thesmelter’s operations. Attach as part of Ex-hibit B a schedule reporting by type andamount the major components of such in-vestments.

Line 19—Total Smelter Capital Investment.Enter for each year the total of Lines 08, 17and 18.

Line 20 and 21—Trade Accounts and NotesPayable. Report for each year trade accountsand notes due on the smelter’s purchasesfrom unaffiliated suppliers (Line 20) and onits intersegment transfers or purchases fromaffiliated suppliers (Line 21). Trade payablesreported by the smelter as due to affiliatedsuppliers should be stated or, if necessary,restated on terms equivalent to those re-ceived from unaffiliated suppliers on a pur-chase of comparable materials. Attach aspart of Exhibit B a schedule showing adjust-ments required on the smelter’s tradepayables to equate trade credit terms re-ceived from affiliated and unaffiliated sup-pliers.

Line 22—Other Expense Accruals. Report foreach year payments classified as current forsalaries and wages, other employee benefits,operating taxes and related operating ex-penses assignable to the smelter’s oper-ations. Attach as part of Exhibit B a sched-ule classifying by type and amount themajor components of such accruals.

Line 23—Current Notes Payable. Report foreach year payments due to nontrade credi-tors on short-term financing arrangementsdirectly associated with the smelter’s oper-ations. Exclude current installments due onlong-term debt financing arrangements,notes due to offices and directors, interseg-ment loans or advances and loans or ad-vances from affiliated operating segments.

Line 24—Other Current Liabilities. Report foreach year other nontrade payables classifiedas current obligations assignable to thesmelter’s operations.

Line 25—Total Current Liabilities. Enter foreach year the total of Lines 20 through 24.

Line 26—Net Smelter Capital Investment.Enter for each year the difference betweenLines 19 and 25.

Schedule B.1—Pre-Control Revenue Forecast

General. Use Schedule B.1 to report annualforecasts of operating revenues anticipatedduring the years 1984 through 1990 from oper-ation of the smelter subject to this NSO ap-plication. These pre-control revenue projec-tions should be based on revenues and pro-duction associated with operating the smelt-er without any SO2 air pollution controlsthat have not been installed as of the NSOapplication date. Forecast smelter revenuesshould be expressed on a tolling serviceequivalent basis as described in Section 2.3.4.

Copper smelters that will process con-centrates containing an average of 1,000

pounds per hour or more of arsenic duringthe forecast period should assume that theywill use best engineering techniques to con-trol fugitive emissions of arsenic. All smelt-ers should also assume that they will be re-quired to meet all other regulatory require-ments in effect at the time the application ismade.

The line items in Schedule B.1 are ex-plained in the following instructions. Attachas part of Exhibit B schedules to (1) explainthe methods used to make the required fore-casts, (2) explain differences, if any, betweenhistorical trends and the forecasts and (3)provide data and information to support theforecasts.

Lines 01 and 05—Concentrates Processed. Re-port for each year the forecast quantity ofconcentrates processed for unaffiliated par-ties (Line 01) and affiliated parties (Line 05).

Lines 02 and 06—Smelting Charge. Report foreach year the forecast smelting charge forunaffiliated parties (Line 02) and affiliatedparties (Line 06). See Section 2.4 for forecastcopper smelting charges furnished by EPA.

Lines 03 and 07—Total Smelter Revenues. Re-port for each year the forecast total oper-ating revenues derived from processing con-centrates. The total for unaffiliated parties(Line 03) is equal to the product of Lines 01,02, and 04, and for affiliated parties (Line 07),the product of Lines 05, 06, and 08.

Lines 04 and 08—Average Product Grade. Re-port for each year the forecast average qual-ity rating assigned to concentrates processedfor unaffiliated parties (Line 04) and affili-ated parties (Line 08).

Line 09—Total Co-Product Revenues. Reportfor each year the forecast net revenues fromsales of co-products derived from the smelt-er’s operations. Attach as part of Exhibit Ba schedule showing by individual type of co-product, the forecast quantity produced andsold, forecast market price per unit of sales,and forecast total revenues derived from theco-product sales.

Line 10—Total By-product Revenues FromPollution Control Facilities. Report for eachyear forecast revenues from the sale of by-products derived from operation of thesmelter’s pollution control facilities, exclud-ing any SO2 air pollution controls that havenot been installed as of the NSO applicationdate. Attach as part of Exhibit B a scheduleshowing by type of by-product produced (e.g.,sulfuric acid) the forecast quantity of out-put, forecast market price per unit of outputsold, and forecast total revenue derived fromthe by-product sales.

Line 11—Total By-product Revenues FromOther Smelter Processing. Report forecast rev-enues from the sales of gold, silver, andother by-products derived from the smelter’soperations. Attach as part of Exhibit B aschedule providing additional documentationas specified in the instructions for Line 10.


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Schedule B.2—Pre-Control Cost Forecast

General. Use Schedule B.2 to report annualforecasts of operating costs anticipated dur-ing the years 1984 through 1990 from oper-ation of the smelter subject to this NSO ap-plication. These pre-control cost projectionsshould be based on costs and production as-sociated with operating the smelter withoutany SO2 air pollution controls that have notbeen installed as of the NSO applicationdate.

Copper smelters that will process con-centrates containing an average of 1,000pounds per hour or more of arsenic duringthe forecast period should assume that theywill use best engineering techniques to con-trol fugitive emissions of arsenic. All smelt-ers should also assume that they will be re-quired to meet all other regulatory require-ments in effect at the time the application ismade.

The line items in Schedule B.2 are ex-plained in the following instructions. Attachas part of Exhibit B schedules to (1) explainthe methods used to make the required fore-casts, (2) explain differences, if any, betweenhistorical trends and the forecasts, and (3)provide data and information to support theforecasts.

Line 01—Direct Labor Hours. Report for eachyear the quantity of direct labor hours re-quired to support the processing levels pre-viously reported. Attach as part of Exhibit Ban explanation of the labor productivity fac-tors involved.

Line 02—Average Hourly Wage Rate. Reportfor each year the forecast average wage rateper unit of direct labor input. Attach as partof Exhibit B a description of direct labor costfactors under any existing labor contractsthat extend to the forecast period and an ex-planation of the methodology used to fore-cast wage rates. EPA-provided forecast wageindices are reported in Section 2.4.


Line 04—Supplemental Employee Benefits.Report for each year adjustments required todirect labor costs for other employee com-pensation under supplemental benefit plans.Attach as part of Exhibit B a description ofsuch plans and their costs and an expla-nation of the methodology used to forecastsuch costs. EPA-provided forecast wage indi-ces are reported in Section 2.4.

Line 05—Total Production Labor Cost. Enterfor each year the total of Lines 03 and 04.

Lines 06, 09, 12, 15 and 18—Energy Quantities.Report for each year the quantity of energyby type required to support the processinglevels reported in the smelter’s revenue. At-tach as part of Exhibit B an explanation ofenergy characteristics and use factors con-

sidered in forecasting the smelter’s futureenergy requirements.

Lines 07, 10, 13, 16, and 19—Unit Prices. Re-port for each year the forecast price per unitof energy input by type of energy. Attach aspart of Exhibit B a description of the energyprice factors under any existing energy con-tracts that extend to the forecast period andan explanation of the methodology used toforecast unit energy prices. EPA-providedforecast energy indices are reported in Sec-tion 2.4.

Lines 08, 11, 14, 17, and 20—Total Payments.Enter for each year the products of quantityand prices paid for electricity (Lines 06×07),natural gas (Lines 09×10), coal (Lines 12×13),fuel oil (Lines 15×16), and other (Lines 18×19).

Line 21—Total Energy Costs. Enter for eachyear the total of Lines 08, 11, 14, 17, and 20.

Schedule B.3—Pre-Control Forecast Profitand Loss Summary

General. Use Schedule B.3 to report annualforecasts of operating revenues and oper-ating costs derived in Schedules B.1 and B.2for the years 1984 through 1990. The transferof line items from Schedules B.1 and B.2 tothis Schedule is explained in the followinginstructions.

Line 01—Smelter Revenues-Unaffiliated Par-ties. Enter the totals reported in ScheduleB.1, Line 03.

Line 02—Smelter Revenues-Affiliated Parties.Enter the totals reported in Schedule B.1,Line 07.

Line 03—Co-product and By-product SalesRevenues. Enter the totals reported in Sched-ule B.1, Line 12.

Line 04—Other Operating Revenues. Reportoperating revenues anticipated from sourcesnot accounted for under Lines 01 through 03.Refer to instructions for Line 04 of ScheduleA.3 for items that should not be included in‘‘Other Operating Revenues.’’ Attach as partof Exhibit B a schedule showing annualamounts forecast by individual revenue com-ponent for ‘‘other’’ operating revenues asso-ciated with the smelter’s forecast pre-con-trol operations. Identify in the supportingschedule any differences in the ‘‘other’’ rev-enue components reported in this Scheduleand Schedule A.3 and explain the reasons forsuch differences.

Line 05—Total Operating Revenues. Enter foreach year the total of Lines 01 through 04.

Line 06—Material Costs. Report total costsforecast for flux, refractories, coke and othermaterials directly associated with the smelt-er’s processing of concentrates. Attach aspart of Exhibit B a schedule showing the an-nual amounts forecast by major materialcost components. For each cost component,identify the forecast quantity and unit priceelements of material cost and explain thebasis for forecasting these quantity and priceelements. Identify in the supporting scheduleany differences in the ‘‘other’’ material cost


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components shown in this Schedule andSchedule A.3 and explain the reasons forsuch differences.

Line 07—Production Labor Costs. Enter thetotals reported in Schedule B.2, Line 05.

Line 08—Energy Costs. Enter the totals re-ported in Schedule B.2, Line 21.

Line 09—Pollution Control Costs. Report thetotal costs forecast for expenses identifiablewith operation and maintenance of all pollu-tion control equipment and facilities exceptany SO2 air pollution controls that have notbeen installed as of the NSO applicationdate. By-product credits associated with op-eration of the pollution control facilitiesshould be eliminated from the cost accounts,reclassified to Schedule B.1, Line 10 and in-cluded in Line 03 of this Schedule. Attach aschedule as part of Exhibit B classifying pol-lution control costs by major cost compo-nents. Explain the basis used for estimatingeach of the cost components.

Line 10—Production Overhead Costs. Reportthe total costs forecast for indirect labor, in-direct materials and other production over-head costs associated with the smelter’s op-erations. Attach as part of Exhibit B aschedule showing annual overhead costs pro-jected by major cost components associatedwith the smelter’s operations. For each costcomponent, where appropriate, identify theforecast quantity and unit price elements ofoverhead costs and explain the basis for esti-mating these quantity and price elements.Also identify in the supporting schedule anydifferences in production overhead cost clas-sifications used in this Schedule and Sched-ule A.3 and explain the reasons for such dif-ferences.

Line 11—Other Production Costs. Reportother forecast production costs not pre-viously reported on Lines 06 through 10. At-tach as part of Exhibit B supporting sched-ules showing the basis of the forecasts.

Line 12—Total Cost of Sales. Enter for eachyear the sum of operating costs reported onLines 06 through 11.

Line 13—Gross Operating Profit. Enter foreach year the difference between Lines 05and 12.

Line 14—Selling, General and AdministrativeExpenses. Report the total costs forecast foradministrative, marketing and general cor-porate overhead functions that directly orindirectly support the smelter’s operations.Refer to the NSO Financial Reporting Over-view for a general discussion of indirect costallocations from overhead cost pools. Attachas part of Exhibit B a schedule classifyingselling, general and administrative expensesinto major cost components. Indicate wheth-er each component represents costs directlyassignable to the smelter or indirect costsallocated from other business segments tothe smelter. Explain the basis used for esti-mating the amount of expected costs in-cluded in each component and the basis used

for allocating indirect cost elements to thesmelter. Identify and explain any differencesbetween the selling, general and administra-tive cost classification used in this Scheduleand that used in Line 15 of Schedule A.3.

Line 15—Taxes, Other than Income Taxes.Report the total costs forecast for propertytaxes and associated levies paid to govern-mental units by or for the benefits of thesmelter operation. Attach as part of ExhibitB a schedule classifying operating taxes bymajor component. Indicate whether eachcomponent represents taxes directly assign-able to the smelter or taxes that have beenallocated among more than one facility. Ex-plain the basis used for estimating taxes andthe basis for any allocation of taxes to thesmelter. Identify and explain any differencesbetween the component classifications usedin this Schedule and those used in Line 16 ofSchedule A.3.

Line 16—Research Costs. Report the esti-mates of research costs incurred directly byor for the benefit of the smelter operations.Attach as part of Exhibit B a scheduleclassifying the costs by major direct and in-direct assigned components. Explain thebasis for estimating the costs assigned toeach component. Identify and explain anydifferences between classifications used inthis Schedule and those used in Line 17 ofSchedule A.3.

Line 17—Pollution Control Facility Deprecia-tion and Amortization. Report the estimatesof depreciation and amortization charges as-sociated with the smelter’s actual and fore-cast investment in all pollution controlequipment and facilities except any SO2 airpollution controls that have not been in-stalled as of the NSO application date. Re-ported charges should be computed in ac-cordance with depreciation and amortizationmethods adopted for certified financialstatement reporting purposes by the firm.Attach explanatory supporting schedules aspart of Exhibit B.

Line 18—Other Smelter Facility Depreciationand Amortization. Report the pro forma esti-mates of depreciation and amortizationcharges associated with the smelter’s invest-ment in equipment and facilities other thanthose classified as pollution control facili-ties. Attach explanatory supporting sched-ules as part of Exhibit B.

