40 CFR Part 57 — Primary Nonferrous Smelter Orders

PART 57—PRIMARY NONFERROUS SMELTER ORDERS Authority: Secs. 110, 114, 119, 301, Clean Air Act, as amended (42 U.S.C. 7410, 7414, 7419, and 7601); sec. 406 of Pub. L. 95-95. Source: 50 FR 6448, Feb. 15, 1985, unless otherwise noted. Subpart A—General § 57.101 Purpose and scope. (a) Applicability of the regulations. (1) The eligibility of smelters for a Primary Nonferrous Smelter Order (NSO) under section 119 of the Clean Air Act; (2) The procedures through which an NSO can be approved or issued by EPA; and (3) The minimum contents of each NSO required for EPA issuance or approval under section 119. Subpart I et seq. (b) State authority to adopt more stringent requirements. § 57.102 Eligibility. (a) A primary copper, lead, zinc, molybdenum, or other nonferrous smelter is eligible for an NSO if it meets the following conditions: (1) The smelter was in existence and operating on August 7, 1977; (2) The smelter is subject to an approved or promulgated sulfur dioxide (SO 2 2 (3) The Administrator determines, based on a showing by the smelter owner, that no means of emission limitation applicable to the smelter which would enable it to comply with its SIP stack emission limitation for SO 2 (b) For the purposes of these regulations: (1) The following means of emission limitation shall be considered adequately demonstrated for nonferrous smelters. (Taking into account nonair quality health and environmental impact and energy considerations, but not the cost of compliance). (i) Retrofit control technologies. (B) Magnesium oxide (concentration) scrubbing; (C) Lime/limestone scrubbing; and (D) Ammonia scrubbing. (ii) Replacement or process modifications. (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 which would enable a smelter to comply with its SIP emission limitation for SO 2 (3) An applicable means of emission limitation which would enable a smelter to comply with its SIP emission limitation for SO 2 (i) The rate of return test. (ii) The profit protection test. (c) When applying for an NSO, a smelter must establish, for purposes of applying the financial eligibility tests, which adequately demonstrated constant control technology applicable to that smelter is the most economically feasible for use at that smelter. [50 FR 6448, Feb. 15, 1985, as amended at 51 FR 10211, Mar. 25, 1986] § 57.103 Definitions. (a) The Act (b) Active use 2 (c) Adequate SO 2 (d) Administrative Law Judge (e) The Administrator (f) Ambient air (g) Ambient air quality (h) An approved measure (i) Assistant Administrator for Air and Radiation (j) Constant controls, control technology, and continuous emission reduction technology (k) Effective date of an NSO Federal Register (l) EPA and the Agency (m) Fugitive emissions (n) Issuance Federal Register. (o) Issuing agency, (p) Malfunction (q) Maximum production capacity (r) NAAQS and National Ambient Air Quality Standards, (s) Scheduled maintenance (t) Smelter owner and operator (u) Supplementary control system (v) Unauthorized dispersion technique (w) Unless otherwise specified in this part, all terms shall have the same meaning given them by the Act. [50 FR 6448, Feb. 15, 1985, as amended at 57 FR 5328, Feb. 13, 1992] § 57.104 Amendment of the NSO. An NSO shall be amended whenever necessary for compliance with the requirements and purposes of this part. (a)(1) Issuance of amendment. (2)(i) Notwithstanding the requirements of paragraph (a)(1) of this section, amendments to SIP compliance schedule interim compliance dates in State-issued NSO's need not be submitted for EPA approval if the amendment does not delay the interim date by more than three months from the date as approved by the Administrator and if the final compliance date is unchanged. Delays longer than 3 months shall be handled according to the provisions of § 57.104(a)(1). (ii) Changes made in accordance with this subparagraph may be effective immediately but must be submitted to EPA within seven days. EPA will give public notice of receipt of such changes by publication of a Notice in the Federal Register. (3) In any case in which the issuing agency fails to issue an amendment necessary for compliance with the requirements and purposes of this part, EPA may, after first giving the issuing Agency notice, issue such amendment. (b) Revision of SCS Manual. Provided, (1) No violations of NAAQS occur in the smelter's Designated Liability Area during that time; and (2) The smelter operator has not been informed by the issuing agency or EPA that its application is not adequately documented, unless such deficiency has been remedied promptly. (c) Notice and opportunity for hearing. § 57.105 Submittal of required plans, proposals, and reports. (a) The failure of a smelter owner to submit any plan, report, document or proposal as required by its NSO or by this part shall constitute a violation of its NSO. (b) If the Administrator determines that a nonferrous smelter is in violation of a requirement contained in an NSO approved under these regulations, the Administrator shall, as provided by section 119(f) of the Act: (1) Enforce such requirement under section 113 (a), (b), or (c) of the Act; (2) Revoke the order after notice and opportunity for hearing; (3) Give notice of noncompliance and commence action under section 120 of the act; or (4) Take any appropriate combinations of these actions. (c) Under section 304 of the Act, any person may commence a civil action against an owner or operator of a smelter which is alleged to be in violation or any order approved under this part. § 57.106 Expiration date. Each NSO shall state its expiration date. No NSO issued under this regulation shall expire later than January 1, 1988. § 57.107 The State or local agency's transmittal to EPA. (a) Content and bases of the State or local agency's NSO. (1) The text of the NSO; (2) The application submitted by the smelter owner, except for appendix A to this part, all correspondence between the issuing agency and the applicant relating to the NSO, and any material submitted in support of the application; (3) A concise statement of the State or local agency's findings and their bases; and (4) All documentation or analyses prepared by or for the issuing agency in support of the NSO. (b) The State or local agency's enforcement plan. § 57.108 Comparable existing SIP provisions. Notwithstanding any other provision of this part, an NSO may contain provisions to which the affected smelter is subject under the applicable EPA-approved State Implementation Plan (SIP) for sulfur dioxide in lieu of the corresponding provisions which would otherwise be required under this part if the Administrator determines that those SIP provisions are substantially equivalent to the corresponding NSO provisions which would otherwise be required, and if the Administrator determines that the smelter is in substantial compliance with those SIP provisions. For the purposes of this section, provisions to which the affected smelter is subject under the applicable EPA-approved State Implementation Plan are those which became effective before the smelter owner applied for the NSO. § 57.109 Maintenance of pay. The Administrator will not approve or issue an NSO for any smelter unless he has approved or promulgated SIP provisions which are applicable to the smelter and which satisfy the requirements of section 110(a)(6) of the Clean Air Act. § 57.110 Reimbursement of State or local agency. As a condition of issuing an NSO, any issuing agency may require the smelter operator to pay a fee to the State or local agency sufficient to defray the issuing agency's expenses in issuing and enforcing the NSO. § 57.111 Severability of provisions. The provisions promulgated in this part and the various applications thereof are distinct and severable. If any provision of this part or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions, or the application of such provisions to other persons or circumstances, which can be given effect without the invalid provision of application. Subpart B—The Application and the NSO Process § 57.201 Where to apply. Any eligible smelter may apply for an NSO to the appropriate EPA Regional Office or to the appropriate State or local air pollution control agency. (a) When application is made to EPA, all parts of the application required to be submitted under this subpart shall be sent directly to the Director, Stationary Source Compliance Division (EN-341), U.S. Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460, Attention: Confidential Information Unit. In addition, the smelter owner shall send a copy of the application, except that part required to be submitted under § 57.203(b) (eligibility), directly to the appropriate EPA Regional Office. (b) When application is made to the appropriate State or local agency, the smelter owner shall submit one complete copy of all parts of the application required to be submitted under this subpart to that agency, in addition to the application requirements contained in paragraph (a) of this section. If the smelter owner is requesting an advance eligibility determination pursuant to § 57.203(b), such request must be made in writing and shall accompany the copy of the application being sent to the Director of the Stationary Source Compliance Division of the Environmental Protection Agency. (c) If the smelter owner is requesting a waiver of the interim constant control requirement of § 57.301, such request must be sent directly to the Director, Stationary Source Compliance Division, at the time of application, in accordance with § 57.802. (d) The NSO Process. (2)(i) If the smelter is determined to be eligible for an NSO under paragraph (d)(1) of this section, the issuing Agency shall apply the appendix A financial eligibility tests again before issuing an NSO in order to determine if the smelter can comply with its SIP requirements on or before January 1, 1988 by installing adequately demonstrated technology which is reasonably available. (ii) If application of the tests shows that the smelter could comply by or before January 1, 1988, the issuing agency shall notify the smelter of this determination, and shall not issue an NSO to the smelter unless the NSO contains a SIP compliance schedule meeting the requirements of § 57.705. Such a compliance schedule must provide for compliance with the smelter's SO 2 (iii) If no adequately demonstrated technology is found to be reasonably available to enable a smelter to comply by January 1, 1988, it would be excused from the compliance schedule requirement in § 57.201(d)(2)(ii), but it would be subject to reevaluation of its ability to comply by that date at any time during the term of the NSO. (See § 57.201(d)(3)). (3) At any time during the term of an NSO which does not contain a SIP compliance schedule, EPA or the issuing agency may reevaluate the availability of technology to the smelter. If EPA or the issuing agency determines that adequately demonstrated technology is reasonably available to permit the smelter to comply with its SIP by or before January 1, 1988, the NSO shall be amended within 3 months time after such determination. The amendment shall require compliance with all SIP requirements by or before January 1, 1988, and shall include a compliance schedule meeting the requirements of § 57.705. The determination that adequately demonstrated technology is reasonably available shall be made by reapplying the same appendix A financial eligibility tests required by subpart B, updated by economic data reflecting current operating conditions and currently demonstrated control technology. Any such determination and amendment shall be governed by the provisions of this part and section 119 of the Clean Air Act. (4) Notice and opportunity for public hearing in accordance with section 119 of the Clean Air Act must be provided before issuance of any NSO. (e) A smelter that does not have any constant SO 2 2 2 2 § 57.202 How to apply. (a) Letter of intent. (b) Complete application. 2 (2) If an issuing agency transmits an NSO to EPA for approval before the expiration of the suspension of the Federal SIP emission limitation, the suspension shall continue until EPA approves or disapproves the NSO. § 57.203 Contents of the application. (a) Claim of confidentiality. et seq. et seq. (b) Each smelter owner shall make the showing required by § 57.102(a)(3) by completing and submitting appendix A to this part and any necessary supplemental information to the issuing agency as a part of its application. Each smelter shall also submit as part of its application the information which, in conjunction with the information required by appendix A, is necessary for the issuing agency to make the determination required by § 57.201(d)(2). Any smelter owner or State may, at its option, simultaneously submit this material to EPA for an advance eligibility determination. (c) Current operating information. (1) A process flow diagram of the smelter, including current process and instrumentation diagrams for all processes or equipment which may emit or affect the emission of sulfur dioxide; the characteristics of all gas streams emitted from the smelter's process equipment (flow rates, temperature, volumes, compositions, and variations over time); and a list of all monitoring data and strip charts, including all data, charts, logs or sheets kept with respect to the operation of any process equipment which may emit or affect the emission of sulfur dioxide; (2) The smelter's maximum daily production capacity (as defined in § 57.103(r)), the operational rate (in pounds of concentrate charged to the smelting furnace per hour) of each major piece of process equipment when the smelter is operating at that capacity; and the smelter's average and maximum daily production rate for each product, co-product, or by-product, by year, for the past four years; (3) The optimal conversion efficiency (defined in terms of percent of total SO 2 (4) The average conversion efficiency of any acid plant or other sulfur dioxide control system during normal process operations (excluding malfunctions), by month, during the past four years. (5) The percent of the time the acid plant or other control system was available for service during each month for the past four years, excluding downtime for scheduled maintenance, and a full explanation of any major or recurring problems with the system during that time; (6) The frequency and duration of times during the past four years when the SO 2 (7) A description of all scheduled, periodic, shutdowns of the smelter during the past four years, including their purpose, frequency and duration; and the same information with respect to unscheduled shutdowns; (8) The gas volume, rates, and SO 2 (9) The average monthly sulfur balance across the process and control equipment, including fugitive emissions, for the past 4 years; and (10) A description of engineering techniques now in use at the smelter to prevent the release of fugitive emissions into the atmosphere at low elevations. (d) The smelter owner's proposals. (e) A smelter may submit as part of its application, information necessary to determine any SIP compliance schedule which might be required under § 57.201(d)(2). (f) Additional information. (g) Request for a waiver of constant controls. (h) Unless a smelter applies for a waiver in accordance with subpart H, a smelter shall submit as part of its application a proposed schedule for compliance with the interim constant control requirements of subpart C which satisfies the requirements of § 57.702. § 57.204 EPA action on second period NSOs which have already been issued. (a) EPA may approve a second period NSO issued by a State before the date of publication of these regulations in the Federal Register, (1) The second period NSO was issued by the State consistent with the procedural requirements of section 119 of the Clean Air Act; (2) EPA can make a determination that the smelter is eligible for a second period NSO and whether the smelter can comply with its SO 2 (3) The provisions of the NSO are consistent with the requirements of these regulations. (b) Should EPA require a smelter to submit information before taking final action on an NSO referred to in paragraph (a), of this section, it shall specify a reasonable period for submission of such information in light of the nature of the information being required. The duration of such period shall not exceed the period allowed for submission of a complete application under § 57.202 (a) and (b). (c) The Agency shall consider the SIP emission limitation for SO 2 § 57.205 Submission of supplementary information upon relaxation of an SO 2 (a) In the event an SO 2 (b) Upon receipt of any supplementary information required under paragraph (a), the issuing agency shall promptly reevaluate the availability of the means of compliance with the new SIP limit under the NSO eligibility tests specified in § 57.102(b)(3). If the issuing agency determines that the demonstrated control technology necessary to attain the new SO 2 2 (c) EPA shall take action to approve or disapprove the issuing agency's determination and NSO amendment, if any, within a reasonable time after receipt of such determination and amendment. (d) If EPA disapproves the issuing agency's determination or NSO amendment, or if a smelter fails to submit any supplementary information as required under paragraph (a), EPA and/or the issuing agency shall take appropriate remedial action. EPA shall take appropriate remedial action if the issuing agency does not make any determination and amendment required by this section within the time contemplated by § 57.202(a). Subpart C—Constant Controls and Related Requirements § 57.301 General requirements. Each NSO shall require an interim level of sulfur dioxide constant controls to be operated at the smelter, unless a waiver of this requirement has been granted to the owner under subpart H of this part. Except as otherwise provided in § 57.304, the interim constant controls shall be properly operated and maintained at all times. The NSO shall require the following gas streams to be treated by interim constant controls: (a) In copper smelters, off-gases from fluidized bed roasters, flash furnaces, NORANDA reactors, electric furnaces and copper converters; (b) In lead smelters, off-gases from the front end of the sintering machine and any other sinter gases which are recirculated; (c) In zinc smelters, off-gases from mult-hearth roasters, flash roasters and fluidized bed roasters; and (d) In all primary nonferrous smelters, all other strong SO 2 (e) In all primary nonferrous smelters, any other process streams which were regularly or intermittently treated by constant controls at the smelter as of August 7, 1977. § 57.302 Performance level of interim constant controls. (a) Maximum feasible efficiency. 