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EXHIBIT 10.135 

 

UNITED STATES DISTRICT COURT 

DISTRICT OF NEW MEXICO 

 

CONSENT DECREE 

Date lodged in Court March 10, 2005 

Date entered by Court. ____________ 

 

THE GRAND CANYON TRUST and ) 

SIERRA CLUB, ) 

 ) 

Plaintiffs, ) 

 ) 

THE STATE OF NEW MEXICO, ) 

 ) 

Plaintiff-Intervenor, ) 

 ) 

v. ) CV 02-552 BB/ACT (ACE) 

 ) 

PUBLIC SERVICE COMPANY OF ) 

NEW MEXICO, ) 

 ) 

 Defendant. ) 

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I. BACKGROUND 

WHEREAS, on May 16, 2002, Grand Canyon Trust and Sierra Club ("Plaintiffs") filed a citizen suit against Public 

Service Company of New Mexico ("PNM") in the United States District Court for the District of New Mexico in the above 

cause alleging certain violations of the Clean Air Act ("CAA") at PNM's San Juan Generating Station ("San Juan") near 

Farmington, New Mexico; and 

WHEREAS, Plaintiffs' complaint alleged that PNM had violated, and was continuing to violate, the twenty (20) 

percent opacity emission limit at San Juan Units 1, 3 and 4, and that PNM was operating San Juan Units 3 and 4 without a 

prevention of significant deterioration ("PSD") permit in violation of the CAA; and 

WHEREAS, after discovery, Plaintiffs and PNM filed at least four cross motions for summary judgment on 

both Plaintiffs' claims for relief and PNM's defenses; and 

WHEREAS, on May 1, 2003, the Court granted Plaintiffs' motion for summary judgment on standing; and 

WHEREAS, on August 20, 2003, the Court granted PNM's motion for summary judgment on Plaintiffs' PSD 

claim; and 

WHEREAS, the Court held a bench trial from November 17-19, 2003, on PNM's general defenses to Plaintiffs' 

opacity claim; and 

WHEREAS, on February 2, 2004, the Court dismissed after trial PNM's general defenses to Plaintiffs' opacity claim; 

and 

WHEREAS, on April 29, 2004, Plaintiffs served a second notice of intent to sue PNM regarding additional CAA 

violations at San Juan; and 

WHEREAS, on May 26, 2004, PNM agreed to the entry of an Order that found 42,008 

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opacity limit violations at San Juan that would be addressed in the remedy phase of the case; and 

WHEREAS, on September 12, 2003, the State of New Mexico, through the New Mexico Environment Department 

("Department"), issued a draft administrative compliance order to PNM alleging that San Juan had violated on numerous 

occasions the limits for nitrogen oxides, sulfur dioxide, particulate matter, and opacity in its New Source Review and Title V 

permits; and 

WHEREAS, on May 14, 2004, the Department issued a revised draft administrative compliance order to PNM 

alleging that San Juan had violated on numerous occasions the limits for nitrogen oxides, sulfur dioxide, particulate matter, 

and opacity in its New Source Review and Title V permits, the deviation reporting requirements in its Title V permit, and its 

obligation to implement good air pollution control practices; and 

WHEREAS, contemporaneously with the lodging of this Consent Decree, the Department has moved to intervene in 

Plaintiffs' action as a party-plaintiff and has filed a complaint pursuant to Section 304(a) of the CAA, 42 U.S.C. § 7604(a), 

alleging the same violations contained in the draft administrative compliance orders issued on September 12, 2003 and May 

14, 2004; and 

WHEREAS, Plaintiffs, the Department, and PNM have met on numerous occasions in an effort to resolve all of the 

issues and claims that are the subject of the complaints, draft compliance orders and second notice of intent to sue; and 

WHEREAS, Plaintiffs, the Department, and PNM agree that the settlement of these disputes without further litigation 

and through this Consent Decree is in the public interest, and is a fair, reasonable, and appropriate means of resolving the 

claims in the complaints, draft compliance orders and second notice of intent to sue because it requires the installation and 

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operation of pollution control equipment for particulate matter, nitrogen oxides, sulfur dioxide, and mercury at the four (4) San 

Juan units, at an estimated expenditure of more than $200 million. This relief is expected to correct all of the CAA violations

alleged in the complaints, draft compliance orders and second notice of intent to sue, represents remedial relief sufficient to

offset Plaintiffs' and the Department's claims for civil penalties, and reflects PNM's commitment to reduce substantially the 

emission of nitrogen oxides, sulfur dioxide, particulate matter and mercury from San Juan; and 

WHEREAS, PNM is the operator and a co-owner of each unit at San Juan; and 

WHEREAS, except as otherwise stipulated to, PNM denies the allegations and does not admit liability for any claims 

or assertions in the complaints, draft compliance orders and second notice of intent to sue; and 

WHEREAS, Plaintiffs, the Department and PNM consent to the entry of this Consent Decree without further trial or 

appeal; 

NOW THEREFORE, it is hereby AGREED, ORDERED AND DECREED as follows: 

II. DEFINITIONS 

1. Unless otherwise expressly provided herein, the terms used in this Consent 

Decree that are defined in the CAA, or regulations implementing the CAA, shall have the 

meanings set forth in the CAA and its implementing regulations. 

2. Whenever the terms set forth below are used in this Consent Decree, the 

following definitions shall apply: 

 "Act" or "CAA" means the Clean Air Act, 42 U.S.C.A. § 7401 et seq. 

 "Average emission rate" means the total amount of a pollutant emitted from an emission unit during a given time period, 

expressed in pounds per million Btu ("Ib./MMBtu"), derived for 

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participate matter in accordance with Method 5, 40 C.F.R. Part 60, and for SO 2 and NO X in accordance with 40 C.F.R. 

Part 75. An "hourly average" emission rate means the average emission rate of pollutants discharged from the stack 

during a sixty (60) minute period, beginning on the hour. A "daily average" emission rate means the numerical average of 

the hourly average emission rates in an operating day, a "seven day average" emission rate means the numerical average 

of the hourly average emission rates for the operating days that occur within a period of seven (7) consecutive calendar 

days, and a "30 day average" emission rate means the numerical average of the hourly average emission rates for the 

operating days that occur within a period of thirty (30) consecutive calendar days. Unless explicitly specified elsewhere 

in this Decree, all average emission rates and average emission reduction efficiencies shall include all periods of startup, 

shutdown, malfunction, and emergency. All averages shall exclude inappropriate data (e.g., malfunction of the 

monitoring system) as specified elsewhere in this Decree and in the applicable EPA testing regulations at 40 C.F.R. Part 

60, Appendix A, and Part 75. 

"Block average" means an average emission rate for the operating days occurring over a specified period of 

consecutive calendar days. A new "block average" is generated for every specified period. 

"Business day" means any day of the week except Saturday, Sunday and a federal or New Mexico holiday. 

"Calendar day" means any twenty four (24) hour period between 12:00 midnight and the following midnight, 

Mountain Standard Time. 

"CEMS" means continuous emissions monitoring system, which consists of the total equipment used to sample, 

analyze, and record on a continuous basis emissions-related 

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parameters other than Opacity. 

"COMS" means continuous opacity monitoring system, which consists of the total equipment used to sample, 

analyze, and record Opacity on a continuous basis. 

"Consent Decree" or "Decree" means this Consent Decree. 

"Court" means the United States District Court for the District of New Mexico. 

"Day" means a calendar day. In computing any period of time under this Decree, except in computing compliance 

with emission limitations, where the last day would fall on a Saturday, Sunday or federal or New Mexico holiday, the period 

shall run until the close of the next business day. 

"Department" means the New Mexico Environment Department, and any successor departments or agencies. 

"Emergency means any situation arising from sudden and reasonably unforeseeable events beyond the control of 

PNM, including acts of God, which situation requires immediate corrective action to restore normal operation of San Juan. An 

emergency shall not include noncompliance to the extent caused by improperly designed equipment, lack of preventive 

maintenance, or careless or improper operation. 

"EPA" means the United States Environmental Protection Agency, and any successor departments or agencies. 

"Excess opacity reading" means each six (6) minute period of time during which the opacity of emissions from a 

stack at a San Juan unit exceeds twenty (20) percent. 

