UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

MAY 2 a 2011

OFFICE OF

AIR AND RADIATION

The Hono rable Edward J. Markey

United States House ofRepresentatives

2 108 Rayburn House Office Building

Washington, DC 205 15

Dear Congressman Markey:

Thank you for your letter of May 17, 2011, to Administrator Lisa Jackson regarding questions in

preparation for a joint oversight hearing on "Protecting Long-Te rm Tribal Energy Jobs and

Keeping Arizona Water and Power Costs Affordable: The Current and Future Role ofthe Navajo

Generating Station," scheduled for May 24, 2011 by the Subcommittees on Water and Power and

Indian and Alaska Native Affairs. The Administrator asked that I respond on her behalf.

We reproduced your questions below in italicized text and provided our responses below each

question.

Navajo Generating Station

What is the current pollution emissions profile ofthe Navajo Generating Station (NGS)? How

does it compare to other power plants in the United States? How many Class 1 Federal areas

(national parks greater than six thousand acres in size and national wilderness areas) does NGS

emissions impact?

• Based on 2010 emissions, NOS was the third largest emitter of oxides of nitrogen (NOx)

in the nation (24,000 tons), with a facility-wide average NOx emission rate 0£0.28

Ib/MMBtu, with two ofthree units operating new combustion controls, Low NOx Burners

and Separated Overfire Air (LNBfSOFA), installed in 2009 and 20 10.

• NOS impacts eleven Class I Federal areas, including Orand Canyon National Park.

Has EPA made a Best Available Retrofit Technology (BART) determination/or the Navajo

Generating Station (NGS) yet? What is the estimated timeline in which EPA is expected to

release a draft andfinal BART determination? Once afinal BART determinatio n is made, what

is the approximate time that the owners will have to retrofit the plant with the pollution

abatement technology?

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• EPA has not yet propo sed a BART determination for NOS . We intend to issue a proposal

in 2011 and a final BART determination in 2012.

• The Clean Air Act requires facilities to comply with a final BART determination within 5

years of the effective date of the final rule. Emissions reductions that are required under

an alternative to the BART program must be achieved within the first regional haze

planning period, which ends July 31, 20 18.

Is EPA aware of a stakeholder process initiated by the Salt River Project (SRP), the operator

and partial owner ofNGS, to develop a BARTproposal? Should a BARTproposal emerge from

the SRP process. will the EPA assess their proposal as a part ofEPA's BART determination

process? What other opportunities will the public have to comment on EPA 's BART

determination?

• EPA is aware of the stakeholder process initiated by SRP. If the stakeholders develop a

propo sal and submit it to EPA, EPA will take the information into consideration. When

EPA proposes our BART determination in the Federal Register, EPA will request public

comment on our proposal. We plan to hold open houses and publ ic hearings in locations

near Navajo Generating Station, both on the Navajo Nation, and in Arizona. All

information will be available on www.regulat ions.gov.

Given that the electricity generated by NGS is usedf or both power and water delivery in Arizona

and other Western states, what is the EPA doing to evaluate the impact on electricity and water

prices as part ofthe "fi ve factor" analysis for BART determinations?

• EPA is evaluating the potential impact on electricity prices to consumers of NGS power

and the potential impact on water prices to consumers of water from the Central Arizona

Project (CAP). Under the Regional Haze Rule, a BART analysis must include

consideration of five factors: (l ) the costs of compliance, (2) the energy and non-air

quality environmental impacts of compliance, (3) the existing pollution controls at the

source, (4) the remaining useful life of the source and (5) the degree of visibility

impro vement which may reasonably be anticipated to result from the use of such

technology. EPA will evaluate the impacts to electricity and water consumers under

Factor 2: Energy and Non-Air Quality Environmental Impacts of Compliance.

Could you please outline the process in which that EPA has consulted, and will continue to

consult, with the tribes regarding the NGS BART determination? How will EPA take into

account the potential economic impact on the tribes of a proposed BART determination?

