OSr41. UNITEDSTATES ENVIRONMENTAL PROTECTION AGENCY.\I1Z

REGION
IX 75 Hawthorne Street San Francisco, CA 94105-3901 OCT 182011 Steve Williams, City Manager City of Palmdale 38300 Sierra Highway, Suite A Palmdale, CA 93550 Re: Final Prevention
of Significant Deterioration Permit for Palmdale Hybrid Power Project Dear Mr. Williams: In accordance with the Clean Air Act (CAA), asamended (42 U.S.C 7401 et seq.), the U.S. Environmental Protection Agency, Region

9 (EPA) has reviewed your application for aCAA Prevention
of Significant Deterioration (PSD) permit authorizing the construction and operation of anew 570-megawatt (MW, nominal) natural gas-fired combined-cycle power plant, with an integrated
50 MW solar-thermal plant, known asthe Palmdale Hybrid Power Project (PHPP)
in Palmdale, California. EPA issued and published requests for public comment regarding EPA’s proposed action onthe above-referenced application

in August 2011. EPA received comments during the public comment period. Enclosed

is a copyof our Responses

to Comments document for ourfinal permit decision. After consideration

of the expressed views of all commenters, the pertinent Federal statutes and regulations and additional material relevant
tothe application and contained in ourAdministrative Record, the EPA hereby issues the enclosed PSD Permit for the facility described above. The final permit, Response
to Comments document and other key documents relevant
tothe final PSD permit arealso available online at www.regulations.gov (Docket ID # EPA-R09-OAR-201 1-0560), with
alink from ourwebsite
at www.epa. gov/region09/air/perrnit/r9-permits-issued.html#psd. Within 30 days after the service of notice announcing the EPA’s final permit decision, any personwho filed comments
onthe proposed permit or participated

in the public hearing may petition the EPA’s Environmental Appeals Board (EAB) to review anycondition of the final permit. The petition must include

astatement of the reason(s) for requesting review by the FlAB, including

ademonstration that anyissues being raised wereraised during the public comment period tothe extent required by the regulations

at 40 CFR Part 124 and when appropriate,

a showing that the conditions

in question arebased on 1) a finding of fact orconclusion
of law which is erroneous,
or 2) anexercise of discretion
oran important policy consideration which the EAB should, in its discretion, review. Please see40 CFR 124.19 and visit http://www.epa.gov/eab/

for moreinformation regarding the procedures for appeal of aPSD permit decision
tothe EAB.PrintedonRecycled PaperThis PSD permit shall take effect thirty (30) days from the date of service of notice of EPA’s final permit decision unless

a petition(s) for appeal
is properly and timely filed with the EAR. in the event

a petition(s) for review
is filed, construction
of the facility cannot begin under this PSD permit until resolution
of the EAB petition(s). If you have any questions regarding this matter, please contact Lisa Beckham of the EPA’s Region

9 Permits Office at (415) 972-3811. Sincerely, Director, Air Division cc: Thomas Barnett, Inland Energy (via email) Sara Head, AECOM (via email) Mike Carroll, Latham
& Watkins (via email) Bret Banks, Antelope Valley Air Quality Management District (via email) Alan De Salvio, Mo] ave Desert Air Quality Management District (via email) Michael Tolistrup, California Air Resources Board (via email) Matthew Layton, California Energy Commission (via email) Felicia Miller, California Energy Commission (via email)2