1994-034a DANIEL L. CARDOZO

THO A. ENSLOW

TANYA A. GULESSERIAN

MA D. JOSEPH

LOU A A. MILES

GL IA D. SMITH

FELLOW

RACHAEL E. KOSS

OF COUNSEL

THOMAS R. ADAMS

ANN BROADWELL

MAS

RC

LEN

OR SACRAMENTO OFFICE

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### ADAMS BROADWELL JOSEPH & CARDOZO

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b

printed on recycled paper July 7, 2008

Via Email: Lee.Anita@epamail.epa.gov

Anita Lee Environmental Protection Agency,
Air Permits Office 75 Hawthorne Street (AIR-3) San Francisco, CA 94105

Re: Comments on the Victorville 2 Draft PSD Permit

Dear Ms. Lee:

On behalf of California Unions for Reliable Energy (“CURE”), this letter provides comments on the EPA’s draft pr evention of significant deterioration (“PSD”) air permit for the City of Victorville’s proposed power plant (“Project”). The Project is a 563 MW electric generating facility located in the City of Victorville in San Bernardino County. The EPA’s Region 9, the PSD permitting authority, issued a statement of basis and ambient Air Qua lity Impact Report (“SOB”) and a Draft Clean Air Act PSD Permit (“Draft Permit”). 1

CURE is a coalition of labor unions wh ose members help solve the state’s energy problems by building, maintain ing and operating conventional and renewable energy power plants. Since its founding in 1997, CURE has been committed to building a strong economy and a healthier environment. (See http://www.sbctc.org/cure/ .) Individual members of the CURE unions live in and
use areas that will suffer th e impacts of the Project. These members breathe the polluted air and suffer the adverse health and safety impacts from unnecessary air

1 U.S. Environmental Protection Agency, Region IX, Victorville II Hybrid Power Project (SE07-02), Prevention of Significant Deterioration Permit, Proposed Permit Conditions, June 2008 (“proposed PSD Permit”); Docket No. EPA-R09-OAR-2008-0406- 0017; and Statement of Basis and Ambient Air Quality Impact Report for a Clean Air Act Preventi on of Significant Deterioration Permit, June 2008 (“Statement of Basis”); Docket No. EPA-R09-OAR-2008-0406-0016.July 7, 2008 Page 2

1994-034a pollution. Given the proximity to this and other projects, CURE has helped cut smog-forming pollutants in half, reduced toxic emissions, increased the use of recycled water for cooling systems and push ed for groundbreaking pollution control equipment as the standard for all new po wer plants, all while ensuring new power plants are built with highly trained, professional workers who live and raise families in nearby communities.

As discussed below, the proposed PSD Permit is inadequate because the proposed PSD Permit and the supporting St atement of Basis prevent full and fair public review; EPA prematurely issued the application completeness determination rendering the determination deficient; th e EPA failed to determine that the Project may result in violations of the 24-hour PM2.5 National Ambient Air Quality Standard (“NAAQS”); the best available control technology (“BACT”) determinations were incomplete and fl awed, including the lack of a BACT determination for greenhouse gases and the failure to require BACT for particulate matter and carbon monoxide (“CO”) em issions from the combustion turbine generators (“CTGs”); EPA failed to set a limit for the ammonia slip from the selective catalytic reduction (“SCR”) syst em; the proposed permit limits are not federally enforceable; and the project does not comply with the Endangered Species Act or the National Environmental Policy Ac t among other things described below.

We have prepared these comments with the assistance of Dr. Petra Pless. Dr. Pless’ comments along with her curriculum vitae are provided herein as
Attachment 1. Please note that the expert’s comments supplement the issues addressed below, thus her comments should be addressed and responded to separately.

I. THE PROPOSED PSD PERMIT AND STATEMENT OF BASIS DETER
FULL AND ACCURATE PUBLIC REVIEW

For all practical purposes, the prop osed PSD Permit and the supporting Statement of Basis were presented in a way that makes it nearly impossible for an independent reviewer to trace and evaluate the EPA’s decision making process.