2 (b) The limitation level for SO 2 concentration in the control system tail gas. 2 (c) Averaging period. (i) For sulfuric acid plants on copper smelters, 12-hour running average; (ii) For sulfuric acid plants on lead smelters, 6-hour running average; (iii) For sulfuric acid plants on zinc smelters, 2-hour running average; (iv) For dimethylaniline (DMA) scrubbing units on copper smelters, 2-hour running average. (2) A different averaging period may be established if the applicant demonstrates that such a period is necessary in order to account for the factors described in paragraph (b) of this section: Provided, that the period is enforceable and satisfies the criteria of paragraph (a) of this section. (d) Improved performance. (i) Heat exchangers and associated equipment inadequate to sustain efficient, autothermal operation at the average gas strengths and volumes received by the acid plant during routine process equipment operation; (ii) Failure to completely fill all available catalyst bed stages with sufficient catalyst; (iii) Inability of the gas pre-treatment system to prevent unduly frequent plugging or fouling (deterioration) of catalyst or other components of the acid plant; or (iv) Blower capacity inadequate to permit the treatment of the full volume of gas which the plant could otherwise accommodate, or in-leakage of air into the flues leading to the plant, to the extent that this inadequacy results in bypassing of gas around the plant. (2) Notwithstanding any contrary provisions of § 57.304(c) (malfunction demonstration), no excess emissions (as defined in § 57.304(a)) shall be considered to have resulted from a malfunction in the constant control system if the smelter owner has not upgraded serious deficiencies in the constant control system in compliance with the requirements of § 57.302(d)(1), unless the smelter owner demonstrates under § 57.304(c) that compliance with those requirements would not have affected the magnitude of the emission. (e) Multiple control devices. 2 (2) To the extent that compliance with this requirement is demonstrated by the smelter operator to result in excess emissions during unavoidable start up and shut down of the control systems, those excess emissions shall not constitute violations of the NSO. § 57.303 Total plantwide emission limitation. (a) Calculation of the emission limitation. (b) Compliance with the emission limitation. § 57.304 Bypass, excess emissions and malfunctions. (a) Definition of excess emissions. (b) The excess emission report. (1) Identity of the stack or other emission points where the excess emissions occurred; (2) Magnitude of the excess emissions expressed in the units of each applicable emission limitation, as well as the operating data, documents, and calculations used in determining the magnitude of the excess emissions; (3) Time and duration of the excess emissions; (4) Identity of the equipment causing the excess emissions; (5) Nature and cause of such excess emissions; (6) Steps taken to limit the excess emissions, and when those steps were commenced; (7) If the excess emissions were the result of a malfunction, the steps taken to remedy the malfunction and to prevent the recurrence of such malfunction; and (8) At the smelter owner's election, the demonstration specified in paragraph (c) of this section. (c) Malfunction demonstration. (1) The air pollution control systems, process equipment, or processes were at all times maintained and operated, to the maximum extent practicable, in a manner consistent with good practice for minimizing emissions; (2) Repairs were made as expeditiously as practicable, including the use of off-shift labor and overtime; (3) The amount and duration of the excess emissions were minimized to the maximum extent practicable during periods of such emissions; and (4) The excess emissions were not part of a recurring pattern indicative of serious deficiencies in, or inadequate operation, design, or maintenance of, the process or control equipment. (d) Scheduled maintenance exception. (1) The expected additional annual sulfur dioxide removal by any control system (including associated process changes) for which construction had not commenced (as defined in 40 CFR 60.2 (g) and (i)) as of August 7, 1977 and which the smelter owner agrees to install and operate under subpart F, would have offset such excess emissions if the system had been in operation throughout the year in which the maintenance was performed; (2) The system is installed and operated as provided in the NSO provisions established under subpart F; and (3) The system performs at substantially the expected efficiency and reliability subsequent to its initial break-in period. (e) An NSO may provide that excess emissions which occur during acid plant start-up as the result of the cooling of acid plant catalyst due to the unavailability of process gas to an acid plant during a prolonged SCS curtailment or scheduled maintenance are not excess emissions. If the NSO does so provide, it shall also require the use of techniques or practices designed to minimize these excess emissions, such as the sealing of the acid plant during prolonged curtailments, the use of auxiliary heat or SO 2 (f) Requirements for a smelter with constant controls that applies for a waiver. (1) If a smelter that has some interim constant controls applies for a waiver in accordance with subpart H, the following requirements shall apply pending action on the waiver application and following final action granting or approving a waiver: (i) The NSO shall require the smelter to implement maintenance and operation measures designed to reduce to the maximum extent feasible the potential for bypass of existing interim constant controls. (ii) Upon application for a waiver under subpart H, the smelter shall submit to the issuing agency for its approval and to EPA proposed maintenance and operation measures for compliance with the requirements of paragraph (i). (iii) The remainder of this subpart shall apply except that: (A) The emission limitations required under this subpart shall be based only on existing constant control equipment as upgraded through the improved maintenance and operation required by this paragraph, and (B) bypass of existing controls shall not constitute excess emissions, provided the maintenance and operation requirements and emission limitations prescribed by the NSO are satisfied. (2) After any denial of a waiver by the issuing Agency, or any disapproval by EPA of a waiver granted by the issuing agency, the NSO shall be amended consistent with the requirements of this subpart and § 57.702. § 57.305 Compliance monitoring and reporting. (a) Monitoring. 2 (i) Such monitors must be installed, operated and maintained in accordance with the performance specifications and other requirements contained in appendix D to 40 CFR part 52 or part 60. The monitors must take and record at least one measurement of SO 2 (ii) The sampling point shall be located at least 8 stack diameters (diameter measured at sampling point) downstream and 2 diameters upstream from any flow disturbance such as a bend, expansion, constriction, or flame, unless another location is approved by the Administrator. (iii) The sampling point for monitoring emissions shall be in the duct at the centroid of the cross section if the cross sectional area is less than 4.645m 2 2 2 2 (iv) The measurement system(s) installed and used pursuant to this paragraph shall be subject to the manufacturer's recommended zero adjustment and calibration procedures at least once per 24-hour operating period unless the manufacturer specifies or recommends calibration at shorter intervals, in which case such specifications or recommendations shall be followed. Records of these procedures shall be made which clearly show instrument readings before and after zero adjustment and calibration. (2) Each NSO shall require the monitoring of any ducts or flues used to bypass gases, required under this subpart to be treated by constant controls, around the smelter's sulfur dioxide constant control system(s) for ultimate discharge to the atmosphere. Such monitoring shall be adequate to disclose the time of the bypass, its duration, and the approximate volume and SO 2 (b) Reporting. (2) Each NSO shall require that the smelter maintain a record of all measurements and calculations required under § 57.303(b). Results shall be summarized on a monthly basis and shall be submitted to the issuing agency at 6-month intervals. The smelter owner shall retain a record of such measurements and calculations for at least one year after the NSO terminates. (3) The report required under § 57.304(b) shall accompany the report required under paragraph (b)(1) of this section. (c) Quality assurance and continuous data Quality assurance. (2) Continuous data. Subpart D—Supplementary Control System Requirements § 57.401 General requirements. Except as provided in subpart E, each NSO shall require the smelter owner to prevent all violations of the NAAQS in the smelter's designated liability area (DLA) through the operation of an approved supplementary control system (SCS). § 57.402 Elements of the supplementary control system. Each supplementary control system shall contain the following elements: (a) Air quality monitoring network. (1) The monitors shall be located at all points of expected SO 2 2 2 (2) The number and location of sites shall be based on dispersion modeling, measured ambient air quality data, meteorological information, and the results of the continuing review required by paragraph (f) of this section. The system shall include the use of at least 7 fixed monitors unless the issuing agency determines, on the basis of a demonstration by the smelter owner, that the use of fewer monitors would not limit coverage of points of high SO 2 (3) All monitors shall be continuously operated and maintained and shall meet the performance specifications contained in 40 CFR part 53. The monitors shall be capable of routine real time measurement of maximum expected SO 2 2 (b) Meteorological network. (c) Designated liability area. 2 (1) Unless an acceptable demonstration is made under paragraph (c)(2) of this section, the DLA shall be a circle with a center point at the smelter's tallest stack and a minimum radius as given in the following table: Radius for SO 2 1 Emissions rate in tons per hour Emission rate in grains per sec. Radius in kilometers 16 or less 4,000 or less 11 24 6,000 16 32 8,000 24 40 10,000 32 48 or more 12,000 or more 40 1 (2) The NSO may provide for a DLA with different boundaries if the smelter owner can demonstrate through the use of appropriate dispersion modeling and ambient air quality monitoring data that the smelter's controlled emissions could not cause or significantly contribute to a violation of the NAAQS beyond the boundaries of such a different area under any recorded or probable meteorological conditions. (3) A violation of the NAAQS in the DLA of any smelter shall constitute a violation of that smelter's NSO, unless the issuing agency determines on the basis of a showing by the smelter owner that the smelter owner had taken all emission curtailment action indicated by the SCS operational manual and that the violation was caused in significant part by: (i) Emissions of another source(s) which were in excess of the maximum permissible emissions applicable to such source(s), (ii) Fugitive emissions of another source(s), or (iii) The smelter's own fugitive emissions: Provided, (4) For the purposes of this section, maximum permissible emissions for other 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. (1) In the case of any NSO applicant that would have a DLA which would overlap with the DLA of any other smelter that has applied for an NSO or has an NSO in effect, the NSO applicant shall include in its application an enforceable joint plan, agreed to by such other smelter(s). In determining whether a joint plan is required, the NSO applicant shall calculate its DLA according to the table in paragraph (c)(1) of this section. The DLA of the other smelter shall be calculated according to the table in paragraph (c)(1) unless the other smelter has an NSO in effect, in which case the boundaries in that NSO shall be used. The enforceable joint plan shall provide for: (i) Emission curtailment adequate to ensure that the NAAQS will not be violated in any areas of overlapping DLAs; and (ii) Conclusive prospective allocation of legal liability in the event that the NAAQS are violated in the area of overlapping DLAs. Such plans may, but need not, include the operation of a joint SCS system. Each NSO shall require adherence by the NSO applicant owner to the joint plan for emission curtailment and allocation of liability, unless the issuing agency determines, pursuant to the provisions of paragraph (c)(2) of this section, that the NSO applicant's DLA does not overlap with that of any other smelter. (2) In the case of any NSO applicant that would have a DLA which would overlap with the DLA of any other smelter whose owner has not applied for an NSO (and does not have an NSO in effect), the NSO applicant's submittal shall contain a written consent, signed by a corporate official empowered to do so. The consent shall state that if, at any time thereafter, the owner of the other smelter applies for an NSO, and the other smelter's DLA would overlap with the NSO applicant's DLA, the NSO applicant will negotiate and submit an enforceable joint plan for emission curtailment and allocation of liability (as described in paragraph (d)(1) of this section). In determining whether it is necessary to submit such a consent, each smelter's DLA shall be calculated according to the table set forth in paragraph (c)(1) of this section. The consent shall state that a joint plan shall be submitted within 90 days of the issuing agency's notification to the NSO applicant of receipt of the other smelter's letter of intent, unless the issuing agency determines that the DLAs do not overlap. Failure of the NSO applicant to submit such a plan shall constitute grounds for denial of its NSO application or a violation of an effective NSO, as applicable. (e) The SCS operational manual. (1) The operational manual shall prescribe emission curtailment decisions based on the use of real time information from the air quality monitoring network dispersion model estimates of the effect of emissions on air quality, and meteorological observations and predictions. (2) The operational manual shall also provide for emission curtailment to prevent violation of the NAAQS within the smelter's DLA which may be caused in part by stack emissions, and to the extent practicable fugitive emissions, from any other source (unless that other source is a smelter subject to an NSO). (3) The SCS operational manual shall include (but not be limited to): (i) A clear delineation of the authority of the SCS operator to require all other smelter personnel to implement the operator's curtailment decisions; (ii) The maintenance and calibration procedures and schedules for all SCS equipment; (iii) A description of the procedures to be followed for the regular acquisition of all meteorological information necessary to operate the system; (iv) The ambient concentrations and meteorological conditions that will be used as criteria for determining the need for various degrees of emission curtailment; (v) The meteorological variables as to which judgments may be made in applying the criteria stated pursuant to paragraph (e)(3)(iv) of this section; (vi) The procedures through which and the maximum time period within which a curtailment decision will be made and implemented by the SCS operator; (vii) The method for immediately evaluating the adequacy of a particular curtailment decision, including the factors to be considered in that evaluation; (viii) The procedures through which and the time within which additional necessary curtailment will immediately be effected; and (ix) The procedures to be followed to protect the NAAQS in the event of a mechanical failure in any element of the SCS. (f) Continuing review and improvement of the SCS. § 57.403 Written consent. (a) The consent. As a condition of receiving a Primary Nonferrous Smelter Order (NSO) under Section 119 of the Clean Air Act, for the smelter operated by (name of company) at (location), the undersigned official, being empowered to do so, consents for the company as follows: (1) In any civil proceeding (judicial or administrative) to enforce the NSO, the company will not contest: (a) Liability for any violation of the National Ambient Air Quality Standards for sulfur dioxide in the smelter's designated liability area (DLA), except on the ground that a determination under 40 CFR 57.402(c)(3) was clearly wrong; or (b) The conclusive allocation of liability under NSO provisions satisfying 40 CFR 57.402(d)(1) between the company's smelter and any other smelter(s) for any violation of the National Ambient Air Quality Standards for sulfur dioxide in an area of overlapping DLAs. (2) The issuing agency (as defined in 40 CFR 57.103) will be allowed unrestricted access at reasonable times to inspect, verify calibration of, and obtain data from ambient air quality monitors operated by the company under the requirements of the NSO. (b) Rights