* * * SUPPLEMENTAL PUBLIC NOTICE * * *

AVENAL ENERGY PROJECT

ANNOUNCEMENT OF PUBLIC HEARING A ND REQUEST FOR PUBLIC COMMENT

ON PROPOSED ACTION AND SUPPLEMENTAL STATEMENT OF BASIS RELATING TO A

CLEAN AIR ACT PREVENTION OF SIGNI FICANT DETERIORATION PERMIT

FOR THE EMISSION OF AIR POLLUTANTS

PERMIT APPLICATION NO. SJ 08-01

The United States Environmental Protection Agen cy (EPA) provides notice of, and requests public comment on, a proposed action and Supplemental Stat ement of Basis relating to the Prevention of Significant Deterioration (PSD) perm it application for the Avenal Ener gy Project (Project). In 2009, EPA issued a proposed PSD permit for the Project to Avenal Power Center, LLC (APC), pursuant to federal Clean Air Act (CAA) PSD requirements a nd related PSD regulations (40 CFR 52.21), which

would authorize the construction a nd operation of a 600 MW (net) electr ic generating facility. APC is located at 500 Dallas Street, Level 31, Houston, TX 77002.

The Project would be located in Kings County, California, and cons ists of two GE 7FA combustion turbine generators, two heat recove ry steam generators, one steam tu rbine generator, and associated equipment. The proposed location for the Project cons titutes the majority of the northeast quarter of Section 19, Township 21 South, Range 18 East, Mt. Diablo Base and Meri dian. The Kings County Assessor’s Parcel Number (APN) for this locatio n is 36-170-035. The geographic coordinates for the proposed project are approximately Latitude 36.088394° N and Longitude 120.061141° W. The proposed location is currently in agri cultural production, is zoned industrial by the City of Avenal and is owned by the applicant. The City of Avenal has info rmed the EPA that the unofficial address for this location’s APN is 33119 Avenal Cutoff Road, Avenal, California 93204.

On June 16, 2009, EPA issued for public comment a proposed permit for the Project, which would grant conditional approval, in accordance with the PSD re gulations, to APC to construct and operate the facility, along with a statement of basis and ambient air quality impact report describing the basis for the permit conditions and other related information. The proposed PSD permit would require the use of Best Available Control Technology to limit emissions of carbon m onoxide (CO), oxides of nitrogen (NO

x ), particulate matter (PM), and particulate ma tter less than 10 micrometers in diameter (PM 10 ), to the greatest extent feasible. At the time EPA pro posed the PSD permit for the Project, EPA found that air pollution emissions from the Project would not cau se or contribute to vi olations of any of the National Ambient Air Quality Standards (NAAQS) applicab le at that time for th e attainment pollutants regulated under the PSD permit The emissions of other air pollutants from the proposed project, including the pollutants for which the area is not m eeting the NAAQS (and precur sors that lead to the formation of such pollutants) ar e regulated by the San Joaquin Valle y Air Pollution Control District (District), which implements the Nonattainment Ne w Source Review permitting program for this area and has issued the necessary permit.

EPA provided public notices request ing public comment on the proposed permit for the Project on June 16, 2009, August 27, 2009 through August 29, 2009, and September 11, 2009. The August and September 2009 notices announced that EPA would ex tend the public comment pe riod and hold a public

Page 1 of 5information meeting and two public hearings in conjunction with its proposed PSD permit for the Project. The public information meeting and two public hearings were held as scheduled, and the public comment period for the proposed permit closed on October 15, 2009.

Following the close of the public comment period for the Project, on February 9, 2010, EPA published a final rule establishing a primary NAAQS for nitroge n dioxide (NO2) based on a 1-hour averaging time (1-hour NO2 NAAQS), which became effective on April 12, 2010. 75 Fed. Reg. 6474 (Feb. 9, 2010). On April 1, 2010, EPA issued a memorandum explaining that permits issued by EPA on or after the April 12, 2010 effective date must be supported by a demonstration that the source will not cause or

contribute to a violation of the hourly NO2 standard. See Memorandum from Stephen D. Page, EPA Office of Air Quality Planning and Standards, Appli cability of the Federal Pr evention of Significant Deterioration Permit Requirements to New and Revi sed National Ambient Air Quality Standards (Apr. 1, 2010). On June 22, 2010, EPA published a final ru le establishing a primary NAAQS for sulfur dioxide (SO2) based on a 1-hour averaging time, which became effective on August 23, 2010. 75 Fed. Reg. 35,520 (Jun. 22, 2010). On May 7, 2010, EPA issued a rule that establishes limitation on greenhouse gas emissions from automobiles. 75 Fed. Reg. 25,324. As a result of this action, EPA interprets the Clean Air Act and appl icable regulations to require that PSD permits issued after January 2, 2011 contain limitations on greenhouse gas emissions. 75 Fed. Reg. 17,004 (April 2, 2010).

