# State of New Mexico

Susana Martinez Governor June 24, 2011

Dr. Alfredo Armendariz Regional Administrator (6-A) U.S. Environmental Protection Agency, Region 6 1445 Ross Avenue, Suite 1200 Dallas, TX 75202-2733

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On behalf of the New Mexico Environment Department, I am pleased to submit to the Environmental Protection Agency the enclosed revisions to the New Mexico State Implementation Plan (SIP). These revisions include amendments to New Mexico's Regional Haze SIP under 40 CFR § 51.309.

The hearing record for all of the SIP revisions is attached, which includes the revised SIP, filed regulations, transcripts, exhibits, public notices, affidavits of publication, the notice of intent to present technical testimony, and public comments.

Included with the attached hardcopy of the hearing record is an electronic copy of the record provided on disk which I certify to be an exact duplicate of the hardcopy.

These SIP revisions satisfY the requirements of the Clean Air Act, comply with EPA regulations and policy, and will result in significant emission reductions while preserving the proper federalstate partnership envisioned under the Clean Air Act. As such, EPA must approve these revisions. In addition, because the enclosed SIP revisions address two different provisions of the federal Clean Air Act, I believe EPA should address them separately.

First, the enclosed "Interstate Transport SIP" addresses Section 11 0 of the Act, which requires
states to avoid interfering with any other states' implementation plans for visibility. As made clear in the Interstate Transport SIP submitted in 2007, and further explained in two letters to EPA Region 6 from the previous New Mexico administration (one from Governor Richardson on June 12,2009 and another from a member of his staff on May 6, 2010), New Mexico has already satisfied its Interstate Transport obligations. However, the enclosed Interstate Transport SIP supplements those previous submittals by confirming that the emissions from New Mexico

sources will not exceed the assumptions utilized in the modeling conducted by the Western Regional Air Partnership (WRAP), upon which other western states' visibility plans are based.

State Capitol • Room 400 • Santa Fe, New Mexico 87501 • 505-476-2200 • fax: 505-476-2226EPA has already recognized that "the analysis conducted by the WRAP provides an appropriate

means for designing a [plan] that will ensure that emissions from sources in New Mexico are not interfering with the visibility programs of other states." 

### In fact, the enclosed Interstate Transport SIP confirms that emissions will actually be much lower than the WRAP modeling assumptions.

Second, the enclosed revisions to the 2003 "Regional Haze Section 309 SIP" and the enclosed "Regional Haze Section 309(g) SIP" (together, the "Regional Haze SIPs") address New Mexico's obligation to reduce visibility impairment at national parks and wilderness areas ("Class I areas") in accordance with Sections 169A & 169B of the Clean Air Act. The Regional Haze SIPs satisfy New Mexico's regional haze requirements by adopting new sulfur dioxide (S02) milestones for the Section 309 Backstop Trading Program, establishing reasonable
progress goals and a long-term strategy for New Mexico's nine Class I areas, and adopting a variety of control measures to address emissions of visibility impairing pollutants from New Mexico sources. Most notably, the enclosed Regional Haze SIP also includes a Best Available Retrofit Technology (BART) determination for the San Juan Generating Station, which requires the installation of a Selective Non-Catalytic Reduction (SNCR) system to meet EPA's presumptive BART limit for nitrogen oxides (NO,).

I am aware that EPA has proposed a different plan for implementing the Interstate Transport
program and at least a portion of the Regional Haze program in New Mexico through a combined Federal Implementation Plan (FIP). I am also aware of EPA's concern that it is bound by a court order to complete that rulemaking effort by August 5, 20 II. However, the court order imposing the August 5, 20 II deadline only requires EPA to address Interstate Transport requirements before that date. In addition, the proposed FIP suffers from a variety of legal and technical flaws and inappropriately seeks to address only an isolated portion of the regional haze
program. Under these circumstances, I believe EPA can and should address the Interstate Transport program and Regional Haze program separately. Doing so will enable EPA to address New Mexico's Interstate Transport requirements by the court-ordered deadline, while allowing additional time for review of the more lengthy and complicated Regional Haze SIPs.

One of the fundamental principles expressed in Section !OI of the Clean Air Act is that "air pollution control at its source is the primary responsibility of States and local governments." That principle is nowhere better illustrated in the Act than in its visibility provisions, which, as EPA and the courts have recognized, grant to the states significant discretion in the implementation of measures to address visibility impairment. In designing the regional haze
program, Congress recognized that the individual states are best-equipped to balance the need for robust environmental protections with the costs those protections necessarily entail.