not waived by the consent. § 57.404 Measurements, records, and reports. (a) Measurements. (1) Such monitors shall be installed, operated, and maintained in accordance with the performance specifications and other requirements contained in appendices D and E to 40 CFR part 52. The monitors must take and record at least one measurement of sulfur dioxide concentration and stack gas flow rate from the effluent of each affected stack in each fifteen-minute period. (The NSO shall require the smelter operator to devise and implement any procedures necessary for compliance with these performance specifications.) (2) The sampling point shall be located at least eight stack diameters (diameter measured at sampling point) downstream and two diameters upstream from any flow disturbance such as a bend, expansion, constriction, or flame, unless another location is approved by the Administrator. (3) The sampling point for monitoring emissions shall be in the duct at the centroid of the cross section if the cross sectional area is less than 4.645 m 2 2 2 2 (4) The measurement system(s) installed and used pursuant to this paragraph shall be subject to the manufacturer's recommended zero adjustment and calibration procedures at least once per 24-hour operating period unless the manufacturer specifies or recommends calibration at shorter intervals, in which case such specifications or recommendations shall be followed. Records of these procedures shall be made which clearly show instrument readings before and after zero adjustment and calibration. (5) The results of such monitoring, calibration, and maintenance shall be submitted in the form and with the frequency specified in the NSO. (b) Records. (c) Reports. (1) Submit a monthly summary indicating all places and times at which the NAAQS for SO 2 2 (2) Immediately notify EPA and the State agency any time concentrations of SO 2 (3) Make such other reports as may be specified in the NSO. § 57.405 Formulation, approval, and implementation of requirements. (a) SCS content of the application. (1) Each NSO application shall include a complete description of any supplementary control system in operation at the smelter at the time of application and a copy of any SCS operational manual in use with that system. (2) Each NSO application shall contain proposed NSO provisions for compliance 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 include a specific plan for the development of a system fulfilling the requirements of § 57.402(a), (b), and (e) (covering air quality monitoring network, meteorological network, and the SCS operational manual). (b) SCS content of the order. (2) Each NSO shall require the submission of a final report, within 6 months of the required date for completion of the measures specified in the approved plan evaluating the performance and adequacy of the SCS developed pursuant to the approved plan. The report shall include: (i) A detailed description of how the criteria that form the basis for particular curtailment decisions were derived; (ii) A complete description of each SCS element listed in § 57.402 (a) through (d) (covering monitoring, meteorology, and the DLA), and an explanation of why the elements fulfill the requirements of those sections; (iii) A reliability study demonstrating that the SCS will prevent violations of the NAAQS in the smelter's DLA at all times. The reliability study shall include a comprehensive analysis of the system's operation during one or more three-month seasonal periods when meteorological conditions creating the most serious risk of NAAQS violations are likely to occur. Where it is impossible, because of time restraints, to include in such a study and analysis of the three month seasonal period with meteorological conditions creating the most serious risk of NAAQS violations, the study shall analyze the system's operation on the basis of all available information. The NSO shall provide that in such case, a supplemental reliability study shall be submitted after the end of the worst case three-month period as a part of the next semi-annual report required under § 57.402(f). (iv) A copy of the current SCS operational manual. (c) Amendment of the NSO. Subpart E—Fugitive Emission Evaluation and Control § 57.501 General requirements. (a) Each NSO shall require the smelter owner to use such control measures as may be necessary to ensure that the smelter's fugitive emissions do not result in violations of the NAAQS for SO 2 (b) A smelter which is operating under an NSO containing a SIP compliance schedule established in accordance with § 57.705 is required to be making progress toward compliance with any fugitive control requirements contained in its respective SIP and need not meet the other requirements contained in this subpart. (c) A smelter which is subject to an NSO which does not contain a SIP compliance schedule must meet the provisions of §§ 57.502 and 57.503. § 57.502 Evaluation. (a) Evaluation at the time of application. 2 (b) Evaluation during the first 6 months of the NSO. The design and workplan of the study shall be approved, if adequate, by the issuing agency and included in the NSO. The study shall commence no later than the date when the NSO becomes effective and an analysis of its results shall be submitted to the issuing agency within 6 months of the effective date of the NSO. The study shall include an appropriate period during which the ambient air shall be monitored to determine the impact of fugitive emissions of sulfur dioxide, arsenic (at copper smelters only), lead (at lead and zinc smelters only), and total suspended particulates on the ambient air quality in the smelter's DLA. § 57.503 Control measures. The NSO of any smelter subject to the requirements of § 57.502(b) shall be amended, if necessary, within 6 months of EPA's receipt of the analysis specified in § 57.502(b), as provided in § 57.704(c) to implement the requirement of § 57.501. Measures required to be implemented may include: (a) Additional supplementary control. (b) Engineering and maintenance techniques. (1) For reactors, installation and proper operation of primary hoods; (2) For roasters, installation and proper operation of primary hoods on all hot calcine transfer points; (3) For furnaces, installation and proper operation of primary hoods on all active matte tap holes, matte launders, slag skim bays, and transfer points; (4) For converters, installation and proper operation of primary hoods for blowing operations, and where appropriate, secondary hoods for charging and pouring operations; (5) For sintering machines, installation and proper operation of primary hoods on the sinter bed, all hot sinter ignition points, all concentrate laydown points, and all hot sinter transfer points; (6) For blast furnaces, installation and proper operation of primary hoods on all active slag and lead bullion furnace tap holes and transfer points; (7) For dross reverberatory furnaces, installation and proper operation of primary hoods on all active charging and discharging points; (8) Maintenance of all ducts, flues and stacks in a leak-free condition to the maximum extent possible; (9) Maintenance of all process equipment under normal operating conditions in such a fashion that out-leakage of fugitive gases will be prevented to the maximum extent possible; (10) Secondary or tertiary hooding on process equipment where necessary; and (11) Partial or complete building evacuation as appropriate. § 57.504 Continuing evaluation of fugitive emission control measures. Each NSO shall require the smelter owner to conduct an active program to continuously review the effectiveness of the fugitive emission control measures implemented pursuant to § 57.503 in maintaining the NAAQS and, if such measures are not sufficiently effective, to evaluate what additional measures should be taken to assure that the NAAQS will be maintained with a reasonably degree of reliability. The NSO shall also require submission of a semi-annual report to the issuing Agency detailing the results of this review and evaluation. Such a report may be submitted as part of the report required under § 57.402(f). § 57.505 Amendments of the NSO. An NSO shall be amended within three months of submission of any report required under § 57.504 so as to require additional fugitive emission control measures if such report establishes that such additional measures are necessary to assure that the NAAQS will be maintained with a reasonable degree of reliability. Subpart F—Research and Development Requirements § 57.601 General requirements. (a) This subpart is not applicable to NSOs which contain a SIP compliance schedule in accordance with § 57.705. (b) The requirements of this subpart may be waived with respect to a smelter if the owner of that smelter submits with its NSO application a written certification by a corporate official authorized to make such a certification that the smelter will either comply with its SO 2 (c) Except as provided in paragraphs (a) and (b), each NSO shall require the smelter to conduct or participate in a specific research and development program designed to develop more effective means of compliance with the sulfur dioxide control requirements of the applicable State Implementation Plan than presently exist. § 57.602 Approval of proposal. (a) The smelter owner's proposal. (1) The design and substantive elements of the research and development program, including the expected amount of time required for their implementation; (2) The annual expected capital, operating, and other costs of each element in the program; (3) The smelter's current production processes, pollution control equipment, and emissions which are likely to be affected by the program; (4) Potential or expected benefits of the program; (5) The basis upon which the results of the program will be evaluated; and (6) The names, positions, and qualifications of the individuals responsible for conducting and supervising the project. (b) EPA approval. (2) A prerequisite for approval of an R&D proposal by EPA and any issuing agency is that the planned work must yield the most cost effective technology possible. (c) Optional preproposal. § 57.603 Criteria for approval. The approvability of any proposed research and development program shall be judged primarily according to the following criteria: (a) The likelihood that the project will result in the use of more effective means of emission limitation by the smelter within a reasonable period of time and that the technology can be implemented at the smelter in question, should the smelter be placed on a SIP compliance schedule at some future date when adequately demonstrated technology is reasonably available; (b) Whether the proposed funding and staffing of the project appear adequate for its successful completion; (c) Whether the proposed level of funding for the project is consistent with the research and development expenditure levels for pollution control found in other industries; (d) The potential that the project may yield industrywide pollution control benefits; (e) Whether the project may also improve control of other pollutants of both occupational and environmental significance; (f) The potential effects of the project on energy conservation; and (g) Other non-air quality health and environmental considerations. § 57.604 Evaluation of projects. The research and development proposal shall include a provision for the employment of a qualified independent engineering firm to prepare written reports at least annually which evaluate each completed significant stage of the research and development program, including all relevant information and data generated by the program. All reports required by this paragraph shall be submitted to EPA and also to the issuing agency if it is not EPA. § 57.605 Consent. Each NSO shall incorporate by reference a binding written consent, signed by a corporate official empowered to do so, requiring the smelter owner to: (a) Carry out the approved research and development program; (b) Grant each issuing agency and EPA and their contractors access to any information or data employed or generated in the research and development program, including any process, emissions, or financial records which such agency determines are needed to evaluate the technical or economic merits of the program; (c) Grant physical access to representatives and contractors of each issuing agency to each facility at which such research is conducted; (d) Grant the representatives and contractors of EPA and the issuing agency reasonable access to the persons conducting the program on behalf of the smelter owner for discussions of progress, interpretation of data and results, and any other similar purposes as deemed necessary by EPA or any issuing agency. § 57.606 Confidentiality. The provisions of section 114 of the Act and 40 CFR part 2 shall govern the confidentiality of any data or information provided to EPA under this subpart. Subpart G—Compliance Schedule Requirements § 57.701 General requirements. This section applies to all smelters applying for an NSO. Each NSO shall require the smelter owner to meet all of the requirements within the NSO as expeditiously as practicable but in no case later than the deadlines contained in this subpart or any other section of these regulations. For requirements not immediately effective, the NSO shall provide increments of progress and a schedule for compliance. Each schedule must reflect the extent to which any required equipment or systems are already in place and the extent to which any required reports or studies have already been completed. Requirements for smelters to submit compliance schedules and the procedures which they must follow are outlined below. § 57.702 Compliance with constant control emission limitation. (a) This section applies to all smelters which receive an NSO, but only to the extent this section is compatible with any SIP compliance schedule required by §§ 57.201(d)(2) and 57.705. (b) Any NSO issued to a smelter not required to immediately comply with the requirements of subpart G under § 57.701 shall contain a schedule for compliance with those requirements as expeditiously as practicable but in no case later than 6 months from the effective date of the NSO, except as follows: Where a waiver is requested in accordance with subpart H, an NSO may be issued without a schedule for compliance with the requirements for which a waiver is being considered consistent with subpart H, pending a final decision on the request under subpart H. If a waiver is requested in accordance with subpart H, compliance with the requirements of subpart C which were deferred as a result of such request shall be achieved as expeditiously as practicable after, but in no case later than 6 months from a final decision by the issuing agency to deny a waiver under subpart H or disapproval by EPA of a waiver granted by the issuing agency. The time limits specified herein may be extended only if a smelter operator demonstrates that special circumstances warrant more time, in which case the compliance schedule shall require compliance as expeditiously as practicable. An NSO which does not contain a schedule for compliance with all the requirements of subpart C because a waiver has been requested in accordance with subpart H shall be amended in accordance with § 57.104 within three months after a final decision under subpart H so as to either grant a waiver of any remaining requirements of subpart C, or deny such a waiver and place the smelter on a compliance schedule for meeting those requirements. If the issuing agency grants a waiver and such waiver is disapproved by EPA, the issuing agency shall promptly amend the NSO so as to place the smelter on a compliance schedule meeting any remaining requirements of subpart C. (c) Any schedule required under this section shall contain the following information and increments of progress to the extent applicable: (1) Description of the overall design of the SO 2 (2) Descriptions of specific process hardware to be used in achieving compliance with interim SO 2 (3) The date by which contracts will be let or purchase orders issued to accomplish any necessary performance improvements; (4) The date for initiating on-site construction or installation of necessary equipment; (5) The date by which on-site construction or installation of equipment is to be completed; and (6) The date for achievement of final compliance with interim emission limitations. § 57.703 Compliance with the supplementary control system requirements. This section applies to all nonferrous smelters applying for an NSO. (a) Schedules for smelters with existing SCS. Each NSO shall require immediately upon issuance of the NSO operation of any existing supplementary control system and immediately upon the effective date of the NSO the assumption of liability for all violations of the NAAQS detected by any monitor in the SCS system. Each NSO shall require that within six months of the effective date of the NSO the smelter complete any measures specified in the smelter's approved SCS development plan not implemented at the time the NSO is issued, and assume liability for all violations of the NAAQS detected anywhere in the DLA (except as provided in subpart D of these regulations). Other requirements of subpart D such as the requirements for submission of reports records, and for ongoing evaluation of the SCS shall be complied with at the times specified in subpart D and § 57.701. (b) Compliance schedule for smelters with no existing SCS system. Where a smelter has no SCS at the time of issuance of the NSO, the NSO shall require compliance with the requirements of subpart D according to the following schedule: (1) Within six months after the effective date of the NSO the smelter shall install all operating elements of the SCS system, begin operating the system, complete all other measures specified in its approved SCS development plan, begin compliance with the requirements of § 57.404, and assume liability for any violations of the NAAQS within its