### STATE OFNEWMEXICO**BEFORETHEENVIRONMENTALI~ROVEMENTBOARD** 

### IN THEMATTER OFPROPOSEDREVISIONS TO THESTATEIMPLEMENTATIONPLAN FORTHESANJUAN GENERATING STATION BEST AVAILABLE RETROFIT TECHNOLOGY DETERMINATION No. EIB 13- 02(R)
ORDERAND STATEMENT OFREASONS FORADOPTION OFSIPREVISIONS

This matter comes before the NewMexico Environmental Improvement Board ("Board") upon a petitionfiled bythe New Mexico EnvironmentDepartment ("NMED" or "Department"), proposing amendments to New Mexico's State ImplementationPlan ("SIP") for regional haze, in orderto adopt a determination ofthe BestAvailable Retrofit Technology ("BART") and associated emission limits for the SanJuan Generating Station ("SJGS"), operatedbyPublic Sel"Vice CompanyofNew Mexico ("PNM"). A publichearing was held inFarmington, New Mexico on September 5, 2013, with a quorum ofthe Board present during thehearing. The Boardheard technical testimony from theDepartment and otherparties and admitted exhibits into the record. OnSeptember 5, 2013, the Board deliberated and voted to adopt the proposed amendments for the reasons that follow: 

### I. STATEMENT OFREASONS 1. Thefederal CleanAirAct ("CAA'') requires states to submit State ImplementationPlans ("SIPs") to address visibility impairment causedbyregional haze at certain National Parks and Wilderness Areas ("mandatoryfederal Class I areas"), in accordance with

BIB No. 13-02 Statement ofReasons and Order Page 1 of7regulations promulgated by the U.S. Environmental Protection Agency ("EPA"). CAA §§ 169A & 169B (42 U.S.C. §§ 7491 & 7492 ). 2. The EPAregulations governing SIP submittals under CAA Sections 169A and 169B are codified at 40 C.P.R. §§ 51.308- 51.309 ("Regional Haze Rule Sections 308 and 309"). 3. In December 2003 the Board approved a SIP developedbyNMED to comply with the Requirements ofRegional Haze Rule Section 309 with respect to mandatory federal Class I areas located onthe Colorado Plateau. TheDepartmenthas implemented this "Section 309 SIP" continuously since that time. 4. InJune 2011 the Board approved certainrevisions to the 2003 regional haze SIP and adopted additional SIP provisions pursuant to 40 C.F.R. § 51.309(g), which extended the scope oftheregional haze SIP to all mandatoryfederal Class I areas within the State. 5. The 2011 SIP contained source-specific BART determinations pursuant to 40 C.P.R. § 51.308(e) for the SJGS for particulate matter ("PM") and nitrogen oxides ("NOx"), and determined that no other sources in NewMexico were subject to BART requirements. The BART provisions ofthe SIP were contained in Chapter 10 and the documentation of the SJGS BART determination was contained in Appendix D ofthe SIP. 6. The Board continues to believe that the SIP adopted bythe Board in 2011 was adequate and sufficientto comply with the CAA. 7. In August, 2011, the EPApromulgated a federal implementationplan ("FIP") containing

a different NOx BART determination for the SJGS. 76 Fed. Reg. 52,388 (Aug. 22, 2011).

EIB No. 13-02 Statement ofReasons and Order Page 2 of7

### 8. Petitions filed byNew Mexico, PNM, and WildEarth Guardians challenging different aspects ofthe FIP are currentlypending in the United States Court ofAppeals for the Tenth Circuit. 9. In November, 2012, the EPA approved all elements ofNew Mexico's 2011 regional haze SIP, except for the NOx BART determination for the SJGS, on which EPA took no action. 77 Fed. Reg. 70,693 (Nov. 27, 2012). 10. Pursuant to 20.1.300.A NMAC, any person may petition the Board for amendment of regulations within thejurisdiction ofthe Board. 11. OnMay 21, 2013 NMED filed a petition with the Board for a publichearing inthis matter. The petition proposed revised versions Chapter 10 and Appendix D ofthe regional haze SIP. The purpose ofthe revisions is to make a new BART determination for the SJGS based on a scenario referred to as the "State Alternative," which is contained in a tentative agreementbetween NMED, EPA, and PNM known as the "Term Sheet" (attached hereto). The Term Sheet is intended to address pollution control requirements for the SJGS with respect to regional haze and interstate transport for visibility. 12. OnJune 15, 2013, at a meeting conducted in compliance with the Open Meetings Act and other applicable requirements, the Board granted the Department's request for ahearing and scheduled the hearing for September 5, 2013. The Board appointed memberJohn Volkerding as the Hearing Officer. 13. OnJune 28, 2013, public notice ofthe hearing was published in the New Mexico Register, in the FarmingtonDaily Times (in English and Spanish), and in the Albuquerque Journal (in English and Spanish). The notice stated that the Board may EIB No. 13-02 Statement ofReasons and Order Page 3 of7make a decision onthe proposed SIP revisions at the conclusion ofthe hearing, or may

