April 18, 2012 HUNTON &WILLIAMS LL,P 2200 PENNSYLVANIA AVENUE, NW WASHINGTON. D.C. 20037-1701

Tk.L 202 955 1500 FAX 202 77X 2201

HENRY V. NICKEL DIRECT DIAL: 202 955 1561 EMAIL: hn~ckel@hunton.com

FILE NO: 37552.000007


### Privileged and Confidential Attorney Work Product

Colleen McKaughan Associate Director, Air Division United StatesEnvironmental Protection Agency Region IX 75Hawthorne Street SanFrancisco, CA 94105

Dear Ms. McKaughan:

Wehave been requested to respond to your letter of March 14,2012, to Jeffrey Yockey regarding the BART-eligibility status of Unit 4 of TEP's Sundt Generating Station under the visibility program of the Clean Air Act ("CAA). TEP appreciates your interest in understanding the arguments that TEP intends to pursue in this matter. This response supplements the March 16, 201

### 1email from Mr. Yockey to Francisco Donez addressing this issue and providing data regarding Unit 4's emissions, information on stack parameters for Unit 4, and screening-level cost estimates fnr various categories of emission controls.

We appreciate EPA's recognition, as stated in your letter, that the text of EPA's BART Guidelines, which are codified rules at 40C.F.R. Part 5 1App. Y (hereinafter "Appendix Y") and thus are binding on EPA, expressly provide that "any emissions unit for which a reconstruction 'commenced' after August 7, 1977, is 

### notBART-eligible." 40C.F.R. Part 5 1 App. Y

## 5 II.A.2 (emphases added). There is no dispute that Sundt Unit 4's reconstruction commenced after August 7, 1977. Moreover, Appendix Y contains no exceptions or qualifications to the broad exemption established by the rule quoted above. The footnote in the preamble to the BART Guidelines that you citeis not to the contrary, as it merely reflects the reality that post-1977 source reconstructions in the generalrun of cases would have "gone through NSRIPSD permitting." 70Fed. Reg. 39104, 39111 n.9 (July 6, 2005). Nothing in that footnote does -- or

ATLANTA AUSTIN BANGKOK BElJlNG BRUSSELS CHARLOTTE DALLAS HOUSTON LONDON LOS ANGELES McLEAN MIAMI NEW YORK NORFOLK RALEIGH RICHMOND SANFRANCISCO TOKYO WASHINGTON

www hunton.com

# HUN'ION 

# WILLIAMS

Ms. Colleen McKaughan April 18, 20 12 Page 2

could -- contradict the plain, unqualified language ofEPA's rule text that exempts "any" post1977 reconstruction. In any event, as EPA is aware, "[iln the context of the CAA, 'the word "any" has an expansivemeaning."' New Jersey v. EPA,517F.3d 574,582(D.C.Cir. 2008) (quotingNew York v. 

### EPA,443 F.3d 880,885(D.C. Cir. 2006)). Likewise, while it is generally true that BART was intended to "apply to sources which had been 'grandfathered"' from NSR permitting requirements, 70 Fed. Reg. at 39 111,it does not follow that BART applies either to all "grandfathered" sources (it does not apply, for example, to sources that were in operation before 1962)or to sources, like Sundt Unit 4, that were not grandfathered but instead were exempt fromNSR permitting requirements as aresult of a mandatory coal conversion pursuant to a Department ofEnergy Order under Section 301(c)of the Power Plant and Industrial Fuel Act of 1978 (which superseded Sections 2(a) and (b)of the Energy Supply and Environmental Coordination Act of 1974),see 40 C.F.R

### 5 52.2l(b)(2)(iii)(b). (Becausethis order may have been the only one of its kind, abroader precedent is not presented by accepting TEP7s argument.)
For the foregoing reasons, we believe it is clear that Sundt Unit 4 "is not BART-eligible," 40 C.F.R. Part 5 1App. 

### Y 

### 5 II.A.2, and thus cannot be subject to BART requirements. While TEP requests that EPA reconsider its position on the BART-eligibility of SundtUnit 4,TEP understands that EPA may decide to evaluate BART factors as applied to Unit 4 while considering this request. If EPA intends to evaluate these factors for Unit 4, EPA must provide adequate time for development of relevant information and exchange of that information among EPA, the Arizona Department ofEnvironmental Quality, and TEP, including information regarding visibility modeling and cost evaluations of alternative potential BART emission limits that might be considered for the unit.

Unlike other sources in western states that have been evaiuated for BART over the last two or

more years, Unit 4 has not previously been identified as potentially subject to BART requirements. Thus, in contrast to other cases where potential BART emission limit determinations have been developed following extensive study and consultation, such study and consultation have not occurred with respect to SundtUnit 4. Accordingly, unless EPA determines very soon (as it should)that Unit 4 is not BART-eligible -- or that, even if it is, it is not subject to BART -- TEP and the StateofArizona should be given an opportunity to provide information and input to EPA, and to react to EPA's information, views, and conclusions, on these matters.

# HUNTON WILLIAMS

Ms. Colleen McKaughan April 18,2012 Page 

### 3

Finally, TEPdoes not believe the provision of the pending proposed district court consent decree that would require proposed EPA action on regional haze implementation plan requirements for Arizona by May 15, 2012, and final EPA action by November 15,2012,should be adopted. If, however, the decree is adopted and those dates are not significantly extended, then the decree shouldbe revised to exclude Sundt Unit 4 from that provision's coverage, with later dates established for Unit 4 that would allow for resolution of the BART-eligibility issue (and the "subject to BART" issue) for Unit 4 and development of necessary BART-related information with respect to the unit.

We would be happy to discuss these matters with you further at your convenience.
Sincerely,

EPA Region 

### IX

,Arizona Department ofEnvironmental Quality Marc ~erden, Esquire,

## TEP Erik Bakken, TEP Jeffrey 

### G. Yockey, P.E., TEP