"Malfunction" means any sudden, infrequent and not reasonably preventable failure of air pollution control 

equipment, process equipment, or of a process to operate in a normal or usual manner. Failures that are caused in part by poor 

maintenance or careless operation are not malfunctions. 

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"NSR Permit" means PNM's NSR Permit 63-M2, issued January 22, 1997. 

"NO X " means total oxides of nitrogen, except nitrous oxide, which are expressed as nitrogen dioxide using 

EPA Reference Method 7. 

"Opacity" means the degree to which emissions reduce the transmission of light and obscure the view of an 

object in the background. 

"Operating day means a calendar day in which fuel is combusted in a unit for at least three (3) hours. If fuel is 

combusted for more than three (3) hours during a calendar day, the calculation of that day's emissions for the unit shall be 

based upon the average emission rate of pollution during hours in which fuel was combusted in the unit, and shall not include 

any time in which fuel was not combusted. 

"Operating Permit" means PNM's Operating Permit P062, which became effective on August 7, 1998. 

"Parties" means collectively the Plaintiffs, the Department and PNM. 

"Party" means Plaintiffs, the Department or PNM, individually. 

"PM" means any airborne, finely divided solid or liquid material, other than uncombined water, with an aerodynamic 

diameter smaller than 100 micrometers, and which is expressed as PM using EPA Reference Method 5. 

"Plaintiffs" means collectively The Grand Canyon Trust and Sierra Club. 

"PNM" means Public Service Company of New Mexico, a publicly owned corporation doing business in the State of 

New Mexico. 

"Quarter" means a calendar quarter consisting of three (3) full months, beginning on the first day of either January, 

April, July, or October. 

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"Rolling average emission rate" means an average emission rate or average SO 2 percentage reduction that is 

generated each calendar day based on the average emission rate or average SO 2 percentage reduction for the operating days 

within a multiple-day period. A new average emission rate or average SO 2 percentage reduction is generated each calendar 

day. 

"San Juan" means the San Juan Generating Station, comprised of four (4) fossil fuel-fired steam generating units (as 

that term is defined at 40 C.F.R. § 60.41 (a)) and associated equipment, located west of Farmington, New Mexico. 

"Shutdown" means the cessation of operation of a fossil fuel-fired steam generating unit at San Juan for any purpose 

or reason. 

"SO 2 " means sulfur dioxide. 

"SO 2 percentage reduction" means the amount of SO 2 reduced by SO 2 removal equipment determined by (1) 

measuring the concentration of SO 2 in the flue gas upstream of the scrubber inlet (expressed as A), and (2) the 

contemporaneous concentration of SO 2 measured downstream of the scrubber outlet and any scrubber by-pass return 

(expressed as B), and performing the following calculation: 100 - 100(B ÷ A). An "hourly average" SO 2 percentage reduction 

means the numerical average of SO 2 percentage reduction values recorded in a sixty (60) minute period during which 

pollutants are discharged from the stack, beginning on the hour. A "daily average" SO 2 percentage reduction means the 

numerical average of the hourly average SO 2 percentage reduction values in an operating day. "Annual average" SO 2 

percentage reduction means the numerical average of the hourly average SO 2 percentage reduction values for a period of 365 

consecutive calendar days. All averages shall exclude inappropriate data (e.g., malfunction of the monitoring system) as 

specified elsewhere in this Decree and in the applicable EPA testing regulations at 40 C.F.R Part 60, Appendix A, and Part 75. 

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"Startup" means the setting in operation of a fossil fuel-fired steam generating unit at San Juan for any purpose or 

reason. 

"State" means the State of New Mexico, including all of its departments, agencies, and instrumentalities. 

"Unit 1", "Unit 2", "Unit 3", and "Unit 4" mean each of the four (4) fossil fuel-fired steam generating units and 

associated equipment at San Juan. 

III. JURISDICTION AND VENUE 

3. This Court has jurisdiction over the Parties to and the subject matter of this action 

under Section 304 of the Act, 42 U.S.C. § 7604, the citizen suit provision, and under 28 U.S.C. 

§§ 1331,1345, and 1355. 

4. Venue is proper in this Judicial District under Sections 304(c) and 113(b) of the 

Act, 42 U.S.C. §§ 7604(c) and 7413(b), and under 28 U.S.C. §§ 1391 and 1395. 

IV. APPLICABILITY 

5. This Decree shall apply to and be binding upon Plaintiffs, the Department, and 

PNM, and their officers, agents, successors, and assigns. PNM shall provide a copy of this 

Decree to each contractor, subcontractor, laboratory, and any other entity retained to conduct, 

monitor or otherwise perform any of the work required by or necessary to comply with this 

Decree. 

6. In any action to enforce this Decree, PNM shall not assert as a defense the failure 

of its officers, directors, employees, servants, agents, or contractors to take actions necessary to 

comply with this Decree, unless PNM establishes that such failure resulted from a. force mqjeure 

event as defined in this Decree. 

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V. EMISSION CONTROLS AND LIMITATIONS 

7. PNM shall at all times, including periods of startup, shutdown, and malfunction, 

maintain and operate Units 1, 2, 3, and 4 in a manner consistent with good air pollution control 

practices for minimizing emissions. 

8. Prior to installing the pollution control equipment described below, in addition to 

any other applicable requirement, the emissions of PM, SO 2 and NO X and opacity from San Juan 

shall be subject to Section XI (Stipulated Penalties). 

9. PNM shall install the following pollution control equipment, and make any other 

capital and operational modifications necessary to achieve the following emission limitations 

and mercury operational requirements at San Juan by the deadlines set forth in Section VIII 

(Emission Limitation Compliance Deadlines): 

(a) PM and Opacity 

(i) PNM shall operate baghouses and demister technology on San Juan Units 1, 2, 3, and 4 to meet the 

following emission limitations. 

(ii) The PM average emission rate for each of Units 1, 2, 3, and 4 shall not exceed 0.015 lb./MMBtu as 

measured by EPA Reference Method 5 stack tests conducted at least once each calendar quarter at times and conditions 

specified by the Department, and according to test protocols approved by the Department, but in all cases under conditions and 

in a manner no less stringent than described in EPA's 2004 Clean Air Act National Stack Testing Guidance. PNM shall submit 

all results and a complete description of the tests to Plaintiffs and the Department in the next quarterly report following PNM's 

receipt of the results. 

(iii) The opacity limit for San Juan Units 1, 2, 3, and 4 shall be twenty (20) percent, averaged over any 

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six (6) minute period except for one six (6) minute average per hour 

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of up to twenty-seven (27) percent opacity. This limit shall apply at all times when air pollutants are being discharged into the 

atmosphere, unless PNM demonstrates that any excess opacity reading: (a) was caused by a startup, shutdown, malfunction, or 

emergency, or (b) occurred when both the boiler and all fans that move flue gas in the unit were off. Opacity shall be measured

in the stack or, if approved by EPA, after the outlet of the baghouse and corrected to stack exit. 

(iv) Load changes, poor coal quality, air heater cleaning, sootblowing, and high ash hoppers shall not 

excuse any excess opacity reading. 

(v) PNM shall report any exceedance of the opacity limit described above in the next quarterly report 

following the exceedance. 

(vi) If PNM claims that an excess opacity reading was caused by a startup, shutdown, malfunction, or 

emergency, or occurred when both the boiler and all fans that move flue gas in the unit were off, it shall notify the Department 

(a) by facsimile no later than twenty-four (24) hours after the start of the next business day, and (b) in writing no later than ten 

(10) calendar days after the start of the first business day following the reading (or the first reading in the event of a series of 

excess readings). With respect to the written notification, PNM shall use the applicable excess emission form published by the 

Department. To the extent PNM claims a defense described in this subparagraph to an excess opacity reading, it shall disclose 

such claim in its next quarterly report following the excess opacity reading, attach the facsimile and excess emission form filed 

with the Department, and describe any relevant revisions and amendments to the information in the facsimile and excess 

emission form filed with the Department, including (1) the date and time of facsimile and written notification to the 

Department, (2) the cause of the excess opacity reading(s), (3) actions that PNM took to correct the causes of the excess 

opacity reading(s), (4) all actions that PNM will take to prevent the causes of the excess opacity reading(s) from recurring. 

