**P E R M I T TO O P E R A T E**

**Number: [113-7 ]{.underline}**

**FACILITY OWNER-OPERATOR:**

Dynegy Morro Bay LLC

> 1290 Embarcadero Road
>
> Morro Bay, California 93443

**FACILITY LOCATION:**

> Morro Bay Power Plant
>
> 1290 Embarcadero Road

Morro Bay, California

**FOR THE EQUIPMENT LISTED HEREIN AND SUBJECT TO THE LISTED CONDITIONS**

[September 30, 2008]{.underline} [March 31, 2013]{.underline}

**ISSUANCE DATE** **ANNIVERSARY**

#### LARRY R. ALLEN

**Air Pollution Control Officer**

# GARY E. WILLEY

# Engineering Supervisor

Application Number: 4492

Table of Contents

Conventions and Abbreviations iv

I. Specific Emission and Operational Limits 1

II\. Facility Description

> A. General 2
>
> B. Specific Equipment 2
>
> C. Insignificant Equipment 5

III\. Conditions

> A. Standard 6
>
> 1\. Generally Applicable Requirements
>
> 2\. Compliance with Permit Conditions
>
> 3\. Emergency Provisions
>
> 4\. Compliance Plan
>
> 5\. Right of Entry
>
> 6\. Severability
>
> 7\. Circumvention
>
> 8\. Permit Life
>
> 9\. Payment of fees

B. Specific Recordkeeping, Inspection, and Reporting

> 1\. Recordkeeping 11
>
> a\. For all four main boiler units
>
> b\. For certified emission monitoring systems
>
> c\. For SO~2~ emission fuel flow meters
>
> d\. For each main boiler unit
>
> e\. Thinners for metal surface coatings
>
> f\. Thinners for architectural coatings
>
> g\. Standby diesel engine systems
>
> 2\. Files to be Maintained 13
>
> 3\. Inspections, calibrations, and sampling 14
>
> a\. Performance criteria
>
> b\. Daily
>
> c\. Quarterly
>
> d\. Annually
>
> 4\. Unusual operating conditions 15
>
> a\. CEM Recertification
>
> b\. Reports of violations
>
> c\. Monitoring equipment breakdown or shutdown
>
> d\. Deviations from requirements
>
> e\. Asbestos stripping or removal
>
> f\. Unavailable unit
>
> 5\. Reporting 16
>
> a\. Quarterly
>
> b\. Semi-annually
>
> c\. Annually
>
> d\. Annual predicted asbestos renovations
>
> C. Emissions Monitoring Program 18
>
> 1\. Continuous Emissions Monitoring
>
> 2\. Changes to Monitoring Plans
>
> 3\. Fuel Flow Instruments
>
> D. Compliance Testing 19
>
> 1\. Annual Compliance Testing and Equipment Calibration
>
> 2\. Test Methods
>
> E. Specific to Each Process 20
>
> F. Permit Shield 22
>
> 1\. NO~x~ and CO~2~ monitoring

IV\. Compliance Determination Fees 22

V. Acid Rain Provisions 23

**Conventions and Abbreviations**

A. The following referencing conventions are used in this permit.

> 1\. The reference for each requirement will be noted in \[square
> brackets\]. References which are noted as being "District-only" are
> not federally-enforceable requirements. All conditions with references
> in \[square brackets\] that do not contain the phrase "District-only"
> must be considered federally-enforceable requirements.
>
> 2\. Notations at the beginning or end of a multi-part requirement
> shall apply to the entire requirement unless specific parts are
> otherwise referenced.
>
> 3\. Unless otherwise noted, a "day" shall be considered a 24 hour
> period from midnight to midnight (i.e., calendar day).
>
> 4\. The number of values displayed for any given emission or
> operational limit in this permit is intended to represent the number
> of significant figures to which test or analysis results are to be
> rounded. e.g., 2,000 ppm is intended to represent 2.000E3 ppm and any
> test result greater than 2,000.5 ppm would not comply with that limit.
>
> 5\. When rounding test and analysis results or recorded and reported
> values to the correct number of significant figures, any rounding of
> the value \"five (5)\" should result in an even number. e.g., 34.65 to
> three significant figures would be written 34.6. Also when rounding,
> if the final digit is 0, 1, 2, 3, or 4, the number does not change
> and, if the final digit is 6, 7, 8, or 9, the number is increased by
> one.
>
> 6\. Federal regulation subpart references will typically be indicated
> by their subpart designation only. References to regulation appendices
> will be as follows: 40CFR60.App F.4.1 will be used for section 4.1 of
> Appendix F to 40CFR60. The title of all subparts included here are as
> follows:
>
> 40CFR60, [Standards of Performance for New Stationary
> Sources]{.underline} (NSPS)
>
> 40CFR60 Appendix F, [Quality Assurance Procedures]{.underline}
>
> 40CFR61, [National Emission Standards for Hazardous Air
> Pollutants]{.underline} (NESHAPS)
>
> 40CFR61 Subpart M, [National Emission Standards for
> Asbestos]{.underline}
>
> 40CFR72, [Permits Regulation]{.underline} (Acid Rain Program)
>
> 40CFR73, [Sulfur Dioxide Allowance System]{.underline}
>
> 40CFR75, [Continuous Emission Monitoring]{.underline}
>
> 40CFR75 Subpart D, [Missing Data Substitution Procedures]{.underline}
>
> 40CFR75 Appendix B, [Quality Assurance and Quality Control
> Procedures]{.underline}
>
> 40CFR75 Appendix C, [Missing Data Estimating Procedures]{.underline}
>
> 40CFR75 Appendix D, [Optional SO~2~ Emissions Data
> Protocol]{.underline}
>
> 40CFR75 Appendix F, [Conversion Procedures]{.underline}
>
> 40CFR75 Appendix G, [Determination of CO~2~ Emissions]{.underline}
>
> 7\. District Rule numbers only, will be used for the most part in this
> permit. The titles of all rules referenced are as follows:
>
> SIP Rule 106, [Standard Conditions]{.underline}
>
> SIP Regulation IV, Rule 111, [Nuisance]{.underline} (abbreviated SIP
> Rule IV.111) (SIP Rule 111 is slightly different from District Rule
> 402)
>
> SIP Regulation I, Rule 113, [Continuous Emissions
> Monitoring]{.underline} (abbr. SIP Rule I.113)
>
> SIP Regulation IV, Rule 113, [Particulate Matter]{.underline} (abbr.
> SIP Rule IV.113)
>
> SIP Rule 114, [Gaseous Contaminants Prohibitions]{.underline}
>
> SIP Rule 201.E, [Posting of Permit to Operate]{.underline}
>
> Rule 204, [Requirements]{.underline} (a.k.a. New Source Review)
>
> Rule 206, [Conditional Approval]{.underline}
>
> Rule 210, [Periodic Inspection, Testing and Renewal of Permits to
> Operate]{.underline}
>
> Rule 216, [Federal Part 70 Permits]{.underline}
>
> Rule 217, [Federal Part 72 Permits]{.underline}
>
> Rule 302, [Schedule of Fees]{.underline}
>
> SIP Rule 401, [Visible Emissions]{.underline}
>
> Rule 402, [Nuisance]{.underline}
>
> Rule 403, [Particulate Matter Emission Standards]{.underline}
>
> SIP Rule 404, [Sulfur Compounds Emission Standards, Limitations and
> Prohibitions]{.underline}
>
> SIP Rule 405, [Nitrogen Oxides Emission Standards, Limitations and
> Prohibitions]{.underline}
>
> SIP Rule 406, [Carbon Monoxide Emission Standards and
> Limitations]{.underline}
>
> SIP Rule 407, [Organic Material Emission Standards, Limitations and
> Prohibitions]{.underline}
>
> Rule 407, [Organic Material Emission Standards]{.underline}
>
> Rule 411, [Surface Coating of Metal Parts and Products]{.underline}
>
> Rule 425, [Storage of Volatile Organic Compounds]{.underline}
>
> Rule 429, [Oxides of Nitrogen and Carbon Monoxide from Electric Power
> Generation]{.underline}
>
> [Boilers]{.underline}
>
> Rule 430, [Control of Oxides of Nitrogen from Industrial,
> Institutional, Commercial]{.underline}

[Boilers, Steam Generators, and Process Heaters]{.underline}

Rule 433, [Architectural Coatings]{.underline}

> 8\. An "unavailable unit" shall be considered to be a boiler-steam
> turbine unit that has been withdrawn from the California Independent
> System Operator's list of dispatchable units, has been reported to the
> APCO as an unavailable unit and that is not operated.

