UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901 

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### 1 3 2009 CERTIFIED MAIL# 7006 2150 00001 4941 2215 RETURN RECEIPT REQUESTED IN REPLY: AIR-5 REFERTO: DocketNo. R9-09-011 Mr. Randy S. Livingston Vice President

- PowerGeneration Pacific Gas andElectric Company P.O. Box 770000, Mail CodeNIlE San Francisco, CA 94177 Re: PG & E GatewayGenerating Station. Finding andNotice ofViolation DearMr. Livingston: Enclosed is a copy ofa Finding andNotice ofViolation ("NOV") issuedpursuant to section 113(a)(l)ofthe CleanAirAct, 42 U.S.C. §§ 7401-7671q (the "Act"),notifying youthatthe United States Environmental ProtectionAgency ("EPA"), Region IX, finds that Pacific Gas andElectric Company's (PG&E) Gateway Combined Cycle Generating Station located in ContraCostaCounty, California(the "Facility") is in violation ofthe CleanAirAct ("Acf'). You should be awarethat section 113(a)(l)ofthe Act authorizes EPAto issue an orderrequiringcompliance withthe requirements ofthe Act, issue an administrative penalty order, orcommence a civil action seeking an injunctionand/ora civil penalty. Furthermore, section 113(c) ofthe Act provides for criminal penalties in certaincases. In addition, section 306ofthe Act, 42

## u.s.c. §7606, the regulationspromulgated thereunder (2 C.F.R. Part 180), and Executive Order 11738 providethatfacilities to be utilized infederal contracts, grants, and loans mustbe in full compliancewiththe Actand all regulationspromulgatedpursuantto it. A violation ofthe Act mayresult in the PG&E Facilitybeingdeclaredineligibleforparticipation in any federal contract, grant, orloan. Ifyouwishto discussthe enclosedNOV, youmayrequest a conference withEPA withinten (10) working days ofreceipt ofthis NOV. Theconferencewill afford PG&E anopportunityto present informationbearingonthe finding ofviolation, the nature of the violations, and any efforts itmay havetaken orproposesto take to achieve compliance.

Printed on Recycled PaperIfyouhave any questions pertainingto this NOV, please contact Steve Frey ofthe AirEnforcementOffice at (415) 972-3796, orhave your attorney contactAllanZabel, Office ofRegional Counsel, at (415) 972-3902. Thankyoufor yourcooperationin this matter. Sincerely,

# DM::~ Director, Air Division Enclosure

cc: Mr. Jack Broadbent (BAAQMD) Mr. Jim Ryden (CARB) Mr. DaveFarabee (e-mail)

2UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901 

## Am 1 3 

### 2009 IN REPLY: AIR-5 REFER TO: DocketNo. R9-09-11**~r.** Jack Broadbent Executive Of1icerlAir Pollution Control Of1icer Bay AreaAirQuality**~anagement** District District 939 Ellis Street

Enclosed for yourinformationis acopy ofa FindingandNotice ofViolation ("NOV")thatthe United States Environmental ProtectionAgency ("EPA"), Region IX, issuedto Pacific Gas and Electric (PG&E) for violations ofthe CleanAirAct ("Act") at its Gateway CombinedCycle Generating Station located in ContraCostaCounty, California. Thepurpose ofthe NOV is to notify PG&E that EPAfinds thatithas violated certainprovisionsofthe California State Implementation Plan. The violations are set forth more specifically in the enclosedNOV. The NOV has beenissuedpursuantto section 113(a)(l)ofthe Act, 42 U.S.c. §§ 7401-7671q. The Act also providesthat after 30 days from the issuance ofanNOV, EPAmay determine ifany further action will be taken pursuantto section 113 ofthe Act. Ifyouhave any questions concerningthis NOV, pleasecontact Steve Frey, Air EnforcementOffice, at (415) 972-3796, or i'n':\.slc\l' ({Cra.UO\. Sincerely,

Director, Air Division Enclosure

Printed on Recycled PaperUNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX 75 Hawthorne Street San Francisco, CA 94105·3901 

### AUG 

### 13 2009

IN REPLY: AIR-5 REFERTO: DocketNo. R9-09-11 Mr. JimRyden Chief, Enforcement Division CaliforniaAirResources Board P.O. Box 2815 Sacramento, CA95812 DearMr. Ryden: Enclosed for your information is acopy ofa Findingand Notice ofViolation ("NOV")thatthe United States Environmental Protection Agency ("EPA"), RegionIX, issuedto Pacific Gas and Electric (PG&E) for violations ofthe CleanAirAct ("Act") at its Gateway Combined Cycle Generating Station located in ContraCostaCounty, California. Thepurpose oftheNOV is to notify PG&Ethat EPA finds that ithas violated certainprovisions ofthe CaliforniaState ImplementationPlan. Theviolations are set forth more specifically in the enclosedNOV. The NOV has been issuedpursuantto section 113(a)(1)ofthe Act, 42 U.S.c. §§ 7401-7671q. TheActalso providesthatafter 30daysfrom the issuance ofanNOV,EPAmay determine ifany further action willbetakenpursuantto section 113 ofthe Act. Ifyou have any questions concerningthis NOV,please contact Steve Frey, Air Enforcement Office, at (415) 972-3796, or I'rc\.stC\CClcpa.!l()\. Sincerely, 