PNM's failure 

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to materially comply with any requirement specified above shall waive any claim that an excess opacity reading was caused by 

a startup, shutdown, malfunction, or emergency, or occurred when both the boiler and all fans that move flue gas in the unit 

were off. 

(vii) For purposes of this Consent Decree, if Plaintiffs or the Department disagree with any claim of 

defense described in this subparagraph regarding any excess opacity reading, they shall inform PNM in writing within 180 

days of such disagreement. However, any disagreement shall not be subject to Section XII (Dispute Resolution) unless 

Plaintiffs or the Department expressly state that their disagreement represents a final determination regarding the excess 

opacity reading, or the Plaintiffs or the Department issue a demand for stipulated penalties regarding the excess opacity 

reading. Any final determination or demand for stipulated penalties shall be binding upon PNM within thirty (30) days of 

receipt unless PNM invokes Section XII (Dispute Resolution). 

(viii) PNM shall determine compliance with the opacity limit above on a continuous basis using data 

from the current COMS or an EPA-approved COMS at an alternative location. 

(ix) No later than sixty (60) days after the effective date of this Decree, PNM shall submit a report to 

Plaintiffs and the Department that identifies the technology and operational parameters that represent demonstrated state-ofthe-art demister control for each unit, and that determines the extent to which the existing demister technology and operational 

parameters constitute demonstrated state-of-the-art demister control for each unit. The report shall be reviewed pursuant to 

Section IX (Approvals). Within ninety (90) days of approval by Plaintiffs and the Department, PNM shall install such 

technology to the extent it has not already 

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been installed and is in operation. PNM shall operate and maintain demonstrated state-of-the-art demister technology on San 

Juan Units 1, 2, 3, and 4, and implement operational parameters to maximize the reduction of acid mist, scrubber carry-over, 

and any other liquid particulate matter emitted from such units, 

 (b) NO X 

(i) PNM shall design, install, and operate demonstrated state-of-the-art NO X combustion control 

technology on San Juan Units 1, 2, 3, and 4 to minimize the formation of NO X from each unit. PNM shall contract with one or 

more expert(s) on the technologies to identify demonstrated state-of-the-art NO X combustion control equipment and 

operational requirements for each unit. The expert(s) shall prepare a report describing the recommended control equipment and 

operational requirements for each unit, including an explanation of the reasons that such equipment and requirements 

constitute demonstrated state of-the-art NO X combustion control technology. No later than 180 days after the effective date of 

this Decree, PNM shall submit the report to Plaintiffs and the Department. The report shall be reviewed pursuant to Section IX 

(Approvals). 

(ii) Upon approval by Plaintiffs and the Department, PNM shall install and operate NO X combustion 

control technology to meet the following NO X emission limits. 

(iii) The thirty (30) day rolling average emission rate for NO X for each of San Juan Units 1, 2, 3, and 4 

shall not exceed 0.30 lb./MMBtu. For purposes of calculating the thirty (30) day rolling average, NO X emissions for the first 

three (3) hours of a cold startup after coal is fed to the boiler shall be capped at 0.30 lb./MMBtu. Cold startup is defined as a 

startup when the boiler is at ambient indoor temperature measured at the time fuel is first fed to the boiler. No later than sixty 

(60) days after the first twelve (12) months of operation of the new NO x 

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combustion control technology installed at each unit, PNM shall submit a report to Plaintiffs and the Department (a) 

identifying the daily average NO X emission rate for each unit for every operating day in the period and the thirty (30) day 

rolling average emission rate for every calendar day of the period, (b) describing the performance of the NO X control 

technology at each unit, and (c) evaluating the extent to which the 0.30 lb./MMBtu limit can be lowered at each unit based on 

the performance of each unit during the first twelve (12) months of operation of the new NO X combustion control technology. 

The report shall be reviewed pursuant to the procedure in Section IX (Approvals). Upon approval of Plaintiffs and the 

Department, the 0.30 lb./MMBtu limit shall be adjusted to a lower limit for the unit if the data gathered during the first twelve 

(12) months of operation indicate that a given unit is capable of meeting a lower limit, provided, however, that any final NO X 

limit for a given unit shall add a ten (10) percent margin of safety to the most representative thirty (30) day average emission 

rate achieved during the first twelve (12) months of operation. 

(iv) PNM shall report any exceedance of the NO X limits described above in the next quarterly report 

following the exceedance. 

 (v) Compliance with NO X emission limits imposed by this Decree shall be determined on a unit-specific 

basis using data from NO X CEMS installed and operated in accordance with 40 C.F.R. Part 75 and any other applicable 

requirement, 

(c) SO 2 

(i) PNM shall take those measures necessary to reduce SO 2 emissions at San Juan to achieve and 

maintain the emission limits below. 

(ii) The annual rolling average SO 2 percentage reduction for San Juan Units 1, 2, 3, and 4 shall not be 

less than ninety (90) percent for each unit. 

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(iii) The seven (7) day average emission rate of SO 2 at San Juan Units 1, 2, 3, and 4 shall not exceed 

0.250 lb./MMBtu for each unit, calculated as a block average as measured by SO 2 CEMS located downstream of the scrubber 

outlet and any scrubber by-pass return. For purposes of calculating the block average, SO 2 emissions for the first three (3) 

hours of a cold startup after coal is fed to the boiler shall be capped at 0.250 lb./MMBtu. Cold startup is defined as a startup 

when the boiler is at ambient indoor temperature measured at the time fuel is first fed to the boiler. 

(iv) PNM shall report any exceedance of the limits described above in the next quarterly report following 

the exceedance. 

 (v) SO 2 CEMS shall be used to demonstrate compliance with these requirements and shall be 

installed and operated in accordance with the provisions of this Decree, 40 C.F.R. Part 75 and any other applicable 

requirement, 

 (d) Mercury 

(i) PNM shall design activated carbon injection technology (or comparable mercury reduction 

technology) for San Juan Units 3 and 4 for the purpose of maximizing mercury reduction, within the physical and operational 

constraints of each unit, including the pollution control equipment to be operated at each unit after the deadlines in Section 

VIII ("physical and operational constraints"). No later than one year after the effective date of this Decree, PNM shall submit a 

report to Plaintiffs and the Department describing such design and the relevant physical and operational constraints of each 

unit. The report shall be reviewed pursuant to Section IX (Approvals). 

(ii) Within the deadlines established under Section VII (Construction Compliance Deadlines), PNM shall 

install and operate the mercury control technology, install 

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mercury CEMs, and establish operating procedures to maximize mercury reduction for Units 3 and 4 during a test period of 

one and one half (11⁄2 ) years from the commencement of operation of the mercury reduction technology on the first unit. No 

later than ninety (90) days after such test period, PNM shall submit a report to Plaintiffs and the Department presenting the 

results of PNM's efforts to reduce mercury emissions and identifying and discussing the bases for operational parameters to 

achieve maximum mercury reduction, taking into account the physical and operational constraints of each unit. The report 

shall be reviewed pursuant to Section IX (Approvals). 

(iii) Upon approval by Plaintiffs and the Department, the operational parameters for Units 3 and 4 

shall become enforceable under this Decree. PNM shall report compliance with the operational parameters in the 

quarterly reports required by this Decree. 

(iv) PNM shall install and operate similar mercury reduction technology and shall be subject to similar, 

enforceable operational parameters at Units 1 and 2, to achieve maximum mercury reduction, taking into account the physical 

and operational constraints of each unit. PNM shall report compliance with the operational parameters in the quarterly reports 

required by this Decree. 

VI. EMISSIONS MONITORING 

10. PNM shall maintain, calibrate, and operate COMS to measure the opacity of emissions at San 

Juan in compliance with the requirements of its Operating Permit and 40 C.F.R. Part 60. 

11. To the extent PNM intends to change the current location of the COMS in the stack of a unit to 

a location after the baghouse and before the SO 2 scrubber, PNM shall request approval from EPA for any such alternative 

COMS location pursuant to 40 C.F.R. Parts 60 and 

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75 and any other applicable requirement. PNM shall provide copies of any requests for approval and subsequent related 

correspondence and documents to Plaintiffs and the Department no later than seven (7) days after their submittal or receipt. 

Until EPA approves an alternative location, PNM shall use the current COMS to determine compliance with the opacity limit. 