Line 19—Interests. Report the estimates ofinterest and other financing charges on thesmelter’s current and long-term liabilities.Attach as part of Exhibit B a schedule show-ing the interest-bearing debt contracts iden-tifiable with the smelter’s operations, the in-terest rate projected for these contracts, andthe estimated annual interest charges.

Line 20—Miscellaneous Operating Expenses.Report only the total operating expenses as-sociated with or allocated to the smelterthat cannot be appropriately classsified inone of the preceding line items. Attach as


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part of Exhibit B a schedule showing theclassification of these residual operating ex-penses into major cost components. Explainthe basis used for forecasting the cost undereach component. Identify each cost compo-nent in terms of direct or indirect cost andexplain the basis used for allocating the indi-rect costs to smelter operations. Identify andexplain any differences between cost classi-fications included in this Schedule and thoseused in Line 21 of Schedule A.3.

Line 21—Total Other Operating Expenses.Enter for each year the sum of operatingcosts reported on Lines 14 through 20.

Line 22—Income From Operations. Enter foreach year the difference between Lines 21and 13.

Schedule B.4—Constant Controls RevenueForecast

General. Use Schedule B.4 to report annualforecasts of operating revenues anticipatedduring the years 1984 through 1990 from oper-ation of the smelter subject to this NSO ap-plication. These constant controls revenueforecasts should be based on an assumptionthat the applicant immediately implementsa program of additional pollution control fa-cility investments sufficient to achieve fullcompliance with the smelter’s SIP stackemission limitations for sulfur dioxide. Fore-cast smelter revenues should be expressed ona tolling service equivalent basis as de-scribed in Section 2.3.4.

The assumed investment program shouldbe based on whichever adequately dem-onstrated system, applicable to the smelter,that would be most economically beneficialsubsequent to installation of the system. Forthis purpose, adequately demonstrated sys-tems include those specified in Section57.102(b)(1).

Copper smelters that will process con-centrates containing an average of 1,000pounds per hour or more of arsenic duringthe forecast period should assume that theywill use best engineering techniques to con-trol fugitive emissions of arsenic. All smelt-ers should also assume that they will be re-quired to meet all other regulatory require-ments in effect at the time the application ismade.



Lines 02 and 06—Smelting Charge. Report foreach year the forecast smelting charge forunaffiliated parties (Line 02) and affiliated

parties (Line 06). See Section 2.4 for forecastcopper smelting charges furnished by EPA.



Line 09—Total Co-Product Revenues. Reportfor each year the forecast net revenues fromsales of co-products derived from the smelt-er’s operations. Attach as part of Exhibit Ba schedule showing by individual type of co-product, the forecast quantity produced andsold, forecast market price per unit of sales,and forecast total revenues derived from theco-product sales.

Line 10—Total By-product Revenues FromPollution Control Facilities. Report for eachyear forecast revenues from the sale of by-products derived from operation of thesmelter’s pollution control facilities. Attachas part of Exhibit B a schedule showing bytype of by-product produced (e.g., sulfuricacid) the forecast quantity of output, fore-cast market price per unit of output sold,and forecast total revenue derived from theby-product sales.



Schedule B.5—Constant Controls CostForecast

General. Use Schedule B.5 to report annualforecasts of operating costs anticipated dur-ing the years 1984 through 1990 from oper-ation of the smelter subject to this NSO ap-plication. These constant controls cost fore-casts should be based on an assumption thatthe applicant immediately implements aprogram of additional pollution control fa-cility investments sufficient to achieve fullcompliance with the smelter’s SIP stackemission limitations for sulfur dioxide.

The assumed investment program shouldbe based on whichever adequately dem-onstrated system, applicable to the smelter,would be most economically beneficial sub-sequent to installation of the system. Forthis purpose, adequately demonstrated sys-tems include those specified in § 57.102(b)(1).

Copper smelters that will process con-centrates containing an average of 1,000


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pounds per hour or more of arsenic duringthe forecast period should assume that theywill use best engineering techniques to con-trol fugitive emissions of arsenic. All smelt-ers should also assume that they will be re-quired to meet all other regulatory require-ments in effect at the time the application ismade.





Line 04—Supplemental Employee Benefits.Report for each year adjustments required todirect labor costs for other employee com-pensation under supplemental benefit plans.Attach as part of Exhibits B a description ofsuch plans and their costs and an expla-nation of the methodology used to forecastsuch costs. EPA-provided forecast wage indi-ces are reported in Section 2.4.

Lines 05—Total Production Labor Cost. Enterfor each year the total of Lines 03 and 04.

Lines 06, 09, 12, 15 and 18—Energy Quantities.Report for each year the quantity of energyby type required to support the processinglevels reported in the smelter’s revenue. At-tach as part of Exhibit B an explanation ofenergy characteristics and use factors con-sidered in forecasting the smelter’s futureenergy requirements.



Lines 21—Total Energy Costs. Enter for eachyear the total of Lines 08, 11, 14, 17, and 20.

Schedule B.6—Constant Controls ForecastProfit and Loss Summary for the ProfitProtection Test

General. Use Schedule B.6 to report annualforecasts of operating revenues and oper-ating costs derived in Schedules B.4 and B.5for the years 1984 through 1990. These con-stant controls forecasts should be based onan assumption that the applicant imme-diately implements a program of additionalpollution control facility investments suffi-cient to achieve full compliance with thesmelter’s SIP stack emission limitations forsulfur dioxide. The transfer of line itemsfrom Schedules B.4 and B.5 to this Scheduleis explained in the following instructions.




Line 04—Other Operating Revenues. Reportoperating revenues anticipated from sourcesnot accounted for under Lines 01 through 03.Refer to instructions for Line 04 of ScheduleA.3 for items that should not be included in‘‘Other Operating Revenues.’’ Attach as partof Exhibit B a schedule showing annualamounts forecast by individual revenue com-ponent for ‘‘other’’ operating revenues asso-ciated with the smelter’s forecast constantcontrols operations. Identify in the sup-porting schedule any differences in the‘‘other’’ revenue components reported in thisSchedule and Schedule A.3 and explain thereasons for such differences.


Line 06—Material Costs. Report total costsforecast for flux, refractories, coke and othermaterials directly associated with the smelt-er’s processing of concentrates. Attach aspart of Exhibit B a schedule showing the an-nual amounts forecast by major materialcost components. For each cost component,identify the forecast quantity and unit priceelements of material cost and explain thebasis for forecasting these quantity and priceelements. Identify in the supporting scheduleany differences in the ‘‘other’’ material costcomponents shown in this Schedule andSchedule A.3 and explain the reasons forsuch differences.



Line 09—Pollution Control Costs. Report thetotal costs forecast for expenses identifiable


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with operation and maintenance of all pollu-tion control equipment and facilities. By-product credits associated with operation ofthe pollution control facilities should beeliminated from the cost accounts, reclassi-fied to Schedule B.4, Line 10 and included inLine 03 of this Schedule. Attach a scheduleas part of Exhibit B classifying pollutioncontrol costs by major cost components. Ex-plain the basis used for estimating each ofthe cost components.

Line 10—Production Overhead Costs. Reportthe total costs forecast for indirect labor, in-direct materials and other production over-head costs associated with the smelter’s con-stant controls forecasts. Attach as part ofExhibit B a schedule showing annual over-head costs projected by major cost compo-nents associated with the smelter’s oper-ations. For each cost component, where ap-propriate, identify the forecast quantity andunit price elements of overhead costs and ex-plain the basis for estimating these quantityand price elements. Also identify in the sup-porting schedule any differences in produc-tion overhead cost classifications used inthis Schedule and Schedule A.3 and explainthe reasons for such differences.




Line 14—Selling, General and AdministrativeExpenses. Report the total costs forecast foradministrative, marketing and general cor-porate overhead functions that directly orindirectly support the smelter’s operations.Refer to the NSO financial Reporting Over-view for a general discussion of indirect costallocations from overhead cost pools. Attachas part of Exhibit B a schedule classifyingselling, general and administrative expensesinto major cost components. Indicate wheth-er each component represents costs directlyassignable to the smelter or indirect costsallocated from other business segments tothe smelter. Explain the basis used for esti-mating the amount of expected costs in-cluded in each component and the basis usedfor allocating indirect cost elements to thesmelter. Identify and explain any differencesbetween the selling, general and administra-tive cost classification used in this Scheduleand that used in Line 15 of Schedule A.3.

Line 15—Taxes, Other than Income Taxes.Report the total costs forecast for propertytaxes and associated levies paid to govern-mental units by or for the benefit of thesmelter operation. Attach as part of ExhibitB a schedule classifying operating taxes by

major component. Indicate whether eachcomponent represents taxes directly assign-able to the smelter or taxes that have beenallocated among more than one facility. Ex-plain the basis used for estimating taxes andthe basis for any allocation of taxes to thesmelter. Identify and explain any differencesbetween the component classifications usedin this Schedule and those used in Line 16 ofSchedule A.3.

Line 16—Research Costs. Report the esti-mates of research costs incurred directly byor for the benefit of the smelter operations.Attach as part of Exhibit B a scheduleclassifying the costs by major direct and in-direct cost components. Explain the basis forestimating the costs assigned to each compo-nent. Identify and explain any differences be-tween classifications used in this Scheduleand those used in Line 17 of Schedule A.3.

Line 17—Pollution Control Facility Deprecia-tion and Amortization. Report the estimatesof depreciation and amortization charges as-sociated with the smelter’s actual and fore-cast investment in all pollution controlequipment and facilities. Reported chargesshould be completed in accordance with de-preciation and amortization methods adopt-ed for certified financial statement reportingpurposes by the firm. Attach explanatorysupporting schedules as part of Exhibit B.


Line 19—Interest. Report the estimates ofinterest and other financing charges on thesmelter’s current and long-term liabilities.Attach as part of Exhibit B a schedule show-ing the interest-bearing debt contracts iden-tifiable with the smelter’s operations, the in-terest rate projected for these contracts, andthe estimated annual interest charges.

Line 20—Miscellaneous Operating Expenses.Report only the total operating expenses as-sociated with or allocated to the smelterthat cannot be appropriately classified inone of the preceding line items. Attach aspart of Exhibit B a schedule showing theclassification of these residual operating ex-penses into major cost components. Explainthe basis used for forecasting the cost undereach component. Identify each cost compo-nent in terms of direct or indirect cost andexplain the basis used for allocating the indi-rect costs to smelter operations. Identify andexplain any differences between cost classi-fications included in this Schedule and thoseused in Line 21 of Schedule A.3.



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Schedule B.7—Profit Protection Test

General. Applicants must complete thisSchedule and/or Schedule C.4 and the accom-panying schedules if they seek eligibility foran NSO. The line items in Schedule B.7 areexplained in the following instructions.

Line 01—Net Income from Operations. Enterfor each year the amounts reported in Sched-ule B.3, Line 22.

Line 02—Discount Factors. Enter the dis-count factor for each year, computed as de-scribed in the instructions under Section 2.6.

Line 03—Present Value of Future Net Income.Enter for each year the product of Lines 01and 02.

Line 04—Horizon Value. Enter under theTotal column, the estimated horizon value ofthe smelter. This shall be computed by cap-italizing the forecast net income from oper-ations in Line 01 as described in the instruc-tions under Section 2.7.

Line 05—Discount Factor. Enter under theTotal column the appropriate discount fac-tor corresponding to the weighted cost ofcapital, computed as described in the in-structions under Section 2.6.

Line 06—Present Value of Horizon Value.Enter under the Total column the product ofLines 04 and 05.

Line 07—Present Value of Future Net Income.Enter under the Total Column the sum ofamounts previously reported on Line 03 for1984 through 1990.

Line 08—Total Present Value. Enter for eachyear the sum of Lines 06 and 07.

Line 09—Net Income from Operations. Enterfor each year the amount reported in Sched-ule B.6, Line 22.

Line 10—Discount Factors. Follow the in-structions for Line 02.

Line 11—Present Value of Future Net Income.Enter for each year the product of Lines 09and 10.

Line 12—Horizon Value. Enter under theTotal column, the estimated horizon value ofthe smelter. This shall be computed by cap-italizing the forecast net income from oper-ations in Line 09 as described in the instruc-tions under Section 2.7.

Line 13—Discount Factor. Follow the in-structions for Line 05.


Line 15—Present Value of Future Net Income.Enter under the Total column the sum ofamounts previously reported on Line 11 for1984 through 1990.

Line 16—Total Present Value. Enter the sumof Lines 14 and 15.

Line 17—Ratio for Total Present Value ofConstant Controls Case to Total Present Valueof Pre-Control Case. Enter the ratio of Lines

16 to 08. If this ratio is less than .50, thesmelter passes the Profit Protection Test.An applicant also passes the Profit Protec-tion Test if the reported total present valueof pre-tax profits for the pre-control case onLine 08 is a negative value.

Schedule C.1—Constant Controls ForecastProfit and Loss Summary for the Rate ofReturn Test

General. Use Schedule C.1 to report fore-cast revenue and cost information derived inSchedules B.4 and B.5 for the years 1984through 1990. These constant controls fore-casts should be based on an assumption thatthe applicant immediately implements aprogram of additional pollution control fa-cility investments sufficient to achieve fullcompliance with the smelter’s SIP stackemission limitations for sulfur dioxide. Thetransfer of line items from Schedules B.4 andB.5 to this Schedule is explained in the fol-lowing instructions.




Line 04—Other Operating Revenues. Reportoperating revenues anticipated from sourcesnot accounted for under Lines 01 through 03.Refer to instructions for Line 04 of ScheduleA.3 for items that should not be included in‘‘Other Operating Revenues.’’ Attach as partof Exhibit B a schedule showing annualamounts forecast by individual revenue com-ponent for ‘‘other’’ operating revenues asso-ciated with the smelter’s forecast constantcontrols operations. Identify in the sup-porting schedule any differences in the‘‘other’’ revenue components reported in thisSchedule and Schedule A.3 and explain thereasons for such differences.





