### Prevention of Significant Deteriorat ion Permit Pursuant to 40 CFR 52.21 and

Minor NSR Permit in Indian Co untry Pursuant to 40 CFR 49.151-161

U.S. ENVIRONMENTAL PROTEC TION AGENCY, REGION 9

PSD Permit Number:

Tribal NSR Permit: AZ 08-01A

T-0004-NN

Permittee: Salt River Project Agricultural Improvement and

Power District

Mail Station PAB352

P.O. Box 52025 Phoenix, AZ 85072

Facility Name: Navajo Generating Station

Facility Location: On the Navajo Nation Indian Reservation, approximately five miles east of Page off State Route 98, in Coconino County, Arizona.

Pursuant to the provisions of the Clean Air Ac t (CAA), Section 110(a) and 301(d), and the Code of Federal Regulations (CFR) Title 40, Sec tions 49.151-161, the United States Environmental Protection Agency Region 9 (EPA) is issui ng a Minor New Source Review (NSR) permit in Indian County to Salt River Project for Nava jo Generating Station ( NGS). The Prevention of Significant Deterioration (PSD) air quality pe rmit conditions pursuant to 40 CFR Section 52.21 in AZ 08-01A last issued on February 6, 2012, a nd included in this combined PSD and Minor NSR permit (“Permit”), remain unchanged. The PSD -specific conditions are in Section IX and the Minor NSR-specific conditions are in Section X. This permit revision authorizes construction of the Refined Coal Treatment System (RCTS) at NGS.

SRP is authorized to construct and operate the NGS as described herein, in accordance with the Permit, the federal PSD regulations at 40 CF R 52.21, the Minor NSR regulations at 40 CFR 49.151-161, and other terms and conditions set forth in this Permit. Failure to comply with any

condition or term set forth in this Permit is s ubject to enforcement action pursuant to Section 113

of the Clean Air Act. This Permit does not reli eve NGS from the obligation to comply with applicable federal, state, and Navajo Nati on Environmental Protection Agency air pollution control rules and regulations.

Per 40 CFR 49.159(a) Tt he minor NSR portion of this permit will become effective 30 days upon after service of notice of this final permit d ecision unless review is requested on the being finally issued and signed permit pursuant to 40 CFR 49.159( df)(2 ). The PSD portion of this permit remains effective and is unchanged.

Deborah Jordan Date Director, Air DivisionNavajo Generating Station Draft Minor NSR Permit February 2016 2 Navajo Generating Station

PSD Permit No. AZ 08-01A: Low NO X Burner Project

Project Description The Navajo Generating Station (NGS) has a combined power generating capacity of 2,250 net megawatts and consists of three existing coal-fir ed steam generating units (Boiler Units 1, 2, and 3), associated air pollution contro l devices, and auxiliary equipment. The facility was constructed

in 1970 and is located on the Nava jo Nation Indian Reservation a pproximately five miles east of Page, Arizona. Units 1, 2, and 3 are operated by the Salt River Project Agricultural and Power District (SRP) and co-owned by the following six entities: U.S. Bureau of Reclamation, SRP, Los Angeles Department of Water and Power, Ar izona Public Service Company, Nevada Power, and Tucson Electric Power Company. The Permittee receives coal with a maximum sulfur content of 1.5% by weight from the Pea body Western Coal Comp any’s Kayenta Mine.

SRP decided to implement voluntary emission reduction projects at the NGS by retrofitting all

three boilers with Low-NO x Burners (LNBs) and separated ove r-fire air (SOFA) systems. All

three boilers have been retr ofitted since PSD Permit AZ 08- 01 was issued on November 20,

2008.

Although the LNB/SOFA Project signi ficantly reduces emissions of NO x at NGS, it also results in a significant increase in CO emissions. This significant increase in CO emission triggered a Best Available Control Technology (B ACT) review for emissions of CO as part of the issuance for PSD Permit AZ 08-01. The boilers were retrofitted and not originally designed for optimum combustion as with new units. Thus, it was difficu lt to appropriately asse ss the required CO

emissions limitation.