designated liability area (except as provided by subpart D), detected by the SCS monitors in place. (2) Within nine months thereafter the smelter shall submit the SCS Report, assume liability for all violations of the NAAQS detected anywhere within its designated liability area, and comply with all other requirements of subpart D, except for those which subpart D specifies are to be satisfied at or after the close of such nine-month period, including requirements for submission of studies, reports, and records, and the requirements for continued review and evaluation of the SCS. § 57.704 Compliance with fugitive emission evaluation and control requirements. This section applies only to smelters not required to submit SIP Compliance Schedules under § 57.705. Each NSO shall require that smelters satisfy each of the requirements of subpart E as expeditiously as practicable, taking into account the extent to which those requirements have already been satisfied, and in any event, within any deadlines specified below. (a) Plan for fugitive emission control. (b) SCS Report. (c) NSO amendment. (1) With respect to the additional use of SCS, upon approval or promulgation of the plan submitted under paragraph (a) of this section and upon approval or promulgation of the requirements for the system described in the additional SCS Report under paragraph (b) of this section; (2) With respect to the additional use of engineering techniques, upon approval or promulgation of the compliance schedule required by paragraph (a) of this section. § 57.705 Contents of SIP Compliance Schedule required by § 57.201(d) (2) and (3). This section applies to smelters which are required to submit a SIP Compliance Schedule as discussed below. (a) Each SIP Compliance Schedule required by § 57.201(d) (2) and (3) must contain the following elements: (1) Description of the overall design of the SO 2 (2) Descriptions of specific process hardware to be used in achieving compliance with the SIP emission limitation including gas capacity values; (3) The date by which contracts will be let or purchase orders issued to accomplish any necessary performance improvements; (4) The date for initiating on-site construction or installation of necessary equipment; (5) The date by which on-site construction or installation of equipment is to be completed; (6) The date for achievement of final compliance with SIP emission limitations; and (7) Any other measures necessary to assure compliance with all SIP requirements as expeditiously as practicable. (b) Operations of SCS. Subpart H—Waiver of Interim Requirement for Use of Continuous Emission Reduction Technology § 57.801 Purpose and scope. (a) This subpart shall govern all proceedings for the waiver of the interim requirement that each NSO provide for the use of constant controls. (b) In the absence of specific provisions in this subpart, and where appropriate, questions arising at any stage of the proceeding shall be resolved at the discretion of the Presiding Officer or the Administrator, as appropriate. § 57.802 Request for waiver. (a) General. (2) The smelter owner shall append to the completed and signed appendix A full copies of all documents, test results, studies, reports, scientific literature and assessments required by appendix A. To the extent that the material consists of generally available published material, the smelter owner may cite to the material in lieu of appending it to appendix A. The smelter owner shall specifically designate those portions of any documents relied upon and the facts or conclusions in appendix A to which they relate. (b) Effect of submitting incomplete application. (2) Failure to comply with the requirements of paragraphs (a) and (b)(1) of this section shall be grounds for denial of the requested waiver. (c) Time for requesting waivers. (d) Submission of request. (e) Eligibility. (f) Criteria for decision. (1) The higher of the two net present values of future cash flows completed under the two alternative sets of assumptions set forth in the instructions to schedule D.6 in appendix A in less than liquidation (salvage) value; or (2) The smelter's average variable costs at all relevant levels of production (after installation of interim constant control equipment) would exceed the weighted average price of smelter output for one year or more. § 57.803 Issuance of tentative determination; notice. (a) Tentative determination. (i) A “Staff Computational Analysis,” using the financial information submitted by the smelter owner under § 57.802 to evaluate the economic circumstances of the smelter for which the waiver is sought; (ii) A tentative determination as to whether an interim requirement for the use of constant controls would be so costly as to necessitate permanent or prolonged temporary cessation of operations at the smelter for which the waiver is requested. The tentative determination shall contain a “Proposed Report and Findings” summarizing the conclusions reached in the Staff Computational Analysis, discussing the estimated cost of interim controls, and assessing the effect upon the smelter of requiring those controls. The tentative determination shall also contain a proposed recommendation that the waiver be granted or denied, based upon the Proposed Report and Findings, and stating any additional considerations supporting the proposed recommendation. This tentative determination shall be a public document. (2) In preparing the Proposed Report and Findings, the EPA staff shall attempt to the maximum extent feasible to avoid revealing confidential information which, if revealed, might damage the legitimate business interests of the applicant. The preceding sentence notwithstanding, the tentative determination shall be accompanied by a listing of all materials considered by EPA staff in developing the tentative determination. Subject to the provisions of § 57.814(a), full copies of all such materials shall be included in the administrative record under § 57.814, except that, to the extent the material consists of published material which is generally available, full citations to that material may be given instead. (b) Public notice. (1) Publication at least once in a daily newspaper of general circulation in the area in which the smelter is located; and (2) Posting in the principal office of the municipality in which the smelter is located. (c) Individual notice. (d) Request for individual notice. (e) Form of notice. (1) A summary of the information contained in appendix A; (2) The tentative determination prepared under paragraph (a) of this section: Provided, that except in the case of the smelter owner, a summary of the basis for the grant or denial of the waiver may be provided in lieu of the formal determinations required by paragraph (a)(1) of this section; (3) A brief description of the procedures set forth in § 57.804 for requesting a public hearing on the waiver request, including a statement that such request must be filed within 30 days of the date of the notice; (4) A statement that written comments on the tentative determination submitted to EPA within 60 days of the date of the notice will be considered by EPA in making a final decision on the application; and (5) The location of the administrative record and the location at which interested persons may obtain further information on the tentative determination, including a copy of the index to the record, the tentative determination prepared under paragraph (a) of this section, and any other nonconfidential record materials. § 57.804 Request for hearing; request to participate in hearing. (a) Request for hearing. (1) Identification of the person requesting the hearing and his interest in the proceeding; (2) A statement of any objections to the tentative determination; and (3) A statement of the issues which such person proposes to raise for consideration at such hearing. (b) Grant or denial of hearing; notification. (c) Form of notice of hearing. (1) A statement of the time and place of the hearing; (2) A statement identifying the place at which the official record on the application for waiver is located, the hours during which it will be open for public inspection, and the documents contained in the record as of the date of the notice of hearing; (3) The due date for filing a written request to participate in the hearing under paragraph (d) of this section; (4) The due date for making written submissions under 57.805; and (5) The name, address, and office telephone number of the hearing Clerk for the hearing. (d) Request to participate in hearing. (1) A brief statement of the interest of the person in the proceeding; (2) A brief outline of the points to be addressed; (3) An estimate of the time required; and (4) If the request is submitted by an organization, a nonbinding list of the persons to take part in the presentation. As soon as practicable, but in no event later than two weeks before the scheduled date of the hearing, the Hearing Clerk shall make available to the public and shall mail to each person who asked to participate in the hearing a hearing schedule. (e) Effect of denial of or absence of request for hearing. § 57.805 Submission of written comments on tentative determination. (a) Main comments. (b) Reply comments. (1) Written comments submitted by other participants pursuant to paragraph (a) of this section; (2) Written comments submitted in response to the notice of hearing; (3) Material in the hearing record; and (4) Material which was not and could not reasonably have been available prior to the deadline for submission of main comments under paragraph (a) of this section. (c) Form of comments. (d) Use of comments. (2) Notwithstanding the foregoing, within two weeks prior to either deadline specified by paragraph (a) of this section for the filing of main comments, any person who has filed a request to participate in the hearing may file a request with the Presiding Officer to submit all or part of his main comments orally at the hearing in lieu of submitting written comments. The Presiding Officer shall, within one week, grant such request if he finds that such person will be prejudiced if he is required to submit such comments in written form. § 57.806 Presiding Officer. (a) Assignment of Presiding Officer. (2) If the parties to the hearing waive their right to have the Agency or an Administrative Law Judge preside at the hearing, the Administrator shall appoint an EPA employee who is an attorney to serve as presiding officer. (b) Powers and duties of Presiding Officer. (1) Chair and conduct administrative hearings held under this subpart; (2) Administer oaths and affirmations; (3) Receive relevant evidence: Provided, that the administrative record, as defined in § 57.814, shall be received in evidence; (4) Consider and rule upon motions, dispose of procedural requests, and issue all necessary orders; (5) Hold conferences for the settlement or simplification of the issues or the expediting of the proceedings; and (6) Do all other acts and take all measures necessary for the maintenance of order and for the efficient, fair and impartial conduct of proceedings under this subpart. [50 FR 6448, Feb. 15, 1985, as amended at 57 FR 5328, Feb. 13, 1992] § 57.807 Hearing. (a) Composition of hearing panel. (b) Additional hearing participants. (c) Questioning of hearing participants. (d) Submission of additional material. (e) Transcript. § 57.808 Opportunity for cross-examination. (a) Request for cross-examination. (1) The disputed issue(s) of material fact as to which cross-examination is requested. This shall include an explanation of why the questions at issue are factual, rather than of an analytical or policy nature; the extent to which they are in dispute in the light of the record made thus far, and the extent to which and why they can reasonably be considered material to the decision on the application for a waiver; and (2) The person(s) the participant desires to cross-examine, and an estimate of the time necessary. This shall include a statement as to why the cross-examination requested can be expected to result in full and true disclosure resolving the issue of material fact involved. (b) Order granting or denying request for cross-examination. (1) The issues as to which cross-examination is granted; (2) The persons to be cross-examined on each issue; (3) The persons allowed to conduct cross-examination; (4) Time limits for the examination of witnesses; and (5) The date, time and place of the supplementary hearing at which cross-examination shall take place. In issuing this ruling, the Presiding Officer may determine that one or more participants have the same or similar interests and that to prevent unduly repetitious cross-examination, they should be required to choose a single representative for purposes of cross-examination. In such a case, the order shall simply assign time for cross-examination by that single representative without identifying the representative further. (c) Supplementary hearing. (d) Alternatives to cross-examination. (2) In passing on any request for cross-examination submitted under paragraph (a) of this section, the Presiding Officer may, as a precondition to ruling on the merits of such request, require that alternative means of clarifying the record be used whether or not a request to do so has been made under the preceding paragraph. The person requesting cross-examination shall have one week to comment on the results of utilizing such alternative means, following which the Presiding Officer, as soon as practicable, shall issue an order granting or denying such person's request for cross-examination. § 57.809 Ex parte (a) General. ex parte (2) No member of the decisional body shall make or knowingly cause to be made to any interested person outside the Agency or member of the Agency trial staff an ex parte (b) Effect of receipt of ex parte communication. (2) Upon receipt by any member of the decisionmaking body of an ex parte (c) Definitions. (1) Agency trial staff (2) Decisional body (3) Ex parte communication Ex parte (i) Communications between Agency employees other than between the Agency trial staff and the member of the decisional body; (ii) Discussions between the decisional body and either: (A) Interested persons outside the Agency, or; (B) The Agency trial staff if all parties have received prior written notice of such proposed communications and have been given the opportunity to be present and participate therein. (4) Interested person outside the Agency [50 FR 6448, Feb. 15, 1985, as amended at 57 FR 5328, Feb. 13, 1992] § 57.810 Filing of briefs, proposed findings, and proposed recommendations. Unless otherwise ordered by the Presiding Officer, each hearing participant may, within 20 days after reply comments are submitted under § 57.805(b), or if a supplementary hearing for the purpose of cross-examination has been held under § 57.808(c), within 20 days after the transcript of such supplemental hearing becomes available or if alternative methods of clarifying the record have been used under § 57.808(d), within 20 days after the alternative methods have been employed, file with the Hearing Clerk and serve upon all other hearing participants proposed findings and proposed recommendations to replace in whole or in part the findings and recommendations contained in the tentative determination. Any such person may also file, at the same time, a brief in support of his proposals, together with references to relevant pages of transcript and to relevant exhibits. Within 10 days thereafter each participant may file a reply brief concerning alternative proposals. Oral argument may be held at the discretion of the Presiding Officer on motion of any hearing participant or sua sponte. § 57.811 Recommended decision. As soon as practicable after the conclusion of the hearing, one or more responsible employees of the Agency shall evaluate the record for preparation of a recommended decision and shall prepare and file a recommended decision with the Hearing Clerk. The employee(s) preparing the decision will generally be members of the hearing panel and may include the Presiding Officer. Such employee(s) may consult with and receive assistance from any member of the hearing panel in drafting a recommended decision and may also delegate the preparation of the recommended decision to the panel or to any member or members of it. This decision shall contain the same elements as the tentative determination. After the recommended decision has been filed, the Hearing Clerk shall serve a copy of such decision on each hearing participant and upon the Administrator. § 57.812 Appeal from or review of recommended decision. (a) Exceptions. (2) Within 10 days of the service of exceptions and briefs under paragraph (a)(1) of this section, any hearing participant may file and serve a reply brief responding to exceptions or arguments raised by any other hearing participant together with references to the relevant portions of the record, recommended decision, or opposing brief. Reply briefs shall not, however, raise additional exceptions. (b) Sua sponte review by the Administrator. sua sponte (c) Scope of appeal or review. (d) Argument before the Administrator. § 57.813 Final decision. (a) After review. (b) In the absence of review. (c) Timing of judicial review. § 57.814 Administrative record. (a) Establishment of record. (2) All material required to be included in the record shall be added to the record as soon as feasible after its receipt by EPA. All material in the record shall be appropriately indexed. The Hearing Clerk shall make appropriate arrangements to allow members of the public to copy all nonconfidential record materials during normal EPA business hours. (3) Confidential record material shall be indexed under paragraph (a)(2). Confidential record material shall, however, be physically maintained in a separate location from public record material. (4) Confidential record material shall consist of the following: (i) Any material submitted pursuant to § 57.802 for which a proper claim of