Moreover, nothing in the Clean Air Act requires EPA to address Interstate Transport and Regional Haze requirements together. On the contrary, EPA has generally addressed these
programs separately in the past. As just one example, EPA Region 8 recently proposed to take separate action on the Interstate Transport and Regional Haze implementation plan revisions submitted by the state of Colorado. Even EPA's proposed FIP for New Mexico itself contemplates separate Interstate Transport and Regional Haze plans with regard to S02 emiSSIOns.Accordingly, EPA should meet its August 5, 2011 deadline by simply approving New Mexico's prior Interstate Transport submittals, as supplemented by the enclosed Interstate Transport SIP. Even if EPA does not agree that New Mexico's prior submittals have already satisfied its Interstate Transport obligations, EPA should be able to act on New Mexico's four-page Interstate Transport SIP before August 5, 2011.

Since the court order does not require EPA to address New Mexico's Regional Haze program by August 5, 2011, New Mexico is now, as of this submittal, in the same position as nearly every other state

- awaiting EPA action on its Regional Haze SIP. As with other states, EPA must determine whether New Mexico's Regional Haze SIPs are complete no more than six months from this date and, following that completeness determination or the expiration of six months, EPA must act to approve or disapprove those SIPs within twelve months, including time allowed for public notice and comment on the proposed action. Because EPA will be required to consider New Mexico's Regional Haze SIPs regardless of whether it flllalizes the proposed FIP, EPA should take no action on its proposed FIP, particularly since the August 5, 2011 deadline does not apply to regional haze. At a minimum, EPA should reopen the docket on the proposed PIP for at least ninety (90) days to accept further comment in light of the submission of these SIP revisions.

I hope you will begin an immediate, expedited review and approval of the enclosed SIP revisions and, as recommended above, take separate action on the separate Interstate Transport and Regional Haze requirements of the Clean Air Act.

If there are any questions concerning this SIP submittal, please contact Raj Solomon at (505) 827-2855.

Sincerely,

Susana Martinez Governor

Enclosures

cc: Guy Donaldson, EPA Region 6 Dave Martin, NMED Cabinet Secretary Raj Solomon, NMED Deputy Cabinet Secretary1 

### List of Enclosures:

01 Section 309 Revised State Implementation Plan 02 Appendix K - Recommendations for Maki ng Attribution Determinations in the Context of Reasonably Attributable BART 03 20.2.73 NMAC Revisions - Notices of Intent and Emissions Inventory Requirements 04 20.2.81 NMAC Revisions - Western Backstop Sulfur Dioxide Trading Program

05 Section 309(g) State Implementation Plan 06 Appendix A - Emissions Ov erview (WRAP, undated) 07 Appendix B - Air Quality Modeling (WRAP, undated) 08 Appendix C - Summary of WRAP RMC BART Modeling for New Mexico 09 Appendix D - New Mexico BART De termination for San Juan Generating Station 10 Appendix E - Supplementary Informati on for Four Factor Analyses by WRAP States, EC/R Incorporated, May 4, 2009 (corrected April 20, 2010) 11 Appendix F - Supplementary Inform ation for Four-Factor Analyses for Selected Individual Facilities in New Mexico, May 5, 2009

12 NMED Notice of Intent to Prese nt Technical Testimony - May 2, 2011 13 NMED Ex. 1 Clean Air Act § 169A 14 NMED Ex. 2 Clean Air Act § 169B 15 NMED Ex. 3 40 C.F.R. § 51. 308 (Regional Haze Rule § 308) 16 NMED Ex. 4 40 C.F.R. § 51. 309 (Regional Haze Rule § 309) 17 NMED Ex. 5 BART Guidelines – Appe ndix Y to 40 C.F.R. Part 51 Published at 70 Fed. Reg. 39104

18 NMED Ex. 6 NMED Requests for Information from PNM 19 NMED Ex. 6a Email - BART Mo deling Results from WRAP (11.9.06) 20 NMED Ex. 6b Email – PNM San Juan Generating BART Modeling (6-26-07) 21 NMED Ex. 6c Email - Comments on the BART modeling report for the San Juan Generating Station (7.30.07) 22 NMED Ex. 6d Email - SJGS BART An alysis Additional Information Request (9.21.07) 23 NMED Ex. 6e Letter - Department Request (12.21.07) 24 NMED Ex. 6f Letter PN M-BART-Request (4-25-08) 25 NMED Ex. 6g Email - PNM NOxInformation Review (3.20.08) 26 NMED Ex. 6h Email - Meeting (6.18.08) 27 NMED Ex. 6i Letter – Additional Information Request (12.29.08)2 