B. Abbreviations used in this permit are as follows:

40CFR Chapter 40 to the Code of Federal Regulations

> APCO Air Pollution Control Officer

CCR California Code of Regulations

CEMS continuous emissions monitoring system

CO carbon monoxide

> CO~2~ carbon dioxide
>
> District San Luis Obispo County Air Pollution Control District
>
> g/o greater of
>
> gr/dscf grains per dry standard cubic foot

H&SC California Health and Safety Code

lb/hr pounds per hour

lb/mmBtu pounds per million British thermal units

> MBPP Morro Bay Power Plant
>
> MW Megawatt electric
>
> MWge gross Megawatt electrical
>
> NH~3~ ammonia
>
> NMOC non-methane organic compounds
>
> NO~x~ oxides of nitrogen

NO~2~ nitrogen dioxide

O~2~ oxygen

PM10 particulate matter less than 10 microns

> ppmv parts per million by volume
>
> QA quality assurance
>
> RATA Relative Accuracy Test Audit
>
> RVP Reid vapor pressure
>
> scfh standard cubic feet per hour
>
> SIC Standard Industrial Classification

SIP State of California Implementation Plan

SO~x~ oxides of sulfur

SO~2~ sulfur dioxide

> TPH total petroleum hydrocarbons
>
> tpy tons per year

TVP true vapor pressure

> VOC volatile organic compounds

**I. Specific Emission and Operational Limits**

**A. Emission Limits.** The following emission limits shall apply to the
identified units.

+--------+---+----+---+----------+-----------+-----------------------+
| **     | * |    |   |          | **Com     | **Notes**             |
| Unit** | * |    |   |          | pliance** |                       |
|        | L |    |   |          |           |                       |
|        | i |    |   |          |           |                       |
|        | m |    |   |          |           |                       |
|        | i |    |   |          |           |                       |
|        | t |    |   |          |           |                       |
|        | * |    |   |          |           |                       |
|        | * |    |   |          |           |                       |
+--------+---+----+---+----------+-----------+-----------------------+
| B      | 1 | N  | g | 150 ppmv | c         | notes (a), (b), & (c) |
| oilers | \ | O~ | a |          | ontinuous | \[District-           |
| 1 and  | . | x~ | s |          | emissions |                       |
| 2      |   |    |   |          | m         | only, Rule 429.D.1\]  |
|        |   |    |   |          | onitoring |                       |
+--------+---+----+---+----------+-----------+-----------------------+
| B      | 2 | N  | g | 56 ppmv  |           |                       |
| oilers |   | O~ | a |          |           |                       |
| 3 and  |   | x~ | s |          |           |                       |
| 4      |   |    |   |          |           |                       |
+--------+---+----+---+----------+-----------+-----------------------+
|        | 3 | N  | g | 225 ppmv |           | note (c)              |
|        | \ | O~ | a |          |           |                       |
|        | . | x~ | s |          |           | corrected to three    |
|        |   |    |   |          |           | percent oxygen \[SIP  |
|        |   |    |   |          |           | Rule 405.A.1\]        |
+--------+---+----+---+----------+-----------+-----------------------+
| B      | 4 | CO |   | 1,000    |           | notes (a) (b), & (c)  |
| oilers | \ |    |   | ppmv     |           | \[District-only, Rule |
| 1,     | . |    |   |          |           | 429.D.2\]             |
| 2,3,&4 |   |    |   |          |           |                       |
+--------+---+----+---+----------+-----------+-----------------------+
|        | 5 |    |   | 2,000    | c         | note (c)              |
|        | \ |    |   | ppmv     | ontinuous |                       |
|        | . |    |   |          | emissions | dry basis,            |
|        |   |    |   |          | m         | intentional           |
|        |   |    |   |          | onitoring | duplication of        |
|        |   |    |   |          |           | condition III.A.1.e   |
|        |   |    |   |          |           | \[SIP Rule 406.A\]    |
+--------+---+----+---+----------+-----------+-----------------------+
|        | 6 | N  |   | 10 ppmv  | annual    | notes (a), (b) & (c)  |
|        | \ | H~ |   |          | test if   | \[District-only, Rule |
|        | . | 3~ |   |          | used for  | 429.D.3\]             |
|        |   |    |   |          | emission  |                       |
|        |   |    |   |          | control   |                       |
+--------+---+----+---+----------+-----------+-----------------------+

notes: (a) One clock hour average at three percent oxygen on a dry
basis.

> \(b\) For steady state compliance testing, the emission limits shall
> be based on a sixty (60) consecutive minute average.
>
> \(c\) The emission limits may be adjusted upward to include testing
> equipment error as follows:
>
> \(1\) for periodic compliance testing, five percent (5%) of the
> applicable limit; and
>
> \(2\) for continuous in-stack monitoring, ten percent (10%) of the
> applicable limit or 2 ppmv, whichever is greater.

7\. Total oxides of nitrogen emissions from boilers 1, 2, 3, and 4 shall
not exceed 2.50 tons per day \[District-only, Rule 429.D.1.d\]

8\. The emission limitations listed in conditions I.A.1, through I.A.5
shall not apply during: \[District-only, Rule 429.C.1\]

> a\. periods of start‑up, not to exceed twelve (12) hours; or
>
> b\. periods of shut‑down, not to exceed eight (8) hours; or
>
> c\. APCO-approved control system calibration and tuning, not to exceed
> forty-eight (48) hours, following maintenance or overhaul of a boiler
> or its control system. To qualify for this exemption, the APCO shall
> receive notice at least forty-eight (48) hours prior to any
> calibration and tuning or at the beginning of maintenance if it is of
> an emergency or unforeseen nature.

**B.** **Operational Limits.** The following operational limits shall
apply to the specified units. Compliance will be determined through
recordkeeping except as noted. \[District-only, Rule 206\]

1\. Heat inputs into individual boiler units 3 and 4 of process unit A
shall not exceed 3.5 billion Btu per hour per boiler and 76.8 Billion
Btu per day per boiler. \[District-only, Rule 206\]

2\. Fuel oil shall not be burned in any boiler. \[District-only, Rule
211\]

**II. Facility Description**

**A. General.** This facility produces electrical power for
California\'s electrical distribution grid and has a Standard Industrial
Classification (SIC) Code of 4911. Four natural gas boilers produce the
steam necessary for their corresponding turbine-generators to produce
1,030 megawatts (gross).

> Main boiler units 3 and 4 have undergone modifications to reduce their
> oxides of nitrogen (NO~x~) emissions. Each now has flue gas
> recirculation, overfire air ports, and low-NOx burners and are meeting
> a 56 ppmv limit established by District Rule 429. No modifications to
> main boiler units 1 and 2 have yet been necessary to meet Rule 429\'s
> limitations. Continuous emission monitoring systems (CEMS) are
> installed on each of the four main boiler units.
>
> This facility is subject to the federal Acid Rain Program.
> Consequently, this permit is intended to be a combined Acid Rain
> (Title IV) and federal operating (Title V) permit.

**B.** **Specific Equipment.** Equipment descriptions are organized by
process. Major emission units are listed but all associated valves,
flanges, piping, and minor emission units, which are not explicitly
identified, are also included in this permit and subject to their
respective major emission unit's requirements. Dynegy is authorized to
operate the equipment listed below in the configuration described. \[SIP
Rule 201\]

**1. Process Unit A, Electrical Power Generation**; consisting of:

  ----------- ---------- --------------- -------------- -----------------------------
  **TITLE**              **HEAT          **CAPACITY**   **DESCRIPTION**
                         INPUT/STEAM                    
                         OUTPUT RATING**                

  a\.         Boiler 1   1,700 mmBtuh    170 MW         Combustion Engineering,
                                                        radiant heat boiler, gas
                                                        fired

  b\.         CEMS-1     n/a             n/a            Perkin-Elmer MCS 100 -
                                                        NO~x~/CO~2~/CO

  c\.         Boiler 2   1,700 mmBtuh    170 MW         Combustion Engineering,
                                                        radiant heat boiler, gas
                                                        fired

  d\.         CEMS-2     n/a             n/a            Perkin-Elmer MCS 100 -
                                                        NO~x~/CO~2~/CO

  e\.         Boiler 3   3,200 mmBtuh    345 MW         Babcock and Wilcox, radiant
                                                        heat boiler, gas fired,
                                                        equipped with flue gas
                                                        recirculation and over‑fire
                                                        air ports