Rather than setting the CO emission rates equa l to the lowest proposed BACT limitation for new units, EPA incorporated a proposed emission ra te of 0.42 lb/MMBtu, based on a rolling 30-day average into the previous permit along with lang uage that would allow the limit to be ratcheted down following the first 18 months of operation of the LNB/SOFA systems. In accordance with this permit requirement, SRP submitted CO and NO x emissions data from Unit 3, the first boiler unit outfitted with the LNB/SOFA system. This data was used to determine the appropriate CO

emissions limit for all three boilers. Although this permit revi sion establishes the final CO emissions limitation for Units 1, 2 and 3 at NGS , Demonstration Period reporting requirements are still required for Units 1 and 2.

Minor NSR Permit T-0004-NN

Administrative Amendment (August 2015) NGS has added a new mercury control system consisting of a calcium bromide application system and a new powdered activated carbon (PAC ) injection system for Units 1, 2, and 3. The addition of this equipment also increases truck tr affic at NGS for the routine delivery of calcium bromide and PAC. This project results in emi ssions increases of particulate matter (PM, PM 10 , and PM 2.5 ) from the PAC system’s storage silos and f ugitive truck traffic emissions for deliveries

of calcium bromide and PAC.Navajo Generating Station Draft Minor NSR Permit February 2016 3 Refined Coal Treatment Sy stem (Proposed Project) NGS is adding a new Refined Coal Treatment Sy stem (RCTS) which adds calcium bromide and cement kiln dust to the coal prior to being pul verized for combustion in Units 1, 2, and 3. The project consists of:

 Installation of two coal feed belt conveyors (BC-11A and BC-11B);

 Installation of two mixing pugmills where cemen t kiln dust and calcium bromide will be applied to the coal;

 Installation of two refined coal product belt conve yors (BC-12A and BC-12B);

 Installation of two dust colle ction and filtering systems, DC-12 and DC-13, for the new coal handling operations;

 Installation of three 150 ton cement kiln dust storage silos, each equipped with baghouses (DC-14, DC-15, and DC-16);

 Installation of two 20 ton day bins for cemen t kiln dust, each equipped with baghouses (DC-17 and DC-18);

 Installation of a 8,700 gallon storage tank and two 405 gallon day tanks for calcium bromide storage;

 Increased truck traffic on unpaved roads for delivery of cement kiln dust and calcium bromide;

This project results in emissions in creases of particulate matter (PM, PM 10 , and PM 2.5 ) from the RCTS’s cement kiln dust storage silos and day bins, belt conveyors, and fugitive truck traffic

emissions for deliveries of cement kiln dust and calcium bromide. The project will also result in minimal increased emissions of particulate matter (PM, PM 10 , and PM 2.5 ) from boiler Units 1, 2

and 3 due to the increased ash content of the coal , but the emissions limits for those Units will remain unchanged.Navajo Generating Station Draft Minor NSR Permit February 2016 4 EQUIPMENT DESCRIPTION

Unit ID /

Stack ID Unit Description Maximum Capacity Controls

Existing Equipment

Boiler 1-

U1/

Stack- S1 One (1) pulverized coal-fired boiler, using No. 2 fuel oil for ignition fuel. Stack S1 equipped

with SO 2 , CO, and NO x CEMS,

and a COMS. 7,725 MMBtu/hr;

750 Net MW FGD system, SCBR1 (1999); ESP1, LNB/SOFA system (2011)

Boiler 2-

U2/

Stack- S2 One (1) pulverized coal-fired boiler, using No. 2 fuel oil for ignition fuel. Stack S1 equipped

with SO 2 , CO, and NO x CEMS,

and a COMS. 7,725 MMBtu/hr; 750

Net MW FGD system, SCBR2 (1998); ESP2, LNB/SOFA system (2010)

Boiler 3-

U3/

Stack- S3 One (1) pulverized coal-fired boiler, using No. 2 fuel oil for ignition fuel. Stack S1 equipped

with SO 2 , CO, and NO x CEMS,

and a COMS. 7,725 MMBtu/hr; 750

Net MW FGD system, SCBR3 (1997); ESP3, LNB/SOFA system (2009)