The Statement of Basis did not present all of the information necessary for members of the public to verify whether the EPA’s determinations were correct. Instead, the reviewer was forced to cons ult a multitude of documents beyond the Applicant’s application for a PSD Permit (“PSD Application”), its supplements and the EPA’s administrative record for this pr oject. For example, rather than provideJuly 7, 2008 Page 3

1994-034a a complete BACT analysis for each pollutant and source subject to PSD review to support the BACT-based permit limits in th e body of the document, the Statement of Basis provided only brief summaries th at were based on a number of additional documents. The PM10 (as a surrogate fo r PM2.5) BACT analysis for the Project’s CTGs is a prime example. The Statemen t of Basis provided the following terse

summary:

Particulate emissions from the gas turb ine trains result from fuel sulfur, inert trace contaminants, and incomplete combustion of hydrocarbons. We do not believe that any add-on particul ate emission controls have been demonstrated in practice for this type of source. Thus, the proposed permit
limits the sulfur content of the fuel to no more than 0.2 grains per 100 dry standard cubic feet as BACT, which woul d limit sulfate particulate emissions.

We are proposing to limit particulat e emissions (PM and PM10) to 12 lb/hr
from each turbine without duct burner firing, and 18 lb/hr with duct burner firing. As noted earlier, using PM10 as a surrogate for PM2.5 does not affect
the emission controls selected as BACT. 2

The EPA’s conclusion regarding PM an d PM2.5 BACT appear to be based on the BACT analyses contained in two su pplemental submissions to the PSD Application for PM2.5 and PM, but the Statement of Basis did not mention these documents. These supplements to the PSD Application can be found in the docket
on the EPA’s website. 3 Our review of these document s shows that they, in turn, do not contain all of the information relied upon to come to conclusions regarding BACT either. The necessary information, specifically, the PM and PM10 permit limits from the South Coast Air Quality Management District’s BACT Guidelines and the EPA’s RACT/BACT/LAER Clearinghouse for other, similar facilities relied upon to determine the BACT permit limits fo r Victorville II are not provided in the supplements to the PSD Application, or for that matter anywhere in documents

2 Statement of Basis, pp. 14-15.

3 Sara Head, ENSR, Letter to Ed Pike, U.S. Envi ronmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project (VV2), June 25, 2007; Docket No. EPA-R09-OAR-2008-0406-0009; Thomas Barnett, Inland Energy, Inc., Letter to Anita Lee, U.S. Environmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration (PSD)
Permit for Victorville 2 Hybrid Power Project, January 28, 2008; Docket No. EPA-R09-OAR-2008-

0406-0010.July 7, 2008 Page 4

1994-034a listed on the EPA’s website. The respective BACT determinations contain no
reference where to find the information they relied upon to reach their conclusions regarding the proposed BACT permit limits. The docket shows that a number of California Energy Commission documents have been submitted into the administrative record, such as the Application for Certification (“AFC”, 4 the Preliminary 5 and Final Staff Assessments, 6 and some mysterious “Distribution of Supplemental Information,” which are not available directly on the EPA’s website
but rather are available on the CEC’s website. 7 This sends the reviewer on a wild goose chase searching through these se veral hundred-page documents and theirrespective, equally long appendices, updates, and revisions to find the most up-todate list of permit limits for these pollutant s. At a bare minimum, EPA should have referenced and provided cites to the relevant data.

The EPA’s failure to “show its work” runs counter to its obligation to conduct an independent review of the Applicant’ s BACT determinations, giving instead the impression that EPA simply-rubber-stamped the application. In addition, the review process the EPA used here effectivel y frustrated public review and analysis. The analytic path showing the basis for th e EPA’s decisions must be clear and welldocumented in a stand-alone document referencing a few clearly identified documents without requiring the reviewer to wade through literally stacks of documents on the EPA’s and the California Energy Commission’s websites.

Finally, CURE’s experts attempted to evaluate the Project’s modeling data purported to be part of EPA’s administrative record. However, the modeling data was completely omitted from the record . CURE attempted to obtain the modeling data on July 3, 2008, however no one at Re gion 9 was available to provide the data. This omission begs the question whethe r EPA itself ever reviewed the modeling
data.

4 Inland Energy, Inc., Application for Certification, Victorville Hybrid Power Project, February 2007.

5 California Energy Commission, Victorville 2 Hybrid Power Project, Application For Certification (07-AFC-1), San Bernardino County, Prelimin ary Staff Assessment, CEC-700-2007-021-PSA,
November 2007.

6 California Energy Commission, Victorville 2 Hybrid Power Project, Application For Certification (07-AFC-1), San Bernardino County, Final Staf f Assessment, CEC-700-2007-021-FSA, March 2008.