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Line 09—Pollution Control Costs. Report thetotal costs forecast for expenses identifiablewith operation and maintenance of all pollu-tion control equipment and facilities. By-product credits associated with operation ofthe pollution control facilities should beeliminated from the cost accounts, reclassi-fied to Schedule B.4, Line 10 and included inLine 03 of this Schedule. Attach a scheduleas part of Exhibit B classifying pollutioncontrol costs by major cost components. Ex-plain the basis used for estimating each ofthe cost components.





Line 14—Selling, General and AdministrativeExpenses. Report the total costs forecast foradministrative, marketing and general cor-porate overhead functions that directly orindirectly support the smelter’s operations.Refer to the NSO Financial Reporting Over-view for a general discussion of indirect costallocations from overhead cost pools. Attachas part of Exhibit B a schedule classifyingselling, general and administrative expensesinto major cost components. Indicate wheth-er each component represents costs directlyassignable to the smelter or indirect costsallocated from other business segments tothe smelter. Explain the basis used for esti-mating the amount of expected costs in-cluded in each component and the basis usedfor allocating indirect cost elements to thesmelter. Identify and explain any differencesbetween the selling, general and administra-tive cost classification used in this Scheduleand that used in Line 15 of Schedule A.3.

Line 15—Taxes, Other than Income Taxes.Report the total costs forecast for property

taxes and associated levies paid to govern-mental units by or for the benefit of thesmelter operation. Attach as part of ExhibitB a schedule classifying operating taxes bymajor component. Indicate whether eachcomponent represents taxes directly assign-able to the smelter or taxes that have beenallocated among more than one facility. Ex-plain the basis used for estimating taxes andthe basis for any allocation of taxes to thesmelter. Identify and explain any differencesbetween the component classifications usedin this Schedule and those used in Line 16 ofSchedule A.3.

Line 16—Research Costs. Report the esti-mates of research costs incurred directly byor for the benefit of the smelter operations.Attach as part of Exhibit B a scheduleclassifying the costs by major direct and in-direct costs components. Explain the basisfor estimating the costs assigned to eachcomponent. Identify and explain any dif-ferences between classifications used in thisSchedule and those used in Line 17 of Sched-ule A.3.

Line 17—Pollution Control Facility Deprecia-tion and Amortization. Report the estimatesof depreciation and amortization charges as-sociated with the smelter’s actual and fore-cast investment in all pollution controlequipment and facilities. Reported chargesshould be computed in accordance with de-preciation and amortization methods adopt-ed for tax reporting purposes by the firm. At-tach explanatory supporting schedules aspart of Exhibit B.

Line 18—Other Smelter Facility Depreciationand Amortization. Report the pro forma esti-mates of depreciation and amortizationcharge associated with the smelter’s invest-ment in equipment and facilities other thanthose classified as pollution control facili-ties. Attach explanatory supporting sched-ules as part of Exhibit B.

Line 19—Interest on Short-Term Debt. Reportthe estimates of interest and other financingcharges on forecast short-term obligations asclassified in the smelter’s current liabilitieson Schedule A.4. Interest and associated fi-nancing charges on long-term debt shouldnot be included as an expense identifiablewith the smelter’s operations. Attach as partof Exhibit B a schedule showing the interest-bearing, short-term debt contracts identifi-able with the smelter’s operations, the inter-est rate projected for these contracts, andthe estimated annual interest charges. Iden-tify and explain any differences between theclassifications used in this Schedule andthose used in Line 20 of Schedule A.3.

Line 20—Miscellaneous Operating Expenses.Report only the total operating expenses as-sociated with or allocated to the smelterthat cannot be appropriately classified inone of the preceding line items. Attach aspart of Exhibit B a schedule showing the


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classification of these residual operating ex-penses into major cost components. Explainthe basis used for forecasting the cost undereach component. Identify each cost compo-nent in terms of direct or indirect cost andexplain the basis used for allocating the indi-rect costs to smelter operations. Identify andexplain any differences between cost classi-fication included in this Schedule and thoseused in Line 21 of Schedule A.3.



Line 23—Income Taxes. Enter the product ofincome from operations (Line 22) and thesum of the Federal, State and local marginaltax rates. Attach as part of Exhibit B aschedule detailing the estimated marginaltax rate by taxing entity.

Line 24—Net Income From Operations. Enterfor each year the difference between Lines 23and 22.

Schedule C.2—Constant Controls SustainingCapital Investment Forecast

General. The applicant should estimate andreport, in Schedule C.2, yearly sustainingcapital outlays for maintenance of thesmelter’s existing productive capability.These estimates should be forecast under theassumption that full compliance with SIPemission limitations for SO2 will beachieved. Major elements of these outlaysshould be disclosed, as well as the total ofsuch outlays. Estimates shall be restrictedto those items that will be capitalized fortax purposes. These outlays shall primarilybe for plant replacement, although outlaysfor improvements and expansion may be in-cluded to the extent that improvements and/or expansion, exclusive of required pollutioncontrol outlays, can be justified as economi-cally feasible. Estimates of sustaining cap-ital shall exclude any incremental invest-ment for constant control requirements.Sustaining capital investments in facilitiesshared with other operating segments shallbe allocated in accordance with the instruc-tions given below.

Estimates of sustaining capital shall becompatible with productive capacity andpollution control requirements underlyingthe operating revenue and cost forecasts in-corporated in Schedule C.1.

Lines 01 to 06—Sustaining Capital. Reportfor each year by individual line item prop-erty, plant and equipment sustaining capitalinvestments assignable to smelter oper-ations. Include both (1) property, plant andequipment directly associated with thesmelter’s operations and (2) facilities sharedwith other operating segments to the extentthat a causal and beneficial relationship can

be established for the intersegment alloca-tions of such facility investments.

Attach as part of Exhibit B an explanatoryschedule disclosing and supporting by indi-vidual line item the major elements of an-nual capital expenditures for sustaining cap-ital. Further classify these annual capitalexpenditures into both (1) investments re-quired to maintain the smelter versus in-vestments in smelter expansion and im-provements and (2) direct facility versusjoint-use facility investments. Explain themethod used for allocating capital expendi-tures on joint-use facilities to the smelter’soperations.

Line 07—Total Smelter Sustaining Capital.Enter for each year the total of Lines 01through 06. Transfer the reported total foreach year to Schedule C.4, Line 06.

Schedule C.3—Historical Capital InvestmentIn Constant Dollars

General. Use Schedule C.3 to report theend-of-period asset investments and currentliabilities for the most recent fiscal year: (a)expressed in nominal dollars as of the date ofthe original transaction, and (b) expressed inthe current year’s dollars, i.e. 1984 dollars.The value of net investment in constant dol-lars (1984 dollars for smelters applying for anNSO in 1984) is used in Schedule C.4 as thebenchmark of the Rate of Return Test.

Applicants should complete Schedule C.3according to the following instructions.Transfer into the first column of ScheduleC.3 the historical cost figures that are re-ported in the last (1983) column of Table A.4.In the second column of Schedule C.3, reportthe figures from the first column of ScheduleC.3, expressed in constant (1984) dollars.

Convert each nominal dollar figure of thefirst column into constant (1984) dollars inaccordance with the historical cost/constantdollar accounting method defined in Finan-cial Accounting Standards Board (FASB)Statement No. 33 (Docket Item No. IV–A–6d),with the following exception: the applicantmust not report the lower recoverableamount as required by FASB No. 33. Attachexplanatory supporting schedules as part ofExhibit B.

Schedule C.4—Rate of Return Test

General. Applicants must complete thisSchedule and/or Schedule B.7 and the accom-panying schedules if they seek eligibility foran NSO. The line items in Schedule C.4 areexplained in the following instructions.

Line 01—Net Income from Operations. Enterfor each year the amounts reported in Sched-ule C.1, Line 24.

Lines 02 and 03—Depreciation and Amortiza-tion. Enter for each year the amounts re-ported in Schedule C.1, Lines 17 and 18, re-spectively.


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Line 04—Operating Cash Flow. Enter foreach year the total of amounts reported onLines 01 through 03.

Line 05—Constant Controls Capital Invest-ment. Enter the estimated capital outlays forconstant controls for the years during whichoutlays would be made. These values shallcorrespond to the constant control invest-ment estimates shown in the supportingschedules for Line 17 of Schedule C.1.Changes in working capital investment dueto investment in constant controls facilitiesmay be added to the capital investment esti-mates shown in the supporting schedules forSchedule C.1.

Line 06—Sustaining Capital. Enter for eachyear the amounts reported in Schedule C.2,Line 07.

Line 07—Total. Enter for each year the sumof Lines 05 and 06.

Line 08—Net Cash Flow Projections. Enterfor each year the difference between Lines 04and 07.


Line 10—Present Value of Future Cash Flows.Enter for each year the product of Lines 08and 09.

Line 11—Horizon Value. Enter under theTotal column the estimated horizon value ofthe smelter reported in Schedule C.5, Line 16.

Line 12—Discount Factor. Enter under theTotal column the appropriate discount fac-tor, computed as described in the instruc-tions under Section 2.6.


Line 14—Present Value of Future Cash Flows.Enter under the Total column the sum ofamounts previously reported on Line 10 for1984 through 1990.


Line 16—Net Smelter Capital Investment inConstant Dollars. Enter under the Total col-umn the amount reported in the second(Constant Dollar) column of Schedule C.3,Line 26 if the value is greater than zero. Ifthe value is zero or less, enter zero.

Line 17—Net Present Value. Enter the dif-ference between Lines 15 and 16. Applicantsreporting a negative net present value willpass the Rate of Return Test.

Schedule C.5—Horizon Value of Cash Flowsfor the Rate of Return Test

General. The applicant should use ScheduleC.5 to calculate the horizon value of net cashflow projections for the Rate of Return Test.This horizon value is used in Schedule C.4.The computation of the horizon value is dif-ferent for this test than for the Profit Pro-tection Test because this test requires thereporting of depreciation for tax purposes.

In Schedule C.5, the applicant removes thetax savings of constant controls depreciationfrom the cash flows for the last two forecastyears. A depreciation-free horizon value isthen calculated from these depreciation-freecash flows. The tax savings of constant con-trols depreciation during the horizon yearsare then calculated separately. The final ho-rizon value is equal to the sum of the depre-ciation-free horizon value and the tax sav-ings from depreciation of constant controlsaccruing over the horizon years. The lineitems in Schedule C.5 are explained in thefollowing instructions.

Line 01—Net Cash Flow Projections. Enterfor each of the final two forecast years thevalues in Schedule C.4, Line 08, for the cor-responding years.

Line 02—Depreciation and Amortization.Enter for each of the final two forecast yearsthe value in Schedule C.4, Line 02, for thecorresponding years.

Line 03—Marginal Tax Rate. Enter for eachof the final two forecast years the marginalincome tax rate applicable to the smelter.This rate should incorporate both Federaland State tax liability.

Line 04—Tax Savings. Enter for each of thefinal two forecast years the product of Lines02 and 03.

Line 05—Nominal Dollar Values. Enter foreach of the final two forecast years the dif-ference between Lines 01 and 04.

Line 06—1990 Dollar Values. For each of thefinal two forecast years the nominal dollarvalues must be expressed in the last forecastyear’s dollars (1990 dollars). Transfer the 1990amount in Line 05 directly to Line 06. Inflatethe 1989 amount to 1990 dollars using theforecast GNP price deflator.

Line 07—Average. Enter under the Totalcolumn the average of the two values in Line06.

Line 08—Horizon Factor. Enter under theTotal column the horizon factor provided inSection 2.7.

Line 09—Depreciation-free Horizon Value.Enter under the Total column the product ofLines 07 and 08.

Line 10—Depreciation and Amortization.Enter for each year of the horizon period de-preciation charges associated with thesmelter’s investment in equipment and fa-cilities related to pollution controls. Theseinvestments should include those actuallymade and those required to be made by theend of the forecast period. Reported chargesshould be computed in accordance with de-preciation and amortization methods adopt-ed for tax reporting purposes by the firm. At-tach as part of Exhibit B supporting sched-ules consistent with those supporting Line 17in Schedule C.1.

Line 11—Marginal Tax Rate. Enter for eachyear of the horizon period the marginal in-come tax rate applicable to the smelter. This


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rate should incorporate both Federal andState tax liability.

Line 12—Tax Savings. Enter for each year ofthe horizon period the product of Lines 10and 11.

Line 13—Discount Factors. Enter the dis-count factor for each year of the horizon pe-riod. This shall be computed according to theinstructions under Section 2.6, except thatthe variable N found in the discount factorformula represents the number of years inthe future, counting from the last forecast year.For example, N=1 for the first year of the ho-rizon period.

Line 14—Present Value of Tax Savings. Enterfor each year of the horizon period the prod-uct of Lines 12 and 13.

Line 15—Total Present Value of Tax Savings.Enter under the Total column the sum ofvalues on Line 14 for the horizon years.

Line 16—Horizon Value. Enter under theTotal column the sum of Lines 09 and 15.

