## - REVISION TO THF STATE IMPLEMENTA'TION PLAN FOR THE SOUTHCOAST AIR QUALITY MANAGEMENT DISTRICT, STATE OF CALIFORNIA: SULFUR OXIDES AND PARTICULATE MATTER OFFSET REQUIREMENTSFOR THE PROPOSED CPV SENTINEL POWER PLANT TO BE LOCATED IN DESERT HOT SPRINGS, CALIFORNIA, INCLUDING AB 1318 OFFSET TRACKING SYSTEM

PREAMBLE: PURPOSE OF SIP REVISION The purpose ofthis source-specific revision to the StateImplementation Plan (SIP) for the South Coast Air Quality Management District (AQMD) is to implement California AB 1318 (2009, V.M. Perez) (Stats. 2009, Ch. 285), including California Health and Safety Code Section 40440.14. That section requires the Executive Officer ofthe AQMD to credit to the South Coast District's internal emission credit accounts and transfer to eligible electrical generating facilities emission credits in the full amounts needed to issue permits for eligible electrical generating facilities to meet requirements for sulfur oxides and particulate matter emissions. The proposed CPV Sentinel, LLC power plant has been found to be an eligible electrical generating facility under this section, and is the only known eligible facility. Theproposed SIP revision will provide a mechanism for the transfer of credits to CPV Sentinel, and will establish the AB 1318


## -- tracking system used to account for such credits.

DESCRIPTION OFPROPOSED POWER PLANT
CPV Sentinel, LLC has proposed to build an 850 megawatt (MW) natural gas-fired power plant, to be located at 62575 Power Line Road, Desert Hot Springs, California, 92440. The project has submitted an Application for Certification to the California Energy Commission (07-AFC-3) and has submitted a Title V Application for a Permit to Construct to the AQMD (Facility ID No. 152707) Theproposed plant has been found to be an eligible electrical generating facility under Health and Safety Code section 40440.14(d) because it is (1) subjectto the permitting jurisdiction of the State Energy Resources Conservation and Development Commission (also referred to as California Energy Commission or CEC), (2) it has a purchase agreement, executed

on or before December 3 1,2008, to provide electricity to a public utility, as defined in Section 216 ofthe Public Utilities Code, subject to regulation by the Public Utilities Commission, for use within the Los Angeles Basin Local Reliability Area, and (3) it is under the jurisdiction of the South Coast Air Quality Management District, but not within the South Coast Air Basin (it is proposed to be located in the Salton Sea Air Basin). In addition, the AQMD has found that the proposed CPV Sentinel project meets all the requirements of the applicable new source review rule and all other applicable district regulations that must be met under Section 1744.5 of Title 20 ofthe California Code of Regulations, as required by Health and Safety Code Section


# - 40440.14(a).REASON FOR SIPREVISION

California Health and Safety Code section40440.14 in AB 1318 requires the Executive Officer of the AQMD to credit to the AQMD's internal emission credit accounts and to transfer to eligible electrical generating facilities, which includes only the CPV Sentinel power plant, emission credits in the full amounts needed for particulate matter and sulfur oxides to issue permits to the proposed CPV Sentinel power plant. To implement AB 1318,this SIPrevision provides a federally-approved mechanism to transfer credits from the AQMD's internal accounts to offset the CPV Sentinel Energy Project proposed Power Plant because CPV Sentinel is not eligible for either Rule 1304or the May 3,2002 version ofRule 1309.1 and AB 1318requires the transfer ofthe specified credits.

ESTABLISHMENT OF AB13 18 TRACKING SYSTEM FOR CPV SENTIIVELPOWER PLANT
AQMD has decided to establish a new tracking system for the CPV Sentinel Energy Project specific to AB 13 18 which consists of specific offsets credits that have been identified from reductions occurring from permitted equipmentthat permanently ceased operations in AQMD. The AQMD has not issued any ERCs for these specific emission reductions to the companies that operated the equipment as a result of the reductions. These Soxand PM10 offsets have been removed from the AQMD's internal offset accounts and have not been used by any other source,
nor will they be used by any other projects in the future if they are used for the CPV Sentinel Energy Project. These offsets are also described in the documented entitled "CPV Sentinel Energy Project AB 13 18Tracking System" attached hereto.

The amounts of emission offsets contained in the AB 1318Tracking System are based on actual SOXand PMlO emissions reported to AQMD under AQMD's Annual Emissions Reporting Program. In addition, for each source of credit, the equipmenthas been shut down and the permits have been inactivated by AQMD. The emission reductions for SOXand PM 10have occurred during calendar years 1999through 2008. The offsets deposited in the AB 131 8 Tracking System meet all the U.S. EPA's integrity criteria for qualifying as offsets, meaning they are all real, permanent, enforceable, quantifiable, and surplus. The AB 13 18Tracking System is being submitted to U.S. EPA for approval.

TEXT OF SIPREVISION -CPV Sentinel Energy Project AB 1318Tracking System

The proposed text of the SIPrevision is as follows:

The Executive Officer ofthe South Coast Air Quality Management District shall transfer sulfur oxides and particulate emission credits from the CPV Sentinel Energy Project AB 1318Tracking System, attached hereto and incorporated by reference herein, to eligible electrical generating facilities pursuant to Health and Safety Code section 40440.14, as in effect January 1,2010, (i.e. the CPV Sentinel Power Plant to be located in Desert Hot Springs, CA) in the full amountsneeded to issue permits to construct and to meet requirements for sulfur oxides and particulate matter emissions. Notwithstanding District Rule 1303,this SIPrevision provides a federally enforceablemechanism for transferring offsets from the AQMD's internal accounts to the CPV Sentinel Project. The Executive Officer shall complete the transfer of credits to an electrical generating facility pursuant to this provision upon the receipt ofpayment ofthe mitigation fees set forth inthe south coast district's Rule 1309.1,as adopted on August 3, 2007, regardless ofthe subsequent repeal ofthose provisions. This section shall remain in effect only until January 1, 2012, and sunsets as of that date. Such repeal does not affect the federal approvability of credits

orthe transfer of such credits that are transferred prior to the repeal.

OFFSET EVALUATION FOR CPV SENTINEL PROJECT

The offset evaluation for SOXand PMlO for the CPV SentinelProject is included in the CPV Sentinel Energy Project AB 13 18 Tracking System as authorized by AB 131 8 and is being submitted to U.S. EPA for approval and inclusion into the SIP. The offset requirements for VOC and NOx are being met by compliance with existing SIP-approved AQMD rules and do not require any additional approvals from U.S. EPA. The Salton Sea Air Basin is not designated as Nonattainrnent for either CO or PM2.5 and therefore offsets are not required for these pollutants.

".. CAA 

## 5 11 O(1) ANALYSIS

This SIPrevision does not interfere with any applicable requirement concerning attainment or reasonable furtherprogress or any other requirement ofthe Clean Air Act, asprovided in CAA 

## 5 110(1),42 U.S.C. 

## 5 74 1 O(1). This SIPrevision merely provides a mechanism for satisfying the offset requirements of CAA 

## 5 173,42 U.S.C.

## 5 7503, which fully satisfies that requirement. Even if the § 11O(1) analysis included the air quality impacts of operation of the CPV Sentinel Energy Project, the accompanying "Air Quality Demonstration: SIP Revision for CPV Sentinel Energy Project" showsthat operation oftheplant does not violate 

## 5 11 O(1).