EPA has found that applicants seeking PSD permits to construct stationary sources of air pollution have experienced unforeseen challenges with the preparati on and review of informati on to predict the impact of proposed sources on hourly NO2 concentrations. As a result of concerns about these challenges expressed by permit applicants, EPA began a policy review to determine whether additional action by EPA was necessary to facilitate th e preparation of information to pr edict hourly NO2 concentrations and to enable EPA and other permitting authorities to complete action on pending PSD permit applications in a timely manner.

As part of this policy review, and in light of EP A’s statutory obligation under Clean Air Act section 165(c) to grant or deny a complete PSD permit app lication within one year, and other circumstances present in this case, EPA has determined that it is appropriate to grandfather the PSD permit application from APC from the requirement to demonstrate that th e proposed facility will not cause or contribute to a violation of the hourly NO2 standard. Accord ingly, EPA proposes to approve APC’s PSD permit application for the Project without re quiring a demonstration that the s ource will not cause or contribute to a violation of the hourly NO2 standard. In add ition, EPA believes the factors that justify such an approach for the hourly NO2 standard also provide a basis not to subject th is permit application to additional permitting requirements that have taken e ffect following the promulgation of the hourly NO2 NAAQS. Therefore, EPA also will not require the source to meet emissions limitations for greenhouse gases or to demonstrate that it will not cause or contribute to a viola tion of the NAAQS for hourly

concentrations of sulfur dioxide.

This determination represents a ch ange in the position EPA has taken in this matter and in previous interpretive statements issued by EPA. Because th is change in position requires that EPA modify or narrow previous interpretations of EPA regulations and the position EP A has taken in public statements regarding this permit, the Agency believes it is nece ssary and appropriate to provide the public with an opportunity to comment on this pr oposed action before the Agency issues a final decision on the pending permit application that would grandfather th e Project from these additional requirements.

Page 2 of 5EPA has also determined that it is appropriate to provide a detailed Environmental Justice Analysis regarding its proposed PSD permit action for the Project for public comment.

This supplemental public notice requests public co mment on the following three issues: (1) EPA’s proposal to approve APC’s PSD perm it application for the Project wi thout requiring a demonstration

that this source will not cause or contribute to a violation of the hourly NO2 standard; (2) EPA’s proposal not to require this source to meet emissions limitations for greenhouse gases or to demonstrate that the proposed source will not cause or cont ribute to a violation of the NAAQS for hourly

concentrations of sulfur dioxide ; and (3) EPA’s Environmental Just ice Analysis for its proposed PSD permit action for the Project. EPA is now taki ng comment solely on these three matters. EPA previously provided opportunity for public comment on all other aspects of the Project’s and the proposed PSD permit’s compliance with PSD requireme nts, and a written response to those comments will be provided with EPA’s final permit decision fo r the Project. EPA is not reopening the comment period generally or accepting additional comment at this time on any issues other than the three matters described immediately above.

EPA has prepared a Supplemental Statement of Basi s describing in more detail the basis for EPA’s proposed decision to grandfather the Project from demonstrating compliance with these additional requirements, and incorporating EPA’s Environmen tal Justice Analysis for its proposed PSD permit action for the Project. This Supplemental Statemen t of Basis is available on the EPA Region 9 website at http://www.epa.gov/region9/air/ permit/r9-permits-issued.html.

EPA has determined that it is appr opriate to hold a Third Public Hear ing relating to the PSD application for the Project to provide the public an opportunity to provide comment on th e actions that are the subject of this notice and EPA’s Supplemental Statem ent of Basis. At this public hearing, any person may provide written or oral comments, in English or Spanish, and data pertaini ng to (1) EPA’s proposal to approve APC’s PSD permit appli cation for the Project without requ iring a demonstration that this

source will not cause or c ontribute to a violation of the hourly NO2 standard; (2) EPA’s proposal not to require this source to meet emissions limitations for greenhouse gases or to demonstrate that the proposed source will not cause or co ntribute to a violation of the NAAQS for hourly concentrations of sulfur dioxide; and (3) EPA’s Enviro nmental Justice Analysis for its proposed PSD permit action for the Project. The date, time and location of the Third Public Hearing are as follows:

Date: April 12, 2011 Time: 7:00 – 10:00 pm

Location: The Avenal Theater 233 E. King Street Avenal, California 93204

English-Spanish simultaneous translation services w ill be provided at this Third Public Hearing.