12. After the effective date of this Decree, PNM shall maintain, calibrate, and operate CEMS at San

Juan Units 1, 2, 3, and 4 to measure accurately and continuously the emissions of SO 2 , NO X , and total exhaust from each 

unit in full compliance with the requirements of 40 C.F.R. Parts 60 and 75, including requirements for heat input rate 

measurements. Nothing herein shall preclude PNM from installing, certifying, and operating integrated CEMS equipment to 

measure SO 2 , NO X , opacity, or any combination thereof. 

13. PNM shall ensure that any modification to a COMS or CEMS necessitated by PNM's actions 

under or in furtherance of this Decree shall be completed prior to the operation of the SO 2 , NO X , and PM controls required 

by this Decree. 

14. PNM shall recertify all COMS and CEMS at San Juan as required by 40 C.F.R. Parts 60 and 75. 

15. No later than seven (7) operating days after the first passage of flue gas through the SO 2 

controls for each unit, PNM shall calculate for all hours during which pollutants are discharged from the stack in each 

operating day: (a) the SO 2 hourly average percentage reduction, and (b) the SO 2 hourly average emission rate. 

16. No later than thirty (30) days after the first startup following construction of NO X controls for 

each unit, PNM shall begin to calculate the hourly average NO X emission rate. 

17. For any hour that valid, quality-assured CEM data for a unit is unavailable, PNM shall calculate 

the SO 2 and NO X emissions for the unit in accordance with the missing data 

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substitution procedures in 40 C.F.R. Part 75. 

18. Except for COMS or CEMS breakdowns, repairs, calibration checks, and zero and span adjustments as 

provided in 40 C.F.R. § 60.13(e), PNM shall be bound by the data from its COMS and NO X and SO 2 CEMS, and shall not 

challenge the accuracy or credibility of its COMS and NO X and SO 2 CEMS in any action under this Decree. 

VII. CONSTRUCTION COMPLIANCE DEADLINES 

19. PNM shall design, contract, construct, and complete all PM, SO 2 , NO X , and mercury controls required by 

this Decree according to the following schedule, subject only to force majeure under Section XIII: 

Activity 

Deadline 

(a) San Juan Unit 4. 

(i) Commence physical, on-site construction of PM, SO 2 , NO X , and mercury controls 10/31/06 

(ii) Complete construction and initiate startup of PM, SO 2 , NO X , and mercury controls 10/31/07 

10/31/07- 

(iii) Provide opportunity for on-site 12/31/07 

 inspection by Plaintiffs and Department 

(b) San Juan Unit 3. 

(i) Commence physical, on-site construction of PM, SO 2 , NO X , and mercury controls 4/30/07 

(ii) Completion of construction and initiate startup of PM, SO 2 , NO X , and mercury controls 4/30/08 

(iii) Provide opportunity for on-site 4/30/08 -

6/30/08 

 inspection by Plaintiffs and Department 

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(c) San Juan Unit 1. 

(i) Commence physical, on-site construction of PM, SO 2 , and NO x controls 10/31/07 

(ii) Complete construction and initiate startup of PM, SO 2 , and NO x controls 

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10/31/08 10/31/08- 

(iii) Provide opportunity for on-site 12/31/08 

 inspection by Plaintiffs and Department 

(iv) Commence construction of mercury controls 9/30/09 

(v) Complete construction and initiate mercury controls 12/31/09 

(d) San Juan Unit 2. 

(i) Commence physical, on-site construction of PM, SO 2 , andNO x controls 3/31/08 

(ii) Complete construction and initiate startup of PM, SO 2 , andNO x controls 3/31/09 

3/31/09- 

(iii) Provide opportunity for on-site inspection by Plaintiffs and Department 5/31/09 

(iv) Commence construction of mercury controls 9/30/09 

(v) Complete construction and initiate mercury controls 12/31/09 

(vi) Provide opportunity for on-site inspection by Plaintiffs and Department. 12/31/09-

3/31/10 

 

VIII. EMISSION LIMITATION COMPLIANCE DEADLINES 

20. PNM's obligation to comply with the Opacity, PM, SO 2 , and NO X emission limitations, and mercury 

emission reduction operational requirements described in Section V (Emission Controls and Limitations) shall commence on 

the dates listed below, subject only to force majeure under Section X in (Force Majeure). 

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(a) Opacity. PM. NO x , and SO 2 Emission Limits: 

(i) For Unit 4, no later than ninety (90) days after completion of construction of PM, NO X , and SO 2 

controls, or by December 31, 2007, whichever date is earlier. 

(ii) For Unit 3, no later than ninety (90) days after completion of construction of PM, NO X , and SO 2 

controls, or by June 30, 2008, whichever date is earlier. 

(iii) For Unit 1, no later than ninety (90) days after completion of construction of PM, NO X , and SO 2 

controls, or by December 31, 2008, whichever date is earlier. 

(iv) For Unit 2, no later than ninety (90) days after completion of construction of PM, NO X , and SO 2 

controls, or by May 31, 2009, whichever date is earlier. 

(b) Mercury Reduction Operational Requirements 

(i) For Units 3 and 4, no later than sixty (60) days after approval of operational requirements for each unit, 

or by June 30, 2009, whichever date is earlier. 

(ii) For Units 1 and 2, no later than (45) days after completion of construction of mercury controls, or by 

January 30, 2010, whichever date is earlier. 

IX. APPROVALS 

21. After receiving any report for approval under this Decree, Plaintiffs and the Department shall have twenty 

(20) business days from receipt of the report to provide written notice of approval or disapproval, in whole or in part. By 

notice from Plaintiffs or the Department to PNM, this deadline may be extended by no more than twenty (20) additional 

business days. If the deadline is so extended then any compliance deadline related to such approval shall be extended for the 

same number of days. If Plaintiffs and the Department do not provide timely written notice, the report shall be deemed to be 

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approved. If the Plaintiffs and/or the Department disapprove a report, in whole or in part, the disapproving party shall 

state the 

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reason(s) and justification(s) for its disapproval. No later than twenty (20) business days after receipt of the written notice of 

disapproval, PNM shall either (a) accept the disapproving party's position, (b) resolve the issue with the disapproving party 

and obtain agreement from the remaining party, or (c) initiate the procedure in Section XII (Dispute Resolution). The 

resolution of a disapproval by one of the three methods shall constitute approval for the purpose of this Decree. 

Notwithstanding the above procedure, the Parties shall make their best effort to resolve issues regarding the approval of reports 

through informal consultation and without resort to the procedure in Section XII (Dispute Resolution). Plaintiffs reserve their

right to seek from PNM their reasonable costs and fees in evaluating and otherwise addressing PNM's reports under this 

Section IX (Approvals). PNM reserves its right to oppose any request for costs and fees by Plaintiffs. 

X. REPORTING 

22. No later than forty-five (45) days after the end of each quarter, beginning with the first quarter 

of 2005 and continuing until this Decree is terminated under Section XXIV, PNM shall provide a quarterly report to the 

Plaintiffs and the Department containing the information for the immediately preceding quarter that PNM is required to report 

on a quarterly basis under this Decree. 

23. Each quarterly report shall begin with a cover letter, signed by a representative of PNM, that

summarizes the information contained in the report. 

24. Each quarterly report shall include, for each San Juan unit: 

(a) a description of construction deadlines achieved, projects completed, progress made toward meeting future 

deadlines, and any actual, expected or reasonably foreseeable delays; 

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(b) identification of all excess opacity readings and any exceedances of the current SO 2 and NO X emission limits 

described in Section XI (Stipulated Penalties). 

(c) identification of each failure to meet a standard or emission limitation or operational requirement described in 

Section V (Emission Controls and Limitations) or a deadline in Section VIII (Emission Limitation Compliance 

Deadlines); 

(d) the quarterly report described in 40 C.F.R. § 60.7; 

(e) after installation of the PM controls, the required quarterly reports for PM and opacity, 

(f) after installation of the SO 2 controls, PNM shall report on a quarterly basis all seven (7) day block averages that 

exceeded the applicable emission limitation. PNM shall also report each day for which the annual rolling SO 2 

percentage reduction average emission rate at any unit exceeded the applicable reduction requirement during the prior 

quarter. In addition, PNM shall report on a quarterly basis a list of the hours excluded from the determination of 

compliance with the applicable emission limitation. 

