# Colorado Utilities Coalition for Clean Air**--------~-----** - ---------­

# cue PRELIMINARY PREHEARING STATEMENT OF 

### 11/10/06 UPSETS RULEMAKING



### BEFORETHE AIR QUALITY CONTROLCOMMISSION STATE OF COLORADO



### PRELIMINARY PREHEARINGSTATEMENT OF PLATTE RNERPOWERAUTHORITY TRl-STATE GENERATION AND TRANSMISSION ASSOCIATION INC. PUBLIC SERVICE COMPANY OF COLORADO doing business as XCEL ENERGY APPEARING INDIVIDUALLY. AND ALSO APPEARING AS MEMBERS OF THE 

### COLORADO UTILITIES COALITIONFORCLEAN AIR

IN THE MATTER OF THE PROPOSED REVISIONS TO COMMON PROVISIONS REGULATION REGARDING UPSET PROVISIONS

The above-captioned entities. appearing individually and as members ofthe Colorado Utilities Coalition for Clean Air ("CUC"). by their undersigned attorneys. hereby submit this Prehearing Statement in this matter. This PreliminaryPrehearing Statementis submitted through the CUC's undersigned attorneys pursuant to Section 1.5.5(5)(c) ofthe Procedural Rules ofthe Air Quality Control Commission ("Commission"). 

### I. EXECUTIVE SUMMARY The CUC has participated in the stakeholder collaborative process sponsored by the Air 

### Pollution Control Division (Division) and Commission. The stakeholder process was designed to work with the Environmental Protection Agency (EPA) and other interested partiesto evaluate options for improving the rule in the context of EPA's concerns. The existing version ofthe Upset Condition Rule found in the Common Provisions Regulations has been in place for over 30years and during that period oftime, the air quality in Coloradohas significantlyimproved, to a point ofthe elimination non-attaimnent areas. This has incurred notwithstanding significant population increases. To date, evidence has not been offered to demonstrate the Upset Provision threatens the national ambient air quality standards orprovisions ofthe prevention ofsignificant deterioration (PSD) program. The Commissionhasproposed two options for consideration. The CUC supports the adoption of "Option 2." The Division has stated that eitheroption would accomplish itsprogrammatic goals. Option 2 builds on and clarifies existing Division policies and offers the most straight-forward improvement.

1111312006 733518.1

### cue PRELIMINARY PREHEARING S1'ATEMENT0'11110106 UPSETS RULEMAKING



### II. STATEMENT OF FACTUAL AND LEGAL ISSUESIISSUES TO BE RESOLVED BY THE COMMISSION A. 

### Whether the existingUpsets Provision is inconsistent with the Federal Clean Air Act? While EPA has issued non-regulatory guidance, it has not promulgated regulations consistence with its guidance memos. A series ofguidance memos dating back to 1981 are similar but not always consistent and therefore the CUC believes that even ifEPA's guidance had regulatory effect, Option 2 would be consistent with such guidance. Colorado has made great progress in the last 30 years to improve air quality with the current Upset Provisionbeing in effect. There is no factual evidence that the administration ofthe Upset Provision by the Division nor judicial rulings concerning the interpretation of the Upset Provisions have served to interfere with achievement and maintenance ofthe national ambient air quality standards, norwiththe provisions ofthe PSD program. B. Whether the Commission should make revisions to the current upset provision and ifso, how to do so in the most clear, efficient, and easily understood manner which protects citizens against litigation and penalties for actions over which they have no control

- - ­ that is, upset conditions? Section I.G. ofthe Common ProvisionsRegulation defines upset conditions as follows:
"An 

### unpredictable failure ofair pollution control or process equipment which results in the violation ofemission control regulations and which is not due to poor maintenance, improper or careless operations, or is otheIWise preventable through exerciseofreasonable care." Thus, in order to qualify for any special treatment as an upset condition, the event must be unavoidable and outside the owner's control. 