confidentiality has been made under section 114(c) of the Act and 40 CFR part 2; and (ii) The Staff Computational Anaylsis prepared under § 57.803 (b) Record for issuing tentative determination. (c) Record for acting on requests for cross-examination. (d) Record for preparation of recommended decision. (e) Record for issuance of final decision. (2) Where a hearing has been held, the administrative record for issuance of the Administrator's final decision shall consist of the record of preparation of the recommended decision, any briefs or reply briefs submitted under § 57.812 (a) through (c), and the transcript of any oral argument granted under § 57.812(d). § 57.815 State notification. The Administrator shall give notice of the final decision in writing to the air pollution control agency of the State in which the smelter is located. § 57.816 Effect of negative recommendation. No waiver of the interim requirement for the use of constant controls shall be granted by the Administrator or a State unless the Administrator or a State first takes into account the Administrator's report, findings, and recommendations as to whether the use of constant controls would be so costly as to necessitate permanent or prolonged temporary cessations of operation of the smelter. Appendix A to Part 57—Primary Nonferrous Smelter Order (NSO) Application Instructions 1. General Instructions 1.1 Purpose of the Application 1.2 NSO Financial Tests 1.3 Confidentiality 2. NSO Financial Reporting Overview 2.1 Revenue and Cost Assignment 2.2 Transfer Prices on Affiliated Party Transactions 2.3 Forecasting Requirements 2.4 EPA Furnished Forecast Data 2.5 Applicant Generated Forecasts 2.6 Weighted Average Cost of Capital for Nonferrous Metal Producers 2.7 Horizon Value 2.8 Data Entry 2.9 Use of Schedules 2.10 Use of Exhibits Detailed Instructions for Each Schedule A.1 Historical Revenue Data A.2 Historical Cost Data A.3 Historical Profit and Loss Summary A.4 Historical Capital Investment Summary B.1 Pre-Control Revenue Forecast B.2 Pre-Control Cost Forecast B.3 Pre-Control Forecast Profit and Loss Summary B.4 Constant Controls Revenue Forecast B.5 Constant Controls Cost Forecast B.6 Constant Controls Forecast Profit and Loss Summary for the Profit Protection Test B.7 Profit Protection Test C.1 Constant Controls Forecast Profit and Loss Summary for the Rate of Return Test C.2 Constant Controls Sustaining Capital Investment Forecast C.3 Historical Capital Investment in Constant Dollars C.4 Rate of Return Test C.5 Horizon Value of Cash Flows for the Rate of Return Test D.1 Interim Controls Revenue Forecast D.2 Interim Controls Cost Forecast D.3 Interim Controls Forecast Profit and Loss Summary D.4 Interim Controls Sustaining Capital Investment Forecast D.5 Cash Proceeds from Liquidation D.6 Permanent Waiver from Interim Controls Test D.7 Horizon Value of Cash Flows for the Interim Controls Test 1. General Instructions 1.1 Purpose of the application. This application provides financial reporting schedules and the accompanying instructions for EPA's determination of eligibility for a nonferrous smelter order (NSO), and for a waiver of the interim constant controls requirement of an NSO. Although the determination of eligibility for an NSO is prerequisite for the determination of a waiver, appendix A, as a matter of convenience to applicants, includes both the NSO and waiver tests and reporting schedules. In order to support an NSO eligibility determination, the applicant must submit operating and financial data as specified by the schedules included in this application. Specific instructions for completing each schedule are provided in subsequent sections of the instructions. In general, applicants must provide: (a) Annual income statements, balance sheets and supporting data covering the five most recent fiscal years for the smelter for which the NSO requested. (b) Forecasts of operating revenues, operating costs, net income from operations and capital investments for the firm's smelter operations subject to this application, on the basis of anticipated smelter operations without any sulfur dioxide air pollution control facilities that have not been installed as of the NSO application date. (c) Forecasts of operating revenues, operating costs, net income from operations and capital investments for the firm's smelter operations subject to this application, on the basis of anticipated smelter operations with expected additional sulfur dioxide control facilities required to comply with the smelter's SIP emission limitation. (d) For smelters applying for a waiver of interim constant controls, forecasts of operating revenues, operating costs, and capital investments for the firm's smelter operations prepared on the basis of two alternative assumptions: (1) Installation of additional pollution control facilities required to comply with interim constant control requirements, no installation of any additional SO 2 2 1.2 NSO financial tests. EPA will use separate tests to determine eligibility for an NSO and to evaluate applications for a waiver of the interim constant control requirement. The two tests for NSO eligibility employ a present value approach for determining the reasonable availability of constant control technology that will enable an applicant to achieve full compliance with its SIP sulfur dioxide emission limitation. The tests for the waiver of the interim constant control requirements employ variable costing and discounted cash flow standards for evaluating an applicant's economic capability to implement those requirements. 1.2.1 NSO Eligibility Tests. 2 (a) Profit Protection Test. (b) Rate of Return Test. 1.2.2 Temporary Waiver from Interim Controls. 1.2.3 Permanent Waiver from Interim Controls. Applicants that do not have an existing constant control system or whose constant controls are not sufficient when in operation and optimally maintained to treat all strong streams in accordance with subpart C, may apply for a waiver of the requirements of subpart C with respect to any interim constant controls not already installed. Applicants will be eligible for a permanent waiver of the requirement for interim constant controls not already installed, if they can establish pursuant to the procedures in this application that an imposition of such control requirements would necessitate permanent closure of the smelter. Economic justification for a permanent closure is defined as a situation in which the present value of future cash flows anticipated from the smelter after installing the required interim control technology is less than the smelter's current salvage value under an orderly plan of liquidation. Future cash flows are determined under two alternative assumptions. The higher present value of cash flows computed under these assumptions is then compared to salvage value. 1.2.4 EPA Contact for NSO Inquiries. Inquiries concerning this portion of the requirements for NSO application should be addressed to Laxmi M. Kesari, Environmental Protection Agency, EN 341, 1200 Pennsylvania Ave., NW., Washington, DC 20460. 1.2.5 Certification. The NSO Certification Statement must be signed by an authorized officer of the applicant firm. 1.3 Confidentiality. Applicants may request that information contained in this application be treated as confidential. Agency regulations concerning claims of confidentiality of business information are contained in 40 CFR part 2, subpart B (41 FR 36902 et seq., et seq., 2. NSO Financial Reporting Overview 2.1 Revenue and Cost Assignment. The amounts assigned to operations of the smelter subject to this NSO application should include (1) revenues and costs directly attributable to the smelter's operating activities and (2) indirect operating costs shared with other segments of the firm to the extent that a specific causal and beneficial relationship can be identified for the allocation of such costs to the smelter. Do not allocate revenues and costs associated with central administrative activities for which specific causal and beneficial relationships to the activities of the smelter cannot be established. Nonallocable items include, but are not restricted to, amounts such as dividend and interest income on centrally administered portfolio investments, central corporate administrative office expenses and, except for schedules supporting the Profit Protection Test, interest on long-term debt financing arrangements. Provide a detailed explanation of amounts classified as nontraceable on a separate schedule and attach as part of Exhibit B. 2.2 Transfer Prices on Affiliated Part Transactions. Certain transactions by the smelter subject to an NSO application may reflect sales to or purchases from “affiliated” customers or suppliers with whom the smelter has a common bond of ownership and/or managerial control. In preparing this application, affiliated party transactions shall be defined as transactions with any entity that the firm, or its owners, controls directly or indirectly either through an ownership of 10 percent or more of the entity's voting interests or through an exercise of managerial responsibility. Applicants must attach as part of Exhibit B supporting schedules explaining the pricing policies established on affiliated party transactions incorporated in the financial reporting schedules. Prices on inter-segment material and product transfers within a firm, or on external purchases from and sales to other affiliated suppliers and customers, may differ from the prices on comparable transactions with unaffiliated suppliers and customers. In this event, applicants also must present in the Exhibit B supporting schedules and incorporate in the NSO financial reporting schedules appropriate adjustments for restating affiliated party transactions. Affiliated party transactions must be restated at either (a) equivalent prices on comparable transactions with unaffiliated parties if such price quotations can be obtained or (b) prices that provide the selling entity with a normal profit margin above its cost of sales if a meaningful comparison with unaffiliated transaction prices cannot be established. A “normal” profit margin is defined as the gross operating profit per dollar of operating revenue that will provide an average after-tax rate of return on permanent capital (total assets less current liabilities). This average rate of return is defined differently for the historical and forecast periods. The applicant must use a rate of return of 8.0 percent for the historical 1 Federal Register. forecast 1 Forecast smelting charges for integrated smelters can be computed from forecast market smelting charges. Integrated copper smelters may use as the basis of their forecast revenues the forecast copper smelting charges provided by EPA, adjusted as described in Section 2.4.1. An applicant may submit other forecasts, providing the forecast methodology is in accordance with the guidelines in Section 2.5 and fully documented as part of Exhibit B. 2.3 Forecasting Requirements. NSO applicants must provide the Agency with financial forecasts in Schedules B.1 through B.6 and C.1 through C.2. Applicants requesting either a temporary or permanent waiver from interim constant control requirements also must provide an additional set of financial forecasts in Schedules D.1 through D.4. 2.3.1 Forecast Period. The forecast period must include at least two full years following completion and startup of the required pollution control system. The forecast period shall be from 1984 through 1990 for an NSO application filed in 1984. If an application is filed in a later year, the 1984 through 1990 period should be adjusted accordingly. All references in this appendix to the period 1984 through 1990 should be interpreted accordingly. 2.3.2 Forecast Adjustment by Control Case. Some line items that have the same title in several schedules may contain different information because they are based on different assumptions regarding pollution controls. Production interruptions or curtailments due to the installation of pollution control facilities may require adjustments to certain revenue and cost estimates in the respective control cases. For example, production curtailments associated with supplementary control systems may be the basis for the pre-control case, yet are eliminated when constant controls replace supplementary control systems in the constant controls case. The application of pollution control techniques that involve process changes in the smelter's operations (e.g., conversion to flash smelting) also may require specific forecasts by applications of associated impacts on incremental operating revenues and costs. 2.3.3 Nominal Dollar Basis. Applicants must make their financial forecasts in terms of nominal dollars. Forecasts of selected parameters provided by EPA will furnish guidelines to an applicant in preparing the required cost and revenue estimates. In particular, copper smelting charges provided in nominal-dollar terms must be used directly by the applicant as given; i.e., the stipulated charge estimates should not be inflated. 2.3.4 Tolling Service Equivalent Basis. Applicants must express all revenue forecasts on a tolling service equivalent basis. Thus, forecast revenues are computed as the product of the forecast quantity of processed concentrate, the forecast average product grade of the concentrate (the percent of metal in the concentrate), and the forecast smelting charge. Smelters that are not tolling smelters and that do not use the copper smelting charges provided by EPA (as described in Section 2.4.1) can forecast a smelting charge from forecast product grade of the concentrate, percent recovery, and product and concentrate prices. The forecast prices and derivation of the smelting charge must be in accordance with the guidelines in Section 2.5, and the methodology must be fully documented in Exhibit B. 2.4 EPA Furnished Forecast Data. In making projection for the period 1984 through 1990, 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 of change) to be used by smelters applying for an NSO before January 1, 1985. If forecasts are needed for 1991 and EPA has not provided new forecasts, applicants should use the Data Resources, Inc. forecasts for 1991 (Docket Item No. IV-A-6c) and the average of CRU's forecasts for 1989 and 1990 (expressed in 1991 dollars). 1984 1985 1986 1987 1988 1989 1990 Copper smelting charge 1 14.5 14.6 16.0 15.3 15.3 15.5 15.4 Annual Percentage Rates of Change Wages 5.0 5.7 5.8 6.1 6.4 6.7 7.0 Energy prices: Electricity 7.0 8.8 8.1 8.3 7.1 4.9 5.5 Natural gas 3.6 5.7 9.3 8.7 9.2 8.0 8.4 Coal 5.1 7.0 8.9 9.0 9.7 9.7 9.7 Fuel 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 2.4.1 Copper smelting charge. EPA will supply a forecast of reference copper smelting charges. These charges, which are f.o.b. U.S. mine, are based on an estimate of export smelting charges and on the differential value of copper in the U.S. and the world market. They must be used in forecasting unaffiliated party revenues for the period following the expiration of existing contracts and in forecasting affiliated party revenues for the entire forecast period. The applicant may submit its own smelting charge forecast for the post-contract period, provided that such forecast is in accordance with the guidelines in Section 2.5 and fully documented and substantiated as part of Exhibit B. The EPA forecast export charge represents the world market copper smelting charge with copper valued at the London Metal Exchange (LME) copper price. This charge serves as the reference charge for the applicant copper smelter in calculating its smelting charges. Applicant copper smelters must derive their smelting charges from this world market charge as described in paragraph (a) below. The applicant may adjust the derived smelter-specific smelting charge to account for other factors, provided the adjustments are fully documented as part of Exhibit B. An example of such a factor is the unit deduction for metallurgical losses in smelting. Adjustment for this factor is discussed in paragraph (b) below. (a) The derivation of a smelter-specific smelting charge from the world market charge is based on assumptions regarding transportation costs and the U.S. producer-world copper price differential. The EPA forecast export charge is the forecast smelting charge available at a Japanese smelter, with copper valued at the London Metal Exchange copper price. The charge includes no freight costs, which must be paid by the mine. A U.S. smelter determines its smelting charge to a mine by meeting the combined world market smelting charge, adjusted to reflect copper valued at the U.S. producer price, and the transportation charge from the mine to the Japanese smelter. This combined price is the highest that a mine is willing to pay for smelting. The smelter's net smelting charge is equal to the combined world smelting charge, adjusted to the U.S. producer price for copper (i.e., the export forecast charge plus the U.S. producer price premium), and the transportation cost between the mine and a Far East smelter, minus the cost of transporting the concentrate between the mine and the applicant smelter. The applicant smelter's net smelting charge for concentrate from an individual mine is computed by first adding the U.S. producer Price-LME world price differential to the EPA-supplied forecast. The cost of transporting copper from the U.S. mine to the Far East is then added to this figure. The net smelting charge is obtained by subtracting from this total the cost of transporting copper from the mine to the applicant smelter. In making these calculations, an applicant must supply (and fully document in Exhibit B), the freight cost between the mine and the Far East and between the mine and the smelter. This freight cost must be converted to nominal dollars of the respective forecast years by applying the GNP percentage price change forecasts supplied by EPA or smelter-provided forecasts of transportation price changes. The smelter-provided forecasts of transportation price changes must