Testimony of Ted Schooley

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STATE OF NEW MEXICO

BEFORE THE ENVIRONMENTAL IMPROVEMENT BOARD

IN THE MATTER OF PROPOSED REVISIONS

TO THE STATE IMPLEMENTATION PLAN

FOR THE SAN JUAN GENERATING STATION

BEST AVAILABLE RETROFIT TECHNOLOGY

DETERMINATION 

No. EIB 13- 02(R)

_____________________________________________________________________________

NMED EXHIBIT 10 – Written Testimony of Ted Schooley

______________________________________________________________________________

Statement of Witness Qualifications

Ted Schooley has served as the Permitting Programs Manager of the Air Quality Bureau

of the New Mexico Environment Department (“NMED”) since May, 2013. He began with the

Bureau in May of 2001 as the Minor Source Manager, and later served as the Technical Services 

Manager of the Permitting Section in the Bureau. Mr. Schooley holds a Bachelor of Science 

degree in Mechanical Engineering from Louisiana State University, New Orleans, as well as a 

Bachelor of Science in Math and Physics from the University of Texas at El Paso. He is a 

registered Professional Engineer in mechanical engineering in the State of Louisiana. His 

resume is attached as Exhibit 10a.

Testimony

1 My name is Ted Schooley and I am the Permitting Programs Manager for the Air Quality 

2 Bureau within NMED. The purpose of my testimony is to describe the stakeholder process that 

3 informed the February 15, 2013 tentative agreement (the “Term Sheet”) between the NMED, 

4 Public Service Company of New Mexico (“PNM”), and the U.S. Environmental Protection 

5 Agency (“EPA”) to address regional haze and visibility transport requirements for the San Juan 

6 Generating Station (“SJGS”); to explain the purpose and mechanism of the Testing Program 

7 provided in paragraph 1.d of this Term Sheet, and to affirm the Department’s support for the 

8 “State Alternative” contained in the Term Sheet as the State’s BART determination for the 

9 SJGS.
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1 Background

2 On June 2, 2011, this Board adopted a regional haze state implementation plan (“SIP”) 

3 that included New Mexico’s determination of Best Available Retrofit Technology (“BART”) for 

4 the PNM San Juan Generating Station (“SJGS). This plan required the installation of Selective 

5 Non-Catalytic Reduction (“SNCR”) controls, with a NOx emission limit of 0.23 lbs/MMBtu and 

6 an estimated total capital invest of approximately $76 million. On June 24, 2011, Governor 

7 Martinez submitted the SIP to the Environmental Protection Agency (“EPA”) for approval (EPA 

8 received the SIP on July 5, 2011). 

9 On August 22, 2011, without taking action to approve or disapprove New Mexico’s SIP, 

10 the EPA promulgated a federal implementation plan (“FIP”) imposing a different BART limit on 

11 the San Juan Generating Station. This federal plan required the installation of Selective Catalytic 

12 Reduction (“SCR”) controls with a NOx emission limit of 0.05 lbs/MMBtu, at a total cost that 

13 EPA estimated to be $345 million, but which PNM estimated to be between $740 million and 

14 $860 million.

15 On October 21, 2011, New Mexico petitioned for judicial review of EPA’s FIP in the 

16 United States Court of Appeals for the Tenth Circuit, as provided for by the Clean Air Act. 

17 Among other issues, New Mexico challenged EPA’s decision to issue this FIP without first 

18 determining whether New Mexico’s SIP fully satisfied the Act, because only if the SIP were 

19 found to be deficient would EPA have the statutory authority to issue a FIP. New Mexico argued 

20 that EPA’s duty to consider the SIP was especially clear in the context of BART determinations, 

21 because Congress expressly delegated decisions on BART to the States. The state also filed a 

22 motion asking the court to stay the FIP pending the outcome of the litigation. On March 1, 2012,

23 the court denied that motion, without issuing an opinion.
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1 In response to these events, on April 26, 2012, New Mexico Governor Susana Martinez 

2 wrote EPA Administrator Lisa Jackson a letter requesting a 90-day stay of the federal rule “in 

3 order to create a structure in which discussions of potential solutions to the regional haze dispute 

4 can occur.” Governor Martinez further explained:

5 “I initiated [a lawsuit] against the EPA because I could not stand idly by as EPA 

6 infringed on New Mexico’s rights and moved to impose a significant economic burden 

7 on our citizens. However, I believe we owe it to taxpayers to see if we can avoid further 

8 litigation by resolving this dispute outside of the courtroom. Therefore, I am urging 

9 EPA, Public Service Company of New Mexico (PNM) and other interested stakeholders 

10 to evaluate whether there are any viable alternatives to the BART FIP that will be in both 

11 the environmental and economic best interests of New Mexico.”