# De&MrfV

Director, Air Division Enclosure

Printed on Recycled Paper1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX In the Matter of: PACIFIC GAS AND ELECTRIC Proceeding under Section of the Clean Air Act, 42 U.S.C. § 9613(a) COMPANY 113(a) Docket No. R9-09-11 FINDING AND NOTICE OF VIOLATION

STATUTORY AND REGULATORY AUTHORITY 1. This Finding and Notice of Violation ("FNOV") is issued to the Pacific Gas and·Electric Company ("PG&E") for violations of the Clean Air Act at PG&E's Gateway Generating Station ("GGS") located in Contra Costa County near Antioch, California. This FNOV is issued pursuant to Section 113 (a) (1) of the Act, 42 U.S.C. § 7413 (a) (1). Section 113 (a) (1) of the Act requires the

dministrator of the United States Environmental Protection gency ("EPA") to notify any person in violation of an applicable stateimplementation plan ("SIP") or a permit when the

dministrator finds that person to be in such violation. The authority to issue this FNOV has been delegated to the Regional

dministrator of EPA, Region IX, and re-delegated to the Director of the Air Division of EPA, Region IX. 2. The Administrator of the Environmental Protection gency ("EPA"), pursuant to authority under Section 109 of the Clean Air Act (the "Act"), 42 U.S.C. § 7409, promulgated National

mbient Air Quality Standards ("NAAQS") for certain criteria pollutants, including PM1o ' carbon monoxide, and nitrogen dioxide. 40 C.F.R. §§ 50.6, 50.8, and 50.11. 3. Pursuant to Section 107(d) of the Act, 42 U.S.C.

- 1 ­1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 § 7407(d), the Administrator promulgated lists of attainment status designations for each air quality control region ("AQCR") in every State. These lists identify the attainment status of each AQCR for each of the criteria pollutants. The carbon dioxide, PM10 ' and nitrogen dioxide attainment status designations for the California AQCRs are listed at 40 C.F.R. § 81.305. 4. The Bay Area Air Quality Management District ("BAAQMD") has primary jurisdiction over major stationary sources of air pollution sources in the San Francisco Bay Area Intrastate AQCR. 40 C.F.R. 81.21. This jurisdiction includes GGS. 5. Section 161 of the Act, 42 U.S.C. § 7471, requires that each state implementation plan ("SIP") contain provisions to implement the Act's Prevention of Significant Deterioration ("PSD") program for areas of that state which are designated as being in attainment with any NAAQS for a criteria pollutant. The PSD program applies to major new sources of air pollution. 6. The PSD permitting program for the San Francisco Bay

rea Intrastate AQCR is the federal PSD program, which is set forth at 40 C.F.R. § 52.21 ("PSD Program"). 7. The PSD Program requires, among other things, that the

owner or operator of a new major stationary source of air pollution obtain a PSD permit, which complies with the requirements of 40 C.F.R. § 52.21, prior to constructing a new major source of air pollution. The PSD permit must require, among other things, that the best available control technology ("BACT") be installed at the source being constructed or modified. The definition of a major modification is set forth in

- 2 ­1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 40 C.F.R. § 52.21. FINDINGS OF FACT AND LAW 8. PG&E generates electricity at GGS, which is a nDminal 530 megawatt, natural gas-fired, combined cycle, combustion turbine power plant. At all times relevant to this FNOV, GGS has been and continues to be a major source of air pollution. GGS is located in Contra Costa County near Antioch, California, which is under the jurisdiction of BAAQMD and EPA. 9. On July 24, 2001, PG&E's predecessor in interest, Delta, LLC ("Mirant"), obtained a PSD permit from the BAAQMD as part of a single, comprehensive Authority to Construct. BAAQMD issued that PSD permit pursuant to the authority set forth in 40 C.F.R. 52.21 and a delegation of authority from EPA dated April 26, 1986. Such delegation of authority to issue PSD permits and implement the PSD Program is allowed under 40 C.F.R. 52.21{u). 10. The delegation of authority to BAAQMD to implement the PSD Program was revoked on March 3, 2003. A partial redelegation of authority to BAAQMD to implement the PSD Program

was issued on June 21, 2004. 11. At some point during the time period between February 2002 and September 2002, Mirant ceased construction of GGS. This cessation of construction lasted more than 18 months. 12. Pursuant to the PSD Program, 40 C.F.R. 52.21{r), where construction of a major new source pursuant to a PSD permit is discontinued for 18 months or more, the PSD permit automatically expires unless an extension is granted by the Administrator of EPA or someone who currently possesses a valid delegation of authority from the Administrator to grant such an extension.