Schedule D.1—Interim Controls RevenueForecast

General. Use Schedule D.1 to report annualforecasts of operating revenues anticipatedduring the years 1984 through 1990 from oper-ation of the smelter applying for an interimcontrols waiver. The applicant applying for apermanent waiver should complete ScheduleD.1 twice, with revenue and production pro-jections based on two alternative assump-tions: (1) Installation of interim constantcontrol equipment, no installation of any ad-ditional SO2 controls that the smelter wouldotherwise be required to install but for theissuance of an NSO, and closure after Janu-ary 1, 1988, and (2) installation of interimconstant control equipment and any addi-tional SO2 controls required to comply withthe smelter’s SIP emission limitation byJanuary 2, 1988, so that the smelter will re-main open through the horizon period. Theapplicant applying for a temporary waivershould use only the first assumption. For asmelter that has no continuous emissioncontrols, the assumed interim control in-vestment program should be based on the in-stallation and operation of a well-designedsulfuric acid plant to treat all strong gasstreams. For a smelter that already hassome continuous emission controls, the as-sumed interim constant control investmentshould be based on the installation and oper-ation of any additional acid plant capacitythat would be necessary for treatment of allstrong streams with interim constant con-trols. The interim controls projectionsshould account for other regulatory require-ments on the same basis as provided for inthe NSO eligibility tests.

Forecast smelter revenues should be ex-pressed on a tolling service equivalent basisas described in Section 2.3.4. The line itemsin Schedule D.1 are explained in the fol-lowing instructions. Attach as part of Ex-

hibit B schedules to (1) explain the methodsused to make the required forecasts, (2) ex-plain differences, if any, between historicaltrends and the forecasts, and (3) provide dataand information to support the forecasts.


Lines 02 and 06—Smelting Charge. Report foreach year the forecast smelting charge forunaffiliated parties (Line 02) and affiliatedparties (Line 06). See Section 2.4 for forecastcopper smelting charges furnished by EPA.



Line 09—Total Co-Product Revenues. Reportfor each year the forecast net revenues fromsales of co-products derived from the smelt-er’s operations. Attach as part of Exhibit Ba schedule showing by individual type of co-product the forecast quantity produced andsold, forecast market price per unit of sales,and forecast total revenues derived from theco-product sales.

Line 10—Total By-product Revenues FromPollution Control Facilities. Report for eachyear forecast revenues from the sale of by-products derived from operation of thesmelter’s pollution control facilities. Attachas part of Exhibit B a schedule showing bytype of by-product produced (e.g., sulfuricacid) the forecast quantity of output, fore-cast market price per unit of output sold,and forecast total revenue derived from theby-product sales.



Schedule D.2—Interim Controls CostForecast

General. Use Schedule D.2 to report annualforecasts of operating costs anticipated dur-ing the years 1984 through 1990 from oper-ation of the smelter applying for an interimcontrols waiver. The applicant applying for apermanent waiver should complete ScheduleD.2 twice, with cost and production projec-tions based on two alternative assumptions:


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(1) Installation of interim constant controlequipment, no installation of any additionalSO2 controls that the smelter would other-wise be required to install but for theissuance of an NSO, and closure after Janu-ary 1, 1988, and (2) installation of interimconstant control equipment and any addi-tional SO2 controls required to comply withthe smelter’s SIP emission limitation byJanuary 2, 1988, so that the smelter will re-main open through the horizon period. For asmelter that has no continuous emissioncontrols, the assumed interim control in-vestment program should be based on the in-stallation and operation of a well-designedsulfuric acid plant to treat all strong gasstreams. For a smelter that already hassome continuous emission controls, the as-sumed interim constant control investmentshould be based on the installation and oper-ation of any additional acid plant capacitythat would be necessary for treatment of allstrong streams with interim constant con-trols. The interim controls projectionsshould account for other regulatory require-ments on the same basis as provided for inthe NSO eligibility tests.

The line items in Schedule D.2 are ex-plained in the following instructions. Attachas part of Exhibit B schedules to (1) explainthe methods used to make the required fore-casts, (2) explain differences, if any, betweenhistorical trends and the forecasts, and (3)provide data and information to support theforecasts.




Line 04—Supplemental Employee Benefits.Report for each year adjustments required todirect labor costs for other employee com-pensation under supplemental benefit plans.Attach as part of Exhibit B a description ofsuch plans and their costs and an expla-nation of the methodology used to forecastsuch costs. EPA-provided forecast wage indi-ces are reported in Section 2.4.

Line 05—Total Production Labor Costs. Enterfor each year the total of Lines 03 and 04.

Lines 06, 09, 12, 15, and 18—Energy Quan-tities. Report for each year the quantity ofenergy by type required to support the proc-essing levels reported in the smelter’s rev-

enue. Attach as part of Exhibit B an expla-nation of energy characteristics and use fac-tors considered in forecasting the smelter’sfuture energy requirements.



Line 21—Total Energy Costs. Enter for eachyear the total of Lines 08, 11, 14, 17, and 20.

Schedule D.3—Interim Controls ForecastProfit and Loss Summary

General. Use Schedule D.3 to report fore-cast revenue and cost information summedin Schedules D.1 and D.2 for the years 1984through 1990. Applicants applying for a per-manent waiver must complete Schedule D.3twice. Forecast revenues and costs in Sched-ule D.3 shall be compatible with productivecapacity and pollution control assumptionsunderlying the operating revenue and costforecasts incorporated into each set ofSchedules D.1 and D.2. Applicants applyingfor a temporary waiver should use only thefirst assumption: installation of interim con-stant control equipment and no installationof any additional SO2 controls that thesmelter would otherwise be required to in-stall but for the issuance of an NSO. Thetransfer of line items from Schedules D.1 andD.2 to this Schedule is explained in the fol-lowing instructions.

Line 01—Smelter Revenues—Unaffiliated Par-ties. Enter the totals reported in ScheduleD.1, Line 03.

Line 02—Smelter Revenues-Affiliated Parties.Enter the totals reported in Schedule D.1,Line 07.

Line 03—Co-product and By-product SalesRevenues. Enter the totals reported in Sched-ule D.1, Line 12.

Line 04—Other Operating Revenues. Reportoperating revenues anticipated from sourcesnot accounted for under Lines 01 through 03.Refer to instructions for Line 04 of ScheduleA.3 for items that should not be included in‘‘Other Operating Revenues.’’ Attach as partof Exhibit B a schedule showing annualamounts forecast by individual revenue com-ponent for ‘‘other’’ operating revenues asso-ciated with the smelter’s forecast interimcontrols operations. Identify in the sup-porting schedule any differences in the‘‘other’’ revenue components reported in this


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Schedule and Schedule A.3 and explain thereasons for such differences.



Line 07—Production Labor Costs. Enter thetotals reported in Schedule D.2, Line 05.

Line 08—Energy Costs. Enter the totals re-ported in Schedule D.2, Line 21.

Line 09—Pollution Control Costs. Report thetotal costs forecast for operation and main-tenance of all pollution control equipmentand facilities under the two alternative setsof assumptions made in correspondingSchedules D.1 and D.2. Byproduct credits as-sociated with operation of the pollution con-trol facilities should be eliminated from thecost accounts, reclassified to Schedule D.1,Line 10 and included in Line 03 of this Sched-ule. Attach a schedule as part of Exhibit Bclassifying pollution control costs by majorcost components. Explain the basis used forestimating each of the cost components.


Line 11—Other Production Costs. Reportother forecast production costs not pre-viously reported on lines 06 through 10. At-tach as part of Exhibit B supporting sched-ules showing the basis of the forecasts.



Line 14—Selling, General and AdministrativeExpenses. Report the total costs forecast for

administrative, marketing and general cor-porate overhead functions that directly orindirectly support the smelter’s operations.Refer to the NSO Financial Reporting Over-view for general discussion of indirect costallocations from overhead cost pools. Attachas part of Exhibit B a schedule classifyingselling, general and administrative expensesinto major cost components. Indicate wheth-er each component represents costs directlyassignable to the smelter or indirect costsallocated from other business segments tothe smelter. Explain the basis used for esti-mating the amount of expected costs in-cluded in each component and the basis usedfor allocating indirect cost elements to thesmelter. Identify and explain any differencesbetween the selling, general and administra-tive cost classification used in this Scheduleand that used in Line 15 of Schedule A.3.

Line 15—Taxes, Other than Income Taxes.Report the total costs forecast for propertytaxes and associated levies paid to govern-mental units by or for the benefit of thesmelter operation. Attach as part of ExhibitB a schedule classifying operating taxes bymajor component. Indicate whether eachcomponent represents taxes directly assign-able to the smelter or taxes that have beenallocated among more than one facility. Ex-plain the basis used for estimating taxes andthe basis for any allocation of taxes to thesmelter. Identify and explain any differencesbetween the component classifications usedin this Schedule and those used in Line 16 ofSchedule A.3.

Line 16—Research Costs. Report the esti-mates of research costs incurred directly byor for the benefit of the smelter operations.Attach as part of Exhibit B a scheduleclassifying the costs by major direct and in-direct cost components. Explain the basis forestimating the costs assigned to each compo-nent. Identify and explain any differences be-tween classifications used in this Scheduleand those used in Line 17 of Schedule A.3.

Line 17—Pollution Control Facility Deprecia-tion and Amortization. Report the estimatesof depreciation and amortization charges as-sociated with the smelter’s actual and fore-cast investment in all pollution controlequipment and facilities under the two alter-native sets of assumptions made in cor-responding Schedules D.1 and D.2. Reportedcharges should be computed in accordancewith depreciation and amortization methodsadopted for tax reporting purposes by thefirm. Attach explanatory supporting sched-ules as part of Exhibit B.



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Line 19—Interest on Short-Term Debt. Reportthe estimates of interest and other financingcharges on forecast short-term obligations asclassified in the smelter’s current liabilitieson Schedule A.4. Interest and associated fi-nancing charges on long-term debt shouldnot be included as an expense identifiablewith the smelter’s operations. Attach as partof Exhibit B a schedule showing the interest-bearing, short-term debt contracts identifi-able with the smelter’s operations, the inter-est rate projected for these contracts, andthe estimated annual interest charges. Iden-tify and explain any differences between theclassifications used in this Schedule andthose used in Line 20 of Schedule A.3.

Line 20—Miscellaneous Operating Expenses.Report only the total operating expenses as-sociated with or allocated to the smelterthat cannot be appropriately classified inone of the preceding line items. Attach aspart of Exhibit B a schedule showing theclassification of these residual operating ex-penses into major cost components. Explainthe basis used for forecasting the cost undereach component. Identify each cost compo-nent in terms of direct or indirect cost andexplain the basis used for allocating the indi-rect costs to smelter operations. Identify andexplain any differences between cost classi-fications included in this Schedule and thoseused in Line 21 of Schedule A.3.



Line 23—Income Taxes. Enter the product ofincome from operations (Line 22) and thesum of the Federal, State and local marginaltax rates. Attach as part of Exhibit B aschedule detailing the estimated marginaltax rate by taxing entity.

Line 24—Net Income From Operations. Enterfor each year the difference between Lines 23and 22.

The temporary waiver from interim con-trols test is on Line 13 of Schedule D.3 thatwas completed under the assumption of in-stallation of interim constant control equip-ment and no installation of any additionalSO2 controls that the smelter would other-wise be required to install but for theissuance of an NSO. Applicants will be eligi-ble for a temporary waiver from the interimdevelopment of constant control technologyfor sulfur dioxide emissions if the reportedgross operating profit on Line 13 is a nega-tive value for one or more years duringwhich the NSO is in effect.

Schedule D.4—Interim Controls SustainingCapital Investment Forecast

General. Use Schedule D.4 to report yearlysustaining capital outlays for maintenanceof the smelter’s existing productive capa-

bility. The applicant should complete Sched-ule D.4 twice, under two alternative assump-tions: (1) Installation of interim constantcontrol equipment, no installation of any ad-ditional SO2 controls that the smelter wouldotherwise be required to install but for theissuance of an NSO, and closure after Janu-ary 1, 1988, and (2) installation of interimconstant equipment and any additional SO2

controls required to comply with the smelt-er’s SIP emission limitation by January 2,1988, so that the smelter will remain openthrough the horizon period.

Major elements of these outlays should bedisclosed, as well as the total of such out-lays. Estimates shall be restricted to thoseitems that will be capitalized for tax pur-poses. These outlays shall primarily be forplant replacement, although outlays for im-provements and expansion may be includedto the extent that improvements and/or ex-pansion, exclusive of required pollution con-trol outlays, can be justified as economicallyfeasible. Estimates of sustaining capital in-vestments shall exclude any incremental in-vestment for sulfur dioxide emission con-trols reported in Line 06 of Schedule D.6.Sustaining capital investments in facilitiesshared with other operating segments shallbe allocated in accordance with the instruc-tions given below.

Estimates of sustaining capital shall becompatible with productive capacity andpollution control requirements underlyingthe operating revenue and cost forecasts in-corporated in Schedule D.3.

Line 01 to 06—Sustaining Capital. Report foreach year by individual line item property,plant and equipment sustaining capital in-vestments assignable to smelter operations.Include both (1) property, plant and equip-ment directly associated with the smelter’soperations and (2) facilities shared withother operating segments to the extent thata causal and beneficial relationship can beestablished for the intersegment allocationsof such facility investments.

Attach as part of Exhibit B an explanatoryschedule disclosing and supporting by indi-vidual line item the major elements of an-nual capital expenditures for sustaining cap-ital. Further classify these annual capitalexpenditures into both (1) investments re-quired to maintain the smelter versus in-vestments in smelter expansion and im-provements and (2) direct facility versusjoint-use facility investments. Explain themethod used for allocating capital expendi-tures on joint-use facilities to the smelter’soperations.

Line 07—Total Smelter Sustaining Capital.Enter for each year the total of Lines 01through 06. Transfer the reported total foreach year to Schedule D.6, Line 06.