7 See U.S. Environmental Protection Agency, Region IX, Administrative Record Index, Victorville 2 Hybrid Power Project, PSD Permit (SE-07 -02), Docket No. EPA-R09-OAR-2008-0406, see footnote referencing the availability of CEC documents at: http://www.energy.ca.gov/sitingcases/ victorville2/documents/index.html

.July 7, 2008 Page 5

1994-034a II. THE EPA’S COMPLETENESS DE TERMINATION WAS ISSUED
PREMATURELY AND IS DEFICIENT

On June 13, 2007, the EPA issued an application completeness determination (“Completeness Determination”) to the Applicant stating that the EPA received the initial PSD Application on May 8, 2007 an d an update on June 22, 2007, which together would cover the pollutants NOx, CO, and PM2.5, and that the EPA deems the PSD Application administratively complete. 8 The Completeness Determination was prematurely made and is thus invalid for several reasons.

First, the Completeness Determination was issued prematurely because it did not address PM, one of the criteri a pollutants subject to PSD review. 9 On December 20, 2007, six months after the Completeness Determination was issued, the EPA requested information regarding PM and received a PM analysis from the Applicant on January 28, 2008. 10 An analysis of PM is essential for the EPA’s review of the Project as PM is a regula ted PSD pollutant. Thus, this information was required to be available to th e EPA before issuing a Completeness Determination. EPA’s request for this information six months after issuing the Completeness Determination demonstrated that the Completeness Determination was issued prematurely be cause it omitted PM.

Second, greenhouse gases are also pollutants subject to regulation under the Clean Air Act, as discussed in more detail in Comment IV.A and the EPA was required to address these pollutants in its review and ensure that the Applicant had provided EPA with all necessary inform ation prior to issuing a Completeness Determination. Therefore, the Completeness Determination is invalid because it failed to address pollutants subject to regulation under the Act.

Third, the Agency failed to set PM 2.5 BACT limits, instead using PM10 BACT as a surrogate. As discussed below this approach violates federal law.

8 U.S. Environmental Protection Agency, Region IX, Jon Roberts, City of Victorville, Subject: Application Completeness Determination for Victorville II Prevention of Significant Deterioration Permit Application, June 13, 2007; Do cket No. EPA-R09-OAR-2008-0406-0008S.

9 Statement of Basis, Table 3, p. 9.

10 Thomas Barnett, Inland Energy, Inc., Letter to Anita Lee, U.S. Environmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration (PSD) Permit for Victorville 2 Hybrid Power Pr oject, January 28, 2008; Docket No. EPA-R09-OAR2008-0406-0010.July 7, 2008 Page 6

1994-034a In sum, the EPA prematurely issued the Applicant a Completeness Determination even though the Applicat ion itself was deficient of critical information and analyses essential to the PSD Application.

III. The Agency’s PM2.5 PSD Analysis Is Flawed

The Statement of Basis identified PM2. 5 as an attainment pollutant subject
to PSD review. 11 For purposes of PSD review of PM2.5, the Agency determined that the use of PM10 as a surrogate for PM2.5 is appropriate. 12 Accordingly, the Project impact analysis of ambient air quality relied on modeling of estimated PM10
emissions. 13 For a 24-hour averaging period, maximum project impacts from all Project sources were estimated at 6.1 μg/m 3 of PM2.5 (on a PM10 as a surrogate basis). On an annual basis, maximum Pr oject impacts were modeled at 0.3 μg/m 3 of PM2.5 (on a PM10 as a surrogate basis). 14

, 15 Based on these modeled maximum impacts, the Agency concluded that Projec t operation would not cause a violation of the PM2.5 National Ambient Air Quality Standards (“NAAQS”) and would therefore not be significant. 16 The Agency’s analyses violate federal law and are flawed. Therefore, the Agency’s conclusions regard ing the significance of Project impacts
are erroneous as shown below.

A. The Use of PM10 as a Surrogate for PM2.5 Violates Federal Law and Relies on Guidance That Is In Conflict with Statutory Requirements and Is No Longer Technically Justified

Contrary to the Agency’s assertions, PM 10 cannot be used as a surrogate for PM2.5 for purposes of PSD review. This surrogate approach violates federal law

11 Statement of Basis, p. 9.

12 Ibid

.