12

13 In response to Governor Martinez’s request, on July 2, 2012, Administrator Jackson 

14 signed an order staying the effectiveness of the FIP for 90 days from the date of publication in 

15 Federal Register. The order was published in the Federal Register on July 16, 2012, (77 Fed. 

16 Reg. 41,697) and a 45 day extension of administrative stay was subsequently published on 

17 October 24, 2012 (77 Fed. Reg. 64,908). Although by their express terms these actions stayed 

18 only the effective date of the FIP and did not alter the ultimate compliance deadline of 

19 September 21, 2016 for installation of SCR, EPA indicated in the order it would take future 

20 action to extend that deadline or account for an alternative proposal. 

21 Stakeholder Process

22 In order to accomplish the evaluation of other alternatives called for by Governor 

23 Martinez, the Department conducted a stakeholder outreach process. The process was organized 

24 and facilitated by then-General Counsel Ryan Flynn. I participated in it along with Liz Bisbey25 Kuehn, also of the Air Quality Bureau, to provide technical support. The process began in July, 

26 2012, when the Department published its Proposed Stakeholder Outreach Plan to establish a 

27 broad, consensual goal with stakeholders, EPA, and PNM, and to determine if an alternative plan 
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1 was feasible. This plan included a series of public meetings and the convening of a Technical 

2 Work Group of stakeholder representatives and experts. 

3 In accordance with the plan, the Department then held a series of public meetings 

4 in July and August, 2012, in venues accessible to the local stakeholders. The principal 

5 stakeholders identified included local communities, consumers, the Navajo Nation, 

6 environmental and public health groups, industry, PNM, and federal, state, and local leaders. 

7 These public meetings were held in: 

8 1. Farmington, July 24, to address local community concerns; 

9 2. The Navajo Nation, August 9, to address the tribe’s concerns;

10 3. Albuquerque, August 13, to address consumer and ratepayer concerns; and

11 4. Farmington, August 20, to address environmental and public health concerns.

12

13 In addition to these public meetings, the Department organized a Technical Work Group 

14 comprising stakeholder representatives and experts. The Department held a series of Technical 

15 Work Group meetings, facilitated by an independent professional facilitator. The meetings 

16 provided technical input to assist the Department with evaluating whether a viable alternative 

17 existed and, if so, to make recommendations concerning its nature.

18 The Technical Work Group included representatives from the Navajo Nation, New 

19 Mexico Public Regulation Commission, WildEarth Guardians, New Mexico Industrial Energy 

20 Consumers, the Sierra Club, Four-Corners Economic Development, Inc., the City of Farmington, 

21 Western Environmental Law Center, Western Resource Advocates, the U.S. Forest Service, 

22 PNM, the Department, New Energy Economy, and Amigos Bravos.

23 The Technical Work Group did not reach a consensus around any specific plan, and not 

24 all of the groups mentioned above support the State Alternative. However, despite the diversity 

25 of stakeholder interests, there was general agreement on the additional factors that should be 
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1 considered in developing a regional haze strategy for the SJGS – including the impact on jobs 

2 and the capital cost of any proposal. There was also broad agreement that the shutdown of units 

3 was an appropriate element of an alternative plan.

4 After considering the input of the various stakeholders, on October 2, 2012, the 

5 Department announced that it had formulated a proposed alternative. This plan featured the 

6 shutdown of SJGS Units 1 and 2 and the installation of SNCR emission controls on Units 3 and 

7 4. The Department found that the alternative would result in similar emission reductions 

8 required by EPA’s Federal Implementation Plan at a fraction of the costs, and deliver additional 

9 environmental benefits. Chief among these is that it would reduce not only NOx but SO2, 

10 mercury, particulates, and carbon; reduce water usage and coal ash production; and allow for 

11 greater fuel diversity by avoiding unnecessary over-commitment to coal fired power.