(g) after installation of the NO X controls, the required quarterly reports for NO X emissions; 

(h) after installation of the mercury control equipment, the required quarterly reports 

for mercury (Hg) emissions; and 

(i) a description of any stipulated penalties due or paid to the Department, or into 

escrow, including the reason for such payment(s) and the total amount held in 

escrow at the end of each quarter. 

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25. If Plaintiffs or the Department request clarification of any quarterly report, including a request for 

information not provided in such report, PNM promptly shall provide such clarification or information. If the information is 

requested in electronic form PNM shall provide it to the extent available. PNM shall retain all documents relating to 

compliance with this Decree, including contracts, plans, and specifications, in accordance with Section XVIII (Record 

Preservation). Upon request of the Department, PNM shall supply a copy of such documents, subject to a claim of confidential 

business information under the New Mexico Air Quality Control Act. Upon request of the Plaintiffs, PNM shall provide a 

copy of such documents as long as Plaintiffs execute a reasonable confidentiality agreement that strictly limits release of the

confidential business information to Plaintiffs and their counsel and experts. If Plaintiffs do not agree with PNM's claim of 

confidential business information Plaintiffs may invoke the dispute resolution procedure in Section XII (Dispute Resolution). 

26. PNM's obligation to provide quarterly reports is in addition to any other notification or report 

required by this Decree or by PNM's operating permit, unless such notification or report is required on a quarterly basis. 

Nothing in this Decree shall be interpreted to excuse or diminish PNM's obligation to provide any other notice report, or other 

document to the public or local, state or federal officials. 

XI. STIPULATED PENALTIES 

27. PNM shall pay stipulated penalties for each failure by PNM to comply with a term or condition of this 

Decree, unless excused by Section XIII (Force Majeure) or Section XII (Dispute Resolution). All stipulated penalties shall be 

calculated on a per unit, per day basis, unless expressly stated otherwise. Stipulated penalties shall not be assessed for any 

reason other than those set forth in this Section. 

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28. For each failure to comply with a construction commencement deadline: 

(a) 1 st through 30 th day after deadline - $750 

(b) 31 st through 60 th day after deadline -$5,000 

(c) Beyond 60 th day - $ 10,000 

29. For each failure to comply with a construction completion deadline: 

(a) 1 st through 30 th day after deadline - $3,000 

(b) 31 st through 60 th day after deadline - $ 10,000 

(c) Beyond 60 th day - $20,000. 

30. PNM shall maintain a record of all stipulated penalties that accrue pursuant to paragraph 28 for 

each unit. If PNM meets the construction completion deadline for a unit, PNM shall not be obligated to pay any accrued 

stipulated penalties under this paragraph for that unit. If PNM does not meet the construction completion deadline for a unit,

PNM shall pay all accrued penalties for that unit, including interest pursuant to 28 U.S.C. § 1961 (a). 

31. For each failure to comply with a PM emission limit, $2,500, with the period of noncompliance

commencing with the failure of a PM stack test and ending when a PM stack test demonstrates compliance, except for periods 

when the unit is not in operation. 

32. For each excess opacity reading from San Juan Units 1, 3, and 4, excluding only excess 

readings caused by a startup or shutdown, or that occurred when both the boiler and all fans that move flue gas in the unit were 

off, stipulated penalties shall be determined on a quarterly basis for the period of time beginning with the quarter in which this 

Decree is entered until the first quarter in which flue gas first passes through the baghouse for that unit: 

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(a) Unit l: 

Stipulated penalties will be due for each excess opacity reading above the following 

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quarterly threshold amounts: 150 excess opacity readings/quarter for 2005; 125 excess opacity readings/quarter for 

2006; 100 excess opacity readings/quarter for 2007; and 75 excess opacity readings/quarter for 2008 and thereafter. 

(b) Units 3 and 4: 

Stipulated penalties will be due for each excess opacity reading above the following quarterly threshold amounts, by 

unit: 14 excess opacity readings/quarter for 2005; 12 excess opacity readings/quarter for 2006; 10 excess opacity 

readings/quarter for 2007; and 8 excess opacity readings/quarter for 2008 and thereafter. 

(c) The stipulated penalty for any quarterly excess opacity readings at San Juan Units 1, 3 or 4 shall equal $1,000 

per excess opacity reading above the values specified above, except that the stipulated penalty for the first ten (10) 

percent of the excess opacity readings above the quarterly thresholds for Unit 1 only shall be $750. Payment of all 

stipulated penalties pursuant to this paragraph shall be made, without written demand therefor into a commercially 

available escrow account, within thirty (30) days of the end of the applicable quarter. 

33. For every calendar year, beginning on January 1, 2005 for each unit, if the average number of excess opacity 

readings per quarter for four (4) quarters is less than the applicable quarterly threshold as set forth above, all stipulated 

penalties and interest that have accrued in the escrow account during that year shall be refunded to PNM. However, if the 

average number of excess opacity readings per quarter in that calendar year is greater than the applicable quarterly threshold as 

set forth above, all stipulated penalties and interest that have accrued in the escrow account during that year shall be paid to the 

Department. In any calendar year in which there are less than 365 days before flue gas first passes through the baghouse of any

unit, the number of excess opacity readings for the balance of the 365 days shall be determined by the following formula: N = 

(A ÷ 90)D; where: 

N = Number of excess opacity readings added to complete the 365 day period; 

A = Number of excess opacity readings from the most recent preceding complete 

quarter for the applicable unit; and 

D = Number of days needed to complete 365 day period. 

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34. For each failure to comply with an opacity standard after the applicable final compliance 

date until termination of this Decree, the stipulated penalty shall be $2,000 per excess reading, excluding excess 

emissions caused by startup, shutdown, malfunction, and emergency. 

35. For each failure to comply with a current SO 2 emission limit at San Juan between the effective 

date of this Decree and the date specified in Paragraph 20(a), stipulated penalties shall be $1,500 per violation, excluding 

excess emissions excused by the Department pursuant to Section 20.2.7 NMAC. Such SO 2 emission limits are: 

(a) For all four (4) units combined, 13,000 pounds per hour on a rolling 3-hour average, 

(b) For all four (4) units combined, 0.55 lb./MMBtu on a rolling 30-day average, and 

(c) For all four (4) units combined, 0.46 lb./MMBtu on a rolling hourly annual average. 

(d) For Units 1, 3 and 4, by unit, 1.2 lb./MMBtu on a rolling 3-hour average. 

(e) For Unit 2, seventy-two (72) percent SO 2 reduction on a 30-day rolling average. 

36. For each failure to comply with any SO 2 emission limit in Section V (Emission Controls and 

Limitations) after the date specified in Section VIII (Emission Limitation Compliance Deadlines), $5,000 per violation. 

37. For each failure to comply with a current NO X emission limit at San Juan between the 

effective date of this Decree and the date specified in Section VIII (Emission Limitation Compliance Deadlines), excluding 

only excess readings caused by a startup or shutdown, stipulated penalties shall be determined on a quarterly basis as provided

in paragraph 38. The 

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current NO X emission limits are: 

(a) For all four (4) units combined, 9,000 pounds per hour on a rolling twenty-four (24) hour period. 

(b) For Units 1, 3 and 4, by unit, 0.45 lb./MMBtu on a rolling three (3) hour average. 

(c) For Unit 2, 0.7 lb./MMBtu on a rolling three (3) hour average. 

38. The quarterly excess NO X emission thresholds, by unit, are as follows: 

(a) Unit l: 

Stipulated penalties will be due for each hour of excess NO X emissions above the following quarterly threshold 

amounts: 20 excess NO X emissions/quarter for 2005; 15 excess NO X emissions/quarter for 2006 and thereafter. 

(b) Units 2, 3 and 4: 

Stipulated penalties will be due for each hour of excess NO X emissions above the following quarterly threshold 

amounts: 2 excess NO X emission/quarter for each unit for 2005 and thereafter. 

(c) The stipulated penalty for any quarterly excess NO X emission at San Juan shall equal $5,000 per each hour of 

excess NO X emission above the values specified above. Payment of all stipulated penalties pursuant to this 

paragraph shall be made, without written demand therefor into a commercially available escrow account, within thirty 

(30) days of the end of the applicable quarter. 