comply with guidelines regarding such forecasts in Section 2.5. An applicant must use a 3 cent per pound U.S. producer price premium (relative to the LME price) in calculating the smelter's net smelting charge. The applicant may substitute its own forecasts of the U.S. producer price premium if it can substantiate such forecasts in accordance with the guidelines in Section 2.5 regarding applicant-provided smelting charge forecasts of principal products. All supporting documentation for such applicant-supplied forecasts must be supplied in Exhibit B. Any updates of the producer price premium will be available in the rulemaking docket or from the INFORMATION CONTACT noted in the Federal Register. The following two representative examples illustrate this methodology for making the transportation and U. S. producer price premium adjustment. (1) The applicant smelter, located in Arizona, obtains concentrate from an adjacent mine. The freight charge from mine to smelter is zero. The mine is willing to pay the applicant smelter an amount no higher than the sum of the world market smelting charge (adjusted for the copper value differential) and the transportation cost of shipping copper from the mine to the Far East. This combined cost is the net charge received by the applicant smelter. If the export smelting charge is 12 cents per pound and the freight cost between the mine and the Far East is 13 cents per pound, the applicant smelter would calculate a net smelting charge equal to 28 cents: 12 cents plus 3 cents (for the U.S. producer price premium) plus 13 cents (for the freight cost between the mine and the Far East). (2) The applicant smelter obtains concentrate from a nonadjacent mine. The mine will pay a charge no higher than the total market smelting charge, valued at the U.S. producer price, and the transportation costs between the mine and a Far East smelter. The applicant's net smelting charge is equal to this combined cost minus the transportation costs for shipping the concentrate between mine and applicant smelter. Suppose that the mine to Far East freight charge is 13 cents per pound and the mine to applicant smelter freight charge is 4 cents per pound. If the export smelting charge is 12 cents per pound, the net smelting charge is equal to 24 cents per pound: 12 cents plus 3 cents (for the U.S. producer price premium) plus 13 cents (for the freight cost to the Far East) minus 4 cents (for the freight cost to the applicant smelter). (b) The EPA forecast charges are based on a one unit deduction for metallurgical losses. This means that if a concentrate grades 25 percent copper, the mine is only credited with 24 percent for metal return. The one unit deduction on 25 percent concentrate is equivalent to a 96 percent payment for contained copper. Should a smelter recover less than 96 percent, its revenue would be less than the EPA forecast smelting charge. Should a smelter recover more than 96 percent, its revenue would be greater than the EPA forecast smelting charge. 2.4.2 Indices (Annual Percentage Changes). These indices, which are expressed as annual percentage rate changes in price (wages, energy prices, and GNP price deflator) must be used only for estimating the rate of price increases for the forecast period following the expiration of the applicant's current contracts. The applicant may use alternative forecasts of annual percentage changes for the forecast period following the expiration of current contracts, if justification is provided. Any such alternative forecasts must be prepared by a widely-recognized forecasting authority with expertise comparable to that of the forecaster relied upon by EPA. In addition, the documentation of these forecasts must be comparable to that provided by EPA's forecaster. The wage indices are to be applied to wage paid to manufacturing labor. The energy price indices are to be applied to prices of the respective energy products. The GNP price deflators are to be applied to prices for non-metal, non-labor, and non-energy inputs. 2.5 Applicant Generated Forecasts. Within the specified limitations, applicants may submit a method of forecasting smelting charges and by-product, co-product and other prices. The method selected must be explained and unit prices or costs provided where applicable. The forecast elements must be compatible with an applicant's historical cost and revenue elements to permit direct comparisons of historical and forecast data. Applicants must attach as part of Exhibit B appropriate schedules explaining variances between forecast and historical unit costs for the smelter. Forecasts of the smelting charges of the smelter's principal product (i.e., copper, lead, zinc, etc.) may be prepared either by an independent forecasting authority or by the smelter's in-house personnel. If the forecasts are prepared by an independent forecasting authority, the following conditions must be satisfied: (1) The forecasting authority must have expertise comparable to that of the forecaster relied upon by EPA. (2) As much documentation of the forecasting methodology as can reasonably be obtained must be made available to EPA. Such documentation must, at a minimum, be comparable to the documentation supporting EPA smelting charge forecasts. 2 2 If the smelting charge forecasts are prepared by in-house personnel, the following conditions must be met: (1) The in-house forecasts must be certified as being based on sound methodology by an independent forecasting authority with expertise comparable to that of the forecaster who prepared the EPA-supplied smelting charges. The independent forecasting authority shall also provide a brief explanation of the basis for the conclusion reached in the certification. (2) The smelter owner shall provide EPA with the documentation of the forecasting methodology employed, which must at a minimum be comparable to the extent of documentation supporting EPA's smelting charge forecasts. The smelter owner shall also make available upon request by EPA such additional documentation of the methodology and underlying data as EPA considers appropriate for evaluation of the forecasts. Forecasts of freight cost changes, which are applied to the freight costs used in calculating a smelter's net smelting charges, must be prepared by a widely-recognized forecasting authority. The forecaster's expertise must be comparable to that of the forecaster relied upon by EPA in forecasting the annual percentage changes in wages, energy prices, and GNP. The documentation of these forecasts must be comparable to that provided by EPA's forecaster. To the maximum extent practicable, by-product, co-product and (when applicable) unaffiliated smelting charges must be stated at market prices adjusted to f.o.b. smelter. Adjustments of these pricing bases must be made to reflect differences in grades and types of production. All adjustments must be consistent with expected sales, grades and types of concentrate processed. Applicants must attach as part of Exhibit B schedules describing and explaining the methods used to forecast these revenue items and the adjustments required for these revenue forecasts. Applicants must explain fully any changes from the historical data that are required to forecast labor productivity, ore-concentrate grade and composition, materials and energy consumption per unit of output, yield rates and other physical input/output relationships. Existing contractual terms must be used in forecasting those sales or input costs or prices to which the applicant is committed by contracts. The use of contract-dictated prices must be disclosed and supported by attaching as part of Exhibit B the terms and duration of labor and other supplier arrangements. Cost of compliance estimates need not be to the accuracy of final design/bid estimates; feasibility grade estimates will be acceptable. Updated cost of compliance estimates used in internal five year plans or specially prepared estimates of costs of compliance will generally be satisfactory. 2.6 Weighted Average Cost of Capital for Nonferrous Metal Producers. The industry average cost of capital is a weighted average of the rates of return for equity and debt. Its components are the interest rate and the return on equity specific to the nonferrous metals industry. 2.6.1 Computation. 3 3 R = (0.65 × E) + (0.182 × I) where R = weighted average cost of capital E = return on equity I = interest rate. The components are calculated as follows. (a) Return on equity for the nonferrous metals industry. (b) Interest Rate. (c) Source of the 20 Year Treasury bond yield. Federal Reserve Bulletin, 2.6.2 Discount Factor. The discount factor corresponding to the weighted average cost of capital for any forecast year is computed according to the following equation: where DF = discount factor R = weighted average cost of capital N = the number of years in the future (e.g., for the applicant applying in 1984, N = for the forecast year 1985). The horizon value, which is described in Section 2.7, is computed as of 1990, the end of the detailed forecast period. The discount factor to be applied to the horizon value is the same as for any other 1990 figure. For example, if the application is made in 1984, the value of N is 7. 2.7 Horizon Value. The horizon value is the present value of a stream of cash flows or net income for 15 years beyond the last forecast year. Applicants must compute the horizon value by capitalizing the average forecast value of the last two forecast years using the current real weighted cost of capital. The line item instructions for schedules having a horizon value entry will specify the values to be capitalized. The applicant averages the values of the last two years after expressing both values in terms of the last year's dollars. The two-year average value is then multiplied by 9.6. This is the factor associated with capitalizing a 15 year value stream at the current real Applicants must use a separate schedule to calculate the horizon value for the Rate of Return Test and the Interim Controls Test (Schedule C.5 and D.7, respectively). These separate schedules adjust for potential overstatements in the horizon value cash flows that may be caused by control equipment depreciation reported for tax purposes. 2.8 Data Entry 2.8.1 Rounding. All amounts (including both dollar values and physical units) reported in the schedules and exhibits accompanying this application must be rounded to the nearest thousand and expressed in thousands of dollars or units unless otherwise indicated in the instructions. 2.8.2 Estimates. Where an applicant's records cannot produce the specific data required by this application, the use of estimates will be allowed if a meaningful estimate can be made without significant distortion of the reported results. Data estimates must be supported by attaching on a separate sheet of paper as a part of Exhibit B an explanation identifying where such estimates are used and showing explicitly how the estimates were made. 2.8.3 Missing Data. Applicants must provide, where applicable, all operating and financial data requested by this application. Only substantially complete applications can be accepted for processing by the Agency. Questions concerning data entries for which information is not provided by or cannot reasonably be estimated from the applicant's existing accounting records should be addressed to the EPA Contact for NSO Inquiries. 2.8.4 Historical Period. The annual data requested in the historical schedules, Schedules A.1 through A.4, must be reported for each of the five fiscal years immediately preceding the year in which this application is filed. The historical period shall be from fiscal years 1979 through 1983 for an NSO application filed in 1984. If an application is filed in a later year, the references in this appendix to the period 1979 through 1983 should be interpreted accordingly. 2.9 Use of schedules. All applicants must complete Schedules A.1 through A.4, which record historical revenues, cost, and capital investment data. These schedules will be used by EPA to assist in evaluating forecast data. Completion of the remaining schedules depends on the test required of the applicant. 2.9.1 NSO Eligibility. An NSO applicant must pass one of the following two tests and complete the corresponding schedules. (a) Profit Protection Test. Schedule B.7 presents the calculations for the Profit Protection Test. The applicant enters the forecast profits from Schedules B.3 and B.6. The present value of the forecast profits is then computed for each case. If the present value of forecast pre-tax profits with constant controls is less than 50 percent of the present value of forecast pre-tax profits without controls (base case) the smelter passes the test and is eligible for an NSO. The smelter also passes the test if the present value of forecast pre-tax profits without controls (base case) is negative. (b) Rate of Return Test. Schedule C.4 presents the calculations for the Rate of Return Test. The applicant reports in Schedule C.4 the forecast cash flows from Schedules C.1 and C.2 and the horizon value from Schedule C.5, computes their present value, and subtracts the value of invested capital in constant dollars (taken from Schedule C.3) to yield net present value. If the net present value is less than zero, the smelter passes the test and is eligible to receive an NSO. This result indicates that the smelter is expected to earn a rate of return less than the industry average cost of capital. 2.9.2 Interim Control Waivers. An applicant for a waiver from interim controls must complete either a portion or all of Schedules D.1 through D.7, depending on whether the application is for a temporary or permanent waiver. (a) Temporary Waiver from Interim Controls Test. 2 (b) Permanent Waiver from Interim Controls Test. 2 2 Schedules D.1 and D.2 report forecast revenue and cost data under each assumption. Schedule D.3 summarizes Schedules D.1 and D.2, and Schedule D.4 reports forecast sustaining capital under each assumption. Schedule D.5 reports cash proceeds from liquidation. Schedule D.6 presents the calculations for the permanent waiver test. In Schedule D.6, the applicant reports cash flow projections from Schedules D.3 and D.4 and the horizon value from Schedule D.7, computes their present value and subtracts the current salvage value (taken from Schedule D.5) to yield net present value. The higher of the two net present value figures computed under the two alternative assumptions must be used in the test. If the higher net present value figure is negative, the applicant is eligible for a permanent waiver. 2.10 Use of exhibits. In addition to data required by the schedules included in this application, the following information must be attached as exhibits. 2.10.1 Exhibit A. Background information on the firm's organizational structure and its associated accounting and financial reporting systems for primary nonferrous activities. This information must include, where applicable, the firm's: (a) Operating association with an ownership control in consolidated subsidiaries, unconsolidated subsidiaries, joint ventures and other affiliated companies. (b) Organizational subdivision of its primary nonferrous activities into profit centers, cost centers and/or related financial reporting entities employed to control the operation of its mines, concentrators, smelters, refineries and other associated facilities. (c) Material and product flows among the smelter subject to this NSO application, other integrated facilities and its affiliated suppliers and/or customers. In the case of integrated facilities, applicants must provide process flow diagrams depicting the operating interrelationships among its mines, concentrators, smelters, refineries and other integrated facilities. For both integrated and nonintegrated facilities, applicants also must describe the proportion contributed to its primary nonferrous activities by material purchases from and product sales to affiliated suppliers and customers. (d) Annual operating capacity over the five most recent fiscal years for the smelter subject to this application. Operating capacity must be defined in terms of the total quantity of throughput that could have been processed with the available facilities after giving appropriate allowance to normal downtime requirements for maintenance and repairs. Operating capacity data also must consider both capacity balancing requirements among processing steps and annual processing yield rates attainable for each facility. (e) Weighted average analysis of concentrates processed and tonnage produced annually over each of the five most recent fiscal years by the smelter subject to this application. (f) Accounting system and policies for recording investment expenditures, operating revenues, operating costs and income taxes associated with its primary nonferrous activities. Applicants also must provide a complete description of allocation techniques employed for assigning investments, revenues, costs and taxes to individual profit, cost of departmental centers for which costs are accumulated. Applicants must further indicate the relationship of cost and/or departmental accounting entities to the firm's established profit centers. (g) Annual five-year operating and capital expenditure plans (or budgets) by individual nonferrous profit center. These documents must include previous plans prepared for the five preceding fiscal years as well as the current one-year and five-year operating and capital expenditure plans. At least the current one-year and five-year plans must provide a specific breakdown of investment expenditures and operating costs associated with the operation and maintenance of each profit center's existing and proposed pollution control facilities. 