13 Ibid and footnote 15, p. 20.

14 Statement of Basis, Table 7, p. 20.

15 Sara Head, ENSR, Letter to Ed Pike, U.S. Envi ronmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project (VV2), June 25, 2007; Do cket No. EPA-R09-OAR-2008-0406-0009; Table 2, p. 5.

16 Statement of Basis, p. 19.July 7, 2008 Page 7

1994-034a and relies on guidance that is in conflic t with statutory requirements, and is no longer technically justified.

Using PM10 as if it were PM2.5 violat es federal and state law. The EPA since 1997 has distinguished PM2.5 from PM10, most importantly by setting different NAAQS for each pollutant based on their different health impacts. 32 The Clean Air Act contains specific requirem ents regarding areas whose air quality violates the National Ambient Air Quality Standards, or NAAQS. 31 Therefore, the EPA must determine directly whether the project will result in a significant emissions increase and significant net emissions increase of PM2.5 to ensure protection of the public health and compliance with the NAAQS.

Further, the EPA based its decision to use PM10 as a surrogate for PM2.5 emissions on its “October 23, 1997 transi tion memo guidelines, which authorize limits for PM10 as a surrogate for limits on PM2. 5 during the transition period lasting until final PSD PM2.5 regulations are issued...” 17 Reliance on this memo was improper and invalidates th e EPA’s analysis of PM2.5.

First, the EPA cannot rely on guidance that does not have the force of law when that guidance, as here, is in conflict with statutory and regulatory requirements. Further, a BACT limit is re quired “for each regulated NSR pollutant for which the source has the potentia l to emit in significant amounts.” 18 A “regulated NSR pollutant” includes any “po llutant for which a national ambient air quality standard has been promulgated...” and any other “pollutant that otherwise is subject to regulation under the [Clean Air] Act...” 19 Therefore, the Agency should have analyzed PM2.5 as a separate pollu tant and issued a separate PM2.5 BACT
limit.

Second, the Agency’s recommended us e of PM10 as a surrogate for PM2.5 expired by its own terms when the EPA published the final PM2.5 implementation rule in September 2007. 20 The 1997 memo cited above provided interim guidance

17 Statement of Basis, footnote 8, p. 12.

18 40 CFR 52.21(j)(2).

19 40 CFR 52.21(b)(50(i) – (iv).

20 See Final Rule for Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5).July 7, 2008 Page 8

1994-034a for implementing the new PM2.5 NAAQS. 21 This ten-year-old memo stated that sources could use the PM10 surrogacy appr oach to meet NSR requirements until certain difficulties were resolved, most notably with respect to monitoring, emissions estimation, and air quality modeling. A more recent EPA memo reaffirmed the surrogacy approach specif ically for nonattainment NSR, but noted that EPA recommended using PM10 as a surrogate for PM2.5 “until [U.S. EPA] promulgate[s] the PM2.5 implementation rule.” 22 As mentioned above, the final PM2.5 implementation rule has b een published in September 2007.

Third, technical difficulties in directly implementing the PM2.5 NAAQS that grounded the 1997 interim guidance have b een resolved. The EPA itself noted in the preamble to the November 2005 Proposed PM2.5 Implementation Rule that these technical concerns have been resolved: “As discussed in this preamble, those difficulties have been resolved in most respects, and where they have not been, the proposal contains appropriate provisions to account for it .” 23 The EPA also has included the PM2.5 algorithms in the AERMOD air quality computer modeling program, the recommended model for short distance air quality assessment, thus formally resolving prior concerns about PM2.5 modeling capabilities. 24

B. The Agency Must Implement the Final Rule for Implementation of the New Sour ce Review Program for PM2.5

On May 8, 2008, EPA finalized its regulations to i mplement the NSR program for fine particulate matter, effective July 15, 2008. 25 The new rule, entitled “Final Rule for Implementation of the New Source Review (NSR) Program
for Particulate Matter Less Than 2.5 Microm eters (PM2.5),” requires all sources to determine Project impacts on a PM2.5 as PM2.5 basis. The rule applies to all

21 John S. Seitz, U.S. Environmen tal Protection Agency, Memorand um, Interim Implementation of New Source Review Requirements for PM2.5, October 23, 1997.

22 Stephen D. Page, U.S. Environmental Protection Agency, Memorandum, Implementation of New Source Review Requirements in PM-2.5 Nonattainment Areas, April 5, 2005.

23 Proposed Rule To Implement the Fine Particle National Ambient Air Quality Standards, 70 Fed. Reg. 65984, 66043, November 1, 2005; emphasis added.

