# MEMORANDUM

TO: Navajo Generating Station Docket

FROM: Colleen McKaughan, Associate Director, Air Division, EPA Region 9

DATE: March 19, 2013

PARTICIPANTS: See attached sign

‐ in sheet

SUMMARY: Colleen McKaughan met with Chairman Ned Norris, Tohono O’odham Nation, and members

of the Water Resources Committee on March 19, 2013. Colleen went over a presentation on the

proposed Navajo Generating Station BART determination (copy attached), and responded to questions.Region 9, Air Permits OfficeOverview of EPA ProposedOverviewofEPAProposedRulemakingforNavajo Generating StationMeeting with Tohono O’odham NationMarch 19, 2013Colleen McKaughanAssociate Director, Air DivisionUS E i l P i A R i 91USEnvironmentalProtectionAgency,Region9Region 9, Air Permits Office2Region 9, Air Permits OfficeOverviewOn Febr ar 5 EPA p blished o r proposed•OnFebruary5,EPApublishedourproposedBART determination and an alternative to BARTfor NGSforNGS• We proposed two things:–an emission limit for oxides of nitrogen (NO)anemissionlimitforoxidesofnitrogen(NOxachievable with installation of selective catalyticreduction (SCR) in 5 years (BART) and–a framework to give NGS credit for early NOxreductions and provide NGS with more flexibility onthe timingof compliance(alternative to BART)p( )3Region 9, Air Permits OfficeHistory of NGS•NGS is located on Navajo Nation and burns coal thatNGSislocatedonNavajoNationandburnscoalthatis mined on reservation lands of the Navajo Nationand Hopi Tribe• U.S. Bureau of Reclamation owns 24.3% of NGS forthe benefit of the Central Arizona Project• NGS plays important roles in Arizona:– EmploymentSource of revenue to Navajo Nation and Hopi Tribe–SourceofrevenuetoNavajoNationandHopiTribe– Source of electricity–Electricityis also used topumpCAP water and fulfillppterms of several water settlement agreements withtribes located in Arizona4Region 9, Air Permits OfficeWhy Are We Evaluating NGS?C•ongress required EPA to improve visibility atNational Parks and Wilderness Areas (Class I areas)–Regional Haze ProgramRegionalHazeProgram• Large, old sources of air pollution that affect visibilityin Class I areas must be evaluated to determine ifinClassIareasmustbeevaluatedtodetermineifnew air pollution controls should be required (BestAvailable Retrofit Technology – BART)• NGS affects visibility at 11 Class I areas, includingGrand Canyon and Canyonlands and is subject to theBART i t f th R i l H P5BARTrequirementoftheRegionalHazeProgramRegion 9, Air Permits OfficeHow Do We Improve Visibility?• Air pollutants (for example, gases like NOxthatform particulate matter) cause regional haze• By reducing emissions of air pollutants that causehaze, we can improve visibility• The same pollutants that impair visibility are aconcern for human health, therefore reducinghaze also improves air qualityhazealsoimprovesairquality• EPA or State Agencies evaluate whether newcontrols should be required for all facilities thatcontrolsshouldberequiredforallfacilitiesthatare subject to BART requirement6Region 9, Air Permits OfficeHow is BART determined?• BART is determined based on a 5-factor analysis– Factor 1 – How much would controls cost the facility?– Factor 2 – Are there energy, economic, or otherenvironmental impacts of the control?– Factor 3 – What are the existing controls at the facility?– Factor 4 – What is the remaining useful life of thef ilit ?facility?– Factor 5 – How will visibility improve by addingcontrols?7Region 9, Air Permits OfficeBrief Overview of 5-Factor AnalysisLNB/SOFA SNCR + LNB/SOFA SCR + LNB/SOFA

actor 1Emission Limit 0.24 lb/MMBtu 0.18 lb/MMBtu 0.055 lb/MMBtuEmission Reductions 10,865 tpy 16,608 tpy 28,573 tpyTotal Capital Costs$45million$84 million$541 million