• During EPA's preliminary work on its BART determination for the Four.Corners Power

Plant (FCPP) and NOS, EPA periodically updated Navajo Nation EPA on our analyses

during annual meetings on air issues. Before signing the ANPRM in 2009, our Acting

Regional Administrator called President Shirley to inform him of the ANPRM and offer

consultation. We understand the importance ofFCPP to the Navajo Nation, and the

importance of NGS to both the Navajo and the Hopi Tribe.

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• EPA met with representatives ofthe Navajo Nation in September 2009 to initiate

consultation for both power plants. In November 2009, we sent letters to all Arizona

Tribes offering to consult on NGS and requested feedback on how each Tribe would like

the consultation process to occur. In December 2009, EPA provided a briefing and

presentation to the members of the InterTribal Council of Arizona. We received

consultation requests from the Gila River Indian Community, Hopi Tribe, Ak-Chin

Indian Community, and Tohono O'odham Nation and met with those Tribes individually.

In addition to a direct consultation meeting with EPA, the Hopi Tribe submitted a report

it commissioned from ICF International on potential impacts of several potential

regulatory requirements on NOS. We are reviewing that report as part of our economic

analysis for NOS. EPA extended the time period for Tribes to review and comment on

the ANPRM to March I, 2010, over 6 months after Federal Register publication of the

ANPRM.

• EPA is considering the potential economic impact to Tribes in our analysis of the

potential impacts to electricity and water rates. We are providing the opportunity to

Tribes to submit water volume and cost information so that our analyses can specifically

focus on impacts to individual Tribes, as all Tribes have different water settlement

agreements and sources of water.

Concerns have been raised about closing the NGS. Has EPA proposed closing the NGS? In

EPA's Advanced Notice of Proposed Rulemaking (ANPR) published in the Federal Register on

August 28, 2009, none of the scenarios that EPA outlinesf or comment include shutting down any

of the 3 boilers at NGS. As part ofthe BART determination, are you considering scenarios

beyond those outlined in the ANPR? Ifso, do any of those scenarios involve shutting down any

or all ofthe boilers at NGS?

• EPA has not proposed to close NOS. EPA's goal is to conduct a thorough analysis to

determine on a case-by-case basis the appropriate level of control as BART that is cost

effective, improves visibility, and does not harm Tribes. EPA did not discuss any

scenarios in our ANPRM that involved closing any ofthe boilers at NOS because it is not

EPA' s intention to require shutdown, directly or indirectly, of any boilers at NGS or

FCPP. If the facility's owners propose to EPA an alternative to BART, EPA will

consider the alternative proposal, whether or not it involves closing one or more units.

The scenarios proposed in the August ANPR examine the impact ofinstalling a variety ofcontrol

technologies including Low NOx Burners (LNB), Separated Overfire Air (SOFA) and Selective

Catalytic Reduction (SCR). Are these technologies in common use at other power plants in the

United States? How many Us. plants have these technologies installed? How many will be

installing these technologies in the next 5 years? Does EPA f actor in the constructionjobs

associated with installing these technologies in their economic analyses f or the BART

determination?

• The NOx control technologies discussed in the ANPRM, LNB/SO FA and SCR, are

common technologies that are used at coal-fired power plants throughout the United

States and the world. LNB and SOFA are controls that reduce NOx during the

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combustion proce ss and are often known as "combustion controls". SCR is a postcombustion control techn ology that removes NOx form ed during combustion by

converting it to inert atmos pheric nitrogen (N2) . The combined use ofLNB/SOFA and

SCR typically represents Best Available Control Technology (BACT), required for the

construction of any new coal-fired power plant.

• In the United States, based on 2010 total coa l steam capacity (315,900 MW), LNB was

installed on 240,627 MW (76% of capacity) to reduce emissions of NOx • As stated

previously, several NOx control technologies are often used in combination with each

other. Because many coa l-fired power plants using LNB also employ other technologies

to further reduce NOx , the reported percentages will exceed 100%. Ove rfire air is used

on 80,339 MW (25% ofthe coal steam capacity), and SCR is used on 122,947 MW (39%

of capacity). In 2014, EPA expects the total coal steam capacity equipped with LNB to

increase to 263,834 MW (83% of expected 2014 coal steam capacity of3 17,700 MW),

OFA to increase to 100,814 MW (32%), and SCR to increase to 147,986 MW (47%).