### It would be unfair to penalize or subject a source to litigation for instances that truly qualify as upset conditions. The Division's administrative practice is to closely scrutinize claims for upset conditions and to challenge those it deems unworthy. The Colorado statute has several provisions which authorize the state to go to court to stop behavior which, even though unavoidable, threatens public health, the environment or ambient air quality standards. Option 2 clarifies that such injunctive action can be taken. Thus, the existing statutory and regulatory scheme complies with the Federal Clean Air Act and as administered bythe Division is protectiveofColorado's air.

2

### cue PUUMINAItY PItEHEAlUNG STATEMENTOF 11/10/06 UPSEnS RULEMAKING



### III. ALTERNATIVE REGULATORY LANGUAGE/ PROPOSED STATEMENT OF BASIS AND PURPOSELANGUAGE

The CUC asks the Commission to adopt Option 2 and thus. does not have alternative language to propose. The CUC reserves the right to offer alternative language after a review of the preheating statementsofothers.

IV. ECONOMICIMPACT ANALYSIS

- PROCEDURALRULE 1.S.5.(S)(c)(ix) Since the

# cue generally agrees with Option 2 as proposed by the Commission. it anticipates no revision to the final economic impact analysis. The CUS respectfullyreserves the right to further evaluate this issue following review ofthe prehearing statement ofothers.

VI. EXHIBITS The CUC does not have exhibits to offer as part of its preliminary prehearing statement. However, it reserves the right to offer rebuttal exhibits following the review ofprehearing and rebuttal statements ofotherparties.

VII. WITNESSES The undersigned will appear to make legal and policy arguments and to present factual infonnation relevant to theissuespresented.

VIII. TIME ALLOCATIONATTHE HEARING The CUC respectfully requests 30 minutes oftime for direct testimony and respectfully reserves the right to request additional time for rebuttal testimony following a review ofthe prehearing statement ofthe otherparties.

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### 3cue PRELIMINARY PREHEARING STATEMENT OF 11/10/06 UPSI!1'S RUU!IIAKING



### Respectfully submitted this 10,h 

### day ofNovember, 2006

.

. Sand rson, #2402 1775 S treet, Twenty-First Floor Denver, Colorado 80203 Telephone: (303) 863-7500 Facsimile: (303) 595-3159 Email: jsanderson@rcalaw.com ATTORNEYS FOR: PLATIERIVER POWERAUTHORITY PUBLIC SERVICE COMPANY OF COLORADOdoing business as XCELENERGY TRI-STATEGENERATION AND TRANSMISSION ASSOClATlON, INC. APPEARING INDIVIDUALLY AND AS MEMBERS OF THE COLORADOUTILITIES COALITION FOR CLEAN AIR

4CERTIFICATE OFDELIVERY 

### The undersigned certifies that on this 13th

### day ofNovember, 2006, a true and correct copy ofthe foregoing Preliminary Prebearing 

### Statement was delivered via email and addressed as follows:

NAME REPRESENTED BY/ADDRESS TELEPHONEIFAXIE-MAIL
Air Quality Control Commission Theresa L. Martin EDo-AQCC-A5 4300 Cherry Creek Drive South Denver, CO 80246 Dena M. Wojtach AirPollution Control Division APCD-Bl (303) 692·3100 FAX: (303) 691·7702 theresa.maJ1in!G)state.co.us
(303) 692-3147 FAX: (303) 691· 7702 dena.woitach@state.co.us 4300Cheny Creek Drive South Denver, CO 80246 Rocky Mountain Clean AirAction Environmental IntegrityProject St. VrainValleyCommunity JeremyNichols, Director 1536Wynkoop, Suite B501 Denver, CO 80202 (303)454·3370 FAX: (303) 572-0032 rmcleanair(Q)gmail.com Watchdogs Mothers AgainstBurningTires Friends ofthe St. Vrain River Valley ColoradO PetroleumAssociation (CPAP) Dennis L. ArCmann Jennifer L Morris Hogan & Hartson (720)406-5374**F~:(720)406.5301** darfmann@hhlaw.com 1470Walnut Street, Suite 200 Boulder, CO 80302 H. Stanley Dempsey, Jr. Colorado Petroleum Association 1580 Lincoln Street, Suite 1125 jImorris@hhlaw.com
(303) 860-0099 FAX: (303)860-0310 staD@coloradopetroleumassociation.com Denver, CO 80203 Rocky Mountain SteelMills d/b/a! CF&I Eugene F. Megyesy,Jr. Dufford & Brown, P.c. 1700Broadway, Suite 2100 Denver, CO 80290-2101 (303) 861-8013 FAX: (303) 832·3804 emegyesy@duffordbro