                         2.2                            
                         millionlb/hr                   
                         steam                          

              burners    160 mmBtuh-gas                 Babcock and Wilcox "S" type
              (24)       each                           

  f\.         CEMS-3     n/a             n/a            Teledyne Instruments Model
                                                        TML 41M02 NO/NOx/O2 Analyzer
                                                        and TML 30M CO Analyzer

  g\.         Boiler 4   3,200 mmBtuh    345 MW         Babcock and Wilcox, radiant
                                                        heat boiler, gas fired,
                                                        equipped with flue gas
                                                        recirculation and over‑fire
                                                        air ports

                         2.2                            
                         millionlb/hr                   
                         steam                          

              burners    160 mmBtuh-gas                 Babcock and Wilcox "S" type
              (24)       each                           

  h\.         CEMS-4     n/a             n/a            Teledyne Instruments Model
                                                        TML 41M02 NO/NOx/O2 Analyzer
                                                        and TML 30M CO Analyzer
  ----------- ---------- --------------- -------------- -----------------------------

**2. Process Unit E, Oil-Water Separator System**; consisting of:

  ----------- ---------------------- -------------------- ------------------------
  **TITLE**                          **CAPACITY**         **DESCRIPTION**

  a\.         separation tank        100 gpm              n/a

  b\.         retention pressure     n/a                  n/a
              tank                                        

  c\.         skimmer tank           n/a                  n/a

  d\.         settling tank          n/a                  n/a

  e\.         Particulate filter     n/a                  n/a

  f\.         oil sludge pond        28,000 gal           30 ft x 30 ft

  g\.         Water holding pond     n/a                  n/a

  h\.         Water treatment        n/a                  n/a
              facility                                    
  ----------- ---------------------- -------------------- ------------------------

**3. Process Unit F, Abrasive Blasting Facility**; consisting of:

  ----------- ------- ------------ ------------ ---------------- -------------------------
  **TITLE**                        **RATING**   **DIMENSIONS**   **DESCRIPTION**

  a\.         Blast                n/a          20ft x 50ft x    n/a
              booth                             18ft             

  1\)                 Dust         n/a          n/a              Torit 4DF64 cartridge
                      collector                                  filter

  2\)                 Exhaust fan  50 hp        n/a              Buffalo model BL730,
                                                                 class II, or equivalent
  ----------- ------- ------------ ------------ ---------------- -------------------------

**4. Process Unit Q, Standby Diesel Engines ^(a)^**

+---+----------------+-------+-----------+-----------------------------+
| # |                | **RAT | **C       | ## D                        |
| # |                | ING** | APACITY** | ESCRIPTION {#description-1} |
|   |                |       |           |                             |
| T |                |       |           |                             |
| I |                |       |           |                             |
| T |                |       |           |                             |
| L |                |       |           |                             |
| E |                |       |           |                             |
+---+----------------+-------+-----------+-----------------------------+
| a | Standby        | 2,220 | 1500 kW   | Onan model 1500DFLE         |
| \ | Generator      | hp    |           | generator set powered by a  |
| . |                |       |           | Cummins KTA50-G9 diesel     |
|   |                |       |           | engine with an oxidative    |
|   |                |       |           | particulate trap, 33 engine |
|   |                |       |           | hours on August 26, 2004    |
+---+----------------+-------+-----------+-----------------------------+
| b | Fire Pump      | 290   | Not       | Cummins model NT-855-F2,    |
| \ | Engine #3      | hp    | a         | diesel engine, SN#10490461, |
| . |                |       | pplicable | 678 engine hours on August  |
|   |                |       |           | 26, 2004.                   |
+---+----------------+-------+-----------+-----------------------------+
| c | Fire Pump      | 290   | Not       | Cummins model NT-855-F2,    |
| \ | Engine #4      | hp    | a         | diesel engine, SN#10490462, |
| . |                |       | pplicable | 443 engine hours on August  |
|   |                |       |           | 26, 2004.                   |
+---+----------------+-------+-----------+-----------------------------+
| d | Ingersol Rand  | 110   | Not       | Deutz Model F6L912, diesel  |
| \ | Model 375      | hp    | listed    | engine, 915 engine hours on |
| . | Compressor     |       |           | August 26, 2004             |
+---+----------------+-------+-----------+-----------------------------+

Note (a) This equipment is insignificant and only subject to generally
applicable requirements for federal enforceability purposes and is
listed here as part of the District permit under District Rule 202.

**C. Insignificant Equipment.** The following equipment and equipment
types are considered environmentally insignificant. This equipment is
not subject to the provisions of this permit except for those units
which are subject to a federally-enforceable, generally applicable
requirement as listed in condition III.A.1.

  -------------------------------------------- --------------------------
  **Description**                              **Basis for
                                               Insignificance**

  boiler blow-down holding tank                Rule 201.A.1

  chemical cleaning holding ponds              Rule 201.A.1

  facility-wide metal cutting operations       Rule 201.A.1

  diesel engine driven standby generators less Rule 201.B.1
  than 50 hp                                   

  waste oil storage tank (1,000 gallon         Rule 201.A.1
  capacity)                                    

  fire water pump diesel storage tanks         Rule 201.I.3

  lube oil storage, clean and dirty            Rule 201.I.8

  gasoline fuel dispensing facility            Rule 201.I.9

  architectural coating spray guns             Rule 201.J.1

  cold solvent cleaners                        Rule 201.J.2

  comfort air conditioning                     Rule 201.M.1

  comfort space heating                        Rule 201.M.5

  welding equipment                            Rule 201.N.2
  -------------------------------------------- --------------------------

**III. Conditions**

**A. Standard Conditions**

**1. Generally Applicable Requirements.** For the purposes of this
permit, all requirements shall be based on standard conditions of 60^o^F
and 14.7 psia. \[SIP Rule 106\]

> a\. Visible emissions shall not exceed Ringelmann #2 or forty percent
> (40%) opacity for a period exceeding three (3) minutes aggregated in
> any sixty (60) minute period of time. \[H&SC 41701 and SIP Rule 401\]
>
> 1\) This condition shall not apply to open outdoor fires, which have
> been approved by the APCO, for the purposes of employee instruction in
> fire fighting methods. \[SIP Rule 401.B.3\]

b.  Visible emissions shall not exceed Ringelmann #1 or twenty (20%)
    opacity for a period exceeding three (3) minutes aggregated in any
    sixty (60) minute period of time. \[District-only Rule 401\]

> c\. If the APCO determines that the operation of this equipment is
> causing a public nuisance, Dynegy shall take immediate action to
> eliminate such nuisance. \[District-only, Rule 402\]
>
> d\. Particulate matter emissions shall not exceed any of the
> following: \[SIP Regulation IV, Rule 113\]
>
> 1\) 0.30 gr/dscf, on an hourly basis, for all emission units;
>
> 2\) that lb/hr amount identified in Table I of SIP Rule IV.113
> depending on process rate;
>
> 3\) 0.30 gr/scf corrected to 3% O~2~ (wet) for combustion device
> emission units except during startup; or
>
> 4\) 0.30 gr/scf corrected to 12% CO~2~ for combustion device emission
> units. \[District-only, Rule 403\]
>
> e\. Sulfur Compound Limitations \[SIP Rules 114.1 and 404.E\]
>
> 1\) Sulfur compound emissions shall not exceed 0.20 percent by volume
> of sulfur compounds calculated as sulfur dioxide.
>
> 2\) Gaseous fuel sulfur content shall not exceed 50 gr/100 dscf (797
> ppmv) total sulfur (as H~2~S at standard conditions).
>
> 3\) Liquid fuel sulfur content shall not exceed 0.50 wt% sulfur.
>
> f\. Carbon monoxide emissions shall not exceed 2,000 ppmv at standard
> conditions, except for internal combustion engines. \[SIP Rule 406\]
>
> g\. Metal surface coatings shall not be thinned or reduced with
> photochemically reactive solvents, as defined in SIP Rule 407. \[SIP
> Rule 407.H.2\]
>
> h\. Architectural coatings, which are purchased in containers of
> larger than one quart capacity, shall not contain photochemically
> reactive solvents nor shall they be thinned or reduced with
> photochemically reactive solvents. \[SIP Rule 407.H.3\]
>
> i\. No more than 1 ^1^/~2~ gallons of photochemically reactive solvent
> may be allowed to evaporate into the atmosphere on any day due to the
> disposal of such solvent. \[SIP Rule 407.H.4\]
>
> j\. This facility must comply with all applicable provisions of the
> Air Toxic \"Hot Spots\" Act as set forth in Health and Safety Code
> Section 44300 (*et seq.*). \[District-only, H&SC 44300 (et seq.) and,
> District-only, Rule 204.F.1\]
>
> k\. All abrasive blasting shall be conducted in accordance with Title
> 17 of the California Code of Regulations (CCR). \[District-only,
> CCR92000 (*et seq.*) and, District-only, Rule 206\]
>
> 1\) Each operator of this equipment shall be supplied with a copy of
> the abrasive blasting provisions of Title 17 and the APCO prepared
> summary of Title 17.
>
> 2\) Abrasive blasting of items smaller than eight feet must be
> conducted within an enclosure or indoors.
>
> 3\) All dry, unconfined blasting shall utilize ARB certified
> abrasives.
>
> 4\) Areas surrounding the blasting operation shall be periodically
> washed, swept, vacuumed, or otherwise cleaned to prevent
> re-entrainment of dust.
>
> l\. This equipment shall be operated consistent with the information
> provided in the Titles IV and V applications under which this permit,
> or previous versions of this permit, were issued and shall be
> maintained in good working order at all times and in such a manner as
> to minimize the emission of air contaminants. \[District-only, Rule
> 206\]
>
> m\. The APCO shall be notified in writing before any changes are made
> in the design, construction, or operation of this equipment or any
> modifications are made to process condition which might increase the
> emission of air contaminants. \[District-only, Rule 202\]
>
> n\. All subject processes shall comply with the provisions of 40 CFR
> 61, [National Emission Standards for Hazardous Air
> Pollutants]{.underline}, subpart A, [General Provisions]{.underline},
> and subpart M, [Asbestos]{.underline}. \[40CFR61.05.c and subpart M\]
>
> 1\) Dynegy shall not fail to report, revise reports, or report source
> test results as required by subpart M. \[40CFR61.05.d\]
>
> 2\) Any change to the information provided in the initial notification
> under 40CFR61.10.a shall be submitted to the APCO no later than 30
> days after that change. \[40CFR61.10.c\]