12 Post-Stakeholder Process

13 Because EPA and the Department could not agree on a mechanism to provide relief from 

14 the September 21, 2016 compliance deadline, briefing of the Tenth Circuit challenges to the FIP 

15 continued while the stakeholder process proceeded during the summer of 2012, with oral 

16 arguments scheduled for October 23, 2012. As that date approached, the Department’s efforts 

17 shifted from obtaining additional stakeholder input on alternatives, to intensive negotiations with 

18 EPA and PNM to try to reach an agreement based on the proposed “State Alternative.” These 

19 efforts then continued on past the date of oral arguments, including a round of focused, in person 

20 discussions between the EPA, the NMED, and PNM, held from November 13 through November 

21 16, 2012, in which I participated. Eventually, in February of 2013, the discussions resulted in 

22 the tentative agreement memorialized with the signing of the Term Sheet. 
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1 The Term Sheet agreement differs from NMED’s originally proposed State Alternative 

2 primarily in the following ways: First, the units to be retired were changed from 1 & 2 to 2 & 3. 

3 Because Unit 3 is larger than unit 1, this results in larger reductions of all pollutants (by 

4 approximately 22%). Second, the Term Sheet adds the requirement that the SO2 emission limit 

5 from remaining units 1 & 4 be reduced by 33%, from 0.15 to 0.10 lb/MMBtu. Third, the Term 

6 Sheet also adds provisions requiring testing and fine tuning of the SNCR controls on units 1 & 4 

7 to determine if a lower rate than 0.23 lbs/MMBtu can be achieved. Finally, under the Term 

8 Sheet, PNM agrees to perform a best available control technology (“BACT”) determination for 

9 the natural gas turbine to be installed at San Juan to partially replace the power of retired units 2 

10 & 3, and to limit NOx emission from that turbine to no more than 75 tons per year.

11 Selective Non-Catalytic Reduction (“SNCR”) Testing Program 

12 Paragraph 1.d. of the Term Sheet provides a post-SNCR installation Testing Program. 

13 This Testing Program consists of three parts: (1) SNCR Performance Testing (2) Fuel 

14 Performance Testing, and (3) Long-Term Performance Evaluation, as described below.

15 SNCR Performance Testing

16 The ammonia/urea reagents are injected into the flue gas stream to react with NOx, thus 

17 reducing NOx emissions. Invariably, this reaction is not 100% efficient, resulting in some 

18 fraction of these reagents being emitted to the atmosphere. The amount being emitted is referred 

19 to as the “slip.” While it reduces NOx emissions, ammonia in the flue gas stream has multiple 

20 negative impacts including odors, health concerns, potential visibility impacts, and equipment 

21 fouling. 
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1 The Term Sheet limits the acceptable ammonia/urea injection rates such that they do not 

2 result in a slip of less than 5 ppm because it has been empirically determined that for similar 

3 installations, the NOx Reduction Efficiency is dramatically reduced below this slip level. 

4 The Term Sheet limits the maximum slip to 10 ppm because at higher slip values the 

5 return in increased NOx reduction efficiency gained by doing so does not justify increasing the 

6 aforementioned negative impacts.

7 The SNCR Performance Testing is pre-Long-Term Performance Evaluation testing to 

8 develop a targeted ammonia/urea injection rate range over various load levels without exceeding 

9 a to-be-agreed-upon preliminary slip limit of between 5 and 10 ppm, with the goal of minimizing 

10 NOx emissions. These ammonia/urea injection rates corresponding to various load levels will be 

11 used in the Long-Term Performance Evaluation Period phase of this testing program. The terms 

12 of the SNCR Performance Testing protocol also provide responsibilities and performance dates 

13 for the various parties to concur on a slip limit that PNM will comply with for SJGS Units 1 and 

14 4. 

