February 2, 2012

‘I’he 1-lonorable Jared Blurnenfeld

Region 9 Administrator

U.S. Environmental Protection Agency

75 Hawthon ,ucet

San Francisco, CA 941 05

Re: Pending Best Available Retrofit Technology (BART) Proposalfor

Navajo Generating Station

Dear Administrator Blumenfeld:

We understand that the United States Environmental Protection Agency (EPA) is no developing a Best Available Retrofit echnology (BART) proposal for the Navajo Generating Station (\GS) designed to reduce regional haze in certain national parks and wilderness areas. ‘[his proposal could require the installation of emission control technology at a cost of up to $1 .1 billion. We respectfully request that you develop a BART proposal that makes progress towards the long-term goals of the Regional Fiaze Rule without introducing a risk of severe economic and

environmental consequences in the state.

NUS provides a significant economic benefit to the State of Arizona. The plant employs over 50() people, more than 80% of whom are Navajo. The Kayenta Mine, which supplies coal to NGS, has over 400 employees and approximately 80% are Native American. Ibis accounts for

about 1,000 direct jobs between the two facilities. NUS also provides substantial broader economic benefits to the state as a whole. In a recent study, Arizona State University estimated that NGS and the Kayenla Mine will account for over $20 billion in Gross State Product between

2011 and 2044, and contribute to over 3,000 jobs each year.

The FPA’s BAR 1’ proposal for NGS could also have a significant impact on ater costs arni use

in Arizona. NUS supplies over 90% of the power used by the Central Arizona Project (CAP, to

pump water from the Colorado River. it provides funds for the repayment ol the cost of

constructing the CAP, and for water rights settlements with multiple central Arizona Indian

Tribes. ‘I’he cost increases associated with EPA’s BAWl proposal will be born

disproportionately by 1 ‘rihal and agricultural water users.

CAP’s supply ol renewable water is integral to the economy of the State ol’Arizona and supports o’.’er 80% of Arizona’s population and economic activity. In addition, CAP has also helped the State ol Arizona meet its water management and regulatory objectives of reducing groundwater

use and ensuring availability of groundwater as a supplemental water supply during future
installation of new emission controls

— low NOx burners with separated overfire air (LNB/SOFA)

— that have reduced NOx emissions by about 40%. While an EPA BART proposal requiring any emission controls in addition to those recently installed at NGS could have high costs to the economy and be potentially devastating to local communities, the Navajo Nation and the Hopi Tribe, the benefits of such

a proposal would be highly uncertain or negligible. As a report released by the National Renewable Energy Lab (NREL) acknowledges:

The body of research to date ... is inconclusive as to whether removing approximately two-thirds of the current NOx emissions from [NGS] would lead to

any perceptible improvement in visibility at the Grand Canyon and other areas of

concern.

We are facing a situation where little, if any, perceptible visibility improvements would be achieved, and yet the cost of installing such control measures would, according to the NREL report, increase cost of water for municipal users by as much as 7 percent and for Tribal and agricultural users from anywhere between 13 and 32 percent. For agricultural users, these costs would potentially price them out of the market for the very renewable CAP water resource that has drawn them away from groundwater.

The viability of NGS is contingent on several key issues in addition to the EPA’s decision on what constitutes BART. Namely, the plant site lease and fuel supply contract expire in 2019. The extension of these agreements will require a comprehensive environmental review and approval by the United States Department of Interior. The fuel supply contract with Peabody Energy is also currently being renegotiated.

If EPA were to require the six NGS owners to install, in addition to the recently installed LNB/SOFA, the most stringent, high-cost controls as BAR’.I’, the owners would have to justify a significant capital expense without any certainty that the plant could continue to operate beyond 2019, and without any certainty regarding the future cost of the plant site lease and fuel supply. This could put the plant at

a significant risk of closure, which could have devastating economic, water and power supply consequences.

The EPA’s Regional Haze Rule is structured in 10-year planning periods, with the long-term goal ofreaching natural background visibility conditions in designated national parks by 2064. In the first 10-year planning period, facilities that are subject to the Regional Flaze Rule are required to install the control technology that is determined by EPA to be BART. EPA will have opportunities to require more stringent controls in subsequent planning periods, if necessary, in order to achieve the long-term goals of the Regional Haze Rule.

We respectfully request that you take the unique circumstances affecting NUS into consideration in your pending BART proposal. We are confident that if those circumstances are properly taken into account, EPA can develop a BART proposal that makes progress towards the long-term
ANDY :E7ZL TOBIN STEVE PIERCE Speaker of the House Senate President

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ALB1RT HALE J CK JA KSO

7 Arizona State Representative, District

2 ona St e Sen or, Dist ct