3)  Each subject process shall be maintained and operated in a manner
    consistent with good air pollution control practice for minimizing
    emissions. \[40CFR61.12.c\]

> o\. Any gasoline transfer to a stationary storage tank shall utilize a
> permanently installed submerged fill pipe and a tight-fitting nozzle.
> \[SIP Rule 407.C.1.a\]
>
> p\. Dynegy shall follow good operating practices when storing or
> transferring gasoline including: \[SIP Rule 424.B.5\]
>
> 1\) preventing spills;
>
> 2\) utilizing closed storage containers; and
>
> 3\) disposing of any gasoline in compliance with all applicable
> federal, state, and local regulations.
>
> q\. Dynegy shall ensure that cold solvent metal cleaning devices, with
> the exception of wipe clean operations:
>
> 1\) utilize: \[SIP Rule 416.B\]
>
> i\. a container for the solvent and the articles being cleaned;
>
> ii\. a cover, easily operated with one hand, which prevents the
> solvent from evaporating when the cleaning device is not in use;
>
> iii\. a shelf for draining cleaned parts such that the drained solvent
> is returned to the solvent storage container;
>
> iv\. a permanent, conspicuous label, which lists all applicable
> operating requirements; and
>
> v\. a freeboard ratio equal to or greater than 0.75, if the solvent
> surface area is greater than or equal to 5.4 square feet; and
>
> 2\) are operated as follows. \[SIP Rule 416.C\]
>
> i\. All degreasing equipment and emission control equipment must be
> operated and maintained in good working order.
>
> ii\. No solvent may be allowed to leak from the degreasing equipment.
>
> iii\. All solvent must be stored and disposed of in a manner which
> prevents its evaporation to the atmosphere.
>
> iv\. The cover of any cleaning device shall not be removed unless that
> device is in use or undergoing maintenance.
>
> v\. The operator shall drain parts for at least 15 seconds after
> cleaning or until dripping ceases.
>
> vi\. Flowing solvent shall consist of a liquid stream and not a fine,
> atomized, or shower type spray; and the motive pressure for that
> solvent flow shall be sufficiently low to prevent the splashing of
> solvent beyond the container.
>
> r\. Dynegy shall not ignite or maintain an open outdoor fire except as
> approved by the APCO for the purposes of employee instruction in fire
> fighting methods. \[SIP Rule 501.A\]
>
> s\. A copy of the State certification must be readily available for
> any portable equipment that operates at Dynegy's Morro Bay Power Plant
> and is registered with ARB pursuant to CCR Title 13, section 2450 (et
> seq.). \[SIP Rule 205\]
>
> t\. This facility shall comply with all applicable provisions of
> District Rule 433, Architectural Coatings. \[District-only, Rule 433\]

**2. Compliance with Permit Conditions** \[Rule 216\]

> a\. Dynegy shall comply with all terms and conditions of this permit.
> Non-compliance with federally-enforceable requirements constitutes a
> violation of the federal Clean Air Act. Continuing non-compliance with
> any federally-enforceable permit condition is grounds for permit
> termination, revocation and reissuance, modification, enforcement
> action, or denial of permit renewal. \[Rule 216.F.1.f for all
> \'federally-enforceable\' conditions and, District-only, Rule 206 for
> \'District-only\' enforceable conditions\]
>
> b\. The need to halt or reduce a permitted activity in order to
> maintain compliance shall not be used as a defense for noncompliance
> with any permit condition.
>
> c\. This permit may be reopened by the APCO at any time for cause. For
> the purposes of this permit, the following circumstances shall
> constitute cause. \[Rule 216.K.1\]
>
> 1\) Dynegy becomes subject to an additional federally‑enforceable
> requirement, the remaining term of this permit is three years or more,
> and the effective date of that requirement is not later than the date
> on which this permit is due to be reissued. \[Rule 216.K.1.a\]
>
> 2\) The APCO or the EPA determine that this permit contains a material
> mistake or that inaccurate statements were made in establishing the
> emissions standards, terms, or conditions of the permit. \[Rule
> 216.K.1.c\]
>
> 3\) The APCO determines that this permit must be revised or revoked to
> assure compliance with any applicable requirement, or EPA determines
> that the permit must be revised or revoked to assure compliance with
> any federally‑enforceable requirement. \[Rule 216.K.1.d\]
>
> d\. This permit does not convey property rights or exclusive privilege
> of any sort. \[Rule 216.F.1.i\]
>
> e\. Within a reasonable time period, Dynegy shall furnish any
> information requested by the APCO, for the purpose of determining:
>
> 1\) compliance with this permit; \[Rule 216.F.1.j.2\]
>
> 2\) air contaminant emissions; \[SIP Rule 205\]
>
> 3\) whether or not cause exists to modify, revoke, reissue, or
> terminate this permit; or \[Rule 216.F.1.j.1\]
>
> 4\) whether or not cause exists for an enforcement action. \[Rule
> 216.F.1.j.2\]
>
> f\. If Dynegy is not in compliance with any federally-enforceable
> requirement and a variance is obtained from the District\'s Hearing
> Board, Dynegy shall submit to the APCO a schedule of compliance, which
> has been approved by the Hearing Board, as an administrative amendment
> to this permit. \[Rule 216.F.2.c\]

g\. A pending permit action, or notification of anticipated
noncompliance, does not stay any condition of this permit. \[SIP Rule
205\]

> h\. All terms and conditions of this permit are enforceable by the EPA
> Administrator and citizens of the United States under the federal
> Clean Air Act unless referenced as being based on a District-only
> requirement. All terms and conditions of this permit, including those
> referenced as being based on a District-only requirement, are
> enforceable by the APCO. \[Rule 216.F.3\]
>
> i\. This permit, or a true copy, shall be made readily accessible at
> Dynegy's Morro Bay power plant and shall not be altered or defaced in
> any way. \[SIP Rule 201.E&F\]
>
> j\. The terms and conditions of this permit shall apply to the
> equipment listed herein, which is operated by either Dynegy or their
> contractor(s), and located at 1290 Embarcadero, Morro Bay, California,
> or on contiguous properties to those addresses, which are owned and
> controlled by Dynegy. \[SIP Rule 205\]
>
> k\. Any change in the designated representative shall be documented by
> the submission of a certification of representation to EPA
> headquarters with a copy to the APCO. \[40CFR72.23.a\]
>
> l\. Within 30 days following any change in the owners or operators,
> the designated representative shall submit a certification of
> representation to EPA headquarters with a copy to the APCO.
> \[40CFR72.23.c.2\]
>
> m\. A permit revision shall not be required to implement processes
> changes, economic incentives, marketable permits, emissions trading
> and other similar programs that are provided for elsewhere in this
> permit. \[Rule 216.F.1.l\]

**3. Emergency Provisions.** Dynegy shall comply with the requirements
of District Rule 107, [Upset and Breakdown Conditions]{.underline}.
\[Rule 107\]

**4. Compliance** **Plan** \[Rule 216\]

> a\. Dynegy will continue to comply with those permit conditions with
> which it is in compliance, as identified in this permit. \[Rule
> 216.F.1.f & L.2.b\]
>
> b\. Dynegy shall comply with all federally enforceable requirements
> that become applicable during the permit term, in a timely manner, as
> identified in this permit. \[Rule 216.F.1.f & L.2.c\]
>
> c\. Dynegy shall comply with all APCO approved compliance plans.
> \[District-only Rule 206\]

**5. Right of Entry.** The Regional Administrator of U.S. Environmental
Protection Agency, the Executive Officer of the California Air Resources
Board, the APCO, or their authorized representatives, upon the
presentation of credentials, shall be permitted to enter upon the
premises and, at reasonable times, be permitted to: \[Rule 216.F.2.a\]

> a\. inspect the stationary source, including equipment, work
> practices, operations, and emission-related activity;
>
> b\. inspect and duplicate records required by this Permit to Operate;
> and
>
> c\. sample substances or monitor emissions from the source or other
> parameters to assure compliance with the permit or applicable
> requirements. Monitoring of emissions can include source testing.