convene at a later date to consider action onthe proposal. 14. NMED filed a Notice ofIntent to Present Technical Testimony (NOI) on August 16, 2013, in accordance with the 20.1.1 NMAC. The following parties also filed entries of appearance: Public Service Company ofNew Mexico; and New Mexico Industrial Energy Consumers (NMIEC). 15. The Board also considered public comment, including letters from the Bureau ofLand Management and National Park Service and NMED's and PNM'sresponse to those comments, as well as letters, electronic submissions and in-person comments during the hearing from individuals and organizations, members ofthe local community, legislators, employees and former employees ofthe SanJuan Generating Station, the county commission and ratepayers. The public comment was almost unanimous in its support for the SIP proposed byNMED. 16. A hearing was inthis matter was held in Farmington, New Mexico on September 5, 2013, at which a reasonable opportunity for all persons to beheard was provided. 17. The Board has the authority to adopt the proposed SIP revisions pursuant to N.M.S.A. 1978, §§ 74-2-5.B & C. 18. Implementation ofthe StateAlternative will abate air pollution. 19. CAA § 169A(g)(2) requires that BART determinations shall take into consideration "[1] the costs ofcompliance, [2] the energy and nonair quality environmental impacts of compliance, [3] any existing pollution control technology in use at the source, [4] the remaining useful life ofthe source, and [5] the degree ofimprovement which may reasonablybe anticipated to result from the use ofsuch technology." The Board EIB No. 13-02 Statement ofReasons and Order Page4 of7determined that there was ample oral and written testimony that the SIP proposed by NMED meets these requirements. 20. Inconsidering the proposed SIP revisions, the Board is required bythe Air Quality Control Act, NMSA 1978, Section 74-2-5.E. to give weight it deems appropriate to all facts and circumstances, includingbutnot limited to (1) character and degree ofinjury to

or interference with health, welfare, visibility and property; (2) the public interest, including the social and economic value ofthe sources and subjects ofair contaminants; and (3) technical practicability and economic reasonableness ofreducing or eliminating air contaminants from the sources involved and previous experience with equipment and methods available to control the air contaminants involved. The Boardheard ample oral and written testimony and considered all these facts and circumstances regarding the NMED-proposed SIP in making its decision. 21. EPAhas promulgated guidelines for States to use in making BART determinations, which are codified at 40 C.F.R. Part 51, Appendix Y. Pursuant to CAA § 169A(b)(2),

use ofthe guidelines is mandatory for BART determinations for fossil fuel fired power plants with total generating capacity in excess of750 megawatts. 22. NMED's determinationthat the State Alternative constitutes BART for NOx for the SJGS complies with the guidelines at 40 CFR Part 51 Appendix Y and properly weighs the statutoryfactors ofCAA § 169A(g)(2). 23. The Board concludes thatthe BART guidelines at Appendix Y provide an appropriate methodologyto consider to the factors specified by NMSA 1978, Section 74-2-5.E. The Department's application ofAppendix Y to the BART determination for the State Alternative appropriately weighs the Section 74-2-5.E factors. EIB No. 13-02 Statement ofReasons and Order Page 5 of724. In addition, in accordance with N.M.S.A, Section 74-2-5.E (2), the Board concludes that the public interest will be served byimplementation ofthe State Alternative. Specifically, in addition to satisfying the NOx BARTrequirements ofthe CAA, implementation ofthe State Alternative will result in significant reductions in sulfur dioxide, particulate matter, carbon dioxide, and mercury; significantreductions in coal ash generated and water consumed. 25. In accordance with NMSA 1978 Section 74-2-5(C)(l)(a), the proposed SIP revisions and regulations are no more stringent than but at least as stringent as required by the federal act and federal regulations pertaining to visibility protection in mandatory class I areas. 26. The notice and hearing requirements of NMSA 1978 Section 74-2-6 and 20.1.1 NMAC

were satisfied inthis rulemaking process. 27. The proposed amendments are adopted for any or all ofthe reasons stated above. II. ORDER Byunanimous vote ofa quorum ofthe Board members, the proposed revisions to New Mexico's regional haze SIP at Chapter 10 and Appendix D, as contained in NMED's June 27, 2013 public review drafts ofthose documents, were approvedbythe Board on September 5, 2013. The Department shall submit these SIP revisions, with any corrections necessary to address the errors identified in NMED Exhibit 16, as expeditiously as possible to the EPAfor approval. To the extentthat any provision within Chapter 10, Section 10.5 (Implementation of the State Alternative) is not self-executing, the Department shall take appropriate actions to implement thatprovision using its applicable powers and authorities, including butnot limited to

EIB No. 13-02 Statement ofReasons and Order Page 6 of7enforcement authority under N.M.S.A. 1978, 74-2-12 andpermitting authority under N.M.S.A. 1978, § 74-2-7, and implementingregulations.

Debo A. Peacock, Chair OnBehalfofthe Board

EIB No. 13-02 Statement ofReasons and Order Page 7 of7 Dated: September 5, 2013