2.10.2 Exhibit B. Supplemental description and explanation of items appearing in the financial reporting schedules. Other parts of Section 2 and the detailed instructions for the Schedules specify the information required in Exhibit B. 2.10.3 Exhibit C. Financial data documentation. Applicants must document annual balance sheet, income statement and supporting data reported for the firm's preceding five fiscal years or for that portion of the past five years during which the firm engaged in smelter operations. This documentation must be provided by attaching to the application: (a) SEC 10-K reports filed by the parent corporation for each of the preceding five fiscal years. (b) Certified financial statements prepared on a consolidated basis for the parent corporation and its consolidated subsidiaries. This requirement may be omitted for those years in which SEC 10-K reports have been attached to this Exhibit. (c) Business Segment Information reports filed with the Securities and Exchange Commission by the firm for each of the preceding five years (as available). Schedule A.1—Historical Revenue Data General. Lines 01, 14, 27 and 40—Primary Nonferrous Product Sales. Lines 02, 15, 28 and 41—Unaffiliated Customer Sales. Lines 03, 16, 29 and 42—Unaffiliated Customer Revenues. Lines 04, 17, 30 and 43—Unaffiliated Customer Prices. Lines 05, 18, 31 and 44—Average Product Quality Grade. Lines 06, 19, 32 and 45—Affiliated Customers Sales. Lines 07, 20, 33 and 46—Affiliated Customer Revenues. Lines 08, 21, 34 and 47—Affiliated Customer Prices. Lines 09, 22, 35 and 48—Average Product Quality Grade. Lines 10, 23, 36 and 49—Total Primary Product Revenues. Lines 11, 24, 37 and 50—Transfer Price Adjustments. Lines 12, 25, 38 and 51—Other Revenue Adjustments. Lines 13, 26, 39 and 52—Adjusted Product Revenues. Line 53—Primary Metal Revenues. Line 54—Toll Concentrates Processed. Lines 55 to 58—Customer Toll Revenues. Lines 59 to 62—Affiliated Customer Toll Revenues. Line 63—Tolling Service Revenues. Line 64—Transfer Price Adjustments. Line 65—Other Revenue Adjustments. Line 66—Adjusted Tolling Service Revenues. Line 67—Co-Product Revenues. Line 68—Pollution Control By-product Revenues. Line 69—Other By-product Revenues. Line 70—Total Co-product and By-product Revenues. Schedule A.2—Historical Cost Data General. Line 01—Total Quantity Purchased. Line 02—Quantity Purchased. Line 03—Concentrate Cost. Line 04—Average Unit Price. Line 05—Average Concentrate Grade. Line 06—Quantity Purchased. Line 07—Concentrate Cost. Line 08—Average Unit Price. Line 09—Average Concentrate Grade. Line 10—Total Concentrate Cost. Line 11—Transfer Price Adjustments. Line 12—Other Cost Adjustments. Line 13—Adjusted Concentrate Cost. Line 14—Direct Labor Hours. Line 15—Average Hourly Wage Rate. Line 16—Total Wage Payments. Line 17—Supplemental Employee Benefits. Line 18—Total Production Labor Cost. Lines 19, 22, 25, 28 and 31—Energy Quantities. Lines 20, 23, 26, 29 and 32—Unit Prices. Lines 21, 24, 27, 30 and 33—Total Payments. Line 34—Total Energy Costs. Schedule A.3—Historical Profit and Loss Summary General. Line 01—Primary Metal Sales. Line 02—Co-Product and By-Product Sales. Line 03—Tolling Service Revenues. Line 04—Other Operating Revenues. not Royalties, licensing fees and other income from intangibles. Interest and dividend income on portfolio investments. Equity in income (loss) of unconsolidated subsidiaries and affiliates. Gain (loss) from discontinued operations and disposal of property. Minority interest adjustment to consolidated subsidiary income. Extraordinary items. Line 05—Total Operating Revenue. Line 06—Concentrates Processed. Annual value of concentrate purchases classified according to purchases from unaffiliated and affiliated suppliers. Cost of sales adjustments to concentrate purchases for net annual additions to or withdrawals from concentrate inventories, freight-in on concentrate purchases and inventory spoilage. Impact on cost of sales for restating, where applicable, the cost of concentrate purchases from affiliated suppliers to the equivalent prices paid to unaffiliated suppliers. Volumes, grades and net prices of concentrate purchases from unaffiliated and affiliated suppliers by type of concentrate purchased. Volumes, grades and net prices associated with toll concentrates processed by type of concentrate. Line 07—Other Materials Costs. Annual value of material purchases classified according to purchases from unaffiliated and affiliated suppliers. Cost of sales adjustments to material purchases for net annual additions to or withdrawals from material inventories, freight costs on material purchases and inventory loss. Impact on cost of sales for restating, where applicable, the costs of material purchases from affiliated suppliers to equivalent prices paid to unaffiliated suppliers. Classification of other material costs by major cost factors for each cost component that exceeds 20 percent of any line item in the cost of sales schedule. Line 08—Production Labor Costs. Manhours and wage rates for major labor classifications. Potential impact on wage rates of provision in the smelter's current labor contracts. Explanation of major variances observed in direct labor costs over the five-year period as a result of factors such as strikes or new labor contracts. Line 09—Energy Costs. Line 10—Pollution Control Costs. Major pollution control cost elements with their values classified according to direct and indirect cost factors. Techniques used to allocate indirect pollution control costs to major cost pools. Line 11—Production Overhead. Line 12—Other Production Costs. Major cost elements classified according to direct and indirect production costs. Disaggregation of major overhead cost components into their fixed and variable cost elements. Allocation techniques used in assigning indirect overload costs to the major cost components. Elements of overhead costs represented by purchases from affiliated suppliers and adjustments, if any, required to restate these costs on the basis of equivalent prices paid to unaffiliated supplier. Line 13—Total Cost of Sales. Line 14—Gross Operating Profit. Line 15—Selling, General & Administrative (SG&A) Expenses. Line 16—Taxes, Other Than Income Tax. Line 17—Research Costs. Line 18—Pollution Control Depreciation and Amortization. Line 19—Other Facility Depreciation and Amortization. Line 20—Interest on Short-Term Debt. Line 21—Miscellaneous Operating Expenses. Line 22—Total Other Operating Expenses. Line 23—Income from Operations. Line 24—Gain/(Loss) from Disposition of Property. Line 25—Miscellaneous Income and Expenses. Line 26—Total Other Income and Expenses. Line 27—Net Taxable Income. Schedule A.4—Historical Capital Investment Summary General. The amounts assigned to the subject smelter should include both (1) investments and liabilities directly identifiable with the smelter's operating activities and (2) asset investments shared with other segments to the extent that a specific causal and beneficial relationship can be established for the intersegment allocation of such investments. Do not allocate to the smelter the costs of assets maintained for general corporate purposes. Provide a detailed explanation of amounts classified as nontraceable on a separate schedule and attach as part of Exhibit B. Applicants shall also restate trade receivables and payables for transfer price adjustments on the smelter's transactions with affiliated customers. The line items in Schedule A.4 are explained in the following instructions. Line 01—Cash on Hand and Deposit. Line 02—Temporary Cash Investments. Attach as part of Exhibit B a schedule classifying temporary cash investments according to identifiable budgeted expenditure requirements. Lines 03 and 04—Net Trade Receivables. Lines 05 and 06—Inventory Investments. Line 07—Other Current Assets. Line 08—Total Current Assets. Lines 09 to 14—Property, Plant and Equipment. Attach as part of Exhibit B a schedule reporting by individual line item the annual capital expenditures on additional property, plant and equipment investments in the smelter's operations. Further classify these annual capital expenditures into both (1) investments required to maintain the smelter versus investments in smelter expansion and improvement and (2) direct facility versus joint-use facility investments. Explain the method used for allocating capital expenditures on joint-use facilities to the smelter's operations. Refer to Line 17 instructions for additional reporting requirements on the smelter's facility investments. Line 15—Total Smelter Investment. Line 16—Accumulated Depreciation and Amortization. Line 17—Net Smelter Investment. Line 18—Other Non-Current Assets. Line 19—Total Smelter Capital Investment. Line 20 and 21—Trade Accounts and Notes Payable. Line 22—Other Expense Accruals. Line 23—Current Notes Payable. Line 24—Other Current Liabilities. Line 25—Total Current Liabilities. Line 26—Net Smelter Capital Investment. Schedule B.1—Pre-Control Revenue Forecast General. Use Schedule B.1 to report annual forecasts of operating revenues anticipated during the years 1984 through 1990 from operation of the smelter subject to this NSO application. These pre-control revenue projections should be based on revenues and production associated with operating the smelter without any SO 2 Copper smelters that will process concentrates containing an average of 1,000 pounds per hour or more of arsenic during the forecast period should assume that they will use best engineering techniques to control fugitive emissions of arsenic. All smelters should also assume that they will be required to meet all other regulatory requirements in effect at the time the application is made. The line items in Schedule B.1 are explained in the following instructions. Attach as part of Exhibit B schedules to (1) explain the methods used to make the required forecasts, (2) explain differences, if any, between historical trends and the forecasts and (3) provide data and information to support the forecasts. Lines 01 and 05—Concentrates Processed. Lines 02 and 06—Smelting Charge. Lines 03 and 07—Total Smelter Revenues. Lines 04 and 08—Average Product Grade. Line 09—Total Co-Product Revenues. Line 10—Total By-product Revenues From Pollution Control Facilities. 2 Line 11—Total By-product Revenues From Other Smelter Processing. Line 12—Total Co-product and By-product Revenues. Schedule B.2—Pre-Control Cost Forecast General. 2 Copper smelters that will process concentrates containing an average of 1,000 pounds per hour or more of arsenic during the forecast period should assume that they will use best engineering techniques to control fugitive emissions of arsenic. All smelters should also assume that they will be required to meet all other regulatory requirements in effect at the time the application is made. The line items in Schedule B.2 are explained in the following instructions. Attach as part of Exhibit B schedules to (1) explain the methods used to make the required forecasts, (2) explain differences, if any, between historical trends and the forecasts, and (3) provide data and information to support the forecasts. Line 01—Direct Labor Hours. Line 02—Average Hourly Wage Rate. Line 03—Total Wage Payments. Line 04—Supplemental Employee Benefits. Line 05—Total Production Labor Cost. Lines 06, 09, 12, 15 and 18—Energy Quantities. Lines 07, 10, 13, 16, and 19—Unit Prices. Lines 08, 11, 14, 17, and 20—Total Payments. Line 21—Total Energy Costs. Schedule B.3—Pre-Control Forecast Profit and Loss Summary General. Line 01—Smelter Revenues-Unaffiliated Parties. Line 02—Smelter Revenues-Affiliated Parties. Line 03—Co-product and By-product Sales Revenues. Line 04—Other Operating Revenues. Line 05—Total Operating Revenues. Line 06—Material Costs. Line 07—Production Labor Costs. Line 08—Energy Costs. Line 09—Pollution Control Costs. Line 10—Production Overhead Costs. Line 11—Other Production Costs. Line 12—Total Cost of Sales. Line 13—Gross Operating Profit. Line 14—Selling, General and Administrative Expenses. Line 15—Taxes, Other than Income Taxes. Line 16—Research Costs. Line 17—Pollution Control Facility Depreciation and Amortization. 2 Line 18—Other Smelter Facility Depreciation and Amortization. Line 19—Interests. Line 20—Miscellaneous Operating Expenses. Line 21—Total Other Operating Expenses. Line 22—Income From Operations. Schedule B.4—Constant Controls Revenue Forecast General. The assumed investment program should be based on whichever adequately demonstrated system, applicable to the smelter, that would be most economically beneficial subsequent to installation of the system. For this purpose, adequately demonstrated systems include those specified in Section 57.102(b)(1). Copper smelters that will process concentrates containing an average of 1,000 pounds per hour or more of arsenic during the forecast period should assume that they will use best engineering techniques to control fugitive emissions of arsenic. All smelters should also assume that they will be required to meet all other regulatory requirements in effect at the time the application is made. The line items in Schedule B.4 are explained in the following instructions. Attach as part of Exhibit B schedules to (1) explain the methods used to make the required forecasts, (2) explain differences, if any, between historical trends and the forecasts, and (3) provide data and information to support the forecasts. Lines 01 and 05—Concentrates Processed. Lines 02 and 06—Smelting Charge. Lines 03 and 07—Total Smelter Revenues. Lines 04 and 08—Average Product Grade. Line 09—Total Co-Product Revenues. Line 10—Total By-product Revenues From Pollution Control Facilities. Line 11—Total By-product Revenues From Other Smelter Processing. Line 12—Total Co-product and By-product Revenues. Schedule B.5—Constant Controls Cost Forecast General. The assumed investment program should be based on whichever adequately demonstrated system, applicable to the smelter, would be most economically beneficial subsequent to installation of the system. For this purpose, adequately demonstrated systems include those specified in § 57.102(b)(1). Copper smelters that will process concentrates containing an average of 1,000 pounds per hour or more of arsenic during the forecast period should assume that they will use best engineering techniques to control fugitive emissions of arsenic. All smelters should also assume that they will be required to meet all other regulatory requirements in effect at the time the application is made. The line items in Schedule B.5 are explained in the following instructions. Attach as part of Exhibit B schedules to (1) explain the methods used to make the required forecasts, (2) explain differences, if any, between historical trends and the forecasts, and (3) provide data and information to support the forecasts. Line 01—Direct Labor Hours. Line 02—Average Hourly Wage Rate. Line 03—Total Wage Payments. Line 04—Supplemental Employee Benefits. Lines 05—Total Production Labor Cost. Lines 06, 09, 12, 15 and 18—Energy Quantities. Lines 07, 10, 13, 16, and 19—Unit Prices. Lines 08, 11, 14, 17, and 20—Total Payments. Lines 21—Total Energy Costs. Schedule B.6—Constant Controls Forecast Profit and Loss Summary for the Profit Protection Test General. Line 01—Smelter Revenues-Unaffiliated Parties. Line 02—Smelter Revenues-Affiliated Parties. Line 03—Co-product and By-product Sales Revenues. Line 04—Other Operating Revenues. Line 05—Total Operating Revenues. Line 06—Material Costs. Line 07—Production Labor Costs. Line 08—Energy Costs. Line 09—Pollution Control Costs. Line 10—Production Overhead Costs. Line 11—Other Production Costs. Line 12—Total Cost of Sales. Line 13—Gross Operating Profit. Line 14—Selling, General and Administrative Expenses. Line 15—Taxes, Other than Income Taxes. Line 16—Research Costs. Line 17—Pollution Control Facility Depreciation and Amortization. Line 18—Other Smelter Facility Depreciation and Amortization. Line 19—Interest. Line 20—Miscellaneous Operating Expenses. Line 21—Total Other Operating Expenses. Line 22—Income From Operations. Schedule B.7—Profit Protection Test General. Line 01—Net Income from Operations. Line 02—Discount Factors. Line 03—Present Value of Future Net Income. Line 04—Horizon Value. Line 05—Discount Factor. Line 06—Present Value of Horizon Value. Line 07—Present Value of Future Net Income. Line 08—Total Present Value. Line 09—Net Income from Operations. Line 10—Discount Factors. Line 11—Present Value of Future Net Income. Line 12—Horizon Value. Line 13—Discount Factor. Line 14—Present Value of Horizon Value. Line 15—Present Value of Future Net Income. Line 16—Total Present Value. Line 17—Ratio for Total Present Value of Constant Controls Case to Total Present Value of Pre-Control Case. Schedule C.1—Constant Controls Forecast Profit and Loss Summary for the Rate of Return Test General. Line 01—Smelter Revenues-Unaffiliated Parties. Line 02—Smelter Revenues-Affiliated Parties. Line 03—Co-product and By-product Sales Revenues. Line 04—Other Operating Revenues. Line 05—Total Operating Revenues. Line 06—Material Costs. Line 07—Production Labor Costs. Line 08—Energy Costs. Line 09—Pollution Control Costs. Line 10—Production Overhead Costs. Line 11—Other Production Costs. Line 12—Total Cost of Sales. Line 13—Gross Operating Profit. Line 14—Selling, General and Administrative Expenses. Line 15—Taxes, Other than Income Taxes. Line 16—Research Costs. Line 17—Pollution Control Facility Depreciation and Amortization. Line 18—Other Smelter Facility Depreciation and Amortization. Line 19—Interest on Short-Term Debt. Line 20—Miscellaneous Operating Expenses. Line 21—Total Other Operating Expenses. Line 22—Income From Operations. Line 23—Income Taxes. Line 24—Net Income From Operations. Schedule C.2—Constant Controls Sustaining Capital Investment Forecast General. 