39. For every calendar year, beginning on January 1, 2005 for each unit, if the average number of hourly excess 

NO X emissions per quarter for four (4) quarters is less than the applicable quarterly threshold as set forth above, all stipulated 

penalties and interest that have accrued in the escrow account during that year shall be refunded to PNM. However, if the 

average number of hourly excess NO X emissions per quarter in that calendar year is greater than the applicable quarterly 

threshold as set forth above, all stipulated penalties and interest that have accrued in the escrow account during that year shall 

be paid to the Department. In any calendar year in which there are less than 365 days before the NO X emission limit deadline 

in Section VIII 

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(Emission Limitation Compliance Deadlines) applicable to any unit, the number of excess hourly NO X emissions for the 

balance of the 365 days shall be determined by the following formula: 

 N = (A ÷ 90)D; where: 

N = Number of excess hourly NO X emissions added to complete the 365 day period; 

A = Number of excess hourly NO X emissions from the most recent preceding complete 

quarter for the applicable unit; and 

D = Number of days needed to complete 365 day period. 

40. For each failure to comply with the NO X emission limit after the date specified in Section VIII 

(Emission Limitation Compliance Deadlines), $5,000 per violation. 

41. For each failure to comply with a mercury reduction operational requirement, $5,000 per 

violation. 

42. For the failure to comply with any other material requirement in the Decree, $1,000 per 

violation. 

43. Plaintiffs and the Department will consult regarding demands for stipulated penalties. Plaintiffs 

or the Department may demand stipulated penalties individually or jointly, and the fact that one party does not make a demand 

for stipulated penalties shall not be relevant to the merits of any other demand. Plaintiffs and the Department shall provide to 

the other a copy of any written demand for stipulated penalties at the same time that the demand is served on PNM. 

44. No later than thirty (30) days after receipt of a written demand for stipulated penalties, PNM

shall pay the stipulated penalties to the Department. Payment shall be by check, made payable to the State of New Mexico, and 

delivered to: 

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Office of General Counsel 

New Mexico Environment Department 

Post Office Box 26110 

Santa Fe, New Mexico 87502 

The check shall be accompanied by a transmittal letter referencing this Decree and attaching a copy of the written demand. 

PNM shall send a copy of the check and transmittal letter to the legal representatives for the Plaintiffs. 

45. If PNM disputes the written demand for stipulated penalties, no later than thirty (30) days after 

receipt, PNM shall pay the stipulated penalties into a commercially available interest-bearing escrow account (interest 

computed consistent with 28 U.S.C. § 1961 (a)) and invoke the procedures in Section XII (Dispute Resolution). 

46. PNM's liability for stipulated penalties shall not depend on the date that Plaintiffs or the 

Department send or that PNM receives the written demand. Stipulated penalties shall apply during any period of dispute 

resolution; provided, however, that PNM may request that the Court reduce or eliminate stipulated penalties that accrue during 

the dispute resolution period if the Court deems that PNM pursued the dispute in good faith and not for the purpose of delay, 

without regard to whether PNM prevails in the dispute. 

47. Plaintiffs and the Department reserve all rights to pursue any other remedies for violations of 

this Decree to which they are entitled, including injunctive relief. 

XII. DISPUTE RESOLUTION 

48. Any dispute identified in this Decree to be resolved by dispute resolution shall be subject to the procedures in 

this Section. The dispute resolution procedure of this Section XII (Dispute Resolution) shall be the exclusive mechanism to 

resolve such disputes. All other disputes regarding this Decree shall be resolved only in the context of an action by Plaintiffs or 

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the Department to enforce this Decree. 

49. The dispute resolution procedure shall be invoked upon the giving of written notice by one of

the parties to all others advising of a dispute and stating the reasons therefor. The party receiving such notice shall 

acknowledge receipt of the notice and the Parties shall expeditiously schedule a meeting to begin informal negotiations not 

later than fourteen (14) days from the receipt of such notice. Such period of informal negotiations shall not extend beyond 

thirty (30) calendar days from the date of the first meeting of the parties, unless the parties agree to extend this period. 

50. If the parties are unable to resolve the dispute through the informal process described above, 

the disputing party waives its right to further dispute the issue unless it files a petition with the Court describing the dispute 

and serves it on the other parties. The other party or parties to the dispute shall have thirty (30) days after receipt of the petition 

to file and serve a written response. In judicial proceedings under this Section, the petitioning party shall carry the burdens of 

proof and persuasion. This Court shall have exclusive jurisdiction over any disputes under this Section XII (Dispute 

Resolution). 

51. The invocation of the dispute resolution procedure under this Section shall not extend, 

postpone, or affect any obligation of any Party under this Decree not directly in dispute, unless the Parties or the Court agree 

otherwise. Stipulated penalties with respect to the disputed matter shall continue to accrue, but payment shall be stayed 

pending resolution of the dispute. 

52. Plaintiffs reserve the right to seek from PNM their reasonable costs, including attorney and 

expert witness fees, expended in any dispute resolution process. PNM reserves its right to object to any such request by 

Plaintiffs. 

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XIII. FORCE MAJEURE 

53. For the purpose of this Decree, "force majeure" is defined as any event arising contractors, or 

employees, that delays, prevents, or can reasonably be anticipated to delay or prevent compliance with this Decree and that 

could not be overcome with due diligence. 

54. PNM's unanticipated or increased costs or changed financial circumstances shall not constitute 

force majeure. The absence of an approval under this Decree, or the Department's failure to issue a permit if one is legally 

required before implementing the obligation at issue, or the stay of a permit if issued, shall not constitute force majeure, unless 

PNM demonstrates that (a) it submitted a timely and complete application or other request for approval, (b) it complied with 

all requirements for such application or other request for approval, and (c) it diligently and timely responded to all requests for 

additional information. 

55. If any event occurs which causes or may cause a delay by PNM in meeting any deadline of this 

Decree, whether or not attributable to force majeure, PNM shall give written notice to Plaintiffs and the Department no later 

than ten (10) business days after the date on which PNM first knew or reasonably should have known that the event might 

cause a delay. PNM shall be deemed to have notice of any event that a contractor or subcontractor retained to implement this 

Decree had or reasonably should have had, unless through the affirmative misrepresentation of such contractor or 

subcontractor PNM was not provided such notice. No later than fifteen (15) days after service of the written notice, PNM shall 

submit a written report to Plaintiffs and the Department providing (a) the reasons for the delay, (b) the anticipated length of the 

delay, (c) a description of the obligation has been or would be delayed, (d) a description of all actions taken and to be taken to 

prevent or minimize the delay, (e) a timetable for those 

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actions, (f) a schedule for complying with any deadline in this Decree which has been or would be affected by the event, and 

(g) the rationale and supporting documentation for a claim, if any, that the delay was or would be attributable to force 

majeure. 

56. If Plaintiffs and the Department agree that the delay has been or would be caused by force 

majeure, the Parties may stipulate to an extension of the deadline for the length of time necessary to accommodate the force 

majeure. In establishing a new deadline, Plaintiffs and the Department shall take into consideration PNM's evidence regarding 

weather, outage schedules, and remobilization requirements. If the Parties cannot agree to the length of the extension, PNM 

may invoke the procedure in Section XII (Dispute Resolution). 

57. If Plaintiffs and/or the Department do not agree that the delay or anticipated delay has been or 

would be caused by force majeure, no later than twenty (20) days after receiving PNM's written report, Plaintiffs and/or the 

Department shall notify PNM in writing of this decision. The decision shall be final and binding on PNM unless PNM invokes 

the procedure in Section XII (Dispute Resolution). 

58. PNM shall have the burden of proving that any delay or anticipated delay has been or would be

caused by force majeure (including proving that PNM gave timely notice), and of proving the duration and extent of any delay

(s). 

59. PNM's material failure to comply with the notification and reporting requirements of this 

Section XII (Force Majeure) shall constitute a waiver of any claim of force majeure for the delay or anticipated delay at issue. 

60. The extension of one deadline based on a specific event shall not constitute an extension of any 

other deadline unless agreed by the Parties or directed by this Court. 

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61. If PNM fails to comply with a deadline in this Decree due to force majeure, PNM shall be excused only from 

complying with that deadline and from paying stipulated penalties for failing to comply with that deadline, and only for that 

period of time excused by force majeure. 

XIV. MODIFICATION 

62. Any material modification of this Decree shall be in writing, signed by the Parties, and approved by this 

Court. Non-material modifications of this Decree shall be made upon written agreement of the Parties and shall be filed with 

the Court. 