- 3 ­1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13. Between the time the PSD permit for GGS was issued to Mirant and the latest time that PSD permit would have automatically expired due to discontinued construction of GGS, no valid extension of the PSD permit was requested from or issued by the Administrator of EPA or someone who currently possessed a valid delegation of authority from the Administrator to grant such an extension. Therefore, the PSD permit automatically expired when construction of GGS had ceased for 18 months. 14. PG&E took over ownership of GGS from Mirant on November 30, 2006, and restarted construction of GGS in January 2007. At the time PG&E took over ownership of GGS and restarted construction of GGS, the PSD permit for the construction and operation of GGS had expired. PG&E has not applied for a new PSD permit. 15. PG&E failed to obtain a valid PSD permit prior to restarting construction of and operating GGS. PG&E's failure to have a valid PSD permit continues to this time. FINDING OF VIOLATIONS 16. PG&E violated the SIP and the Act by restarting construction of and operating GGS, a major new source of air pollution, without obtaining a valid PSD permit. ENFORCEMENT 17. Section 113(a) (1) of the Act provides that at any time after the expiration of 30 days following the date of the issuance of this FNOV, EPA may, without regard to the period of violation:issue an order requiring compliance with the requirements of the SIP or permit, or - 4 ­1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 issue an administrative penalty order pursuant to Section 113(d) of the Act for civil administrative penalties of up to $32,500 per day of violation, or bring a civil action pursuant to Section 113(b) for injunctive relief and/or civil penalties of not more than $32,500 per day for each violation. 42 U.S.C. § 7413(a) (1), as amended by the Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. 101-410, as amended, 

### & 40 C.F.R. § 19. Furthermore, for any person who knowingly violates any SIP or permit requirement more than 30 days after the date of the issuance of a FNOV, Section 113(c) of the Act provides for criminal penalties, imprisonment, or both. 42 U.S.C. § 7413 (c) (3)

. In addition, under Section 306(a) of the Act, the regulations promulgated thereunder (40 C.F.R. Part 32), and Executive Order 11738, facilities to be used in federal contracts, grants, and loans must be in full compliance with the

ct and all regulations promulgated pursuant to it. Violation of the Act may result in the GGS being declared ineligible for participation in any federal contract, grant, or loan. PENALTY ASSESSMENT CRITERIA 18. Section 113 (e) (1) of the Act states that the dministrator or a court, as appropriate, shall, in determining the amount of any penalty to be assessed, take into consideration (in addition to such other factors as justice may require) the size of the business, the economic impact of the penalty of the business, the violator's full compliance history and good faith efforts to comply, the duration of the violation as established - 5 ­1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 by any credible evidence (including evidence other than the applicable test method), payment by the violator of penalties previously assessed for the same violation, the economic benefit of noncompliance, and the seriousness of the violation. 42 U.S.C. § 7413 (e) (1) Section 113(e) (2) of the Act allows the Administrator or a court to assess a penalty for each day of violation. 42 U.S.C. § 7413(e) (2). For the purpose of determining the number of days of violation, where EPA makes a prima facie showing that the conduct or events giving rise to a violation are likely to have continued or recurred past the date of the issuance of a FNOV, EPA shall presume the days of violation to include the date of issuance of the FNOV and each and every day thereafter until the violator establishes that continuous compliance has been achieved, except to the extent that the violator can prove by a preponderance of the evidence that there were intervening days during which no violation occurred or that the violation was not continuing in nature. OPPORTUNITY FOR CONFERENCE 19. PG&E may, upon request, arrange to have a conference with EPA to discuss this matter. A conference would enable PG&E to present evidence bearing on the finding of violation, the nature of the violation, and any efforts that it may have taken

or proposes to take to achieve compliance. If PG&E wishes to take advantage of this opportunity, it must make a request for a conference within ten (10) days of receipt of this FNOV. PG&E, if it chooses to request a conference, may choose to be represented by counsel at the conference. Any request for a - 6 ­1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 conference or other inquiries concerning this FNOV should be made in writing to: Allan Zabel Office of Regional Counsel 

### u.s. Environmental Protection Agency, Region 9 75 Hawthorne Street (ORC-2) San Francisco, CA 94105 (415) 972-3902

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