2 Estimates of sustaining capital shall be compatible with productive capacity and pollution control requirements underlying the operating revenue and cost forecasts incorporated in Schedule C.1. Lines 01 to 06—Sustaining Capital. Attach as part of Exhibit B an explanatory schedule disclosing and supporting by individual line item the major elements of annual capital expenditures for sustaining capital. Further classify these annual capital expenditures into both (1) investments required to maintain the smelter versus investments in smelter expansion and improvements and (2) direct facility versus joint-use facility investments. Explain the method used for allocating capital expenditures on joint-use facilities to the smelter's operations. Line 07—Total Smelter Sustaining Capital. Schedule C.3—Historical Capital Investment In Constant Dollars General. Applicants should complete Schedule C.3 according to the following instructions. Transfer into the first column of Schedule C.3 the historical cost figures that are reported in the last (1983) column of Table A.4. In the second column of Schedule C.3, report the figures from the first column of Schedule C.3, expressed in constant (1984) dollars. Convert each nominal dollar figure of the first column into constant (1984) dollars in accordance with the historical cost/constant dollar accounting method defined in Financial Accounting Standards Board (FASB) Statement No. 33 (Docket Item No. IV-A-6d), with the following exception: the applicant must not report the lower recoverable amount as required by FASB No. 33. Attach explanatory supporting schedules as part of Exhibit B. Schedule C.4—Rate of Return Test General. Line 01—Net Income from Operations. Lines 02 and 03—Depreciation and Amortization. Line 04—Operating Cash Flow. Line 05—Constant Controls Capital Investment. Line 06—Sustaining Capital. Line 07—Total. Line 08—Net Cash Flow Projections. Line 09—Discount Factors. Line 10—Present Value of Future Cash Flows. Line 11—Horizon Value. Line 12—Discount Factor. Line 13—Present Value of Horizon Value. Line 14—Present Value of Future Cash Flows. Line 15—Total Present Value. Line 16—Net Smelter Capital Investment in Constant Dollars. Line 17—Net Present Value. Schedule C.5—Horizon Value of Cash Flows for the Rate of Return Test General. In Schedule C.5, the applicant removes the tax savings of constant controls depreciation from the cash flows for the last two forecast years. A depreciation-free horizon value is then calculated from these depreciation-free cash flows. The tax savings of constant controls depreciation during the horizon years are then calculated separately. The final horizon value is equal to the sum of the depreciation-free horizon value and the tax savings from depreciation of constant controls accruing over the horizon years. The line items in Schedule C.5 are explained in the following instructions. Line 01—Net Cash Flow Projections. Line 02—Depreciation and Amortization. Line 03—Marginal Tax Rate. Line 04—Tax Savings. Line 05—Nominal Dollar Values. Line 06—1990 Dollar Values. Line 07—Average. Line 08—Horizon Factor. Line 09—Depreciation-free Horizon Value. Line 10—Depreciation and Amortization. Line 11—Marginal Tax Rate. Line 12—Tax Savings. Line 13—Discount Factors. counting from the last forecast year. Line 14—Present Value of Tax Savings. Line 15—Total Present Value of Tax Savings. Line 16—Horizon Value. Schedule D.1—Interim Controls Revenue Forecast General. 2 2 Forecast smelter revenues should be expressed on a tolling service equivalent basis as described in Section 2.3.4. The line items in Schedule D.1 are explained in the following instructions. Attach as part of Exhibit B schedules to (1) explain the methods used to make the required forecasts, (2) explain differences, if any, between historical trends and the forecasts, and (3) provide data and information to support the forecasts. Lines 01 and 05—Concentrates Processed. Lines 02 and 06—Smelting Charge. Lines 03 and 07—Total Smelter Revenues. Lines 04 and 08—Average Product Grade. Line 09—Total Co-Product Revenues. Line 10—Total By-product Revenues From Pollution Control Facilities. Line 11—Total By-product Revenues From Other Smelter Processing. Line 12—Total Co-product and By-product Revenues. Schedule D.2—Interim Controls Cost Forecast General. 2 2 The line items in Schedule D.2 are explained in the following instructions. Attach as part of Exhibit B schedules to (1) explain the methods used to make the required forecasts, (2) explain differences, if any, between historical trends and the forecasts, and (3) provide data and information to support the forecasts. Line 01—Direct Labor Hours. Line 02—Average Hourly Wage Rate. Line 03—Total Wage Payments. Line 04—Supplemental Employee Benefits. Line 05—Total Production Labor Costs. Lines 06, 09, 12, 15, and 18—Energy Quantities. Lines 07, 10, 13, 16, and 19—Unit Prices. Lines 08, 11, 14, 17, and 20—Total Payments. Line 21—Total Energy Costs. Schedule D.3—Interim Controls Forecast Profit and Loss Summary General. Line 01—Smelter Revenues—Unaffiliated Parties. Line 02—Smelter Revenues-Affiliated Parties. Line 03—Co-product and By-product Sales Revenues. Line 04—Other Operating Revenues. Line 05—Total Operating Revenues. Line 06—Material Costs. Line 07—Production Labor Costs. Line 08—Energy Costs. Line 09—Pollution Control Costs. Line 10—Production Overhead Costs. Line 11—Other Production Costs. Line 12—Total Cost of Sales. Line 13—Gross Operating Profit. Line 14—Selling, General and Administrative Expenses. Line 15—Taxes, Other than Income Taxes. Line 16—Research Costs. Line 17—Pollution Control Facility Depreciation and Amortization. Line 18—Other Smelter Facility Depreciation and Amortization. Line 19—Interest on Short-Term Debt. Line 20—Miscellaneous Operating Expenses. Line 21—Total Other Operating Expenses. Line 22—Income From Operations. Line 23—Income Taxes. Line 24—Net Income From Operations. The temporary waiver from interim controls test is on Line 13 of Schedule D.3 that was completed under the assumption of installation of interim constant control equipment and no installation of any additional SO 2 Schedule D.4—Interim Controls Sustaining Capital Investment Forecast General. 2 2 Major elements of these outlays should be disclosed, as well as the total of such outlays. Estimates shall be restricted to those items that will be capitalized for tax purposes. These outlays shall primarily be for plant replacement, although outlays for improvements and expansion may be included to the extent that improvements and/or expansion, exclusive of required pollution control outlays, can be justified as economically feasible. Estimates of sustaining capital investments shall exclude any incremental investment for sulfur dioxide emission controls reported in Line 06 of Schedule D.6. Sustaining capital investments in facilities shared with other operating segments shall be allocated in accordance with the instructions given below. Estimates of sustaining capital shall be compatible with productive capacity and pollution control requirements underlying the operating revenue and cost forecasts incorporated in Schedule D.3. Line 01 to 06—Sustaining Capital. Attach as part of Exhibit B an explanatory schedule disclosing and supporting by individual line item the major elements of annual capital expenditures for sustaining capital. Further classify these annual capital expenditures into both (1) investments required to maintain the smelter versus investments in smelter expansion and improvements and (2) direct facility versus joint-use facility investments. Explain the method used for allocating capital expenditures on joint-use facilities to the smelter's operations. Line 07—Total Smelter Sustaining Capital. Schedule D.5—Cash Proceeds From Liquidation General. The applicant must stipulate the most advantageous alternative market (use) for the smelter's facilities. Generally, this market will be: Secondary market for used plant and equipment. Sale for scrap. Abandonment where the disposal cost exceeds scrap value. The current net salvage value should be disaggregated into the same property, plant and equipment asset groups reported under the historical capital investment summary, Schedule A.4. The line items in Schedule D.5 are explained in the following instructions. Line 01—Current Assets. Lines 02-07—Property Plant and Equipment. In Column 2, report the net book value of these assets for which liquidation values have been reported in Column 1. The reported values should correspond with amounts reported for 1982 in lines 09 through 15 in Schedule A.4 as adjusted for appropriate eliminations of joint-use facilities and reconciliation to a net book value as reported for income taxes. Attach as part of Exhibit B supporting schedules showing all adjustments and conversion of the net book value as reported on the financial statements, to net book value that would be used for income tax purposes. Compute Column 3 as Column 1 less Column 2. The gain (or loss) shown in Column 3 shall be segregated into ordinary income and capital gains components subject to taxation pursuant to applicable income tax rules. Enter ordinary income in Column 4 and capital gains in Column 5. Line 08—Total Smelter Investment. Line 09—Other Non-current Assets. In Column 2, report the net book value of the non-current assets directly corresponding to those assets included in the liquidation value estimated under Column 1. The remaining columns shall be completed in accordance with the instructions given above for Lines 02 and 06. Line 10—Total Smelter Value. Line 11—Total Current Liabilities. Line 12—Gross Liquidation Value. Line 13—Liquidation Costs. Line 14—Taxable Gain (or Loss). Line 15—Income Tax Rate. Line 16—Income Tax on Gain (or Loss). Line 17—After Tax Cash Proceeds. Schedule D.6—Permanent Waiver from Interim Controls Test General. 2 2 Line 01—Net Income from Operations. Line 02—Net Income Adjustments. Lines 03 and 04—Depreciation and Amortization. Line 05—Operating Cash Flow. Line 06—Pollution Controls Capital Investment. General 2 2 Line 07—Sustaining Capital. Line 08—Total. Line 09—Net Cash Flow Projections. Line 10—Discount Factors. Line 11—Present Value of Future Cash Flows. Line 12—Horizon Value. Line 13—Discount Factor. Line 14—Present Value of Horizon Value. Line 15—Present Value of Future Cash Flows. Line 16—Total Present Value. Line 17—Current Salvage Value. Line 18—Net Present Value. Schedule D.7—Horizon Value of Cash Flows for the Interim Controls Test General. In Schedule D.7, the applicant removes the tax savings of control equipment depreciation from the cash flows for the last two forecast years. A depreciation-free horizon value is then calculated from these depreciation-free cash flows. The tax savings of constant controls depreciation during the horizon years are then calculated separately. The final horizon value is equal to the sum of the depreciation-free horizon value and the tax savings from depreciation of constant controls accruing over the horizon years. The line items in Schedule D.7 are explained in the following instruction. Line 01—Net Cash Flow Projections. Line 02—Depreciation and Amortization. Line 03—Marginal Tax Rate. Line 04—Tax Savings. Line 05—Nominal Dollar Values. Line 06—1990 Dollar Values. Line 07—Average. Line 08—Horizon Factor. Line 09—Depreciation-free Horizon Value. Line 10—Depreciation and Amortization. Line 11—Marginal Tax Rate. Line 12—Tax Savings. Line 13—Discount Factors. counting from the last forecast year. Line 14—Present Value of Tax Savings. Line 15—Total Present Value of Tax Savings. Line 16—Horizon Value. Environmental Protection Agency Primary Nonferrous Smelter Order Application Part I—Identification Information 1. Firm name 2. Street/Box/RFD 3. City 4. State 5. Zip Code 6. IRS Employer Identification No. 7. SEC 1934 Act Registration No. 8. Smelter Name 9. Street/Box/RFD 10. City 11. State 12. Zip Code 13. Contact Person 14. Title 15. Street/Box/RFD 16. City 17. State 18. Zip Code 19. Telephone Part II—Certification I certify that the information provided herein and appended hereto is true and accurate to the best of my knowledge. I understand that this information is being required, in part, under the authority of Section 114 of the Clean Air Act, 42 U.S.C. 7414. Name Title Signature Date 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: a. Quantity sold 15 b. Operating revenue 16 c. Average unit price 17 d. Average product grade 18 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: a. Quantity sold 28 b. Operating revenue 29 c. Average unit price 30 d. Average product grade 31 3. Affiliated customer sales: a. Quantity sold 32 b. Operating revenue 33 c. Average unit price 34 d. Average product grade 35 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: a. Quantity sold 41 b. Operating revenue 42 c. Average unit price 43 d. Average product grade 44 3. Affiliated customer sales: a. Quantity sold 45 b. Operating revenue 46 c. Average unit price 47 d. Average product grade 48 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 revenues 52 E. Primary metal revenues 53 F. Tolling service revenues: 1. Total toll concentrates processed 54 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 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 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 parties: 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 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 expenses 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 A. Forecast smelter revenues—unaffiliated parties: 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.5—Constant Controls 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 Schedule B.6—Constant Controls Profit and Loss Summary for the Profit Protection Test [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 expenses 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.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 XXXX 2. Discount factors 02 XXXX 3. Present value of future net income 03 XXXX 4. 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 income 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 2. Discount factors 10 XXXX 3. Present value of future net income 11 XXXX 4. 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 income 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 constant controls case to total, present value of base case 17 XXXX XXXX XXXX XXXX XXXX XXXX XXXX Schedule C.1—Constant Controls Profit and Loss Summary for the Rate of Return Test [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 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 expenses 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 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 Schedule C.3—Historical Capital Investment in Constant Dollars [Smelter identification] Items from 1983 balance sheet Line Nominal dollars Constant dollars 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 XXXX 2. Depreciation and amortization: a. Pollution control facilities 02 XXXX b. Other smelter facilities 03 XXXX 3. Operating cash flow 04 XXXX 4. Capital expenditure projections: a. Constant controls 05 XXXX b. Sustaining capital 06 XXXX c. Total 07 XXXX 5. Net cash flow projections 08 XXXX 6. Discount factors 09 XXXX 7. Present value of future cash flows 10 XXXX B. 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 Schedule C.5—Horizon Value of Cash Flows [Smelter identification] Line Final forecast years 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 XXXX 2. Depreciation tax savings: a. Depreciation and amortization 02 XXXX XXXX XXXX XXXX XXXX XXXX b. Marginal tax rate 03 XXXX XXXX XXXX XXXX XXXX XXXX c. Tax savings 04 XXXX XXXX XXXX XXXX XXXX XXXX 3. Depreciation-free net cash flows: a. Nominal dollar values 05 XXXX XXXX XXXX XXXX XXXX XXXX b. 1990 dollar values 06 XXXX XXXX XXXX XXXX XXXX XXXX c. 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 the horizon period: 1. Depreciation and amortization 10 XXXX XXXX XXXX 2. Marginal tax rate 11 XXXX XXXX XXXX 3. Tax savings 12 XXXX XXXX XXXX 4. Discount factors 13 XXXX XXXX XXXX 5. Present value of tax savings 14 XXXX XXXX XXXX 6. Total present value of tax savings 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 A. Forecast smelter revenues—unaffiliated parties: 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 D.2—Interim Controls 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 18 c. Total payments 20 6. Total energy costs 21 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 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 expenses 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 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 Schedule D.5—Cash Proceeds From Liquidation [Smelter identification] Line (1) Estimated Liquidation value (2) Reported net book value (3) Total gain (loss) Gain (loss) subject to taxation as— (4) Ordinary income (5) Capital gain A. Total current assets 01 XXXXX XXXXX XXXXX B. 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 XXXXX F. Gross liquidation value 12 G. Liquidation costs 13 XXXXX XXXXX H. 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 XXXX 2. Net income adjustments 02 XXXX 3. Depreciation and amortization: a. Pollution control facilities 03 XXXX b. Other smelter facilities 04 XXXX 4. Operating cash flow 05 XXXX 5. Capital expenditure projections: a. Interim controls 06 XXXX b. Sustaining capital 07 XXXX c. Total 08 XXXX 6. Net cash flow projections 09 XXXX 7. Discount factors 10 XXXX 8. Present value of future cash flows 11 XXXX B. 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 forecast years 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 XXXX 2. Depreciation tax savings: a. Depreciation and amortization 02 XXXX XXXX XXXX XXXX XXXX XXXX b. Marginal tax rate 03 XXXX XXXX XXXX XXXX XXXX XXXX c. Tax savings 04 XXXX XXXX XXXX XXXX XXXX XXXX 3. Depreciation-free net cash flows: a. Nominal dollar values 05 XXXX XXXX XXXX XXXX XXXX XXXX b. 1990 dollar values 06 XXXX XXXX XXXX XXXX XXXX XXXX c. 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 the horizon period: 1. Depreciation and amortization 10 XXXX XXXX XXXX 2. Marginal tax rate 11 XXXX XXXX XXXX 3. Tax savings 12 XXXX XXXX XXXX 4. Discount factors 13 XXXX XXXX XXXX 5. Present value of tax savings 14 XXXX XXXX XXXX 6. Total present value of tax savings 15 XXXX XXXX XXXX XXXX XXXX XXXX XXXX C. Horizon Value 16 XXXX XXXX XXXX XXXX XXXX XXXX XXXX

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