XV. NOTICE TO PARTIES 

63. Whenever this Decree requires a Party to provide notice or submit a document to another Party, the notice or 

document shall be sent to the following persons in electronic (.pdf) format unless the size or other characteristic of the notice 

or document require the submission of a hard copy. 

For Plaintiffs 

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George Hays, Esq. 

Attorney at Law 

Steven Sugarman, Esq. 236 West Portal Avenue, #110 

Belin & Sugarman San Francisco, CA 94127 

618 Paseo de Peralta Phone: 415-566-5414 

Santa Fe, NM 87501 Fax: 415-731-1609 

Phone: 505-983-1700 georgehays@mindspring.com 

Fax: 505-983-0036 

sugarman@bs-law.com For the Department 

 

Reed Zars, Esq. Sandra Ely, Chief 

Attorney at Law Air Quality Bureau 

910 Kearney St. New Mexico Environment Department 

Laramie, WY 82070 2048 Galisteo Street 

Phone: 307-745-7979 Santa Fe, NM 87505 

Fax: 307-745-7999 Phone: 505-827-1494 

rzars@lariat.org Fax: 505-827-1523 

sandra_ely@nmenv.state.nm.us 

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Eric Ames, Esq. 

Office of General Counsel 

New Mexico Environment Department 

1190 St. Francis Dr. 

P.O. Box 26110 

Santa Fe,NM 87502-6110 

Phone: 505-827-2982 

Fax: 505-827-1628 

eric_ames@nmenv.state.nm.us 

For PNM 

Rick Alvidrez, Esq. Keleher & McLeod, P.A. 

P.O. Drawer AA Albuquerque, NM 87103 

Phone: 505-346-9150 

Fax: 505-346-1370 

rla@keleher-law.com 

Randy E. Brogdon, Esq. 

Troutman Sanders LLP 

Bank of America Plaza, Suite 5200 

600 Peachtree St. NE 

Atlanta, GA 30308-2216 

Phone:(404)885-3147 

Fax: (404) 962-6892 

Randy.Brogdon@troutmansanders.com 

Hugh Smith 

Senior Vice President, Energy Resources 

Public Service Company of New Mexico 

2401 Aztec Rd, NE 

Albuquerque, NM 87107 

Phone: (505) 855-6296 

Fax:(505) 855-6327 

HSmithl@pnm.com 

64. A Party may change the name, title, address, telephone number, fax number, or email address of a contact 

person identified above by providing written notice to the other Parties. Such change shall not constitute a modification for the 

purpose of Section XIV (Modification). 

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XVI. ENTRY AND INSPECTION 

65. Nothing in this Decree shall be construed to limit or impair the Department's authority under the 

applicable laws and regulations to enter and inspect San Juan. 

XVII. AVAILABILITY OF INFORMATION 

66. Nothing in this Decree shall be construed to limit or impair the Department's authority under the 

applicable laws and regulations to require PNM to provide information regarding San Juan. 

XVIII. RECORD PRESERVATION 

67. For at least ten (10) years after termination of this Decree, PNM shall maintain all records, documents, data, 

and other information related to this Decree. Nothing in this Decree shall be construed as a waiver of any attorney client, 

attorney work product, or other privilege that PNM might otherwise possess. 

XIX. COMPLIANCE WITH APPLICABLE LAWS 

68. PNM shall undertake the obligations required by this Decree in accordance with applicable 

federal, state, and local laws and regulations. 

69. This Decree is not a permit. The emission limits and related requirements contained in this 

Decree, however, shall be incorporated into permits consistent with Section XXIII (Integration with Permits). This Decree 

does not relieve PNM of its responsibility to comply with all federal, state, and local laws and regulations and orders of this

Court. 

70. Notwithstanding the foregoing, if any current or future federal, state, or local law or regulation 

conflicts with, or have the effect of relaxing, any requirement in this Decree, the more stringent requirement shall apply. 

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XX. EFFECT OF SETTLEMENT 

71. This Decree constitutes a complete and final release of all civil claims for violations alleged in 

the complaints, draft compliance orders, and second notice of intent to sue through the effective date of this Decree. 

72. Nothing in this Decree shall be construed to create any rights in or grant any cause of action to 

any person not a Party to this Decree. The preceding sentence shall not be construed to waive or nullify any rights that a 

person not a signatory to this Decree may have under applicable law. Plaintiffs and the Department expressly reserve all rights,

defenses, claims, demands, and causes of action that they might have against PNM with respect to any matter, transaction, or 

occurrence relating to San Juan that is not addressed in this Decree. PNM expressly reserves all rights and defenses which it 

may have to any claim, demand, or cause of action relating to San Juan that is not addressed in this Decree. The Parties 

expressly reserve all rights, defenses, claims, demands, and causes of action which each Party may have against any person not 

a Party to this Decree with respect to any matter, transaction, or occurrence relating to San Juan. Nothing in this Decree shall 

be construed as a waiver of any privilege by a Party. 

73. As long as PNM remains in compliance with the requirements in this Decree, Plaintiffs and the 

Department covenant not to sue PNM, its officers, employees, agents, successors, or assigns for matters alleged in the 

complaints, draft compliance orders, and second notice of intent to sue. Nothing herein shall prevent Plaintiffs or the 

Department from seeking any legal or equitable remedy to enforce the requirements of this Decree. This covenant not to sue 

does not pertain to any matters not alleged in the complaints, draft compliance orders, or second notice of intent to sue. 

Plaintiffs and the Department expressly reserve all rights, defenses, claims, demands, and causes of action which they may 

have against PNM with respect 

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to any matter, transaction, or occurrence that was not alleged in the complaints, draft compliance orders, or second notice of 

intent to sue. PNM represents and warrants that it has not notified Plaintiffs or the Department of any claims or alleged 

violations that are not included in the matters alleged in the complaint, draft compliance orders, or second notice of intent to 

sue at San Juan, and Plaintiffs and the Department represent and warrant that they are not presently aware of any claims or 

alleged violations at San Juan that are not included in the matters alleged in the complaint, draft compliance orders, or second 

notice of intent to sue. 

74. Nothing herein shall prevent the Department from taking appropriate action to address 

conditions at San Juan that constitute an emergency situation or that present an immediate threat to public health or the 

environment. 

75. This covenant not to sue shall survive the termination of this Decree as an agreement 

between PNM, Plaintiffs and the Department. This Decree shall not be used to establish the liability of PNM in any 

action, except to enforce the provisions of this Decree. 

76. Plaintiffs Grand Canyon Trust and Sierra Club, and the Department, but not the Attorney 

General acting to represent the interests of residential and small business customers, agree not to contest, appeal or otherwise 

challenge a request by any owner of San Juan to recover the costs to install and operate the pollution control equipment 

described in this Decree before the New Mexico Public Regulation Commission ("NMPRC") or any other rate-making 

regulatory agency. PNM's obligations in this Decree shall not be affected by whether any costs associated with the pollution 

control equipment are deemed recoverable by the NMPRC or any other rate-making regulatory agency. 

XXI. RETENTION OF JURISDICTION 

77. The Court shall retain jurisdiction of this matter for the purpose of implementing 

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and enforcing the terms and conditions of the Decree and adjudicating disputes under Section XII (Dispute Resolution) until 

termination of the Decree. 

XXII. ENFORCEMENT 

78. This Decree is an enforceable document. If PNM violates any requirement of this Decree, Plaintiffs and/or 

the Department may request any legal or equitable remedy from this Court to achieve full compliance with such requirement. 

PNM reserves all rights and defenses to an enforcement action by Plaintiffs or the Department not expressly precluded by this 

Decree, and nothing in this Decree shall constitute a waiver of such rights or defenses. 

XXIII. INTEGRATION WITH PERMITS 

79. All requirements set forth in Section V (Emission Controls and Limitations) and Section VI 

(Emissions Monitoring), including all applicable definitions in Section II (Definitions), shall be incorporated as applicable 

requirements into San Juan's Operating Permit. For incorporation of these applicable requirements into PNM's operating 

permit, the requirements of this Decree shall be modified such that the role of Plaintiffs and the Department is assumed by the

Department. 