**6. Severability.** The provisions of this Permit to Operate are
severable, and, if any provision of this Permit to Operate is held
invalid, the remainder of this Permit to Operate shall not be affected
thereby. \[Rule 216.F.1.e\]

**7. Circumvention.** Dynegy shall not build, erect, install, or use,
any article, machine, equipment, or process subject to an applicable
standard, if the use of which conceals an emission that would otherwise
constitute a violation of that standard. \[40CFR60.12, 61.19 & 63.4.b\]

**8. Permit Life.** This Permit to Operate shall become invalid five
years from the original effectiveness date unless a timely and complete
renewal application is submitted to the District. Dynegy shall apply for
renewal of this permit no later than six months before the date of
expiration. Upon submittal of a timely and complete renewal application,
this permit to operate shall remain in effect until the APCO issues or
denies the renewal application. \[Rule 216.I.1, I.2, & I.4\]

**9. Payment of Fees.** Dynegy shall remit Title V compliance
determinations fees to the District in response to the District\'s
invoice on a timely basis. Failure to remit fees in accordance with
District Rule 302 shall result in forfeiture of this Permit to Operate.
Operation without a permit to operate subjects the source to potential
enforcement action by the District and the U.S. EPA pursuant to section
502(a) of the Clean Air Act. \[Rule 216.F.1.k\]

**B. Specific Recordkeeping, Inspection, and Reporting Requirements.**
All records must be retained for a minimum of five (5) years and be made
available to the APCO upon request. For the purposes of this permit,
records shall be considered all calibration and maintenance records, all
original strip-chart or electronic recordings for continuous monitoring
and instrumentation, all records specifically required to be maintained
herein, and copies of all reports required to be submitted herein.
\[District-only, Rule 206, for \"District-only\" records and Rule
216.F.1 for all records other than those which are \"District-only\"\]

**1. Recordkeeping.** Dynegy shall record:

a\. For all four main boiler units, unless otherwise noted, and on an
hourly basis:

> 1\) continuous emission monitoring data as required by 40CFR75.57.b;
> \[40CFR75.57.b\]
>
> 2\) NO~x~ emissions data as required by 40CFR75.57.d and
> 40CFR75.12.b;\[40CFR75.57.d & 40CFR75.12.b\]
>
> 3\) CO~2~ emissions data as required by 40CFR75.57.e.2;
> \[40CFR75.57.e.2\]
>
> 4\) SO~2~ emissions data, when burning natural gas, as required by
> 40CFR75.58.c.4; and \[40CFR75.58.c.4\]

5\) an unavailable unit shall not be subject to the recordkeeping in
B.1.a.

b\. The following data for each certified continuous emission monitoring
system:

> 1\) NO~x~ and O~2~ monitor daily test, seven-day calibration error
> test, and corrective action follow-up test data as required
> 40CFR75.59.a.1; \[75.59.a.1\]
>
> 2\) NO~x~ and O~2~ monitor quarterly linearity check data as required
> 40CFR75.59.a.3; \[& 75.59.a.3\]
>
> 3\) NO~x~ and O~2~ monitor relative accuracy tests and test audit data
> as required by 40CFR75.59.a.5; \[75.59.a.5\]
>
> 4\) NO~x~ and O~2~ monitor cycle time test data as required by
> 40CFR75.59.a.6; \[40CFR75.59.a.6\]
>
> 5\) the results of all RATA trial runs, trial certification tests,
> quality assurance (QA) activities, and QA measurements necessary to
> substantiate compliance with all relevant requirements as required by
> 40CFR75.59.a.7; and \[75.59.a.7\]
>
> 6\) CO monitoring data as required by 40CFR60.7(d) Figure 1 and
> 40CFR60.App F.4.4. \[40CFR60.7(d) & 60.App F.4.4\]

7\) an unavailable unit shall not be subject to the recordkeeping in
B.1.b.

c\. SO~2~ emission fuel flow meter certification and quality assurance
test data as required by 40CFR75.59.b.1. \[40CFR75.59.b.1\]

1\) an unavailable unit shall not be subject to the recordkeeping in
B.1.c.

d\. For each main boiler unit: \[District-only, Rule 429.E.1\]

> 1\) gross and net energy production in megawatt hours (MW‑hrs)
> calculated on a daily basis;
>
> 2\) quantity of natural gas burned on an hourly basis, or
>
> 3\) the CO emission rate in lb/hr and ppmv, corrected to three percent
> (3%) O~2~ on dry basis, based on data from the CEMS on an hourly
> basis;
>
> 4\) the NO~X~ emission rate in lb/hr and ppmv, corrected to three
> percent (3%) O~2~ on dry basis, based on data from the CEMS on an
> hourly basis;
>
> 5\) the quarterly and annual NO~x~ emission rate in lb/mmBtu for any
> main boiler that operated during a calendar quarter; \[40CFR75.12.c\]
>
> 6\) the quarterly and cumulative SO~2~ mass emission rate and heat
> input for each calendar quarter and each calendar year by summing
> hourly values for any main boiler that operated during a calendar
> quarter; \[40CFR75.App D.3.5\]
>
> 7\) the dates, times and duration of any start-up and shut-down
> periods;
>
> 8\) the facility-wide NO~x~ emissions in tons per day calculated on a
> daily basis;
>
> 9\) the heat input, in billion Btu, to boilers 3 & 4 on an hourly and
> daily basis if the boiler operated at any time during the current
> calendar quarter; and
>
> 10\) an unavailable unit shall not be subject to the recordkeeping in
> B.1.d subsections 1, 2, 3, 4, and 10.

e\. The manufacturer\'s brand name and designation of each solvent used
to thin or reduce any coating which is applied to a metal surface by
either Dynegy or any contractor employed by Dynegy. Purchase records
will be sufficient to satisfy this recordkeeping requirement. Material
Data Safety Sheet information sufficient to determine the
non-photochemical reactivity of those solvents shall be maintained
within easy access of this record. \[SIP Rule 407.H.2\]

f\. The manufacturer\'s brand name and designation of each architectural
coating used in containers of one quart capacity or larger, and the
solvent used to thin or reduce those coatings, which is applied by
either Dynegy or any contractor employed by Dynegy. Purchase records
will be sufficient to satisfy this recordkeeping requirement. Material
Data Safety Sheet information sufficient to determine the
non-photochemical reactivity of those coatings and solvents shall be
maintained within easy access of this record. \[SIP Rule 407.H.3\]

g\. An operating log for the current calendar year shall be maintained
on a monthly basis for the engines in process unit Q. Entries shall also
be made for any day that an engine is operated, an engine or control
system is serviced and for any day that an engine receives fuel. The
logs shall be retained for at least three (3) years and shall include
the following data: \[District only, Rule 206\]

1\) Operating mode: emergency, maintenance, or District required testing

2\) Engine hour meter reading at start-up,

3\) Engine hour reading at shutdown,

4\) Operating hours for the calendar day,

5\) Running total calendar year to date operating hours,

6\) Running total calendar year to date operating hours in maintenance
mode,

7\) Running total calendar year to date operating hours in emergency
mode,

8\) Estimated fuel use for the day in gallons,

9\) Running total calendar year to date fuel use in gallons,

10\) Fuel purchased in gallons,

11\) Date and results of each engine inspection, if newly performed
since last entry,

12\) A summary of any preventive or corrective maintenance taken, and

13\) Any additional information required in the engine operator
inspection plan.