PAC Silo

A Storage silo for powdered activated carbon (PAC) 1,200 scfm Baghouse (integral to system)

PAC Silo

B Storage silo for PAC 1,200 scfm Baghouse (integral to system)

FugitivePAC Truck traffic on unpaved roads for PAC delivery 30 VMT/yr Water spray , chemical stabilization, or gravelFugitiveCaBr2 Truck traffic on unpaved roads for calcium bromide delivery 365 VMT/yr Water spray , chemical stabilization, or gravel New Equipment DC-12 Coal handling dust collection

system 16,500 scfm High-efficiency dust collector

DC-13 Coal handling dust collection

system 6,000 scfm High-efficiency dust collector

DC-14 Cement kiln dust silo 1 450 scfm Baghouse (integral to system)

DC-15 Cement kiln dust silo 2 450 scfm Baghouse (integral to system)

DC-16 Cement kiln dust silo 3 450 scfm Baghouse (integral to system) DC-17 Cement kiln dust day bin 1 1,200 scfm Baghouse (integral to system) DC-18 Cement kiln dust day bin 2 1,200 scfm Baghouse (integral to system)FugitiveCement

Kiln Dust Truck traffic on unpaved Roads for cement kiln dust delivery 720 VMT/yr Water spray , chemical stabilization, or gravel

FugitiveCaBr2 Truck traffic on unpaved roads for calcium bromide delivery 70 VMT/yr Water spray , chemical stabilization, or gravelNavajo Generating Station Draft Minor NSR Permit February 2016 5 PERMIT CONDITIONS

I. PERMIT EXPIRATION

As provided in 40 CFR 52.21(r), this PSD Perm it shall become invalid if construction:

A. is not commenced (as defined in 40 CFR 52.21(b)(9)) within 18 months after the approval takes effect; or

B. is discontinued for a period of 18 months or more; or

C. is not completed within a reasonable time.

II. PERMIT NOTIFICATION REQUIREMENTS

Permittee shall notify EPA Region 9 in wr iting or by electronic mail of the:

A. date construction is commenced, postmarke d within 30 days of such date.

B. actual date of initial startup, as defi ned in 40 CFR 60.2, postmarked within 15 days of such date.

C. date upon which initial performance tests will commence, in accordance with the provision of Section IX.F, postmarked not le ss than 30 days prior to such date. Notification may be provided with the s ubmittal of the performance test protocol required pursuant to Section IX.F.

D. date upon which initial performance eval uation of the CEMS will commence in accordance with 40 CFR 60.13(c), postmarked not less than 30 days prior to such date. Notification may be provided with the submittal of the CEMS performance test protocol required purs uant to Condition IX.E.5.

III. FACILITY OPERATION

At all times, including periods of startup, shutdown and malfunction, Permittee shall, to the extent practicable, maintain and operate th e facility including associated air pollution control equipment in a manner consistent w ith good air pollution co ntrol practices for minimizing emissions. Determination of wh ether acceptable operating and maintenance procedures are being used will be based on information available to the EPA which may include, but is not limited to, monitoring re sults, opacity observ ations, review of operating maintenance procedures and inspection of the source.

IV. MALFUNCTION REPORTINGNavajo Generating Station Draft Minor NSR Permit February 2016 6 A. Permittee shall notify EPA by facsimile or electronic mail at R9.AEO@epa.gov within two (2) working days following the discovery of any failure of air pollution control equipment, process equipm ent, or of a process to operate in a normal manner, which results in an incr ease in emissions above the allowable

emission limit stated in Cond ition IX.B of this permit.

B. In addition, Permittee shall notify EPA in writing or electronic mail within fifteen (15) days of any such failure describe d under Condition IV.A. This notification shall include a descript ion of the malfunctioning equipment or abnormal operation, the date of the initial malf unction, the period of time over which emissions were increased due to the failure, the cause of the failure, the estimated

resultant emissions in excess of those a llowed in Condition IX.B, and the methods utilized to mitigate emissions and restore normal operations.

C. Compliance with this malfunction notific ation provision shall not excuse or otherwise constitute a defense to any violation of this permit or any law or regulation such malfunction may cause.