FTotalCapitalCosts$45million$84million$541millionAverage Cost Effectiveness $486/ton $1,745/ton $2,240/tonElectricity Rate for SRPCustomers in 20189.26 cents/kWh 9.28 cents/kWh 9.32 cents/kWh2Energy-only Water Rate for CAPCustomers$58/acre-foot $61/acre-foot $66/acre-foot3 Existing Controls LNB/SOFA were installed early and voluntarily in 2009-20114 Remaining Useful Life Amortization Periodof 20 years; Lease extended to 20445Largest Single Class I areaVisibility Improvement2.1 deciviews 3.1 deciviews 5.4 deciviews8Cumulative Visibility Improvement 16 deciviews 22 deciviews 35 deciviewsRegion 9, Air Permits OfficeWhy Did We Propose New Controls?• Based on our 5-factor analysis, EPA determinedthat installation of SCR + LNB/SOFA at NGS tod NOi ireucexemissions:– is cost-effective–would not create a competitive disadvantage for NGS– would result in a perceptible improvement in visibility atth Cl I ff t d b NGStheClassIareas affectedbyNGS9Region 9, Air Permits OfficeWhy is EPA Proposing an Alternative?• Given the importance of NGS to tribes located in Arizonaand its location on tribal land,it is appropriate to provideadditional flexibility to the ownersadditionalflexibilitytotheowners• Compliance timeframes for alternatives to BART under theRegional Haze Rule that applyon state land do not applypp y pp yon tribal land• Under the Tribal Authority Rule, EPA has discretion tod t i if d h FIP i d i tdetermineifandwhen aFIPis necessary andappropriate,including the timeline for complying with thoserequirements10Region 9, Air Permits OfficeTh R i l H R l (RHR) i ith BARTFramework for Considering Alternatives•TheRegionalHazeRule(RHR)requires eitherBARToranalternative measure that will achieve greater reasonableprogress than BART (more emission reductions)• EPA is proposing to give NGS credit for early and voluntary NOxreductions in order to extend the compliance date to 2023 formeeting BART limitsmeetingBARTlimits• This alternative achieves greater reasonable progress thanBART• EPA included a framework for stakeholders to consider datesbeyond 2023 by implementing additional emission reductionsthat would ensure greater reasonable progress than BARTthatwouldensuregreaterreasonableprogressthanBART11Region 9, Air Permits Office550,000BetterthanBARTCalculationsandComparisonofAlternativeComplianceDates450,000500,000LNBCreditLNBC ditLNBCredit350,000400,000

v er 2009 ‐ 2044BetterthanBARTThreshold t t

tEmissions ReductionBridgeNeededtoEqualBARTLNBCreditLNBCreditLNBCredit250,000300,000

l NOx Emissions o v n g for LNB Credi t n g for LNB Credi t

ng for LNB Credi t100 000150,000200,000

Tota l issions Accounti n issions Accounti n

m issions Accounti050,000100,000 Adjusted Em Adjusted Em

Adjusted E mIFLNBandSCRInstalledConcurrentlyby2018BARTby2018withLNBasInstalledin2009‐2011LNBCredit Alt1(21/22/23) Alt2(23/24/25) Alt3(24/25/26)AlternativeComplianceYearScenarios12Region 9, Air Permits Office•EPA has extended the comment period to August 5 2013What Happens Next?EPAhasextendedthecommentperiodtoAugust5,2013based on requests from Navajo Nation and other stakeholders• Consultation will be ongoingduringthepublic commentperiodg g p p• EPA will hold public hearings towards the end of the commentperiod• EPA anticipates stakeholders will suggest other alternatives toBART that ensure greater reasonable progress in exchange formore time to comply with the BART limitsmoretimetocomplywiththeBARTlimits• EPA will evaluate suggested alternatives and may put forth asupplemental proposal if those alternatives achieve greaterbl th BART13reasonable progressthanBARTRegion 9, Air Permits OfficeEPA DOI d DOE h itt d t k t th tJoint Federal Agency Workgroup•EPA,DOI, andDOEhave committedto worktogethertosupport stakeholder interests in NGS–Create a long-term EPA-DOI-DOI WorkingGroup– Work with stakeholders, including the owners of NGS, tribes and otherCAP water users, and environmentaland community groups, to developa roadmapto achieve long-termgoals related to clean energy,ggy,sustainable water supplies, and sustainable economic development– Complete the Phase 2 reporton clean energy options for NGSSupport shorter term investments that align with long term clean energy–Supportshorterterminvestmentsthatalignwithlongtermcleanenergygoals• The Working Group is a separate process from BART14Region 9, Air Permits OfficeWhat Happens After the Comment Period?• EPA will review and consider all comments beforemaking a final decision• We will respond to all comments in writing andincorporate any changes to the proposal as a resultof comments in our final decisionofcommentsinourfinaldecision• Documents will also be posted online and in ourdocket for this rulemakingdocketforthisrulemaking15Region 9, Air Permits OfficeFor Further InformationName Role Phone EmailColleenMcKaughanAssociate Director,Air Division520.498.0118 McKaughan.Colleen@epa.govAirDivisionAnn Lyons Office of RegionalCounsel415.972.3883 Lyons.Ann@epa.govAnita Lee Staff Lead,Air 415.972.3958 Lee.Anita@epa.govDivision@p g16