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Schedule D.5—Cash Proceeds FromLiquidation

General. Use Schedule D.5 to calculate cashproceeds from liquidation. Applicants shoulddetermine the current salvage value of theirexisting investment in the smelter as the netproceeds that could be derived through anorderly liquidation of the smelter’s assets.The net cash proceeds should be reportedafter an appropriate allowance for disposalcosts, contractual claims against the smelter(e.g., labor termination penalties), and in-come tax effects on the corporation of suchliquidation costs.

The applicant must stipulate the most ad-vantageous alternative market (use) for thesmelter’s facilities. Generally, this marketwill be:

Secondary market for used plant andequipment.

Sale for scrap.Abandonment where the disposal cost ex-

ceeds scrap value.The current net salvage value should be

disaggregated into the same property, plantand equipment asset groups reported underthe historical capital investment summary,Schedule A.4. The line items in Schedule D.5are explained in the following instructions.

Line 01—Current Assets. Enter in Columns 1and 2, the value of total current assets shownin Line 08 of Schedule A.4 (Historical CapitalInvestment Summary) for 1983. No gain orloss should be reported in Columns 3 through5 for the liquidation of current asset invest-ments.

Lines 02–07—Property Plant and Equipment.Enter in Column 1 the appraised liquidationvalue (in terms of pretax cash proceeds) ofthe smelter by asset group. This estimateshould be certified by a qualified third partyprofessional appraiser and shall representthe best use and highest alternative value ofthese assets. The liquidation value of any as-sets which are jointly used by the smelterand other operating segments shall be ex-cluded if, upon closure of the smelter, suchassets would continue in service for the non-smelter activity.

In Column 2, report the net book value ofthese assets for which liquidation valueshave been reported in Column 1. The re-ported values should correspond withamounts reported for 1982 in lines 09 through15 in Schedule A.4 as adjusted for appro-priate eliminations of joint-use facilities andreconciliation to a net book value as re-ported for income taxes. Attach as part ofExhibit B supporting schedules showing alladjustments and conversion of the net bookvalue as reported on the financial state-ments, to net book value that would be usedfor income tax purposes.

Compute Column 3 as Column 1 less Col-umn 2. The gain (or loss) shown in Column 3shall be segregated into ordinary income and

capital gains components subject to taxationpursuant to applicable income tax rules.Enter ordinary income in Column 4 and cap-ital gains in Column 5.

Line 08—Total Smelter Investment. Enter thesum of Lines 02 through 07 for each of thecolumns.

Line 09—Other Non-current Assets. In Col-umn 1, report the appraised value of othernon-current assets in accordance with the in-structions for Line 18, Schedule A.4, exceptthat any joint asset(s) that would continuein the event of smelter liquidation shall beexcluded. This estimate shall be certified bya qualified third-party professional ap-praiser.

In Column 2, report the net book value ofthe non-current assets directly cor-responding to those assets included in theliquidation value estimated under Column 1.

The remaining columns shall be completedin accordance with the instructions givenabove for Lines 02 and 06.

Line 10—Total Smelter Value. Enter the sumof Lines 01, 08 and 09.

Line 11—Total Current Liabilities. Report inboth Columns 1 and 2, the value of total cur-rent liabilities shown in Line 25 of ScheduleA.4 for 1983.

Line 12—Gross Liquidation Value. Enter thedifference between Lines 10 and 11.

Line 13—Liquidation Costs. In Columns 1, 3and 4, report the value of any liquidationcosts such as labor contract terminationpenalties, severance pay and related costs,associated with closure of the smelter.

Line 14—Taxable Gain (or Loss). Enter inColumns 4 and 5, the differences betweenLines 12 and 13.

Line 15—Income Tax Rate. Enter the sum ofthe Federal, State and local marginal taxrates of the firm for ordinary income andcapital gains in Columns 4 and 5, respec-tively. Attach as part of Exhibit B a sched-ule detailing the estimated marginal taxrate by taxing entity.

Line 16—Income Tax on Gain (or Loss). InColumns 4 and 5, enter the product of Line 14and the marginal income tax rates reportedin Line 15. In Column 1, enter the sum of Col-umns 4 and 5.

Line 17—After Tax Cash Proceeds. Enter inColumn 1 the difference between Line 12 andthe sum of Lines 13 and 16.

Schedule D.6—Permanent Waiver fromInterim Controls Test

General. Applicants must complete thisSchedule and its supporting schedules if theyseek a permanent waiver from interim con-trol requirements. The applicant shouldcomplete Schedule D.6 twice, with revenueand production projections based on two al-ternative assumptions: (1) Installation of in-terim constant control equipment, no instal-lation of any additional SO2 controls thatthe smelter would otherwise be required to


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install but for the issuance of an NSO, andclosure after January 1, 1988, and (2) installa-tion of interim constant control equipmentand any additional SO2 controls required tocomply with the smelter’s SIP emission lim-itation by January 2, 1988, so that the smelt-er will remain open through the horizon pe-riod. Forecasts in Schedule D.6 shall be com-patible with assumptions and forecasts ineach set of Schedules D.1 through D.4. Theline items in Schedule D.6 are explained inthe following instructions.

Line 01—Net Income from Operations. Enterfor each year the amounts reported in Sched-ule D.3, Line 24.

Line 02—Net Income Adjustments. Enter anyadjustments to net income not included inSchedule D.3. When assuming closure afterJanuary 1, 1988, the applicant must includethe proceeds from liquidation in 1988. The ap-plicant must estimate liquidation value as of1988 using one of two methods: (1) the appli-cant may complete Schedule D.5 assumingliquidation in 1988 and report the value ofafter-tax cash proceeds in Line 17; or (2) theapplicant may use the value of after-tax cashproceeds in Line 17 of Schedule D.5, as al-ready completed, assuming liquidation inthe current (application) year, and express-ing values in 1988 dollars. The current liq-uidation value must be inflated to 1988 dol-lars by applying the appropriate forecastpercentage rate changes in the GNP pricedeflator. Attach explanatory supportingschedules in Exhibit B.

Lines 03 and 04—Depreciation and Amortiza-tion. Enter for each year the amounts re-ported in Schedule D.3, Lines 17 and 18, re-spectively.

Line 05—Operating Cash Flow. Enter foreach year the total of amounts reported onLines 01 through 04.

Line 06—Pollution Controls Capital Invest-ment. Enter the estimated pollution controlcapital outlays projected to be made underthe two alternative sets of assumptions de-scribed in the General section of this sched-ule. These controls shall include only in-terim control equipment for the first set ofassumptions and both interim control equip-ment and any additional SO2 controls re-quired to comply with the smelter’s SIPemission limitation by January 2, 1988, forthe second set of assumptions. The values as-sumed in this schedule shall correspond tothe investment estimates shown in each setof supporting schedules for Line 17 of Sched-ule D.3. For purposes of allocating costs ofthe additional SO2 controls under the secondset of assumptions, applicants must provideinformation establishing the period overwhich capital outlays for such controlswould be made if installation of the controlsbegins the latest date that would still allowcompliance to be achieved by January 2,1988. Changes in working capital investmentdue to investment in control facilities may

be added to the capital investment estimatesshown in the corresponding supportingschedules for Schedule D.3.

Line 07—Sustaining Capital. Enter for eachyear the amounts reported in Schedule D.4,Line 07.

Line 08—Total. Enter for each year the sumof Lines 05 and 06.

Line 09—Net Cash Flow Projections. Enterfor each year the difference between Lines 04and 07.


Line 11—Present Value of Future Cash Flows.Enter for each year the product of Lines 08and 09.

Line 12—Horizon Value. Enter under theTotal column the estimated horizon value ofthe smelter reported in Schedule D.7, Line16.

Line 13—Discount Factor. Enter under theTotal column the appropriate discount fac-tor, computed as described in the instruc-tions under Section 2.6.


Line 15—Present Value of Future Cash Flows.Enter under the Total column the sum ofamounts previously reported on Line 10 for1984 through 1990.


Line 17—Current Salvage Value. Enter theamount reported in Schedule D.5, Line 17, ifthe value is greater than zero. If the value iszero or less, enter zero.

Line 18—Net Present Value. Enter the dif-ference between Lines 16 and 17. In deter-mining eligibility for a permanent waiverfrom interim control requirements, an appli-cant must use the higher of the two netpresent value figures computed under thetwo alternative assumptions. Applicants re-porting a negative value for the higher netpresent value figure will be eligible for a per-manent waiver from interim use of a con-stant control system for sulfur dioxide emis-sions.

Schedule D.7—Horizon Value of Cash Flowsfor the Interim Controls Test

General. Use Schedule D.7 to calculate thehorizon value of net cash flow projections forthe Interim Controls Test. This horizonvalue is used in Schedule D.6. The computa-tion of the horizon value is different for thistest than for the Profit Protection Test be-cause this test requires the reporting of de-preciation for tax purposes.

In Schedule D.7, the applicant removes thetax savings of control equipment deprecia-tion from the cash flows for the last twoforecast years. A depreciation-free horizon


193


value is then calculated from these deprecia-tion-free cash flows. The tax savings of con-stant controls depreciation during the hori-zon years are then calculated separately.The final horizon value is equal to the sumof the depreciation-free horizon value andthe tax savings from depreciation of con-stant controls accruing over the horizonyears. The line items in Schedule D.7 are ex-plained in the following instruction.

Line 01—Net Cash Flow Projections. Enterfor each of the final two forecast years thevalues in Schedule D.6, Line 09, for the cor-responding years.

Line 02—Depreciation and Amortization.Enter for each of the final two forecast yearsthe value in Schedule D.6, Line 03, for thecorresponding years.

Line 03—Marginal Tax Rate. Enter for eachof the final two forecast years the marginalincome tax rate applicable to the smelter.This rate should incorporate both Federaland State tax liability.

Line 04—Tax Savings. Enter for each of thefinal two forecast years the product of Lines02 and 03.

Line 05—Nominal Dollar Values. Enter foreach of the final two forecast years the dif-ference between Lines 01 and 04.

Line 06—1990 Dollar Values. For each of thefinal two forecast years the nominal dollarvalues must be expressed in the last forecastyear’s dollars (1990 dollars). Transfer the 1990amount in Line 05 directly to Line 06. Inflatethe 1989 amount to 1990 dollars using theforecast GNP price deflator.

Line 07—Average. Enter under the Totalcolumn the average of the two values in Line06.

Line 08—Horizon Factor. Enter under theTotal column the horizon factor provided inSection 2.7.

Line 09—Depreciation-free Horizon Value.Enter under the Total column the product ofLines 07 and 08.

Line 10—Depreciation and Amortization.Enter for each year of the horizon period de-preciation charges associated with thesmelter’s investment in equipment and fa-cilities related to pollution controls. Theseinvestments should include those actuallymade and those forecast to be made by theend of the forecast period. Reported chargesshould be computed in accordance with de-preciation and amortization methods adopt-ed for tax reporting purposes by the firm. At-tach as part of exhibit B supporting sched-ules consistent with those supporting Line 17in Schedule D.3.

Line 11—Marginal Tax Rate. Enter for eachyear of the horizon period the marginal in-come tax rate applicable to the smelter. This

rate should incorporate both Federal andState tax liability.

Line 12—Tax Savings. Enter for each year ofthe horizon period the product of Lines 10and 11.

Line 13—Discount Factors. Enter the dis-count factor for each year of the horizon pe-riod. This shall be computed according to theinstructions under Section 2.6, except thatthe variable N found in the discount factorformula represents the number of years inthe future, counting from the last forecast year.For example, N=1 for the first year of the ho-rizon period.

Line 14—Present Value of Tax Savings. Enterfor each year of the horizon period the prod-uct of Lines 12 and 13.

Line 15—Total Present Value of Tax Savings.Enter under the Total column the sum ofvalues on Line 14 for the horizon years.

Line 16—Horizon Value. Enter under theTotal column the sum of Lines 09 and 15.

ENVIRONMENTAL PROTECTION AGENCY

Primary Nonferrous Smelter Order Application

Part I—Identification Information

1. Firm name llllllllllllllll2. Street/Box/RFD llllllllllllll3. City llllllllllllllllllll4. State lllllllllllllllllll5. Zip Code lllllllllllllllll6. IRS Employer Identification No. lllll7. SEC 1934 Act Registration No. llllll8. Smelter Name llllllllllllll9. Street/Box/RFD llllllllllllll10. City lllllllllllllllllll11. State lllllllllllllllllll12. Zip Code lllllllllllllllll13. Contact Person lllllllllllll14. Title lllllllllllllllllll15. Street/Box/RFD lllllllllllll16. City lllllllllllllllllll17. State lllllllllllllllllll18. Zip Code lllllllllllllllll19. Telephone llllllllllllllll

Part II—Certification

I certify that the information providedherein and appended hereto is true and accu-rate to the best of my knowledge. I under-stand that this information is being re-quired, in part, under the authority of Sec-tion 114 of the Clean Air Act, 42 U.S.C. 7414.

Name llllllllllllllllllllTitle lllllllllllllllllllllSignature llllllllllllllllllDate lllllllllllllllllllll


194


SCHEDULE A.1—HISTORICAL REVENUE DATA[Smelter identification]

Line 1979 1980 1981 1982 1983

A. Copper product sales:1. Total quantity sold ..................................................................... 01 ............ ............ ............ ............ ............2. Unaffiliated customer sales:

a. Quantity sold ....................................................................... 2 ............ ............ ............ ............ ............b. Operating revenue .............................................................. 03 ............ ............ ............ ............ ............c. Average unit price ............................................................... 04 ............ ............ ............ ............ ............d. Average product grade ....................................................... 05 ............ ............ ............ ............ ............