24 See Revision to the Guideline on Air Quality Models: Adoption of a Preferred General Purpose (Flat and Complex Terrain) Dispersion Model and Ot her Revisions; Final Rule, 70 Fed. Reg. 68218, 68253, November 9, 2005, adopting AE RMOD as the “preferred model”.

25 Final Rule for Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5).July 7, 2008 Page 9

1994-034a projects except those where EPA had issu ed a valid completeness determination prior to the rule’s effective date. 26

As shown above, the EPA’s Completen ess Determination was premature because the application is incomplete in numerous ways. EPA must rescind the proposed PSD Permit, request a BACT an alysis of greenhouse gases from the Applicant, and issue a new Completeness Determination once these BACT analyses
have been submitted. Because this ne w Completeness Determination will occur after July 15, 2008, the Agency must also include a PM2.5 BACT analysis based on the Final Implementation Rule’s requirements.

C. Modeled PM2.5 Emissions from the Project’s Stationary Sources Exceed PM10 Significant Impact Levels

The EPA was required to find signific ant impacts for PM2.5 emissions from the Project when using the PM10 surrogacy approach. The first step in determining whether a source would cause significant de terioration of air quality is to compare maximum modeled ambient air concentrations of attainment pollutants to established significant impact levels (“SILs”), also called significance levels. A SIL for a given criteria pollutant and averag ing period is defined as the ambient concentration produced by a source’s emis sions below which the source is assumed to have a less-than-significant impact on air quality. The SILs for emissions of SO 2 , PM10, NOx, CO, and O 3 in Class II areas can be found in the EPA’s NSR Manual, 27
Table C-4. 28 The Class II SIL for PM10 established for a 24-hour period is 5.0 μg/m 3 . The Class II PM10 SIL on an annual basis is 1.0μg/m 3

. 29 The Class I SIL for PM10 established for a 24-hour period fo r areas located within 100 kilometers of a Class I area is 1.0 μg/m 3

. 30 (The Project is located wi thin 100 kilometers of five Class I areas, and just outside of 100 kilo meters from Joshua Tree National Park. 31 )

26 Id. at pp.75-76.

27 U.S. Environmental Protection Agency, New Source Review Workshop Manual, Prevention of Significant Deterioration and Nonattainment Area Permitting, Draft, October 1990; cited pages
attached as Exhibit 1.

28 NSR Manual, Table C-4, p. C.28, see Exhibit 1.

29 Ibid

.

30 Ibid

.

31 Statement of Basis, p. 20.July 7, 2008 Page 10

1994-034a The EPA opted to use the PM10 surrogacy approach for analyzing PM2.5 impacts. Under the PM10 surrogacy appr oach, PM10 is used as a surrogate for PM2.5. Practically, this means that PM10 emissions are calculated and modeled to determine ambient PM10 concentrations and these are compared to PM10 thresholds, in this case, the PM10 SILs. The EPA did not mention the 24-hour and
annual PM10 SILs and instead notes that SILs for PM2.5 have not yet been
established. 32 The EPA failed to identify that the modeled 24-hour PM10 ambient air quality concentrations of 6.1 μg/m 3 by far exceed the Class II PM10 SIL of 5.0 μg/m 3 established for a 24-hour period.

Because EPA followed the surrogacy approa ch for PM2.5, it must finish what
it started. The EPA must model 24-hour PM10 ambient concentrations with the 24-hour PM10 SIL to determine the significan ce of the Project. Using the 24-hour PM10 SIL to determine significance of maxi mum project impacts is analogous to the use of the PM10 significant emissions rate to determine whether PSD applies for PM2.5. The EPA used the PSD signific ant emissions rate to determine PSD applicability for the Project, 33 but failed to explain why the PM10 SILs are not equally applicable for determining significance.

Under the PM10 surrogacy approach, EPA should have required the Applicant to conduct a full-impact analysis to determine if the Project plus existing sources would cause a significant ambient impact anywhere, including whether it
would cause or contribute to a violatio n of any NAAQS or PSD increment, among others. As the area where the Project is located is nonattainment for PM10, any increase in PM10 will contribute to a NAAQS violation and thus any increase in PM10 emissions is per se a significant impa ct. Thus, the Application is incomplete. The EPA must rescind the Application Completeness Determination and require that the Applicant complete a full-impact analysis.