V. RIGHT OF ENTRY

The EPA Regional Administrator, and/or an authorized representative, upon the presentation of credentials, shall be permitted:

A. to enter the premises where the source is located or where any records are required to be kept under the terms and conditions of this PSD Permit; and

B. during normal business hours, to have acces s to and to copy any records required to be kept under the terms and conditions of this PSD Permit; and

C. to inspect any equipment, operation, or me thod subject to requirements in this PSD Permit; and

D. to sample materials and emissions from the source(s).

VI. TRANSFER OF OWNERSHIP

In the event of any changes in control or owners hip of the facilities to be constructed, this PSD Permit shall be binding on all subsequent owners and operators. Permittee shall notify the succeeding owner and operator of th e existence of this PSD Permit and its conditions by letter, a copy of which shall be forwarded to EPA Region 9 at the address

shown in Section X.

VII. SEVERABILITYNavajo Generating Station Draft Minor NSR Permit February 2016 7 The provisions of this PSD Permit are severa ble, and, if any provision of the PSD Permit is held invalid, the remainder of th is PSD Permit shall not be affected.

VIII. OTHER APPLICABLE REGULATIONS

Permittee shall construct and operate this proj ect in compliance with this PSD Permit, the application on which this Permit is based, and al l other applicable fede ral, state, and local air quality regulations. This PSD Permit does not release the Permittee from any liability for compliance with other applicable federa l, state and local environmental laws and regulations, including the Clean Air Act.

IX. SPECIAL CONDITIONS PURSUAN T TO 40 CFR 52.21 - PSD

Low-NO x Burner (LNB) & Separated Over-fire Air (SOFA) Requirements

A. Prior to commencement of installatio n, the Permittee shall submit the following

information to EPA:

1. Design specifications of the LNB/ SOFA system to be installed.

2. At least one month prior to the date of initial start-up, an LNB/SOFA system operating plan which sets forth measures that will be taken to maintain and operate the system in a manner to ensure compliance with the emission limits specified in Condition IX.B.

B. Emission Limits

1. Carbon monoxide (CO) em issions from each unit shall not exceed the following:

a. 0.23 lb/MMBtu based on a 30-day rolling average, and

b. 0.15 lb/MMBtu based on a 12-month rolling average

2. Nitrogen oxide emissions (NO x ) from each unit shall not exceed 0.24

lb/MMBtu based on a 30-d ay rolling average.

C. Demonstration Period Requirements

1. Demonstration Period is defined as th e first 18 months of operation after installation of the LNB/SOFA system.

2. After the Demonstration Period for e ach of the U1 and U2 LNB/SOFA systems, the Permittee shall submit to EPA a written report together with CO CEMS data showing actual CO emissions while maintaining NO x emission levels at or below 0.24 lb/MMb tu on a 30-day rolling average. TheNavajo Generating Station Draft Minor NSR Permit February 2016 8 report shall provide all supporting documentation identifying the combustion characteristics that impact CO emissions. This report shall also evaluate the ten highest occurrences for a one-hou r average and an 8-hour average for pounds per hour CO. If these averages are inco nsistent (higher) with the modeling submittal, either a new modeling analysis will be required to assure maintenance of the CO NAAQS or a short term limit will be established for the permit.

D. At all times, including periods of start up and shutdown, the Permittee shall, to the extent practicable, maintain and operate the LNB/SOFA system in a manner consistent with good combustion practices to minimize emissions.

E. Continuous Emission Monitoring Systems

1. Within 60 days of completion of insta llation of each LNB/SOFA system, the Permittee shall install, and thereafter operate, maintain, certify, and qualityassure a continuous emission monitoring system (CEMS) for each boiler which measures stack gas CO concentrations in lb/MMbtu.

2. The CO CEMS shall meet the applic able requirements of 40 CFR Part 60 Appendix B, Performance Specifications 3 and 4A, and 40 CFR Part 60 Appendix F, Procedure 1. The diluent monitor (O 2 or CO 2 ) must meet the requirements of 40 CFR Part 75.

3. Permittee shall operate, maintain, and quality-assure according to the requirements of 40 CFR Part 75, a CEMS for each boiler which measures stack gas NO x concentrations in lb/MMbtu. The NO x CEMs must meet the requirements of 40 CFR Part 75.