3. Affiliated customers sales:a. Quantity sold ....................................................................... 06 ............ ............ ............ ............ ............b. Operating revenue .............................................................. 07 ............ ............ ............ ............ ............c. Average unit price ............................................................... 08 ............ ............ ............ ............ ............d. Average product grade ....................................................... 09 ............ ............ ............ ............ ............

4. Adjusted copper revenues:a. Total copper revenues ........................................................ 10 ............ ............ ............ ............ ............b. Transfer price adjustment ................................................... 11 ............ ............ ............ ............ ............c. Other revenue adjustments ................................................ 12 ............ ............ ............ ............ ............d. Adjusted copper revenues .................................................. 13 ............ ............ ............ ............ ............

B. Lead product sales:1. Total quantity sold ..................................................................... 14 ............ ............ ............ ............ ............2. Unaffiliated customer sales:


3. Affiliated customer sales:a. Quantity sold ....................................................................... 19 ............ ............ ............ ............ ............b. Operating revenue .............................................................. 20 ............ ............ ............ ............ ............c. Average unit price ............................................................... 21 ............ ............ ............ ............ ............d. Average product grade ....................................................... 22 ............ ............ ............ ............ ............

4. Adjusted lead revenues:a. Total lead revenues ............................................................ 23 ............ ............ ............ ............ ............b. Transfer price adjustment ................................................... 24 ............ ............ ............ ............ ............c. Other revenue adjustments ................................................ 25 ............ ............ ............ ............ ............d. Adjusted lead revenues ...................................................... 26 ............ ............ ............ ............ ............

C. Zinc product sales:1. Total quantity sold ..................................................................... 27 ............ ............ ............ ............ ............2. Unaffiliated customer sales:



4. Adjusted zinc revenues:a. Total zinc revenues ............................................................ 36 ............ ............ ............ ............ ............b. Transfer price adjustment ................................................... 37 ............ ............ ............ ............ ............c. Other revenue adjustments ................................................ 38 ............ ............ ............ ............ ............d. Adjusted zinc revenues ...................................................... 39 ............ ............ ............ ............ ............

D. Molybdenum or other nonferrous metal sales:1. Total quantity sold ..................................................................... 40 ............ ............ ............ ............ ............2. Unaffiliated customer sales:



4. Adjusted molybdenum or other nonferrous metal revenues:a. Total molybdenum or other nonferrous metal revenues .... 49 ............ ............ ............ ............ ............b. Transfer price adjustment ................................................... 50 ............ ............ ............ ............ ............c. Other revenue adjustments ................................................ 51 ............ ............ ............ ............ ............d. Adjusted molybdenum or other nonferrous metal reve-

nues ..................................................................................... 52 ............ ............ ............ ............ ............E. Primary metal revenues ................................................................... 53 ............ ............ ............ ............ ............F. Tolling service revenues:

1. Total toll concentrates processed .............................................. 54 ............ ............ ............ ............ ............


195


SCHEDULE A.1—HISTORICAL REVENUE DATA—Continued[Smelter identification]

Line 1979 1980 1981 1982 1983

2. Unaffiliated customer revenues:a. Concentrates processed ..................................................... 55 ............ ............ ............ ............ ............b. Operating revenue .............................................................. 56 ............ ............ ............ ............ ............c. Average unit price ............................................................... 57 ............ ............ ............ ............ ............d. Average product grade ....................................................... 58 ............ ............ ............ ............ ............

3. Affiliated customer revenues:a. Concentrates processed ..................................................... 59 ............ ............ ............ ............ ............b. Operating revenue .............................................................. 60 ............ ............ ............ ............ ............c. Average unit price ............................................................... 61 ............ ............ ............ ............ ............d. Average product grade ....................................................... 62 ............ ............ ............ ............ ............

4. Adjusted tolling service revenues:a. Total tolling service revenue .............................................. 63 ............ ............ ............ ............ ............b. Transfer price adjustment ................................................... 64 ............ ............ ............ ............ ............c. Other revenue adjustments ................................................ 65 ............ ............ ............ ............ ............d. Adjusted tolling service revenues ....................................... 66 ............ ............ ............ ............ ............

G. Coproduct and byproduct sales:1. Total coproduct revenues .......................................................... 67 ............ ............ ............ ............ ............2. Total byproduct revenues:

a. Pollution control facilities .................................................... 68 ............ ............ ............ ............ ............b. Other smelter processing ................................................... 69 ............ ............ ............ ............ ............

3. Total coproduct and byproduct revenues .................................. 70 ............ ............ ............ ............ ............

SCHEDULE A.2—HISTORICAL COST DATA[Smelter identification]

Line 1979 1980 1981 1982 1983

A. Concentrate costs:1. Total quantity purchased ........................................................... 01 ............ ............ ............ ............ ............2. Unaffiliated purchases:

a. Quantity purchased ............................................................ 02 ............ ............ ............ ............ ............b. Concentrate cost ................................................................ 03 ............ ............ ............ ............ ............c. Average unit price ............................................................... 04 ............ ............ ............ ............ ............d. Average concentrate grade ................................................ 05 ............ ............ ............ ............ ............

3. Affiliated purchases:a. Quantity purchased ............................................................ 06 ............ ............ ............ ............ ............b. Concentrate cost ................................................................ 07 ............ ............ ............ ............ ............c. Average unit price ............................................................... 08 ............ ............ ............ ............ ............d. Average concentrate grade ................................................ 09 ............ ............ ............ ............ ............

4. Adjusted concentrate costs:a. Total concentrate costs ...................................................... 10 ............ ............ ............ ............ ............b. Transfer price adjustment ................................................... 11 ............ ............ ............ ............ ............c. Other cost adjustments ....................................................... 12 ............ ............ ............ ............ ............d. Adjusted concentrate cost .................................................. 13 ............ ............ ............ ............ ............

B. Production labor cost:1. Direct labor hours ...................................................................... 14 ............ ............ ............ ............ ............2. Average hourly wage rate ......................................................... 15 ............ ............ ............ ............ ............3. Total wage payments ................................................................ 16 ............ ............ ............ ............ ............4. Supplemental employee benefits .............................................. 17 ............ ............ ............ ............ ............5. Total production labor cost ........................................................ 18 ............ ............ ............ ............ ............

C. Energy costs:1. Electricity:

a. Quantity in kilowatt hours ................................................... 19 ............ ............ ............ ............ ............b. Price per kwh ...................................................................... 20 ............ ............ ............ ............ ............c. Total electricity payments ................................................... 21 ............ ............ ............ ............ ............

2. Natural gas:a. Quantity in mcf ................................................................... 22 ............ ............ ............ ............ ............b. Price per mcf ...................................................................... 23 ............ ............ ............ ............ ............c. Total natural gas payments ................................................ 24 ............ ............ ............ ............ ............

3. Coal:a. Quantity in tons .................................................................. 25 ............ ............ ............ ............ ............b. Price per ton ....................................................................... 26 ............ ............ ............ ............ ............c. Total coal payments ........................................................... 27 ............ ............ ............ ............ ............

4. Fuel oil:a. Quantity in gallons .............................................................. 28 ............ ............ ............ ............ ............b. Price per gallon .................................................................. 29 ............ ............ ............ ............ ............c. Total fuel oil payments ....................................................... 30 ............ ............ ............ ............ ............

5. Other (specify):a. Quantity (specific units) ...................................................... 31 ............ ............ ............ ............ ............b. Price per unit ...................................................................... 32 ............ ............ ............ ............ ............


196


SCHEDULE A.2—HISTORICAL COST DATA—Continued[Smelter identification]

Line 1979 1980 1981 1982 1983

c. Total payments ................................................................... 33 ............ ............ ............ ............ ............6. Total energy costs ..................................................................... 34 ............ ............ ............ ............ ............

SCHEDULE A.3—HISTORICAL PROFIT AND LOSS SUMMARY[Smelter identification]

Line 1979 1980 1981 1982 1983

A. Operating revenues:1. Primary metal sales ................................................................... 01 ............ ............ ............ ............ ............2. Coproduct and byproduct sales ................................................. 02 ............ ............ ............ ............ ............3. Tolling service revenues ............................................................ 03 ............ ............ ............ ............ ............4. Other operating revenues .......................................................... 04 ............ ............ ............ ............ ............5. Total operating revenues ........................................................... 05 ............ ............ ............ ............ ............

B. Cost of sales:1. Concentrates processed ............................................................ 06 ............ ............ ............ ............ ............2. Other materials .......................................................................... 07 ............ ............ ............ ............ ............3. Production labor ......................................................................... 08 ............ ............ ............ ............ ............4. Energy costs .............................................................................. 09 ............ ............ ............ ............ ............5. Pollution control cost ................................................................. 10 ............ ............ ............ ............ ............6. Production overhead .................................................................. 11 ............ ............ ............ ............ ............7. Other production costs .............................................................. 12 ............ ............ ............ ............ ............8. Total cost of sales ..................................................................... 13 ............ ............ ............ ............ ............

C. Gross operating profit ....................................................................... 14 ............ ............ ............ ............ ............D. Other operating expenses:

1. Selling general and administrative ............................................ 15 ............ ............ ............ ............ ............2. Taxes, other than income tax .................................................... 16 ............ ............ ............ ............ ............3. Research costs .......................................................................... 17 ............ ............ ............ ............ ............4. Depreciation and amortization:

a. Pollution control facilities .................................................... 18 ............ ............ ............ ............ ............b. Other smelter facilities ........................................................ 19 ............ ............ ............ ............ ............

5. Interest on short term debt ........................................................ 20 ............ ............ ............ ............ ............6. Miscellaneous operating expenses ........................................... 21 ............ ............ ............ ............ ............7. Total other operating expenses ................................................. 22 ............ ............ ............ ............ ............

E. Income from operations .................................................................... 23 ............ ............ ............ ............ ............F. Other income and (expense):

1. Gain/(loss) on disposition of property ........................................ 24 ............ ............ ............ ............ ............2. Miscellaneous other income and (expense) .............................. 25 ............ ............ ............ ............ ............3. Total other income and (expense) ............................................ 26 ............ ............ ............ ............ ............

G. Net taxable income .......................................................................... 27 ............ ............ ............ ............ ............

SCHEDULE A.4—HISTORICAL CAPITAL INVESTMENT SUMMARY[Smelter identification]

Line 1979 1980 1981 1982 1983

A. Current assets:1. Cash on hand and deposit ........................................................ 01 ............ ............ ............ ............ ............2. Temporary cash investments .................................................... 02 ............ ............ ............ ............ ............3. Trade receivables, net:

a. Unaffiliated customers ........................................................ 03 ............ ............ ............ ............ ............b. Affiliated customers ............................................................ 04 ............ ............ ............ ............ ............

4. Inventories:a. Raw materials and products ............................................... 05 ............ ............ ............ ............ ............b. Other materials and supplies ............................................. 06 ............ ............ ............ ............ ............

5. Other current assets .................................................................. 07 ............ ............ ............ ............ ............6. Total current assets ................................................................... 08 ............ ............ ............ ............ ............

B. Property, plant and equipment:1. Land ........................................................................................... 09 ............ ............ ............ ............ ............2. Buildings and improvements ..................................................... 10 ............ ............ ............ ............ ............3. Machinery and equipment ......................................................... 11 ............ ............ ............ ............ ............4. Transportation equipment .......................................................... 12 ............ ............ ............ ............ ............5. Pollution control facilities ........................................................... 13 ............ ............ ............ ............ ............6. Other fixed assets ...................................................................... 14 ............ ............ ............ ............ ............7. Total smelter investment ........................................................... 15 ............ ............ ............ ............ ............8. Less: Accumulated depreciation and amortization .................... 16 ............ ............ ............ ............ ............9. Net smelter investment .............................................................. 17 ............ ............ ............ ............ ............

C. Other noncurrent assets ................................................................... 18 ............ ............ ............ ............ ............D. Total smelter capital investment ...................................................... 19 ............ ............ ............ ............ ............


197


SCHEDULE A.4—HISTORICAL CAPITAL INVESTMENT SUMMARY—Continued[Smelter identification]

Line 1979 1980 1981 1982 1983

E. Current liabilities:1. Trade accounts and notes payable:

a. Unaffiliated suppliers .......................................................... 20 ............ ............ ............ ............ ............b. Affiliated suppliers .............................................................. 21 ............ ............ ............ ............ ............

2. Other expense accruals ............................................................. 22 ............ ............ ............ ............ ............3. Notes payable, current .............................................................. 23 ............ ............ ............ ............ ............4. Other current liabilities ............................................................... 24 ............ ............ ............ ............ ............5. Total current liabilities ................................................................ 25 ............ ............ ............ ............ ............

F. Net smelter capital investment ......................................................... 26 ............ ............ ............ ............ ............

SCHEDULE B—PRE-CONTROL REVENUE FORECAST[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990

A. Forecast smelter revenues—unaffiliated par-ties:

1. Concentrates processed ............................ 01 ............ ............ ............ ............ ............ ............ ............2. Smelting charge ......................................... 02 ............ ............ ............ ............ ............ ............ ............3. Total smelter revenues .............................. 03 ............ ............ ............ ............ ............ ............ ............4. Average product grade .............................. 04 ............ ............ ............ ............ ............ ............ ............

B. Forecast smelter revenues—affiliated parties:1. Concentrates processed ............................ 05 ............ ............ ............ ............ ............ ............ ............2. Smelting charge ......................................... 06 ............ ............ ............ ............ ............ ............ ............3. Total smelter revenues .............................. 07 ............ ............ ............ ............ ............ ............ ............4. Average product grade .............................. 08 ............ ............ ............ ............ ............ ............ ............