Further, the EPA has recently proposed three different options for Class I
and Class II SILs for PM2.5. 34 The proposed Class II SIL options for a 24-hour period are 5.0, 4.0, and 1.2 μg/m 3 . The modeled Project emis sions exceed all three of

32 Statement of Basis, p. 19.

33 Statement of Basis, Table 3, p. 9.

34 Environmental Protection Agency, 40 CFR Pa rts 51 and 52, [EPA-HQ-OAR-2006-0605; FRL-8470- 1], RIN 2060-AO24, Prevention of Significant De terioration (PSD) for Particulate Matter Less Than 2.5, Micrometers (PM2.5) – Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC).July 7, 2008 Page 11

1994-034a the proposed options for the 24-hour Class II SIL. Therefore, Project emissions are significant no matter which option of the proposed SILs will be promulgated. The corresponding annual SIL options are 1.0, 0.08, and 0.3 μg/m 3 . If the latter option were promulgated, annual Project impacts, estimated at 0.3 μg/m 3 would also be significant. The proposed Class I SIL options for a 24-h our period are 0.08, 0.24, and 0.07 μg/m 3 . Several maximum modeled concentrations would exceed the proposed 0.07 and the 0.08 μg/m 3 SIL in the Cucamonga, San Gorgonio, and San
Gabriel Wilderness Areas. 35 Thus, when using the new PM2.5 SILs, Project impacts are also significant.

Finally, as discussed below, the A pplicant underestimated PM10 (as a surrogate for PM2.5) emissions because it failed to include in its emissions calculations fugitive dust emissions fr om wind erosion of the solar field and unpaved roads and from entrained road dust from operations and maintenance vehicles traveling on unpaved roads on si te. Thus, the PM2.5 emissions will likely exceed the 24-hour PM2.5 NAAQS.

D. Fugitive Dust PM2.5 Emissions from the Project May Result in a Violation of the 24-Hour National Ambient Air Quality
Standard for PM2.5

In addition to PM2.5 emissions from the Project’s fossil-fuel powered stationary equipment and the cooling towe r, the Project would also result in substantial fugitive dust particulate matte r emissions due to wi nd erosion of the 250-acre graded solar field during construc tion and operation of the Project and the two 20-acre and 30-acre graded construction laydown areas. The Applicant intends to use a chemical dust suppressant on the graded areas during construction, but did not provide information on dust control of the graded sola r field during its operational phase. 36 Even if the use of dust suppr essants were intended, they have been found to have little efficacy at su ppressing small respirable dust particles. Further, while chemical dust suppressants ha ve a relatively high initial efficiency,

35 Sara Head, ENSR, Letter to Ed Pike, U.S. Envi ronmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project (VV2), June 25, 2007; Docket No. EPA-R09-OAR-2008-0406-0009, Table 3.

36 California Energy Commission, Victorville 2 Hybrid Power Project, Application for Certification (07-AFC-1), San Bernardino County, Presiding Member’s Proposed Decision, CEC-800-2008-003- PMPD, May 2008, p. 115; cited pages attached as Exhibit 2.July 7, 2008 Page 12

1994-034a estimated to vary between 40 and 98 percent, the control efficien cy has been found to decay to zero within a few months. 37

In addition, fugitive dust emissions would result from entrained road dust emissions from operations and maintenanc e vehicles driving on the unpaved solar field, and entrained road dust from deliv ery and waste removal vehicles traveling on paved and unpaved roads off-site. (T he Applicant estimated that the Project would have 13 vehicles on site for operat ions and maintenance, which are estimated
to drive a total of 79 miles per month on unpaved roads.)

Major sources that belong to one of the 27 source categories under 40 CFR 52.21 must include fugitive emissions, i.e. emissions that cannot reasonably pass through a stack, chimney, vent, or other f unctionally equivalent opening, in their potential to emit (“PTE”). The source ca tegory “Fossil fuel-fired steam electric plants of more than 250 million British th ermal units per hour heat input” applies to the Project. 38 Therefore, calculations of Proj ect emissions must include fugitive
emissions. 39 The Applicant’s modeled Project PM2.5 emissions only accounted for the Project’s stationary emissions including the CTGs and duct burners, the auxiliary heater, the auxiliary boiler, the emergency diesel engine, and the cooling tower, but failed to account for fugitive dust particulate matter emissions. 40

As mentioned before, modeling of the Pr oject’s stationary source PM10 (as a surrogate for PM2.5) emissions resulted in a maximum project impact of 6.1 μg/m 3

. 41 Added to the background ambient concentration of 26 μg/m 3 , this results in a total impact of 32.1 μg/m 3 , less than 3 μg/m 3 lower than 24-hour NAAQS of 35 μg/m 3. If the PM2.5 fraction of fugitive dust emissions were included in the modeling, the NAAQS would likely be exceeded. Therefore, the Completeness
Determination must be rescinded and the A pplicant directed to estimate fugitive emissions and revise the dispersion modeling to include them.