4. The CO CEMS shall complete a mi nimum of one cycle of operations (sampling, analyzing and data reco rding) for each successive 15-minute period.

5. Permittee shall submit a CO CEMS perfor mance test protocol to the EPA no later than 30 days prior to the test date to allow review of the test plan and to arrange for an observer to be present at the test. The performance test shall be conducted in accordance with the submitted protocol, and any changes required by EPA.

6. Permittee shall furnish the EPA a written report of the results of performance tests within 60 days of completion.

7. The CO CEMS shall be tested annually and quarterly in accordance with the requirements of 40 CFR 60 Appendix F, Procedure 1. The NO x CEMS shall meet the quality assurance requirement found in 40 CFR Part 75.

F. Performance Test

A thirty day initial performance test for CO and NO x shall be conducted with the CEMS starting the day after successful co mpletion of the performance testing forNavajo Generating Station Draft Minor NSR Permit February 2016 9 the CO CEMS. A report of the NO x and CO hourly emissions during this initial test shall be submitted to EPA within 30 days of completion of the test.

G. Recordkeeping and Reporting Requirements

1. Permittee shall maintain records of the hours of operation for U1, U2 and U3 on a monthly basis.

2. Permittee shall maintain r ecords of the amount of fuel used in U1, U2 and U3 on a monthly basis.

3. Permittee shall maintain all records on site of actual operating data and

emissions calculations for emissions limits required in Condition IX.B.

4. Permittee shall maintain CEMS records that contain the following: the occurrence and duration of any startup, shutdown or malfunction, performance testing, evaluations, ca librations, checks, adjustments, maintenance, duration of any periods during which a continuous monitoring system or monitoring device is inope rative, and emission measurements.

5. Permittee shall maintain records and submit a written report of all excess emissions to EPA semi-annually. The report is due on the 30 th day following the end of the cal endar quarter and shall include the following:

a. Time intervals, data and magnit ude of the excess emissions, the nature and cause (if known), corrective actions taken and preventive measures adopted;

b. Applicable time and date of each period during which the CEMS was inoperative (monitor down time), except for zero and span checks, and the nature of system repairs or adjustments; and

c. A negative declaration when no excess emissions occurred or when the CEMS has not been inopera tive, repaired, or adjusted.

6. Excess emissions shall be defined as any operating day in which the 30-day rolling average CO and NO x concentration, as measured by the CEMS,

exceeds the maximum emission limits set forth in Condition IX.B.

7. A period of monitor down time shall be any unit operating hour in which

sufficient data are not obtained to validate the hour for CO, NO x , or O 2

.

8. Excess emissions indicated by the CEMS shall be considered violations of the applicable emission limit fo r the purpose of this permit.

9. All records required by this PSD Permit shall be retained for five years following the date of such measur ements, maintenance, and reports.Navajo Generating Station Draft Minor NSR Permit February 2016 10 X. SPECIAL CONDITIONS P URSUANT TO 40 CFR 49.151- 161 – MINOR NSR IN

INDIAN COUNTRY – Units IDs: PAC Silo A, PAC Silo B, Dust Collectors DC-12 and DC-13, Cement Kiln Dust Storage Silos DC-14 through DC-16, Cement Kiln Dust Day Bins DC-17 and DC-18, Fugitive -PAC, Fugitive-CKD, Fugitive-CaBr2

A. Operating Requirements

1. Vehicle miles traveled (VMT) for truck traffic associated with the delivery of powdered activated carbon (Fugitive- PAC) shall not exceed 30 VMT per 12-month period.

2. VMT for truck traffic associated with the delivery of calcium bromide (Fugitive-CaBr2) shall not exceed 435 VMT per 12-month period.

3. VMT for truck traffic associated with the delivery of cement kiln dust (Fugitive-CKD) shall not exceed 720 VMT per 12-month period.

4. The dust on the site roadwa ys shall be controlled by applications of water such that visible fugitive dust emi ssions do not exceed 20 percent opacity. The Permittee may use applications of wa ter, chemical dust suppressants, or gravel to control dust from site ro adways.Roadways shall be swept as needed between applications of water.