• EPA does not factor the construction jobs associated with installing these technologies

into the economic analysis for BART.

Four Corners Power Plant and Desert Rock

Did EPA require the shutting down ofany boilers at the Four Corners Power Plant (FC? P) in

its proposed October 2010 BART determination? Did the proposal to shut boilers 1-3 at FCPP

originate with EPA or the owners ofFCPP? How is the EPA evaluating the alternative proposal

putforward by the Fepp owners? What opportunities have the public had to comment on the

two proposals? What consultation has EPA done with the affected tribes ?

• EPA did not require the closure of any boilers at FCPP in the October 2010 proposed

BART determination . The proposal to close Units I - 3 at FCPP originated with the

owners of FCPP, and was facilitated by, and is contingent upon , the sale of Southern

California Edison's 48% share of Units 4 & 5 (1500 MW total) to Arizona Public

Service , which owns 100% of Units I - 3 (560 MW total). EPA evaluated the alternative

proposal put forth by the owners of FCPP in our February 25, 2011 Supplementa l Notice,

which proposed to allow the owners of FCPP the flexibility to either comply with our

October 2010 proposed BART determination, or the Alternative to BART proposed by

FCPP's owners. EPA determined that the alternative proposal put forth by the owners of

FCPP, if implemented by July 31, 2018, meets the requirements of a BART Alternative

under the Regio nal Haze Rule because it will result in more emissions reductions, not

only of NOx, but also sulfur dioxide, particulate matter, and mercury, compared to our

October 2010 proposed BART determination.

• The comment period for the October 20 10 proposal and the February 20 11 Suppleme ntal

proposal closed on May 2, 20 11. Thus, the publi c had over 6 months to review and

comment on the October 2010 BART proposal and over 3 months to review and

comment on the February 2011 Supplemental proposal. EPA held four open house and

public hearin g events in March 201 1: two events were held on the Navaj o Nation, in

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Shiprock and Fruitland, New Mexico, near FCPP, one event was held in Farmington,

New Mexico, also near Fepp, and the final event was held in Durango, Colorado, at the

request of environmental groups due to its location downwind of FCP? We provided

Dine Interpretation services at the Ship rock, Fruitland, and Farmington event s. Three of

the events were held in the late afternoon and evening (e.g., open house from 3 - 5 PM,

public hearin g from 6 - 9PM), and one event, at the Nenahnezad Chapter House

(Fruitland, New Mexico), was held in the morning (combi ned open house and public

hearing 9 AM - IPM). All ope n house and public hearing events were well attended.

The Navajo Nation EPA attended the open house and public hearing events at all four

locations.

• EPA consulted with the Navajo Nation EPA on the format , locations, and timeframes for

the open house and public hearings, and Navajo Nation EPA participated in all events

with EPA representatives. The Navajo Nation recently reque sted form al governm ent-togovernment consultation with EPA on the Four Comers Power Plant, and EPA Region 9

will be meeting the President Shelly and other representatives of the Navajo Nation on

May 19, 2011.

There has been controversy surrounding the issuing and rescinding ofthe air permits f or the

Desert Rock power plant that was proposed to be built on Navajo land near Farmington. New

Mexico. Please outline the maj or milestones in permitting the plant. Has EPA indicated to the

developers what additional actions are needed to secure the necessary air permits to move

forward with the development of the plant? Are there actions EPA needs to take before the

developers can complete the requirements to secure the necessary permits?

• EPA wishes to clarify that its air program staff did not rescind the Preve ntion of

Significant Deterioration (PSD) permit for the Desert Rock Energy Facility. Rather, after

EPA issued the permit on July 31, 2008, several environme ntal organizations and the

State of New Mexico (petitioners) appealed the decision to EPA's Environmental

Appeals Board (EAB), which subsequently remanded the permit back to EPA's Region 9

office for further review on September 24, 2009. The EAB's remand was based on two

separate grounds. First, the EAB concluded that it was appropriate to grant a motion

filed by EPA for a voluntary remand of the permit. Second, based on the administrative

record for the permit, the EAB independently concluded that the entire permit should be

remanded because of one overarching issue related to the Best Available Control

Technology (BACT) analysis conducted by the Region.