37 T. Piechota, J. van Ee, J. Batista, K. Stave, D. James, University of Nevada, Las Vegas, and U.S. Environmental Protection Agency (Eds.), Potential Environmental Impacts of Dust Suppressants: “Avoiding Another Times Beach,” An Expert Pane l Summary, Las Vegas, Nevada, May 30-31, 2002, Table 5, pp. 16 and 50; cited pages attached as Exhibit 3.

38 Statement of Basis, p. 8.

39 40 CFR 52.21(b)(iii)(z).

40 See, for example, AFC, p. 6.3-66.

41 Statement of Basis, Table 7, p. 20.July 7, 2008 Page 13

1994-034a IV. THE EPA FAILED TO DETERMINE THAT PM2.5 EMISSIONS FROM
THE PROJECT WOULD BE SIGNIFICANT

For purposes of the Project’s PSD re view for PM2.5, the EPA determined
that the use of PM10 as a surr ogate for PM2.5 was appropriate. 42 Accordingly, the analysis of Project impacts on ambient air quality relied on modeling of estimated
PM10 emissions. 43 For a 24-hour averaging period , maximum project impacts from all Project sources were estimated at 6.1 μg/m 3 of PM2.5 (on a PM10 as a surrogate basis). On an annual basis, maximum Pr oject impacts were modeled at 0.3 μg/m 3

. 44 Based on these modeled maximum impacts, the EPA concluded that operation of Victorville II would not cause a violation of the PM2.5 NAAQS. 45 There are a number of problems with the EPA’s analys es and conclusions and the Applicant’s supporting documents, as shown below.

A. Modeled PM2.5 Emissions from the Project’s Stationary Sources Exceed the PM10 Significant Impact Level

The first step in determining whether a source would cause significant deterioration of air quality is to compare maximum modeled ambient air concentrations of attainment pollutants to established significant impact levels (“SILs”), also called significance levels. A SIL for a given criteria pollutant and averaging period is defined as the ambien t concentration produced by a source’s
emissions below which the source is assume d to have a less-than-significant impact on air quality.

The SILs for emissions of SO 2 , PM10, NOx, CO, and O 3 in Class II areas can be found in the EPA’s NSR Manual, 46 Table C-4. 47 The SIL for PM10 established

42 Statement of Basis, p. 9.

43 Statement of Basis, p. 9 and footnote 15, p. 20.

44 Statement of Basis, Table 7, p. 20; Sara Head , ENSR, Letter to Ed Pike, U.S. Environmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project (VV2), June 25, 2007; Docket
No. EPA-R09-OAR-2008-0406-0 009; Table 2, p. 5.

45 Statement of Basis, p. 19.

46 U.S. Environmental Protection Agency, New Source Review Workshop Manual, Prevention of Significant Deterioration and Nonattainment Area Permitting, Draft, October 1990; cited pages
attached as Exhibit 1.

47 NSR Manual, Table C-4, p. C.28, see Exhibit 1.July 7, 2008 Page 14

1994-034a for a 24-hour period is 1.0 μg/m 3 for areas located within 100 kilometers of a Class I

area. 48 The Project is located within 100 kilome ters of five Class I areas, and just
outside of 100 kilometers from Joshua Tree National Park. 49 The PM10 SIL on an annual basis is also 1.0 μg/m 3

. 50 The EPA failed to identify that the modeled 24- hour PM10 ambient air quality concentrations of 6.1 μg/m 3 greatly exceeded the PM10 SIL of 1.0 μg/m 3 established for a 24-hour period. The EPA made no mention of the 24-hour and annual PM10 SILs, but instead noted that SILs for PM2.5 have not yet been established. 51

Because EPA followed the surrogate approach for PM2.5, the EPA should have compared modeled 24-hour PM10 emissions with the 24-hour PM10 SIL to determine significance for impacts on ambi ent air quality from Project emissions. Using the 24-hour PM10 SIL to determine si gnificance of maximum project impacts is analogous to the use of the PM10 signif icant emissions rate to determine whether PSD applies for PM2.5. The EPA used the PSD significant emissions rate to determine PSD applicability for the Project, 52 but failed to explain why the PM10 SILs are not equally applicable for determining significance.