**2. Files to be Maintained.** Dynegy shall maintain the following
files, retain them for a minimum of five (5) years, and make them
available to the APCO upon request: \[40CFR75.54.a\]

a\. supporting data and information used to calculate values required to
be recorded under condition III.B.1.a; \[40CFR75.57.a.2\]

b\. certification test data and information recorded under condition
III.B.1.b; \[40CFR75.57.a.4\]

c\. the monitoring plan required under condition III.C.1.b;
\[40CFR75.57.a.5\]

d\. the quality control plan required under condition III.C.1.b; and
\[40CFR75.57.a.6\]

e\. an operating log shall be maintained at the abrasive blasting booth,
process unit F, and made available upon request. At a minimum, the log
shall include hours of operation, type of abrasives used, and a copy of
Title 17. \[District-only, Rule 206\]

f\. an APCO approved standby generator engine operator inspection plan,
inspection log, and any other District required records shall be
maintained and shall be made available to the District upon request.
\[District-only, Rule 206\]

**3.** **Inspections, Calibrations, and Sampling.** Dynegy shall
inspect, calibrate, or sample, the following processes as indicated. The
results shall be recorded in an operational log or as specified. \[SIP
Rule 205 for federally enforceable requirements and District-only Rule
206 for District-only requirements\]

a\. Performance criteria for the periodic checks required by these
conditions are as follows. Any percent value refers to percent (%) of
instrument scale unless otherwise noted. \[40CFR75.App A.3 for NO~x~ &
O~2~ and 40CFR60.App F for CO\]

+----------+--------+------+------------+-----------------------------+
| **Test** | **     | **   | **Warning  | **Out-of-Control Level**    |
|          | Freq-u | Para | Level**    |                             |
|          | ency** | -met |            |                             |
|          |        | er** |            |                             |
+----------+--------+------+------------+-----------------------------+
| Cal      | daily  | N    | \>2.5 ppm  | greater of (g/o) \> 5.0 ppm |
| ibration |        | O-LO |            | or \> 5.0% (for span values |
| Error    |        |      | \>5.0 ppm  | \<= 50 ppm), greater of     |
| Check    |        | N    |            | (g/o) \> 10.0 ppm or \>     |
|          |        | O-HI |            | 5.0% (for span values \> 50 |
|          |        |      |            | ppm, but \<= 200 ppm)       |
|          |        |      |            | \[40CFR75.App B.2.1.4\]     |
+----------+--------+------+------------+-----------------------------+
|          |        | O~2~ | 0.50% of   | \>1.0% of measured O~2~     |
|          |        |      | measured   | \[40CFR75.App B.2.1.4\]     |
|          |        |      | O~2~       |                             |
+----------+--------+------+------------+-----------------------------+
|          |        | CO   | \>10.0%    | \>20.0% for 1 day or        |
|          |        |      |            | \>10.0% for 5 days          |
|          |        |      |            | \[40CFR60.App F.4.3.1\]     |
+----------+--------+------+------------+-----------------------------+
| 3 Point  | qua    | N    |            | g/o 5.0 ppm or \>5.0% at    |
| Li       | rterly | O~x~ |            | each of 3 test levels       |
| n-earity |        |      |            | \[40CFR75.App.A.3.2\]       |
| Check    |        |      |            |                             |
+----------+--------+------+------------+-----------------------------+
|          |        | O~2~ |            | g/o 0.50% or \>5.0% of each |
|          |        |      |            | of 3 test levels            |
|          |        |      |            | \[40CFR75.App A.3.2\]       |
+----------+--------+------+------------+-----------------------------+
| 2 Point  | 3 out  | CO   |            | g/o ±5.0 ppm or \>15.0% of  |
| Li       | of 4   |      |            | the average audit value     |
| n-earity | qu     |      |            | \[40CFR60.App.F.5.2.3\]     |
| Check    | arters |      |            |                             |
+----------+--------+------+------------+-----------------------------+
| Relative | an     | N    |            | \>10.0% or ±0.020           |
| Accuracy | nually | O~x~ |            | lb/m                        |
| Test     | (a)    |      |            | mBtu\[40CFR75.App.A.3.3.2\] |
| Audit    | (b)    |      |            |                             |
+----------+--------+------+------------+-----------------------------+
|          |        | CO   |            | g/o \>10.0% or \>50.0 ppmv  |
|          |        |      |            | \[40CFR60.App B.Spec.4.\]   |
+----------+--------+------+------------+-----------------------------+

Note (a) Annually means every four QA operating quarters. RATA frequency
increases to semiannual, every two QA operating quarters, if results
exceed 7.50% or ±0.015 lb/mmBtu. Up to eight consecutive calendar
quarters can occur between RATAs if four QA operating quarters have not
occurred since the last RATA test. \[40CFR75.App B.2.3.1, B.2.3.2\].

\(b\) For unavailable units resuming operation that have not undergone
RATA testing within the last eight (8) consecutive calendar quarters,
RATA testing shall occur within the lesser of 90 calendar days or 720
operating hours.

b\. On a **daily** basis, except for unavailable units.

  ------------- ----------------- ------------ -------------------------------------------
  **Process**   **Description**                **Parameter**

  main boilers  1\)               NO~x~/O~2~   Conduct a calibration error test.
  1,2,3,& 4                       CEMS         \[40CFR75.App B.2.1\]

                2\)               CO CEMS      Conduct a calibration error test.
                                               \[District-only 40CFR60.App F.4.1\]
  ------------- ----------------- ------------ -------------------------------------------

c\. On a **quarterly** basis, except for unavailable units.

  ------------- ----------------- ------------ ------------------------------------------------
  **Process**   **Description**                **Parameter**

  main boilers  1\)               NO~x~/O~2~   Conduct a three point linearity check.
  1,2,3,& 4                       CEMS         \[40CFR75, App. B.2.2\]

                2\)               CO CEMS      Conduct a two point linearity check in three out
                                               of every four calendar quarters. \[40CFR60.App
                                               F.5.1\]

                                               
  ------------- ----------------- ------------ ------------------------------------------------

d\. On an **annual** basis (b), (c).

  ------------- ----------------- --------------- -----------------------------------------
  **Process**   **Description**                   **Parameter**

  main boilers  1\)               NO~x~/O~2~/CO   i\. Conduct a relative accuracy test
  1,2,3,& 4                       CEMS            audit (RATA). \[40CFR75, App B.2.3\]

                                                  ii\. Written or telephone notification of
                                                  RATA testing shall be submitted to the
                                                  APCO, with a copy to the EPA Region IX
                                                  Administrator, at least 7 days prior to
                                                  the first scheduled day of testing.
                                                  \[40CFR75.61.a.5\]

                2\)               CO CEMS         Conduct a RATA. \[District-only, 40CFR60,
                                                  App F & 40 CFR75, App B.2.3.1\]

                                                  
  ------------- ----------------- --------------- -----------------------------------------

Note

\(a\) Annual means every four QA operating quarters. RATA frequency
increases to semiannual, every two QA operating quarters, if results
exceed 7.50% or ±0.015 lb/mmBtu. Up to eight consecutive calendar
quarters can occur between RATAs if four QA operating quarters have not
occurred since the last RATA test. \[40CFR75.App B.2.3.1, B.2.3.2\].

\(b\) For unavailable units resuming operation that have not undergone
RATA testing within the last eight (8) consecutive calendar quarters,
RATA testing shall occur within the lesser of 90 calendar days or 720
operating hours.

**4.** **Unusual Operating Conditions, Actions, and Reporting**
\[District-only, Rule 206\]

a\. CEMS Recertification

> 1\) Any NO~x~/O~2~/CO monitor, which undergoes replacement,
> modification, or change that significantly affects its ability to meet
> the requirements of this permit, must be recertified. \[40CFR75.20.b\]
>
> 2\) Written or telephone notification of recertification testing shall
> be submitted to the EPA Region IX Administrator, with a copy to the
> APCO, at least 7 days prior to the first scheduled day of testing.
> \[40CFR75.61.a.1.ii\]

b\. Reports of Violations. Any violation of any emission limit in
condition I.A, as indicated by the records of the monitoring device,
shall be reported by the operator of the source to the APCO within 48
hours after such occurrence. \[Rule 113.H.3 and SIP Rule I.113.IV.C\]

c\. Monitoring Equipment Breakdown or Shutdown. As soon as reasonably
possible, but in any case within four (4) hours, after its detection,
notify the APCO of any breakdown or shutdown of any CEMS equipment.
\[District-only, Rules 206 and 113.H.4\]

d Any deviation from any requirement in this permit, excluding those
reported under District Rule 107, [Breakdown and Upset
Conditions]{.underline}, shall be reported to the APCO as follows:
\[Rule 216.F.1.o\]

> 1\) as soon as reasonably possible, but in any case within four (4)
> hours, after its detection; and
>
> 2\) as soon as the occurrence has been corrected, but no later than 10
> calendar days after the event, through a written report which includes
> the probable cause of the deviation and the corrective actions or
> preventative measures taken.

e\. At least 10 working days before asbestos stripping or removal work,
the APCO shall be notified as required by section 61.145.b.3.i of
40CFR61 subpart M, [National Emission Standard for
Asbestos]{.underline}. \[40CFR61.145.b.3.i\]

f\. At least 30 calendar days prior to returning an unavailable unit to
operation, unless a shorter period is otherwise allowed by the APCO, the
APCO shall be notified in writing of the proposed boiler unit startup
date \[District only Rule 206\].