### 28 NMED Ex. 7 PNM Submittals Related to BART 29 NMED Ex. 7a San Juan BA RT Modeling Protocol (4.13.07) 30 NMED Ex. 7b PNM BART Analysis (6.6.07) 31 NMED Ex. 7c Email Thread with Cost Analysis Attached 32 NMED Ex. 7d SCR Cost Analysis - (7.11.07) 33 NMED Ex. 7e SNCR HybridCost Analysis (7.11.07) 34 NMED Ex. 7f Updated Visibility Cost Effectiveness Data - (8.23.07) 35 NMED Ex. 7g PNM Response to NMED (9.14.07) - September 14, 2007 36 NMED Ex. 7h PNM SCR Schematic 37 NMED Ex. 7i Refined Visibility Results (11.5.07) 38 NMED Ex. 7j PNM Discussion of OAQPS Cost Manual Method (3.29.08) 39 NMED Ex. 7k Final BARTModeling Response (3.31.08) 40 NMED Ex. 7L Final BARTSNCR Analysis (5.30.08) 41 NMED Ex. 7m Discussion of SJGS Coal and Classification 42 NMED Ex. 7n Final Nalco-MOBOTE C NOx BART Analysis (8.28.08) 43 NMED Ex. 7o Final PM BART Analysis (8.28.08) 44 NMED Ex. 7p PNM SO3 Removal Report (3.16.09) 45 NMED Ex. 7q SNCR Cover Ltr (2.9.11) 46 NMED Ex. 7r PNM BART SNCRAnalysis Update (2.9.11) 47 NMED Ex. 7s SNCRCover Ltr (2.11.11) 48 NMED Ex. 7t Revised SNCR Analysis (2.11.11) 49 NMED Ex. 7u Rate Impact Analysis (2.11.11)

50 NMED Ex. 8 Testimony of Mary Uhl 51 NMED Ex. 8a Testimony on Scientific and Regulatory Background of Regional Haze 52 NMED Ex. 8b Regional Haze Powerpoint Slides 53 NMED Ex. 8c Testimony Re BA RT Determination for PNM SJGS

54 NMED Ex. 9 Testimony of Rita Bates 55 NMED Ex. 9a Testimony Re Revisions to 2003 § 309 SIP 56 NMED Ex. 9b Testimony Re Proposed §309(g) SIP

57 NMED Ex. 10 Additional Proposed Revisions to § 309 SIP (5.2.11)

58 NMED Ex. 11 Additional Proposed Revisions to § 309(g) SIP (5.2.11)

59 NMED Ex. 12 Public Notices3 

### 60 San Juan Citizens Allianc e Comment Letter - May 3, 2011 61 NMED Response to San Ju an Citizens Alliance Comments 62 Public Service Company of New Mexico Notice of Intent to Present Technical Testimony - May 17, 2011 63 San Juan Coal Company Notice of In tent to Present Technical Testimony - May 17, 2011 64 The Natural Resources Defense Counc il, San Juan Citizens Alliance, and WildEarth Guardians Entry of Appearance - May 17, 2011 65 NMED Notice of Receipt of Comme nts - May 16, 2011 (includes U.S. EPA Comments)

66 NMED Supplemental Notice of Intentto Present Technical Testimony - May 20, 2011 67 NMED Ex. 13 May 20, 2011 Revisions to § 309(g) SIP in Response to EPA Comments 68 NMED Ex. 14 May 20, 2011 Revisions to 20.2.81 NMAC in Response to EPA Comments 69 NMED Ex. 15 May 13, 2011 Co mments from U.S. EPA Region 6 70 NMED Ex. 16 NMED Responses toEPA Comments of May 13, 2011 71 NMED Ex. 17 U.S.F.S. Letter of March 30, 2011with Comments 72 NMED Ex. 18 NMED Response to U.S .F.S Comments of March 30, 2011 73 NMED Ex. 19 Proposed Statement of Reasons for Adoption and Order 74 NMED Second Notice of Receipt of Comments - May 26, 2011 (includes comments received May 25, 2011 from U.S. Park Service and Fish and Wildlife Service)