15 Fuel Performance Testing

16 PNM can possibly reduce NOx emissions by pre-treating the coal it uses for fuel. The 

17 purpose of this Fuel Performance Testing protocol is to demonstrate that this pre-treating coal 

18 technology does not:

19 1) Measurably increase NOx emissions

20 2) Adversely impact overall unit operations

21 If this Fuel Performance Testing does not measurably increase NOx emissions or 

22 adversely impact overall unit operations, this pre-treated coal shall be used in the Long-Term 

23 Performance Evaluation Period to determine the NOx emission limit for SJGS Units 1 and 4. 
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1 The Fuel Performance Testing and pre-treated coal will not be required if it is determined to 

2 result in any detrimental effect to Units 1 and 4. PNM is also required to use pre-treated coal on 

3 Units 2 and 3 when used on Units 1 and 4.

4 Long-Term Performance Evaluation Period

5 The purpose of the Long-Term Performance Evaluation Period is to determine a new, 

6 more appropriate, NOx emission rate if the Long-Term Performance Evaluation Period indicates 

7 the actual NOx emissions are substantially lower than the 0.23 lb/MMBtu on a daily rolling 30-

8 day average basis emission rate established in paragraph 1.c of the Term Sheet. The targeted 

9 ammonia/urea injection rates corresponding to various load levels established in the SNCR 

10 Performance Testing and the pre-treated coal, if its use is appropriate, will ensure the actual NOx 

11 emissions measured in the Long-Term Performance Evaluation Period are the lowest practicably 

12 achievable. These actual NOx emission rates will be compared to the 0.23 lb/MMBtu on a daily 

13 rolling 30-day average basis emission rate. The Long-Term Performance Evaluation Period 

14 paragraph of the Term Sheet provides criteria for determining whether the actual NOx emission 

15 rate is substantially lower than 0.23 lb/MMBtu, and, if it is, a formula for determining the new, 

16 lower NOx emission limit. This paragraph also requires PNM to apply for a permit modification 

17 by March 31, 2017 to include both the resulting NOx emission rate, if it is lower than the 0.23 

18 lb/MMBtu on a daily rolling 30-day average basis emission rate, and the agreed upon ammonia 

19 slip.

20 Department’s Position on the State Alternative

21 The Department strongly supports adoption of the State Alternative as a revised BART 

22 determination for the San Juan Generating Station. As the modeling shows, this option will 

23 achieve visibility improvements at each of the 16 affected Class I areas that are within 0.5 
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1 deciview of the improvements achieved by EPA’s FIP, a difference that is undetectable by the 

2 average person. In several cases, the State Alternative will achieve greater visibility 

3 improvements than the FIP. It will do this for a total capital investment of approximately $34 

4 million for SNCR at two units, a fraction of the hundreds of millions required by the FIP. The 

5 State Alternative complies with the provisions of the Term Sheet, and will satisfy the SJGS’s 

6 obligations under the visibility and interstate transport provisions of the Clean Air Act.

7 Equally important to the Department, the State Alternative avoids requiring PNM to 

8 install costly pollution control retrofits to all four of its units, which would involve investment of 

9 on the order of $860 million. Such an investment would not appreciably improve visibility any 

10 more than would the State Alternative, but would effectively lock the SJGS into coal-fired 

11 production at all four units for decades to come. This would significantly impede New Mexico’s 

12 efforts to transition to a more diverse and less carbon-intensive mix of energy sources. This 

13 would be true even if the ultimate cost of the FIP is closer to EPA’s estimate of $345 Million. 

14 Finally, as documented in the Department’s BART determination, the State Alternative would 

15 result in a 62% reduction in nitrogen oxides, a 67% reduction in SO2, a 50% reduction in carbon 

16 dioxide, particulate matter, mercury, and volatile organics, up to a 53% reduction in water usage, 

17 and a up to a 50% reduction in coal ash generated. The FIP, in contrast would reduce emissions 

18 of only nitrogen oxides, and would not do anything to reduce water use or coal ash generation. 

19 For all of these reasons, NMED respectfully requests that the Board adopt the State 

20 Alternative as BART for the SJGS, as contained in the June 27, 2013 public comment version of 

21 the proposed revisions to Chapter 10 and Appendix D of New Mexico’s regional haze state 

22 implementation plan.