5. The Permittee shall load vehicles to prevent their contents from dropping, leaking, blowing, or otherwise escaping. This shall be accomplished by loading so that no part of the load shall come in contact within six (6) inches of the top of any side board, side panel, or tail gate; otherwise the truck shall be tarped. Any material spillage on ro ads shall be cleaned up immediately.

6. The Permittee shall post a speed limit sign of 15 miles-per-hour or lower on

site so that it is visible to truck traffic.

B. Monitoring and Recordkeeping Requirements

1. The Permittee shall monitor and mainta in records on a calendar month basis of each PAC delivery, the VMT of each delivery, and determine the 12- month rolling total.

2. The Permittee shall monitor and maintain records on a calendar month basis of each calcium bromide delivery, the VMT of each delivery, and determine the 12-month rolling total.

3. The Permittee shall monitor and mainta in records on a calendar month basis of each cement kiln dust delivery, the VM T of each delivery, and determine the 12-month rolling total.Navajo Generating Station Draft Minor NSR Permit February 2016 11 4. At least once during each calendar week the Permittee shall perform a visible emissions survey for each PAC Silo (Silos A and B), Dust Collectors DC-12 and DC-13, Cement Kiln Dust Storage Silos (DC-14 through DC16), and Cement Kiln Dust Day Bins (DC-17 and DC-18). The survey shall be performed during daylight hours by an individual trai ned in EPA Method 22 while the equipment is in operation. If visible emissions are detected during the survey, the permittee shall perform a 6-minute EPA Method 9

observation. If visible emissions during the 6-minute EPA Method 9 observation exceed 7 percent opacity, the Permittee shall take corrective

action so that within 24 hours no visible emissions are detected.

5. Baghouse or dust collector filters fo r PAC Silo (Silos A and B), Dust Collectors DC-12 and DC-13, Cement Kiln Dust Storage Silos (DC-14 through DC-16), and Cement Kiln Dust Day Bins (DC-17 and DC-18) shall be inspected and/or replaced by the Permittee as often as necessary to ensure proper operation or more frequently as indicated by pressure differential readings or other indication of filter failure.

6. The Permittee shall maintain an on-site i nventory of spare bags or filters of each type used for PAC Silo (Silos A and B), Dust Collectors DC-12 and DC-13, Cement Kiln Dust Storag e Silos (DC-14 through DC-16), and Cement Kiln Dust Day Bins (DC- 17 and DC-18) to ensure rapid replacement in the event of bag or filter failure.

7. The Permittee shall maintain records of the date and time of any road watering or application of chemical dust suppressants or gravel performed.

8. At least once during each calendar month, the Permittee shall inspect to check that water is flowing to discharg e spray nozzles in the road watering system or water spraying vehicles. The owner or operator must initiate

corrective action within 24 hours an d complete corrective action as expediently as possible. The dates an d results of the monitoring performed on the road watering system or wate r spraying vehicles, any corrective

action taken as a result of each surv ey, and the result of any corrective

action shall be recorded.

XI. AGENCY NOTIFICATIONS

All correspondence as re quired by this permit must be forwarded to:

Director, Air Divi sion (Attn: AIR-3) EPA Region 9

75 Hawthorne Street San Francisco, CA 94105-3901

e-mail: R9AirPermits@epa.gov and AEO_R9@epa.govNavajo Generating Station Draft Minor NSR Permit February 2016 12 Environmental Department Director Navajo Nation EPA

P.O. Box 339 Window Rock, AZ 86515Navajo Generating Station Draft Minor NSR Permit February 2016 13 Attachment A: Abbreviations and Acronyms

acfm actual cubic feet per minute

CAA or the Act Federal Clean Air Act CFR Code of Federal Regulations

CKD cement kiln dust EPA United States Environmental Protection Agency, Region 9

EU emissions unit

hr hour lb/hr pounds per hour NAAQS National ambient air quality standards

NSR new source review PM particulate matter PSD prevention of significant deterioration RCTS refined coal treatment system scfm standard cubic feet per minute

VMT vehicle miles traveled