• The EAB was establ ished in 1992 to funct ion as an administrative appeals co urt within

EPA and serves as the final Agency decision maker on administrative appea ls under all

major environm ental statutes that the Agenc y administers. The EAB consists of four

environm ental appeals judges, which generally sit in a three-judge panel for a particular

case. The EA B is an impartial body independent of all Agency components outside the

immediate Offic e ofthe Administrator.

• Upon review of the facts contained in the permit record for this case, briefs filed by the

Petitioners, and reply briefs submitted by both the permit applicant (Sithe Global Power,

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LLC) and counsel for EPA, the EAB independently found that the permit was deficient

because the applicant and the Region failed to properly consider the use of integrated

gasification combined cycle (IGCC) technology as an emissions control measure in the

required BACT analysis. Because of the fundamental nature of this deficiency, in

September 2009, the EAB remanded the permit in its entirety to the Region for further

review. In addition, the EAB granted a motion filed by Region 9 at the request of stafT

in the Administrator's office in April 2009 that the EAB remand the permit to Region 9

so EPA could voluntarily reconsider its approach to several issues raised in the appeal of

the permit ; the consideration of IGCC technology in the BACT analysis was also among

the issues cited in Region 9's voluntary remand request. Before granting the Region's

remand request, the EAB considered arguments about fairness and due process that had

been made by the permit applicant in a written motion in opposition to the April 2009

request. The EAB concluded that the April 2009 request was not made in bad faith and

that granting the request would not violate the due process requirements of the United

States Constitution.

• Following issuance of the remand order from the EAB in September 2009, EPA made

several attempts to work with the permit applicant to discuss how it could amend its

permit application to address the deficiencies identified by the EAB, the matters that EPA

had sought to reconsider, and other requirements that had arisen since the permit was

initially proposed. The applicant has not amended its permit application to provide the

information that EPA must have in order to proceed. We note that no further action on

EPA's part is necessary before the applicant can submit its amended application.

Nevertheless, EPA remains willing to work with the applicant to address these issues at

any time. Upon receipt of an amended pennit application, EPA would have to review

that application, revise its analyses and the permit to address the issues identified in the

EAB's remand order and applicable Clean Air Act requirements, provide the public with

notice of the revised permit and an opportunity for comment, and make a final permit

decision. In addition, prior to making a final decision to issue the permit, EPA would

also have to ensure that its obligations under Section 7 ofthe Endangered Species Act

(ESA) were met. Throughout our permittin g process for this facility, the Bureau of

Indian Affairs has been the lead federal agency with respect to the Section 7 ESA

consultation with the Fish and Wildlife Service. It is our understanding that consultation

has not been completed.

Could you please outline the process in which that EPA has consulted, and will continue to

consult, with the tribes regarding the development ofthe Desert Rockpower plant?

• Leading up to issuance ofthe permit on July 31, 2008, EPA conducted an extensive

public involvement process, during which we contacted 41 Native American Indian

Tribes to ofTer tribal consultation. Seven tribes responded to our consultation letter

and/or submitted comments on the proposed permit. In addition, representatives of the

Navajo Nation's Dine Power Authority regularly participated in meetings and conference

calls between EPA staff and the permit applicant, and EPA Administrator Jackson had a

number of conference calls with (then) President Shirley ofthe Navajo Nation. In the

event the permit applicant submits an amended application for the Desert Rock facility,

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EPA will continue to work closely with the Native American Tribes in the area as we

have in the past.

We trust that this information will be responsive to your questions. If you need further

information, please contact me, or have your staff contact Cheryl Mackay in the Office of

Congressional and Intergovernmental Relations at (202) 564·2023.

Sincerely,

ina McCarthy

Assistant Administrator

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