C. Forecast co-product and by-product sales:1. Total co-product revenues ......................... 09 ............ ............ ............ ............ ............ ............ ............2. Total by-product revenues from:

a. Pollution control facilities .................... 10 ............ ............ ............ ............ ............ ............ ............b. Other smelter processing ................... 11 ............ ............ ............ ............ ............ ............ ............

3. Total co-product and by-product revenues 12 ............ ............ ............ ............ ............ ............ ............

SCHEDULE B.2—PRE-CONTROL COST FORECAST[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990

A. Forecast production labor cost:1. Direct labor hours ...................................... 01 ............ ............ ............ ............ ............ ............ ............2. Average hourly wage rate ......................... 02 ............ ............ ............ ............ ............ ............ ............3. Total wage payments ................................ 03 ............ ............ ............ ............ ............ ............ ............4. Supplemental employee benefits .............. 04 ............ ............ ............ ............ ............ ............ ............5. Total production labor cost ........................ 05 ............ ............ ............ ............ ............ ............ ............

B. Forecast energy costs:1. Electricity:

a. Quantity in kilowatt hours ................... 06 ............ ............ ............ ............ ............ ............ ............b. Price per kwh ..................................... 07 ............ ............ ............ ............ ............ ............ ............c. Total electricity payments ................... 08 ............ ............ ............ ............ ............ ............ ............

2. Natural gas:a. Quantity in mcf ................................... 09 ............ ............ ............ ............ ............ ............ ............b. Price per mcf ...................................... 10 ............ ............ ............ ............ ............ ............ ............c. Total natural gas payments ................ 11 ............ ............ ............ ............ ............ ............ ............

3. Coal:a. Quantity in tons .................................. 12 ............ ............ ............ ............ ............ ............ ............b. Price per ton ....................................... 13 ............ ............ ............ ............ ............ ............ ............c. Total coal payments ........................... 14 ............ ............ ............ ............ ............ ............ ............

4. Fuel oil:a. Quantity in gallons .............................. 15 ............ ............ ............ ............ ............ ............ ............b. Price per gallon .................................. 16 ............ ............ ............ ............ ............ ............ ............c. Total fuel oil payments ....................... 17 ............ ............ ............ ............ ............ ............ ............

5. Other (specify):a. Quantity (specific units) ...................... 18 ............ ............ ............ ............ ............ ............ ............b. Price per unit ...................................... 19 ............ ............ ............ ............ ............ ............ ............c. Total payments ................................... 20 ............ ............ ............ ............ ............ ............ ............

6. Total energy costs ..................................... 21 ............ ............ ............ ............ ............ ............ ............


198


SCHEDULE B.3—PRE-CONTROL FORECAST PROFIT AND LOSS SUMMARY[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990

A. Forecast operating revenues:1. Smelter revenues—unaffiliated parties ..... 01 ............ ............ ............ ............ ............ ............ ............2. Smelter revenues—affiliated parties ......... 02 ............ ............ ............ ............ ............ ............ ............3. Co-product and by-product sales .............. 03 ............ ............ ............ ............ ............ ............ ............4. Other operating revenues .......................... 04 ............ ............ ............ ............ ............ ............ ............5. Total operating revenues ........................... 05 ............ ............ ............ ............ ............ ............

B. Forecast cost of sales:1. Material costs ............................................ 06 ............ ............ ............ ............ ............ ............ ............2. Production labor costs ............................... 07 ............ ............ ............ ............ ............ ............3. Energy costs .............................................. 08 ............ ............ ............ ............ ............ ............ ............4. Pollution control costs ............................... 09 ............ ............ ............ ............ ............ ............ ............5. Production overhead ................................. 10 ............ ............ ............ ............ ............ ............ ............6. Other production costs .............................. 11 ............ ............ ............ ............ ............ ............ ............7. Total cost of sales ..................................... 12 ............ ............ ............ ............ ............ ............ ............

C. Forecast gross operating profit ........................ 13 ............ ............ ............ ............ ............ ............ ............D. Forecast other operating expenses:

1. Selling, general and administrative ex-penses ........................................................ 14 ............ ............ ............ ............ ............ ............ ............

2. Taxes, other than income tax .................... 15 ............ ............ ............ ............ ............ ............ ............3. Research costs .......................................... 16 ............ ............ ............ ............ ............ ............ ............4. Depreciation and amortization:

a. Pollution control facilities .................... 17 ............ ............ ............ ............ ............ ............ ............b. Other smelter facilities ........................ 18 ............ ............ ............ ............ ............ ............ ............

5. Interest ....................................................... 19 ............ ............ ............ ............ ............ ............ ............6. Miscellaneous operating expenses ........... 20 ............ ............ ............ ............ ............ ............ ............7. Total other operating expenses ................. 21 ............ ............ ............ ............ ............ ............ ............

E. Forecast income from operations .................... 22 ............ ............ ............ ............ ............ ............ ............

SCHEDULE B.4—CONSTANT CONTROLS REVENUE FORECAST[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990



B. Forecast smelter revenues—affiliated parties:1. Concentrates processed ............................ 05 ............ ............ ............ ............ ............ ............ ............2. Smelting charge ......................................... 06 ............ ............ ............ ............ ............ ............ ............3. Total smelter revenues .............................. 07 ............ ............ ............ ............ ............ ............ ............4. Average product grade .............................. 08


a. Pollution control faciltites .................... 10 ............ ............ ............ ............ ............ ............ ............b. Other smelter processing ................... 11 ............ ............ ............ ............ ............ ............ ............

3. Total co-product and by-product revenues 12 ............ ............ ............ ............ ............ ............ ............

SCHEDULE B.5—CONSTANT CONTROLS COST FORECAST[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990




2. Natural gas:a. Quantity in mcf ................................... 09 ............ ............ ............ ............ ............ ............ ............


199


SCHEDULE B.5—CONSTANT CONTROLS COST FORECAST—Continued[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990

b. Price per mcf ...................................... 10 ............ ............ ............ ............ ............ ............ ............c. Total natural gas payments ................ 11 ............ ............ ............ ............ ............ ............ ............





SCHEDULE B.6—CONSTANT CONTROLS PROFIT AND LOSS SUMMARY FOR THE PROFIT PROTECTIONTEST

[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990

A. Forecast operating revenues:1. Smelter revenues—unaffiliated parties ..... 01 ............ ............ ............ ............ ............ ............ ............2. Smelter revenues—affiliated parties ......... 02 ............ ............ ............ ............ ............ ............ ............3. Co-product and by-product sales .............. 03 ............ ............ ............ ............ ............ ............ ............4. Other operating revenues .......................... 04 ............ ............ ............ ............ ............ ............ ............5. Total operating revenues ........................... 05 ............ ............ ............ ............ ............ ............ ............

B. Forecast cost of sales:1. Material costs ............................................ 06 ............ ............ ............ ............ ............ ............ ............2. Production labor costs ............................... 07 ............ ............ ............ ............ ............ ............ ............3. Energy costs .............................................. 08 ............ ............ ............ ............ ............ ............ ............4. Pollution control costs ............................... 09 ............ ............ ............ ............ ............ ............ ............5. Production overhead ................................. 10 ............ ............ ............ ............ ............ ............ ............6. Other production costs .............................. 11 ............ ............ ............ ............ ............ ............ ............7. Total cost of sales ..................................... 12 ............ ............ ............ ............ ............ ............ ............





5. Interest ....................................................... 19 ............ ............ ............ ............ ............ ............ ............6. Miscellaneous operating expenses ........... 20 ............ ............ ............ ............ ............ ............ ............7. Total other operating expenses ................. 21 ............ ............ ............ ............ ............ ............ ............

E. Forecast income from operations .................... 22 ............ ............ ............ ............ ............ ............ ............

SCHEDULE B.7—PROFIT PROTECTION TEST[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990 Total

A. Pre-control case:1. Net income from operations ...... 01 ............ ............ ............ ............ ............ ............ ............ XXXX2. Discount factors ......................... 02 ............ ............ ............ ............ ............ ............ ............ XXXX3. Present value of future net in-

come ........................................... 03 ............ ............ ............ ............ ............ ............ ............ XXXX4. Horizon value ............................. 04 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............5. Discount factor ........................... 05 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............6. Present value of horizon value .. 06 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............7. Present value of future net in-

come ........................................... 07 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............8. Total present value .................... 08 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

B. Constant controls case:1. Net income from operations ...... 09 ............ ............ ............ ............ ............ ............ ............ XXXX


200


SCHEDULE B.7—PROFIT PROTECTION TEST—Continued[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990 Total

2. Discount factors ......................... 10 ............ ............ ............ ............ ............ ............ ............ XXXX3. Present value of future net in-

come ........................................... 11 ............ ............ ............ ............ ............ ............ ............ XXXX4. Horizon value ............................. 12 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............5. Discount factor ........................... 13 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............6. Present value of horizon value .. 14 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............7. Present value of future net in-

come ........................................... 15 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............8. Total present value .................... 16 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

C. Ratio of total present value of con-stant controls case to total, presentvalue of base case ............................ 17 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

SCHEDULE C.1—CONSTANT CONTROLS PROFIT AND LOSS SUMMARY FOR THE RATE OF RETURNTEST

[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990

A. Forecast operating revenues:1. Smelter revenues—unaffilated parties ...... 01 ............ ............ ............ ............ ............ ............ ............2. Smelter revenues—affiliated parties ......... 02 ............ ............ ............ ............ ............ ............ ............3. Co-product and by-product sales .............. 03 ............ ............ ............ ............ ............ ............ ............4. Other operating revenues .......................... 04 ............ ............ ............ ............ ............ ............ ............5. Total operating revenues ........................... 05 ............ ............ ............ ............ ............ ............ ............




2. Taxes, other than income tax .................... 15 ............ ............ ............ ............ ............ ............ ............3. Research costs .......................................... 16 ............ ............ ............ ............ ............ ............ ............4. Depreciation and amortization


5. Interest on short-term debt ........................ 19 ............ ............ ............ ............ ............ ............ ............6. Miscellaneous operating expenses ........... 20 ............ ............ ............ ............ ............ ............ ............7. Total other operating expenses ................. 21 ............ ............ ............ ............ ............ ............ ............

E. Forecast income from operations .................... 22 ............ ............ ............ ............ ............ ............ ............F. Forecast income taxes ..................................... 23 ............ ............ ............ ............ ............ ............ ............G. Forecast net income from operations .............. 24 ............ ............ ............ ............ ............ ............ ............

SCHEDULE C.2—CONSTANT CONTROLS SUSTAINING CAPITAL INVESTMENT FORECAST[Smelter identification]

Sustaining capital Line 1984 1985 1986 1987 1988 1989 1990

1. Land .................................................................. 01 ............ ............ ............ ............ ............ ............ ............2. Buildings and improvements ............................ 02 ............ ............ ............ ............ ............ ............ ............2. Machinery and equipment ................................ 03 ............ ............ ............ ............ ............ ............ ............4. Transportation equipment ................................. 04 ............ ............ ............ ............ ............ ............ ............5. Pollution control facilities .................................. 05 ............ ............ ............ ............ ............ ............ ............6. Other fixed assets ............................................. 06 ............ ............ ............ ............ ............ ............ ............7. Total smelter sustaining capital ........................ 07 ............ ............ ............ ............ ............ ............ ............


201


SCHEDULE C.3—HISTORICAL CAPITAL INVESTMENT IN CONSTANT DOLLARS[Smelter identification]

Items from 1983 balance sheet Line Nominaldollars

Constantdollars

A. Current assets:1. Cash on hand and deposit ............................................................................................ 01 ................ ................2. Temporary cash investments ......................................................................................... 02 ................ ................3. Trade receivables, net:

a. Unaffiliated customers ............................................................................................ 03 ................ ................b. Affiliated customers ................................................................................................ 04 ................ ................

4. Inventories:a. Raw materials and products ................................................................................... 05 ................ ................b. Other materials and supplies .................................................................................. 06 ................ ................

5. Other current assets ...................................................................................................... 07 ................ ................6. Total current assets ....................................................................................................... 08 ................ ................

B. Property, plant and equipment:1. Land ............................................................................................................................... 09 ................ ................2. Buildings and improvements .......................................................................................... 10 ................ ................3. Machinery and equipment ............................................................................................. 11 ................ ................4. Transportation equipment .............................................................................................. 12 ................ ................5. Pollution control facilities ............................................................................................... 13 ................ ................6. Other fixed assets .......................................................................................................... 14 ................ ................7. Total smelter investments .............................................................................................. 15 ................ ................8. Less: Accumulated depreciation and amortization ........................................................ 16 ................ ................9. Net smelter investment .................................................................................................. 17 ................ ................

C. Other noncurrent assets ....................................................................................................... 18 ................ ................D. Total smelter capital investment ........................................................................................... 19 ................ ................E. Current liabilities:

1. Trade accounts and notes payable:a. Unaffiliated suppliers .............................................................................................. 20 ................ ................b. Affiliated suppliers ................................................................................................... 21 ................ ................

2. Other expense accruals ................................................................................................. 22 ................ ................3. Notes payable, current ................................................................................................... 23 ................ ................4. Other current liabilities ................................................................................................... 24 ................ ................5. Total current liabilities .................................................................................................... 25 ................ ................

F. Net smelter capital investment ............................................................................................. 26 ................ ................