If you require a reasonable accommodation, by Marc h 29, 2011 please contact Terisa Williams, EPA Region 9 Reasonable Accommodations Coordinator, at (415) 972-3829, or Williams.Terisa@epa.gov

.

Page 3 of 5All comments on EPA’s tentative determination to deny the PSD permit application for the Project must be received by email or postmarked by April 12, 2011. Comments must be sent or delivered in writing to Shirley Rivera at the postal or email addre ss shown below. Comments should focus on the three

issues listed above.

All information submitted by the applicant is availabl e as part of the administrative record. EPA’s Supplemental Statement of Basis and other previous background documents such as the proposed PSD permit, statement of basis and ambient air quality im pact report, permit applic ation and other supporting information are available on the EPA Region 9 we bsite at http://www.ep a.gov/region9/air/permit/r9- permits-issued.html. The administrative record may also be viewed in person, Monday through Friday from 9:00 AM to 4:00 PM, at the EPA Region 9 addr ess below. Due to building security procedures, please call to arrange a visit 24 hours in advance. Hard copies of the administrative record can be mailed to individuals upon request in accordance with Freedom of Information Act requirements. EPA’s Office of Air and Radiation (Ariel Rios Building, 1200 Penns ylvania Ave. NW, Washington, DC 20460) is also engaged in processing this permit action.

Any written comments must be received (if sent by e- mail) or postmarked (if sent by U.S. mail) on or before April 12, 2011 at the following addresses:

E-mail: R9airpermits@epa.gov

U.S. Mail: Shirley Rivera (AIR-3) U.S. EPA Region 9

75 Hawthorne Street San Francisco, CA 94105-3901 Phone: (415) 972-3966

EPA’s Supplemental Statement of Basis is also av ailable to review at th e following locations: San Joaquin Valley Air Pollution Cont rol District, 1990 E. Gettysburg Ave., Fresno, CA 93726, (559) 230- 6000; Kings County Library, Hanford Branch (Mai n), 401 N. Douty Street, Hanford, CA 93230, (559) 582-0261; Kings County Library, Av enal Branch, 501 East King St reet, Avenal, CA 93204, (559) 386- 5741; and Kings County Library, Kettleman City Bran ch, 104 Becky Pease Street, Kettleman City, CA 93239, (559) 386-9804.

All comments that are received will be included in the public docket without change and will be available to the public, includi ng any personal information provi ded, unless the comment includes Confidential Business Information (CB I) or other information whose disclo sure is restricted by statute. Information that you consider CBI or otherwise protecte d should be clearly identified as such and should not be submitted through e-mail. If you send e-mail di rectly to the EPA, your e-mail address will be automatically captured and included as part of the pub lic comment. Please note that an e-mail or postal address must be provided with your comments if you wi sh to receive direct not ification of EPA’s final decision regarding the permit and responses to co mments submitted during the public comment period.

EPA will consider all written and oral comments submitted during the public comment period before taking final action on the PSD permit application and will send notice of the final decision to each person who submitted comments and contact info rmation during the public comment period or

Page 4 of 5Page 5 of 5 requested notice of the final permit decision. EPA will respond to all substantive comments in a document accompanying the final permit decision and will make the Public Hearing proceedings available to the public.

The final decision will become effective 30 da ys from the date of issuance unless:

1. A later effective date is sp ecified in the decision; or

2. The decision is appealed to the Environmental Appeals Board pursuant to 40 CFR 124.19 (any person who submits written comments on the propos ed permit decision or who participates in a Public Hearing may petition the Environmental Appeals Board to review any part of the permit decision within 30 days after the decision has been issued. Any person who failed to file comments and failed to participate in the publ ic hearing on the proposed permit decision may petition for review by the Environmental Appeal s Board only those parts of the final permit

decision which are different than the proposed permit decision); or

3. There are no comments requesting a change to the proposed permit decision, in which case the

final decision shall become e ffective immediately upon issuance.

If EPA’s current proposed permit decision becomes fina l, and there is no appeal, the proceedings will be

concluded.

If you have questions, please contact Shirle y Rivera at (415) 972-3966 or email at R9airpermits@epa.gov . If you would like to be added to our ma iling list to receive future information about this permit or other PSD permits issued by EP A Region 9, please contact Shirley Rivera at (415)

972-3966 or email at R9airpermits@epa.gov , or visit EPA Region 9's website at http://www.epa.gov/region09/air/perm it/psd-public-guidelines.html.

Please bring the foregoing notice to th e attention of all persons who would be interested in this matter.