75 NMED Exhibits Presented at the June 1, 2011 Hearing 76 NMED Ex. 20 Compiled Section 309(g) SI P (included herein as Section 309(g) SIP) -- was not included in submittal EPA received -- probably the same as enclosures 05 to 11. 77 NMED Ex. 21 Responses to U.S. Park Service and Fish and Wildlife Service Comments

78 Transcript of Hearing - June 1 and 2, 2011 (Volumes 1 and 2)

79 New Mexico Environmental Improv ement Board Statement of Reasons for Adoption of SIP Revisions

# NMED Ex. 20 Compiled Section 309(g) SIP (included herein as Section 309(g) SIP) -- was not included in submittal EPA received -- available in Enclosures 05 to 11.1 National Park Service and U.S. Fish and Wildlife Service Technical Comments New Mexico Revised Regional Haze Section 309(g) State Implementation Plan May 25, 2011

Reasonable Progress Goals: The Regional Haze Rule at 40 CFR 51.309 (g) (3) requires the state to establish reasonable progress goals and implement any additional measures necessary to demonstrate reasonable progress for Class I areas not on the Colorado Plateau, consistent with the provisions of 40 CFR 51.308 (d) (1 ) through (4).

Given that the Class I areas in New Mexico are not meeting the uniform rate of progress in 2018 to achieve natural visibility conditions by 2064, the Regional Haze Rule requires the New Mexico Environment D epartment (NMED) to provide estimates when natural conditions will be achieved.

Response: Table 6

- 5 was added on May 2 to provide estimates of when natural conditions will be achieved.

Reasonable Progress Analysis: NMED's reasonable progress analysis sho uld provide an analysis of NM source categories, major sources within each category, and the potential control options for these sources to determine if reasonable control measures are available.

In Section 11.2.2, NMED cites the Four Factor Analysis performed for the Western Regional Air Partnership (WRAP) by the contractor, EC/R, Inc. (SIP Appendix E) and identifies major source categories for the WRAP states. NMED should take the next step to define major source categories in NM and discuss potential control technology options for each source category (or reference the controls discussed in the EC/R report). WRAP's 2018 Prpl8b point source inventory (see table below) indicates that coal

- fired electric generation and oil and gas production are the major point source categories for 802 emissions.

New Mexico Point Source Categories NOx Prp18b (tons/yr) SO2 Prp18b (tons/yr) Internal Combustion Engines Industrial natural gas 35,357 346

Electric Generation natural gas 2,427 17 External Combustion Boilers Electric Generation coal 25,001 14,253 natural gas 4,389 15

Industrial Processes Mineral Products cement (dry) 1,055 25 cement (wet) 1,000 1,518 Oil and Gas Production 1,704 12,645 Petroleum Industry 905 3,177

For NOx emissions, internal combustion engines and coal

- fired electric generation are the m ajor point source categories. Oil and gas production is the major area source category for NOx emissions. As indicated above, the Class I areas in NM are not projected to meet the uniform rate2 of progress in 2018 towards achieving natural visibility conditions by 2064. Therefore, it is important that NMED place special emphasis on evaluating options for further reducing visibility

- impairing pollutants through the Reas onable Progress Analysis. After reviewing the most recent version of NMED's proposed SIP, we request that NMED examine and consider implementing additional emission reductions in these significant source categories.

In Section 11.2.3, NMED reports results of the four factor analyses performed by EC/R, Inc. for three refineries selected by NMED for further analysis. We request that NMED explain how these three refineries were selected for further analysis.

Response: NMED will examine and consider implementing additional emission reductions in the SIP analysis for 2013.

The region

- wide EC/R Four Factor Analysis includes these source types. New Mexico relied on this analysis for these source types. Additional analysis for specific facilities was not required; however, NMED was interested in further evaluating the three refineries due to emissions and proximity to Class I areas

. New Mexico through a separate process (the Four Corners Air Quality Task Force) analyzed oil and gas sources and the power plants in the four corners region, so did not do specific additional analysis through this process for those source types.

Long- Term Strategy We ask that NMED discuss existing and expected requirements (state or federal) to reduce emissions for the major source sectors in the above table.

Response: Existing and expected state and federal requirements for all sources are outlined in the Long

- Term Strategy section. NMED will review the SIP as required for the 2013 update and update this section as necessary.