....'J1.co

### mcue PIlEUIlINAIlY PREHEARJNG STATEMENT Of 11(10(06 U.lSETlS RULEllAIQNG

NAME REPRESENTEDBY/ADDRESS TELEPHONEIFAXIE-MAIL Colorado Association ofCommerce and Industry (CACI) Dennis L. Arfmann JenniferL. Morris Hogan & Hartson (720)406-5374 FAX: (720) 406-5301 darfmann@hhlaw.com 1470Walnut Street, Suite 200 Boulder, CO 80302 Donald K. Shandy Ryan, Whaley & Coldiron PC 900 Robinson Renaissance jlmorris@hhlaw.com
(405) 228-2138 FAX: (405) 239-6766 dshandY@ryanwhaley.com 119 North RobinsonAvenue Oklahoma City, OK 73102 Colorado ReadyMixed Concrete Association and The Colorado Rock Products Association Melissa I. Young 6855 South Havana Street, Suite 540 Centennial, CO 80112 (303) 771-5290 FAX: (303) 290·8008 myoung@cma.cc



### and an original and 20 copies of the foregoing CUC Preliminary Prehearing Statement of 11/13/06

### Upsets Rulemaking was hand delivered to: Air QualityControl Commission 4300 CherryCreek Drive South Denver, CO 80246 and 

### a"hard copy" was also delivered to: Theresa L. 

### Martin EDO-AQCC-A5 4300 Cherry Creek Drive South Denver, CO 80246 DenaM. Wojtach Air Pollution Control Division APCD-Bl 4300 CherryCreekDrive South Denver, CO 80246

720952.1 11113/2006

# cue REBUTTAL STATEMENT OF 11/28/06 

### UPSETS RULEMAKING**RECE~VE!)** I3EFORE THE AIR QUALITYCONTROL COMMISSION STATE OF COLORADO 

## fWV 2,q**2~a8** AIROVAUD 

### REBUTTAL STATEMENT OF PLATTE RIVER POWER AUTHORITY TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION £NC. PUBLIC SERVICE COMPANY OF COLORADO doing business as XCEL ENERGY APPEARING INDIVIDUALLY. AND ALSO APPEARING AS MEMBERS OF THE 

### COLORADO UTILITIES COALITION FORCLEAN AIR

IN THE MATTER OF THE PROPOSED REVISIONS TO COMMON PROVISIONS REGULATION REGARDING UPSET PROVISIONS

The above-captioned entities, appearing individually and as members ofthe Colorado Utilities Coalition tor Clean Air ("CUC"), by their undersigned attorneys, hereby submit this Prehearing Statement in this maHer. This Rebuttal Statement is submitted through the CUC's undersigned illtor:leys pursuant to the October 17, 2006 ORDER, as amended at the November 15, 2006 PreheaTing Conference.



### A. EXECUTJVE SUMMARY
The

## cue supports adoption ofOption 2, notes that the Division and Attorney General's Office finds that it is consistent with the federal Ckan Air Act, and asks the Commission to adopt it. The CUC has coordinated with the members of the Colorado Association of Commerce and Industry ('CACI") during this stakeholder and rulemaking process and supports the views advanced in CACI's Rebuttal Statement and thus will not repeat any ofthose views in this

## cue Rebuttal Statement. The CUC reserves the right to address any ofthe CACI Rebuttal positions as part ofthe CUC's testimony during the rulemaking hearing. Certain statements and references in Prehearing Statement Exhibits of Rocky Mountain Clean Air Action, et. a!. ("RMC'AA") provide erroneou.i intonnation; these**~rrors** were addressed in the Stakeholder Process, but, nevertheless continue to appear in the RMCAA's materials. These are dddressed below.