**5. Reporting**. Each report due on the date indicated in the following
table should include data for the respective time periods in any given
year, unless otherwise indicated. \[SIP Rule 205\]

  ---------- -------------------------- ------------------ ---------------
  **Due      **Quarterly Data**         **Semi-annual      **Annual Data**
  Date**                                Data**             

  January 31 October 1 through December July 1 through     
             31                         December 31        

  March 1                                                  January 1
                                                           through
                                                           December 31

  April 30   January 1 through March 31                    

  July 31    April 1 through June 30    January 1 through  
                                        June 30            

  October 31 July 1 through September                      
             30                                            
  ---------- -------------------------- ------------------ ---------------

a\. On a **quarterly** basis, no later than January 31, April 30, July
31, and October 31 of any given year.

> 1\) Dynegy shall submit a report to the APCO, which includes the
> following data: \[District-only, Rule 206\]
>
> i\. CEMS system performance based on: \[District-only, Rule 113\]
>
> [(total CEMS downtime in hours)]{.underline} x 100
>
> (total source operating time in hours)
>
> where the total of CEMS downtime is to be listed as:
>
> \(a\) monitor equipment malfunctions,
>
> \(b\) non-monitor equipment malfunctions,
>
> \(c\) quality assurance calibration,
>
> \(d\) other known causes, and
>
> \(e\) unknown causes;
>
> ii\. either, \[District-only, Rule 113\]
>
> \(a\) an affirmative statement of, "No excess emissions", or
>
> \(b\) an excess emission data summary based on:
>
> [(total duration of excess emissions in hours)]{.underline} x 100
>
> (total source operating time in hours)
>
> where excess emissions shall be quantified per the applicable rule or
> regulation placing the limit exceeded;
>
> iii\. for each exceedance, the date and time, concentration, current
> emission limit, cause (if known), and corrective or protective actions
> taken; and
>
> iv\. A results summary of any CEMS relative accuracy test audit
> performed during the respective quarter.
>
> 2\) Dynegy shall submit the Electronic Data Report information
> identified in 40CFR75.64 to the EPA administrator. Each report shall
> be certified to be true, accurate, and correct by a responsible
> official. \[40CFR75.64.a\]

b\. On a **semi-annual** basis, Dynegy shall submit a report to the
APCO, with a copy to the EPA Region IX Administrator. Each report shall
be submitted no later than January 31 and July 31 of any given year,
shall be certified to be true, accurate, and complete by a responsible
official, and shall include the following data. \[Rule 216.F.1.c.3\]

> 1\) Include a summary of deviations from any federally-enforceable
> requirement in this permit.
>
> 2\) If Dynegy is not in compliance with any federally-enforceable
> requirement, include a progress report on the schedule of compliance
> which has been approved by the District Hearing Board. That report
> shall include: \[Rule 216.F.2.c\]
>
> i\. dates for achieving the activities, milestones, or compliance
> required in the schedule of compliance, and dates when such
> activities, milestones or compliance were achieved; and
>
> ii\. an explanation of why any dates in the schedule of compliance
> were not or will not be met, and any preventive or corrective measures
> adopted.

c\. On an **annual** basis, no later than March 1 of any given year.

> 1\) Dynegy shall submit a Compliance Certification Report to the APCO
> pursuant to District Rule 216.L.3. This report shall identify each
> federal applicable requirement in this permit, the compliance status
> of each subject process unit, whether the compliance was continuous or
> intermittent since the last certification, and the method(s) used to
> determine compliance. Each report shall be certified to be true,
> accurate, and complete
>
> by a responsible official and a copy of this portion of the annual
> report shall also be submitted to the EPA Region IX Administrator.
> \[40CFR72.90.a and Rule 216.L.3\]
>
> 2\) Dynegy shall make the following information available to the APCO
> upon request:
>
> i\. summaries of automatic and manual calibration data and internal
> audits of the CO monitors on main boiler units 1, 2, 3, and 4.
> \[District-only Rule 206, 40CFR60.App F.7\]

d\. On an **annual** basis, at least 10 working days before the end of
the calendar year, the APCO shall be notified of the predicted asbestos
renovations for the following year as required by section 61.145.b.3.ii
of 40CFR61 subpart M. \[40CFR61.145.b.3.ii\]

**C. Emissions Monitoring Program**

**1. Continuous Emissions Monitoring.** Dynegy shall:

> a\. operate and maintain continuous emission monitoring systems (CEMS)
> to determine:
>
> 1\) NO~x~ emissions from each main boiler, \[40CFR75.10.a.2 and,
> District-only, Rule 429.D.5.b for all units; SIP Rule I.113.II.A.1 and
> Rule 113.B.1.a for units 3&4\]
>
> 2\) CO~2~ emissions from each main boiler, \[40CFR75.10.a.3.ii for all
> units; SIP Rule I.113.II.A.2 and Rule 113.B.1.b for units 3&4\]
>
> 3\) CO emission from each main boiler, and \[District-only, Rule
> 429.D.5.a\]
>
> 4\) CEMS operation is not required for any unavailable unit.
>
> b\. ensure that the CEMS are operated, calibrated, and maintained
> according to:
>
> 1\) the quality assurance (QA) and quality control procedures of
> 40CFR75 Appendix B, the QA plan prepared pursuant to section 1 of that
> appendix, and 40CFR60 Appendix F, \[40CFR75.10.b and 75.21.a for NO~x~
> and O~2~; and, District-only, 40CFR60.App F for CO\]
>
> 2\) the APCO approved compliance plan, and \[District-only, Rule 206\]
>
> 3\) the monitoring plan prepared pursuant to 40CFR75.53.a.
> \[40CFR75.53.a\]
>
> c\. determine SO~2~ mass emissions using the procedures of 40CFR75
> Appendix D2.3; \[40CFR75.11.d.2\]
>
> d\. calculate NO~x~ emissions using the procedures of 40CFR75 Appendix
> F.3; \[40CFR75.12.b\]
>
> e\. determine CO~2~ mass emissions using the procedures of 40CFR75
> Appendix G; \[40CFR75.10.a.3.ii and 75.13.b\]
>
> f\. ensure that all quality assurance calibration gases meet the
> requirements of 40CFR72.2; \[40CFR75.21.c\]
>
> g\. during any period during which a monitor is out-of-control, follow
> the procedures of 40CFR75.24 for NO~x~ and O~2~ instruments and the
> procedures of 40CFR60 Appendix F.4.3 for CO instruments; and
> \[40CFR75.24 for NO~x~ and O~2~, and, District-only, 40CFR60.App F.4.3
> for CO\]
>
> h\. during any period during which monitoring or heat input data is
> missing, follow the procedures of 40CFR75 Subpart D for NO~x~ and O~2~
> instruments. \[40CFR75 Subpart D\]

**2. Changes to Monitoring Plans.** Whenever a replacement,
modification, or change to a certified CEMS causes that system to be
recertified, Dynegy shall update the respective unit\'s monitoring plan.
\[40CFR75.53.b\]

**3. Fuel Flow Instruments.** Natural gas flow instrumentation shall be
maintained and operated in accordance with 40CFR75 Appendix D for the
purposes of calculating SO2 emissions. \[40CFR 75.App D.2.1 and
40CFR75.4.g\]

**D. Compliance Testing Conditions.** All testing shall be conducted in
accordance with the District's Source Test Policy unless otherwise
allowed by the APCO with the results being reported to the APCO within
45 days of testing. \[District-only, Rule 210.B.1\]

**1. Annual Compliance Testing** **and Equipment Calibration**

a\. Dynegy shall conduct or cause to be conducted, compliance emission
testing for NO~x~ and CO from all four main boiler units. \[SIP Rule
406.A for CO\]

b\. Each main boiler unit shall be tested once every four QA operating
quarters, as defined in 40CFR72.2, and at least once every eight
consecutive calendar quarters. For unavailable units resuming operation
that have not undergone RATA testing within the last eight (8)
consecutive calendar quarters, RATA testing shall occur within the
lesser of 90 calendar days or 720 operating hours. \[SIP Rule 406.A for
CO\]

c\. The calibration of natural gas and fuel flow instrumentation used to
determine SO2 emissions shall be checked and recalibrated, if necessary.
\[40CFR75.App D.2.1.6.1\]

d\. A record of compliance testing shall be maintained and shall include
at least the following information: \[Rule 216.F.1.c.3\]

i\. The date, place as defined in this permit, and time of sampling or
measurements;

ii\. The date(s) analyses were performed;

iii\. The company, person, or entity that performed the analyses;

iv\. The analytical techniques or methods used;

v\. The results of such analyses; and

vi\. The operating conditions as existing at the time of sampling or
measurement.