80. No later than one hundred and eighty (180) days after the effective date of this Decree, PNM 

shall submit an application to revise its NSR permit to authorize the construction of pollution control equipment required by 

Section V (Emission Controls and Limitations) of this Decree, if legally required. PNM shall consult with the Department to 

ensure that the permit application is administratively and technically complete. Plaintiffs may only challenge a provision in 

such permit to the extent it is not consistent with, or is not addressed by, this Decree. 

81. PNM shall incorporate all applicable requirements in the Sections described 

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above at such time as it is required to renew its Operating Permit for San Juan; provided, however, that PNM may seek to 

modify its Operating Permit after the first renewal to incorporate any NO X limit or mercury operational requirements to the 

extent they became applicable after such renewal. The Department shall include in the revised operating permit those emission 

limits and other requirements in the current operating and NSR permits; provided, however, the Department shall not relax any 

limit or requirement of this Decree. PNM shall consult with the Department to ensure that the permit application is 

administratively and technically complete. Plaintiffs may only challenge a provision in such permit to the extent it is not 

consistent with, or is not addressed by, this Decree. 

82. PNM shall provide a copy of each permit application to Plaintiffs at the same time it is 

filed with the Department. 

83. After termination of this Decree, PNM shall not, in any subsequent application for a modified 

or renewed Title V permit, seek to revise any applicable requirement in the Sections described above that is to be incorporated

into a Title V permit to the extent any such revision would render such requirement less stringent. This agreement shall survive 

as an enforceable obligation between PNM, and Plaintiffs and the Department. 

XXIV. TERMINATION OF CONSENT DECREE 

84. This Decree shall remain an enforceable order of the Court until Plaintiffs and the Department agree, or the 

Court determines in response to a petition by a Party, that (a) all requirements of the Decree have been satisfied, (b) PNM has

installed all controls and has been in material compliance with all emission limitations for twelve (12) consecutive months 

(except for the mercury operational requirements for Units 1 and 2 for which six (6) months compliance will be sufficient), (c)

all applicable requirements of the Decree have been incorporated into the 

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Operating Permit for San Juan, and (d) PNM has paid any stipulated penalties due under the Decree. Termination of this 

Decree shall not affect any matter expressly set forth in this Decree that is to survive as an agreement among or between 

Plaintiffs, the Department, and PNM. 

XXV. COSTS 

85. PNM agrees that, pursuant to Section 304 of the Act, 42 U.S.C. § 7604(d-), Plaintiffs are entitled to recover 

their reasonable costs of litigation in this action, including attorney and expert witness fees. The issue of the amount of such 

costs is reserved. If PNM and Plaintiffs are unable to reach an agreement regarding the amount of such costs, Plaintiffs may 

petition the Court for a determination of such amount. Furthermore, Plaintiffs expressly reserve their right to petition the Court 

for recovery of additional costs and fees incurred after they sign this Decree, and PNM reserves its right to oppose any such 

petition. 

XXVI. SEVERABILITY 

86. If any provision or authority of this Decree is held by a court of competent jurisdiction to be invalid, if that 

provision or authority is severable from the remainder of the Decree, the remainder of the Decree shall remain in force and 

shall not be affected by the court's order and ruling. If the application of this Decree to any Party or circumstance is held by a 

court of competent jurisdiction to be invalid, the application of this Decree to other Parties or circumstances shall remain in

force and shall not be affected thereby. 

XXVII. HEADINGS 

87. Any section or paragraph heading in this Decree is provided solely as a matter of convenience to the reader 

and shall not be construed to alter the meaning of any provision of this Decree. 

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XXVIII. NOTICE OF DECREE 

88. The Parties agree to cooperate in good faith in order to obtain the Court's review and entry of 

this Decree. 

89. Pursuant to 42 U.S.C. § 7604(c)(3), this Decree shall be lodged with the Court and 

simultaneously presented to the United States for review and comment for a period not to exceed forty five (45) days. After the

review period, the Decree may be entered by the Court. If the Decree is not entered by the Court, the Parties shall retain all 

rights they had in this litigation or under state law before the lodging of the Decree. 

90. The Parties agree to cooperate in good faith to obtain prompt review of this Decree by the 

United States and the Court. If the United States or the Court comment on the Decree, and as a consequence the Decree is not 

entered, the Parties agree to discuss such comments and attempt to make such revisions as necessary to obtain entry of the 

Decree. 

XXIX. EFFECTIVE DATE 

91. This effective date of this Decree shall be the date on which the Court approves and enters this Decree. 

XXX. SIGNATORIES AND ASSIGNMENT 

92. Each undersigned representative of a Party to this Decree certifies that he or she is fully 

authorized to enter into the terms and conditions of this Decree and to execute and legally bind such Party to this document. 

93. The Parties agree not to oppose entry of this Decree by this Court or challenge any provision of

this Decree. 

94. If PNM proposes to sell or transfer all or part of its ownership interest in any of San Juan, prior 

to such sale or transfer PNM shall advise the purchaser or transferee in writing of 

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the purchaser's or transferee's obligation to comply with the terms of this Decree, and PNM shall send a copy of such written 

notification to the Plaintiffs and the Department at least thirty (30) days before such proposed sale or transfer. 

95. The sale or transfer of all or part of PNM's ownership interest in San Juan, or any modification 

of its status as operator of San Juan, shall not relieve PNM of its obligations to perform under this Decree unless agreed upon

by the Parties. 

96. If the Plaintiffs and the Department agree, the Parties and any purchaser or transferee that has 

become a party defendant to this Decree may execute a modification that relieves PNM of its liability under this Decree with 

respect to the ownership interest to be sold or transferred, and makes the purchaser or transferee liable for all obligations and 

liabilities applicable to the purchased or transferred ownership interest. 

XXXI. COUNTERPARTS 

97. This Decree maybe signed in counterparts. 

 The undersigned Parties enter into this Decree and submit it to this Court for approval and entry. 

 _______________________________________ 

 UNITED STATES DISTRICT COURT JUDGE 

Dated this _________ day of ___________________, 2005 

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GRAND CANYON TRUST 

/s/ Rick Moore Date 3/9/05 

Rick Moore 

Associate Director 

 

Approved as to form: 

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/s/ Steven Sugarman 

Steven Sugarman 

BELIN & SUGARMAN 

618 Paseo de Peralta 

Santa Fe, NM 87501 

505-983-1700 

 

/s/ Reed Zars 

Reed Zars 

Attorney at Law 

910 Kearny St. 

Laramie, WY 82070 

307-745-7979 

 

/s/ George E. Hays 

George Hays 

Attorney at Law 

236 West Portal Avenue, #110 

San Francisco, CA 94127 

415-566-5414 

Attorneys for Plaintiffs Grand Canyon Trust 

and Sierra Club 

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SIERRA CLUB 

/s/ Aaron Isherwood Date March 9, 2005 

Aaron Isherwood 

Sierra Club Environmental 

Law Program 

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PUBLIC SERVICE COMPANY OF 

 NEW MEXICO 

/s/ Jeffry E. Sterba Date 3/9/05 

Jeffry E. Sterba, Chairman 

President and CEO 

 

Approved as to form: 

 

/s/ Richard L. Alvidrez for 

Daniel S. Reinhardt 

Randy E. Brogdon 

TROUTMAN SANDERS, LLP 

Bank of America Plaza Suite 5200 

600 Peachtree Street NE 

Atlanta, GA 30308-2216 

(404) 885-3000 

FAX - (404) 885-3995 

Richard L. Alvidrez 

KELEHER & McLEOD, P.A 

PO Box AA 

Albuquerque, New Mexico 87103 

(505) 346-4646 

FAX (505) 346-1370 

Henry V. Nickel 

HUNTON & WILLIAMS 

1900 K. Street, NW 

Washington, D.C. 20006 

(202) 955-1500 

Attorneys for Defendant Public Service 

 Company of New Mexico 

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NEW MEXICO ENVIRONMENT 

 DEPARTMENT 

/s/ Ron Curry Date 3/9/05 

Ron Curry, Cabinet Secretary 

New Mexico Environment Department 

 

Approved as to form: 

 

/s/ Eric Ames 

Eric Ames, Esq. 

Assistant General Counsel 

Special Assistant Attorney General 

New Mexico Environment Department 

1190 St. Francis Drive 

Santa Fe, New Mexico 87502-6110 

(505) 827-2982 

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