### B. REBUTTAL OFPOSITIONS OFOTHER PARTIES The RMCAA Prehearing Statement attaches s-:\'eral eXhibits. The Stakeholder process that preceded the rulemaking engaged in discussion ofsome ofthese Exhibits and errors were clearly

7.15]2(/ I 11/:!H;200("\

## cue REBUTTAL STATEMENT OF 11/28/06 UPSETS RULEMAKING

identified and discussed during presentations to the Stakeholders. Unfortunately, the RMCAA Exhibits remain unchanged. RMCAA's Exhibit 7 is a ,PowerPoint presentation. Slides list upsets for a 1999-2006 timeframe. A 

### 61 day long 

### upset is listed for Tri-State's Craig 

### Unit 3. During the Stakeholder process, Tri-State reviewed the upset records of the Division and identified a record commencing on 10/27/04 and listed as a 

### 61 day, 

### 5 hour S02 upset at TriState's Craig Station Unit 

### 3 as a typographical error. It appears that Division personnel inadvertently entered a "12" for a "\0" when entering the dateon which the upset ended. As was pointed out during the Stakeholder process, this typographical error when corrected reflects a 

### 5 hour upset, not a 61 day upset. RMCAA's Exhibit lO(A) contains Tri-State's Craig Station's list of upsets called into the Division. 

### Ifone reviews RMCAA's Exhibit 10(A), with the understanding that the Craig Unit I upgrades came online at the end ofNovember 2003, and the Craig Unit 

### 2 upgrades carne online in May of2004, one concludes that each Unit has only had 3 or 4 short periods ofupset in the entire period oftime subsequent to installation ofthe upgrades. It is also pertinent to note that the Craig Units 1and 2 upsets listed on RMCAA's Exhibit 10(A) prior to the installation ofthe upgrades were at a level consistent with the Consent Decree in effect at that time. 

### In short, these data are not supportive ofRMCAA'sargument. Finally, with regard to RMCAA's Exhibit 10(A), please note several comments concerning the Craig Unit 3 information: the 61 day typographical errorhas been addressed above. With respect to the other listed S02 related upset events, one must recall this is a PSD permitted facility equipped with a lime-spray dryer that typically achieves a greater than a 80% reduction ofS02 from low sulfur coal. The PSD permit imposes a daily average S02 emission limit that may not be exceeded more than one day per month; those events are nevertheless reported. Thus, simply looking at a listing ofevents is insufficient to ascertain the compliance status of

### a facility. As staffofthe Division routinely do, one mustcomparethe reported events with the requirements in effect. It must also be noted that it is not credible to assert that the occurrence ofthe two to six short term upset events per year threaten the National Ambient Air Quality Standards ("NAAQS").
If anything, the data discussed above support a finding that the current upsets provision adequately protects theNAAQS and PSDincrements.



### C. REBUTTAL TESTIMONY The undersigned will provide rebuttal testimony for the CUe. The

## cue respectfullyrequests the opportunity to provide rebuttal testimony consistent with this Statement and to address any new issues advanced in the Rebuttal Statementsofotherparties. and to offerother witnesses as maybe required to do so.



### 2

## cue REBUTTAL STATEMENT OF 11/28/06 UPSETS RULEMAKING

Respectfully submitted this 28th day ofNovember, 2006. OCK & APPLEWHITE, 

## '-

..

sso -.. I I

### B}'/~"-~~~~~~~====:-_ 'J Sanderso , #2402 1775 Shennan Street, Twenty-First Floor Denver, Colorado 80203 Telephone: (303) 863-7500 Facsimile: (303) 595-3159 Email: jsanderson@rcalaw.com
ATTORNEYS FOR: PLATTE RIVER POWERAUTHORITY, PUBLIC SERVICE COMPANY OF COLORADOdoing business as XCELENERGY, and TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, 

### INC. APPEARING INDIVIDUALLY AND AS MEMBERS OF THE COLORADO UTILITIES COALITION FOR CLEAN AIR



### 3CERTIFICATE OFDELIVERY The undersigned certifies that on this 28lb day ofNovember, 2006, a true and correct copy ofthe foregoing REBUTTAL STATEMENTon behalfofthe 

## eue was delivered via email as per the tcnns of the Commission's October 17, 2006 Party Status List and Notice, and addressed as foHows:

NAME REPRESENTED BY/ADDRESS TELEPHONE/FAXIE-MAIL
Air Quality Control Conunission Theresa L. Martin EDO-AQCC-A5 4300 Cherry Creek Drive South Denver, CO 80246 Garry Kaufman AirPollution Control Division APCD-BI 4300 Cherry Creek Drive South Denver. CO 80246 (303) 692-3100 FAX: (303) 691-7702 tlmaI1in{(LJcdphe.state.co.us
(303) 692-3147 FAX: (303) 691·7702 garrison.kaufman((/)state.co.us

Colorado Anorney General's Office Steve Brown Attorney for the Commission Attorney General's Office 1525 ShennanStreet, 51h Floor Denver, CO 80203 Thomas A. Roan Attorney for the Division Attorney's General's Office 1525 Shennan Street,S'"Floor Denver, CO 80203 (303) 866-4434 steve.brown(uistatc.co.lIs

(303) 866-5280 tomroan@state.co.us

Rocky Mountain CleanAir Action Environmental Integrity Project St. Vrain Valley Community Watchdogs Mothers Against BurningTires Friends ofthe St. Vrain River Valley Jeremy Nichols, Director 1536Wynkoop, Suile B50I Denver, CO 80202 (303)454·3370 FAX: (303) 572-0032 rmcleanair@gmail.com

Colorado Petroleum Association Dennis L. Arfmann (720) 406-5374 (CPAP) Jennifer L. Morris Hogan & Hartson 1470 Walnut Street, Suite 200 Boulder, CO 80302
H. StanleyDempsey, Jr. ColoradoPetroleum Association 1580 Lincoln Street, Suite 1125 Denver, CO 80203 FAX: (720) 406-5301 darfmannvvhhlaw.com

jlmorris(rohhlaw.com 

### I

(303) 860-0099 FAX, (303) 860-0310 

# I stanCiVcoloradopctroleumassocialion.org

734139.1 11/27/2006I NAME REPRESENTED BY/ADDRESS TELEPHONEIFAXlE-MAIL Rocky Mountain Steel Mills d/b/al CF&I Eugene F. Megyesy, Jr. Dufford & Brown, P.C. 1700Broadway, Suite 2100 (303)861-8013 FAX: (303) 832-3804 emegYcsy@duffordbrown.com Denver, CO 80290-2101
Colorado Association ofCommerce and Industry (CACI) Dennis L. Arfmann Jelll1ifer L. Morris Hogan & Hartson (720) 406-5374 FAX: (720)406-5301 dartinann@hhlaw.com 1470Walnut Street, Suite 200 Boulder, CO 80302
Donald K. Shandy Ryan, Whaley & Coldiron PC 900 Robinson Renaissance 

### iImorris@.hhlaw.com
(405) 239·6040 FAX; (405) 239-6766 dshandy0lrvanwhaley.com 119 North Robmson Avenue Oklahoma City, OK 73102
Colorado Ready Mixed Concrete Association and The Colorado Rock Products Association Melissa 1. Young 6855 SouthHavana Street, Suite 540 Centennial, CO 80112
Jeffrey W. Schwarz 1600 Stout Street, Suite 1700 Denver, CO 80202 (303) 771·5290 FAX: (303) 290-8008 myoung@crna
.cc

(303) 893-1815 FAX: (303) 893-1829 ischwarziCikksmb.com

and an original and 20copies were HAND DELIVERED to: Air Quality Control Commission 4300 CherryCreekDrive South Denver, CO 80246 and a "hard copy" was also 

### HAND DELIVERED to: Theresa 

### L. Martin EDO-AQCC-A5 4300 Cherry CreekDrive South Denver, CO 80246

Steve Brown Attorney for the Commission Attorney General's Office 1525 Sherman Street, 5th Floor Denver, CO 80203 

### Garry Kaufman Air Pollution Control Division APCD-BI 4300 CherryCreek Drive South Denver, CO 80246 Thomas A. Roan Attorney for the Division Attorney's General's Office 1525 Sherman Street, 5th Floor Denver, CO 80203

7341391 11I2712006