SCHEDULE C.4—RATE OF RETURN TEST[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990 Total

A. Operating cash flow projection:1. Net income from operations ...... 01 ............ ............ ............ ............ ............ ............ ............ XXXX2. Depreciation and amortization:

a. Pollution control facilities .... 02 ............ ............ ............ ............ ............ ............ ............ XXXXb. Other smelter facilities ........ 03 ............ ............ ............ ............ ............ ............ ............ XXXX

3. Operating cash flow ................... 04 ............ ............ ............ ............ ............ ............ ............ XXXX4. Capital expenditure projections:

a. Constant controls ............... 05 ............ ............ ............ ............ ............ ............ ............ XXXXb. Sustaining capital ............... 06 ............ ............ ............ ............ ............ ............ ............ XXXXc. Total .................................... 07 ............ ............ ............ ............ ............ ............ ............ XXXX

5. Net cash flow projections .......... 08 ............ ............ ............ ............ ............ ............ ............ XXXX6. Discount factors ......................... 09 ............ ............ ............ ............ ............ ............ ............ XXXX7. Present value of future cash

flows ........................................... 10 ............ ............ ............ ............ ............ ............ ............ XXXXB. Net present value:

1. Horizon value ............................. 11 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............2. Discount factor ........................... 12 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............3. Present value of horizon value .. 13 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............4. Present value of future cash

flows ........................................... 14 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............5. Total present value .................... 15 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............6. Net smelter capital investment

in constant dollars ...................... 16 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............7. Net present value ...................... 17 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............


202


SCHEDULE C.5—HORIZON VALUE OF CASH FLOWS[Smelter identification]

Line

Final forecastyears

Horizon years

1989 1990 1991 1992 1993 1994 1995 Total

A. Depreciation-free horizon value:1. Net cash flow projections .......... 01 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXX2. Depreciation tax savings:

a. Depreciation and amortiza-tion ...................................... 02 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXX

b. Marginal tax rate ................ 03 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXXc. Tax savings ........................ 04 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXX

3. Depreciation-free net cashflows:

a. Nominal dollar values ......... 05 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXXb. 1990 dollar values .............. 06 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXXc. Average .............................. 07 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

4. Horizon factor ............................ 08 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............5. Depreciation-free horizon value 09 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

B. Depreciation tax savings over thehorizon period:

1. Depreciation and amortization ... 10 XXXX XXXX ............ ............ ............ ............ ............ XXXX2. Marginal tax rate ........................ 11 XXXX XXXX ............ ............ ............ ............ ............ XXXX3. Tax savings ............................... 12 XXXX XXXX ............ ............ ............ ............ ............ XXXX4. Discount factors ......................... 13 XXXX XXXX ............ ............ ............ ............ ............ XXXX5. Present value of tax savings ..... 14 XXXX XXXX ............ ............ ............ ............ ............ XXXX6. Total present value of tax sav-

ings ............................................. 15 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............C. Horizon Value ................................... 16 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

SCHEDULE D.1—INTERIM CONTROLS REVENUE FORECAST[Smelter Identification]

Line 1984 1985 1986 1987 1988 1989 1990



B. Forecast smelter revenues—affiliated parties:1. Concentrates processed ............................ 05 ............ ............ ............ ............ ............ ............ ............2. Smelting charge ......................................... 06 ............ ............ ............ ............ ............ ............ ............3. Total smelter revenues .............................. 07 ............ ............ ............ ............ ............ ............ ............4. Average product grade .............................. 08 ............ ............ ............ ............ ............ ............ ............


a. Pollution control facilities .................... 10 ............ ............ ............ ............ ............ ............ ............b. Other smelter processing ................... 11 ............ ............ ............ ............ ............ ............ ............

3. Total co-product and by-product revenues: 12 ............ ............ ............ ............ ............ ............ ............

SCHEDULE D.2—INTERIM CONTROLS COST FORECAST[Smelter Identification]

Line 1984 1985 1986 1987 1988 1989 1990




2. Natural gas:a. Quantity in mcf ................................... 09 ............ ............ ............ ............ ............ ............ ............


203


SCHEDULE D.2—INTERIM CONTROLS COST FORECAST—Continued[Smelter Identification]

Line 1984 1985 1986 1987 1988 1989 1990

b. Price per mcf ...................................... 10 ............ ............ ............ ............ ............ ............ ............c. Total natural gas payments ................ 11 ............ ............ ............ ............ ............ ............ ............





SCHEDULE D.3—INTERIM CONTROLS FORECAST PROFIT AND LOSS SUMMARY[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990

A. Forecast operating revenues:1. Smelter revenues—unaffiliated parties ..... 01 ............ ............ ............ ............ ............ ............ ............2. Smelter revenues—affiliated parties ......... 02 ............ ............ ............ ............ ............ ............ ............3. Co-product and by-product sales .............. 03 ............ ............ ............ ............ ............ ............ ............4. Other operating revenues .......................... 04 ............ ............ ............ ............ ............ ............ ............5. Total operating revenues ........................... 05 ............ ............ ............ ............ ............ ............ ............






5. Interest on short-term debt ........................ 19 ............ ............ ............ ............ ............ ............ ............6. Miscellaneous operating expenses ........... 20 ............ ............ ............ ............ ............ ............ ............7. Total other operating expenses ................. 21 ............ ............ ............ ............ ............ ............ ............

E. Forecast income from operations .................... 22 ............ ............ ............ ............ ............ ............ ............F. Forecast income taxes ..................................... 23 ............ ............ ............ ............ ............ ............ ............G. Forecast net income from operations .............. 24 ............ ............ ............ ............ ............ ............ ............

SCHEDULE D.4—INTERIM CONTROL SUSTAINING CAPITAL INVESTMENT FORECAST[Smelter identification]

Sustaining capital Line 1984 1985 1986 1987 1988 1989 1990

1. Land .................................................................. 01 ............ ............ ............ ............ ............ ............ ............2. Buildings and improvements ............................ 02 ............ ............ ............ ............ ............ ............ ............3. Machinery and equipment ................................ 03 ............ ............ ............ ............ ............ ............ ............4. Transportation equipment ................................. 04 ............ ............ ............ ............ ............ ............ ............5. Pollution control facilities .................................. 05 ............ ............ ............ ............ ............ ............ ............6. Other fixed assets ............................................. 06 ............ ............ ............ ............ ............ ............ ............7. Total smelter sustaining capital ........................ 07 ............ ............ ............ ............ ............ ............ ............


204


SCHEDULE D.5—CASH PROCEEDS FROM LIQUIDATION[Smelter identification]

Line

(1) Esti-mated Liq-

uidationvalue

(2) Re-ported netbook value

(3)Totalgain(loss)

Gain (loss) subjectto taxation as—

(4) Ordi-nary in-come

(5)Capital

gain

A. Total current assets ........................................................ 01 .................. .................. XXXXX XXXXX XXXXXB. Property, plant and equipment:

1. Land ......................................................................... 02 .................. .................. ............ .................. ............2. Buildings and improvements ................................... 03 .................. .................. ............ .................. ............3. Machinery and equipment ....................................... 04 .................. .................. ............ .................. ............4. Transportation equipment ........................................ 05 .................. .................. ............ .................. ............5. Pollution control facilities ......................................... 06 .................. .................. ............ .................. ............6. Other fixed assets .................................................... 07 .................. .................. ............ .................. ............7. Total ......................................................................... 08 .................. .................. ............ .................. ............

C. Other noncurrent assets. ................................................ 09 .................. .................. ............ .................. ............D. Total smelter value ......................................................... 10 .................. .................. ............ .................. ............E. Total current liabilities ..................................................... 11 .................. .................. XXXXX XXXXX XXXXXF. Gross liquidation value ................................................... 12 .................. .................. ............ .................. ............G. Liquidation costs ............................................................ 13 .................. XXXXX ............ .................. XXXXXH. Net Taxable Gain (or loss) ............................................. 14 XXXXX XXXXX XXXXX .................. ............I. Income tax rate ................................................................ 15 XXXXX XXXXX XXXXX .................. ............J. Income tax on gain (loss) ............................................... 16 XXXXX XXXXX XXXXX .................. ............K. After tax cash proceeds from liquidation ........................ 17 .................. XXXXX XXXXX XXXXX XXXXX

SCHEDULE D.6—PERMANENT WAIVER FROM INTERIM CONTROLS TEST[Smelter identification]

Line 1984 1985 1986 1987 1988 1989 1990 Total

A. Operating Cash flow projection:1. Net income from operations ...... 01 ............ ............ ............ ............ ............ ............ ............ XXXX2. Net income adjustments ............ 02 ............ ............ ............ ............ ............ ............ ............ XXXX3. Depreciation and amortization:

a. Pollution control facilities .... 03 ............ ............ ............ ............ ............ ............ ............ XXXXb. Other smelter facilities ........ 04 ............ ............ ............ ............ ............ ............ ............ XXXX

4. Operating cash flow ................... 05 ............ ............ ............ ............ ............ ............ ............ XXXX5. Capital expenditure projections:

a. Interim controls ................... 06 ............ ............ ............ ............ ............ ............ ............ XXXXb. Sustaining capital ............... 07 ............ ............ ............ ............ ............ ............ ............ XXXXc. Total .................................... 08 ............ ............ ............ ............ ............ ............ ............ XXXX

6. Net cash flow projections .......... 09 ............ ............ ............ ............ ............ ............ ............ XXXX7. Discount factors ......................... 10 ............ ............ ............ ............ ............ ............ ............ XXXX8. Present value of future cash

flows ........................................... 11 ............ ............ ............ ............ ............ ............ ............ XXXXB. Net present value:

1. Horizon value ............................. 12 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............2. Discount factor ........................... 13 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............3. Present value of horizon value .. 14 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............4. Present value of future cash

flows ........................................... 15 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............5. Total present value .................... 16 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............6. Current salvage value ............... 17 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............7. Net present value ...................... 18 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

SCHEDULE D.7—HORIZON VALUE OF CASH FLOWS[Smelter identification]

Line

Final forecastyears

Horizon years

Total

1989 1990 1991 1992 1993 1994 1995

A. Depreciation-free horizon value:1. Net cash flow projections .......... 01 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXX2. Depreciation tax savings:

a. Depreciation and amortiza-tion ...................................... 02 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXX

b. Marginal tax rate ................ 03 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXXc. Tax savings ........................ 04 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXX


205

Environmental Protection Agency Pt. 58

SCHEDULE D.7—HORIZON VALUE OF CASH FLOWS—Continued[Smelter identification]

Line

Final forecastyears

Horizon years

Total

1989 1990 1991 1992 1993 1994 1995

3. Depreciation-free net cashflows:

a. Nominal dollar values ......... 05 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXXb. 1990 dollar values .............. 06 ............ ............ XXXX XXXX XXXX XXXX XXXX XXXXc. Average .............................. 07 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

4. Horizon factor ............................ 08 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............5. Depreciation-free horizon value 09 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

B. Depreciation tax savings over thehorizon period:

1. Depreciation and amortization ... 10 XXXX XXXX ............ ............ ............ ............ ............ XXXX2. Marginal tax rate ........................ 11 XXXX XXXX ............ ............ ............ ............ ............ XXXX3. Tax savings ............................... 12 XXXX XXXX ............ ............ ............ ............ ............ XXXX4. Discount factors ......................... 13 XXXX XXXX ............ ............ ............ ............ ............ XXXX5. Present value of tax savings ..... 14 XXXX XXXX ............ ............ ............ ............ ............ XXXX6. Total present value of tax sav-

ings ............................................. 15 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............C. Horizon Value ................................... 16 XXXX XXXX XXXX XXXX XXXX XXXX XXXX ............

PART 58—AMBIENT AIR QUALITYSURVEILLANCE

Subpart A—General Provisions

Sec.58.1 Definitions.58.2 Purpose.58.3 Applicability.

Subpart B—Monitoring Criteria

58.10 Quality assurance.58.11 Monitoring methods.58.12 Siting of instruments or instrument

probes.58.13 Operating schedule.58.14 Special purpose monitors.

Subpart C—State and Local Air MonitoringStations (SLAMS)

58.20 Air quality surveillance: plan content.58.21 SLAMS network design.58.22 SLAMS methodology.58.23 Monitoring network completion.58.24 [Reserved]58.25 System modification.58.26 Annual State air monitoring report.58.27 Compliance date for air quality data

reporting.58.28 SLAMS data submittal.

Subpart D—National Air Monitoring Stations(NAMS)

58.30 NAMS network establishment.58.31 NAMS network description.58.32 NAMS approval.58.33 NAMS methodology.58.34 NAMS network completion.58.35 NAMS data submittal.

58.36 System modification.

Subpart E—Photochemical AssessmentMonitoring Stations (PAMS)

58.40 PAMS network establishment.58.41 PAMS network description.58.42 PAMS approval.58.43 PAMS methodology.58.44 PAMS network completion.58.45 PAMS data submittal.58.46 System modification.

Subpart F—Air Quality Index Reporting

58.50 Index reporting.

Subpart G—Federal Monitoring

58.60 Federal monitoring.58.61 Monitoring other pollutants.

APPENDIX A TO PART 58—QUALITY ASSURANCEREQUIREMENTS FOR STATE AND LOCAL AIRMONITORING STATIONS (SLAMS)

APPENDIX B TO PART 58—QUALITY ASSURANCEREQUIREMENTS FOR PREVENTION OF SIG-NIFICANT DETERIORATION (PSD) AIR MONI-TORING

APPENDIX C TO PART 58—AMBIENT AIR QUAL-ITY MONITORING METHODOLOGY

APPENDIX D TO PART 58—NETWORK DESIGNFOR STATE AND LOCAL AIR MONITORINGSTATIONS (SLAMS), NATIONAL AIR MONI-TORING STATIONS (NAMS), AND PHOTO-CHEMICAL ASSESSMENT MONITORING STA-TIONS (PAMS)

APPENDIX E TO PART 58—PROBE AND MONI-TORING PATH SITING CRITERIA FOR AMBI-ENT AIR QUALITY MONITORING

APPENDIX F TO PART 58—ANNUAL SLAMS AIRQUALITY INFORMATION


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