osr41.—

) UNITED STATES ENVIRONMENTAL PROTECTION AGENCY oI

I

REGION
IX PRO

75 Hawthorne Street San Francisco, CA 94105-3901 August 23, 2011 Gary Chandler President, Pio Pico Energy Center, LLC P.O. Box 95592 2542 Singletree Laie South Jordan, UT 84095 Re: Pio Pico Energy Center PSD Application Dear Mr. Chandler: Thank youfor yoursubmittal of aClean Air Act Prevention
of Significant Deterioration (PSD) permit application for the Pio Pico Energy Center (PPEC),

a300 MW power plant consisting of three natural gas-fired combustion turbine generators,

to be located in San Diego County, CA. PPEC would he anew major stationary sourceunder the PSD program.This letter is intended
to provide youwith the status of ourreview and to provide initial observations
on your application. We provide these comments

to help ensurethat the project meets federal CAA requirements, that the permit will provide necessary information

sothat the basis for the permit decision

is transparent and readily accessible

tothe public, and that the record provides adequate support for the permit decision. We received yourinitial application

in two parts, on April

5 and April 29, 2011. The application consists of the following:

a 33-page document labeled “Application

tothe U.S. EPA for aPrevention
of Significant Deterioration Permit,” and two binders that comprise the Application for Certification (AFC) that Pio Pico Energy Center, LLC submitted
to the California Energy Commission (CEC) for the State’s power plant licensing process.The 33-page document contains

atable that lists “AFC Sections Incorporated into the PSD Permit Application.” When wereviewed the cited AFC sections, however, wefound
it difficult
to follow because someof the information addresses State and local requirements that areunrelated
tothe PSD permit application. For example, Section 5.2, Air Quality, contains information
onthe California Clean Air Act, the Air Toxics Hotspot program,and San Diego County Air Pollution Control District Rules and Regulations. Unfortunately, this approach of relying on portions of the AFC instead of submitting

astand-alone PSD-specific permit application makes
it difficult for EPA to fully assessthe application and ensurethat it contains all the information necessary to prepare

a complete and appropriate administrative record for the draft PSD permit and final permit decision
as required under 40 CFR 124.9 and 124.18. Thus, aswediscussed with yourstaff and consultants

in aconference call on August
9, 2011, please submit

astand-alone PSD permit application with data and analysis solely related to PSD requirements

sothat wecan proceed with ourreview of your application. We also ask that youreview the supporting material and rationale for yourBest Available Control Technology (I3ACT) analyses
to ensurethat yourPSD permit application contains all of the necessary information

to support the proposed BACT. For example,
if youselect the most stringent emissions Pnn:edonRecycled Papercontrol option available for your BACT, please provide details and document what other control options were considered

in order to support that your option
is the most stringent control option. In addition, regarding your BACT analysis for greenhouse gases (GHG), your current application discusses energy efficiency
in a generic fashion, and concludes that the use of efficient simple-cycle gas turbine technology, combined with good combustion operation and maintenance,

is BACT for GHG for this project. However, your analysis does not include

a detailed comparison
of the heat rates of other similar energy efficient turbine models that could meet the needs of the source (i.e., simple-cycle turbines of a similar size). Please include such
a comparison

in your BACT analysis. Your analysis should demonstrate that the turbine selected
is within the range of the most energy efficient turbines available for your proposed source, or it should justifr why more efficient options were eliminated. Please note that our completeness review of your application materials

is ongoing. We may have additional feedback and may request further information

to ensure that we have all of the information necessary for processing the application, particularly once we receive the additional application information requested
in this letter. Finally,
in order to fulfill our obligations under Section

7 of the federal Endangered Species Act (ESA) for our proposed action on the PPEC PSD permit application, we need
a biological assessment (BA) analyzing the effects of the proposed PPEC on Federally-listed
and proposed endangered and threatened species and their designated
or proposed critical habitat, consistent with 50 CFR 402.12. Although the BA is not identified
as a component
of the 40 CFR 52.21 PSD permit application requirements,
we cannot complete our ESA consultation

or issue
a final federal PSD permit decision without an analysis of such effects. In order to expedite the ESA consultation process, we would be happy to discuss with you the appropriate scope of the BA, and we would appreciate the opportunity

to review

a draft of the BA before
it is finalized. We look forward
to continuing

to work with you on this application. Please contact me or Roger Kohn at (415) 972-3973
or kohn.roger(epa.gov

if you have questions
or want to discuss these matters. Sincrejy.

:; Gerardo
C. Rios Chief, Permits Office Air Division cc: Steve lull, Sierra Research Tom Weeks, SDAPCD Eileen Allen, CEC