**2. Test Methods.** The following methods shall be used for compliance
testing and performance audits. The author\'s most currently approved
version of any given method shall be used.

  ------------------------------------------- ---------------------------
  **Parameter/Requirement**                   **Method**

  sample and velocity traverses               EPA 1 or ARB 1

  velocity and volumetric flowrate            EPA 2 or ARB 2

  O~2~, CO~2~, excess air, and molecular      EPA 3, ARB 3, or ARB 100
  weight                                      

  moisture content                            EPA 4 or ARB 4

  NO~x~ stack emissions                       EPA 7E or ARB 100

  NO~x~ CEMS relative accuracy                40CFR75, App A

  CO stack emissions                          EPA 10 or ARB 100

  CO CEMS relative accuracy                   40CFR60, App F

  Particulate trap control                    APCO approved method
  ------------------------------------------- ---------------------------

**E. Conditions Specific to the Identified Process**

**1. Process Unit A, Electrical Power Generation.**

a\. The owners and operators of Units 1, 2, 3 and 4 shall hold SO~2~
allowances in the unit's subaccount not less than the total annual
emissions of sulfur dioxide for the previous calendar year.
\[40CFR72.9(c)\]

> b\. The sulfur dioxide emission allowances in tons per year, as
> granted in Table 2 of 40CFR73 as of April 29, 2003, are as follows.
> The values included here may change as transactions occur because
> sulfur dioxide emission allowances may be bought or sold under the
> Acid Rain Program. \[40CFR73.10.b\]

  -------------- --------------------------- -----------------------------
                 **year 2000 through 2009**  **year 2010 and thereafter**

  Unit 1         1,561 tpy                   1,410 tpy

  Unit 2         139 tpy                     98 tpy

  Unit 3         3,821 tpy                   3,496 tpy

  Unit 4         3,052 tpy                   2,884 tpy
  -------------- --------------------------- -----------------------------

**2. Process Unit F, Abrasive Blasting Facility** \[District-only Rule
206\]

> a\. All abrasive material transfer points shall be fully enclosed
> during blasting. Loading of new and spent abrasive shall be conducted
> with a minimum of dust generation.
>
> b\. All dust collector filters shall be maintained in good condition.
>
> c\. Only steel grit and ARB certified abrasives may be recycled. The
> recycling of abrasives must be done in accordance with the Performance
> Specifications set forth in Title 17. \[District-only, Rule 206\]
>
> d\. Visible emissions from the blasting booth shall not exceed twenty
> percent (20%) opacity for periods aggregating more than three (3)
> minutes in any hour.

3\. **Process Unit Q, Standby Generator** \[District only, Rule 206\]

> a\. No other emergency diesel fired standby generators rated above 50
> hp may be operated at this facility without APCO approval.
>
> b\. Non-emergency operation shall not exceed twenty-six (26) hours in
> any year. An emergency is defined as failure of normal electrical
> power service that is beyond the control of the permit holder.
>
> c\. Only diesel fuel that meets the California Air Resources Board's
> (CARB) specifications for on-road use shall be used to fuel the engine
> unless otherwise approved by the APCO. Records of the fuel purchases
> shall be maintained and include a fuel specification sheet that shows
> compliance with this condition.
>
> d\. PM10 emissions shall not exceed 0.011 g/bhp-hr.
>
> e\. Visible emissions from the exhaust shall not exceed Ringlemann No.
> 1/4 or five percent (5%) opacity for periods aggregating more than
> three (3) minutes in any hour.
>
> f\. An APCO approved engine operator inspection plan shall be
> maintained. The plan shall include a specific inspection procedure to
> ensure that the engine and particulate filter are operated in
> compliance with the emission limits and conditions of this permit.
>
> g\. The engine shall be maintained according to an APCO approved
> engine operator inspection plan; inspections shall be conducted at
> least once every 90 days.
>
> h\. The diesel particulate filter shall be cleaned or replaced after
> each 5000 hours of operation, or as needed to maintain the
> manufacturer's suggested backpressure.
>
> i\. The standby generator particulate filter shall be tested for
> particulate control every 100 hours of operation according to an APCO
> approved test. The particulate control test will consist of monitoring
> and recording the post filter exhaust stream temperature and back
> pressure for one engine run cycle at a typical engine load, and
> reporting this information to the APCO after every 100 hours of
> operation.

4\. **Process Unit Q, Firepump Engines #3 & 4 and Ingersol Rand
Compressor Engine** \[District only, Rule 206\]

a\. Non-emergency operation of the compressor engine shall be limited to
maintenance and performance testing only and shall not exceed twenty
(20) hours per engine per calendar year for the air compressor in
process unit Q. Operation for emissions testing required by the District
shall not be limited by this condition.

b\. Non-emergency operation of the fire pump engines shall not exceed
the number of hours necessary to comply with the testing requirements of
National Fire Protection Association (NFPA) 25 - Standard for the
Inspection, Testing, and Maintenance of Water-Based Fire Protection
Systems, 1998 edition, as referenced through NFPA 13 - Standard for the
Installation of Sprinkler Systems, 1999 edition, in the 2001 California
Building Code, 24 CCR part 2, vol. 2, chapter 35, Uniform Building Code
Standards (the number of necessary hours is nominally 26 hours per year.
Proof of the operating requirements for the fire pump engines shall be
maintained onsite. Operation for emissions testing required by the
District shall not be limited by this condition.

> c\. The Air Pollution Control Officer (APCO) shall be notified in
> writing within seven (7) days of exceeding the yearly non-emergency
> operation limit.

d\. An emergency is defined as failure of normal electrical power
service that is beyond the control of the permit holder and does not
include voluntarily disconnecting from utility grid power or as a fire
that requires the use of the fire suppression system.

e\. Only diesel fuel that meets the California Air Resources Board\'s
specifications for on-road use shall be used to fuel the engines unless
otherwise approved by the APCO. Records of the fuel purchases shall be
maintained and include a fuel specification sheet that shows compliance
with this condition.

f\. Visible emissions from the engine exhaust shall not exceed
Ringelmann No. 1 or twenty percent (20%) opacity for periods aggregating
more than three (3) minutes in any hour.

g\. A non-resettable hour meter for each engine shall be installed and
maintained unless an APCO approved alternative tracking procedure is
approved.

**F. Permit Shield.** The following federally-enforceable limits are
subsumed by the conditions of this permit as referenced. Through this
action, streamlined requirements which were previously District-only
requirements become federally-enforceable if any subsumed requirement is
federally-enforceable. All monitoring, recordkeeping, and reporting
requirements that are associated with any subsumed requirement are also
subsumed and shall not apply except as identified elsewhere in this
permit.

 1. The NO~x~ and CO~2~ continuous emissions monitoring requirements of
SIP Rule I.113.II.A and District Rule 113.B.1 for the main boiler units
are subsumed and shall not apply. \[condition III.C.1\]

**IV. Compliance Determination Fees.** The following fee schedules shall
apply to the indicated process units.

  ------------- ----------------------- ---------- ------------------------------- ----------
  **PROCESS**                           **FEE                                      **Each**
                                        SCHEDULE                                   
                                        (Rule                                      
                                        302.E)**                                   

  A             Boiler Units 1, 2, 3,   22b        Fossil fuel fired power plant   4
                and 4                              boilers                         

  E             Oil-Water Separator     39         oily water treatment            1

  F             Abrasive Blasting       50         Sandblasting                    1
                Facility                                                           

  Q             Standby Engine          28d        Internal Combustion Engine      4
  ------------- ----------------------- ---------- ------------------------------- ----------

**V. Acid Rain Provisions.** The Dynegy Morro Bay Power Plant (MBPP)
shall comply with all applicable provisions of 40CFR72, [Permits
Regulation]{.underline} and their Title IV permit application as
indicated in the following four pages. \[40CFR72 and Rule 217\]

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