B. Fugitive Dust PM2.5 Emissions from the Project May Result in a Violation of the 24-Hour National Ambient Air Quality
Standard for PM2.5

In addition to PM2.5 emissions from the Project’s fossil-fuel powered stationary equipment and the cooling tower, the Project will also result in substantial fugitive dust particulate matte r emissions due to wi nd erosion of the 250-acre graded solar field and the two 20 -acre and 30-acre graded construction laydown areas. The Applicant intends to use a chemical dust suppressant on the graded areas during construction, but did no t provide information on dust control of the graded solar field. 53 Dust suppressants have been found to have little efficacy

48 Ibid

.

49 Statement of Basis, p. 20.

50 NSR Manual, Table C-4, p. C.28; see Exhibit 1.

51 Statement of Basis, p. 19.

52 Statement of Basis, Table 3, p. 9.

53 California Energy Commission, Victorville 2 Hybrid Power Project, Application for Certification (07-AFC-1), San Bernardino County, Presiding Member’s Proposed Decision, CEC-800-2008-003- PMPD, May 2008, p. 115; cited pages attached as Exhibit 2.July 7, 2008 Page 15

1994-034a t

issions. 57 at suppressing small respirable dust part icles. Further, while chemical dus suppressants have a relatively high initia l efficiency, estimated to vary between 40 and 98 percent, the control efficiency has been found to decay to zero within a few
months. 54

In addition, fugitive dust emissions will result from entrained road dust emissions from operations and maintenanc e vehicles driving on the unpaved solar field, and entrained road dust from deliv ery and waste removal vehicles traveling on paved and unpaved roads off-site. (The Applicant estimated that the Project will have 13 vehicles on site for operations and maintenance, which are estimated to drive a total of 79 miles per month on unpaved roads.)

Major sources that belong to one of the 27 source categories under EPA’s CAA regulations at 40 CFR 52.21 must include fugitive emissions, i.e. emissions that cannot reasonably pass through a stack, ch imney, vent, or other functionally equivalent opening, in their potential to emit (“PTE”). The source category “Fossil fuel-fired steam electric plants of more than 250 million British thermal units per hour heat input” applied to the Project. 55 Therefore, calculations of Project emissions must include fugitive emissions. 56 The Applicant’s modeled Project PM2.5 emissions only accounted for the Proj ect’s stationary emissions including the CTGs and duct burners, the auxiliary he ater, the auxiliary boiler, the emergency diesel engine, and the cooling tower, but failed to account for fugitive dust particulate matter em

As mentioned before, modeling of the Pr oject’s stationary source PM10 (as a surrogate for PM2.5) emissions resulted in a maximum project impact of 6.1 μg/m 3

. 58 Added to the background ambient concentration of 26 μg/m 3 , this results in a total impact of 32.1 μg/m 3 , less than 3 μg/m 3 lower than 24-hour NAAQS of 35 μg/m 3. If the PM2.5 fraction of fugitive du st emissions were included in the

54 T. Piechota, J. van Ee, J. Batista, K. Stave, D. James, University of Nevada, Las Vegas, and U.S. Environmental Protection Agency (Eds.), Potential Environmental Impacts of Dust Suppressants: “Avoiding Another Times Beach,” An Expert Pane l Summary, Las Vegas, Nevada, May 30-31, 2002, Table 5, pp. 16 and 50; cited pages attached as Exhibit 3.

55 Statement of Basis, p. 8.

56 40 CFR 52.21(b)(iii)(z).

57 See, for example, AFC, p. 6.3-66.

58 Statement of Basis, Table 7, p. 20.July 7, 2008 Page 16

1994-034a modeling, the NAAQS would likely be ex ceeded. Therefore, the Completeness
Determination must be rescinded and the A pplicant directed to estimate fugitive emissions and revise the dispersi on modeling to include them.

V. THE PROPOSED PSD PERMIT’S BACT DETERMINATIONS ARE
INCOMPLETE AND DEFICIENT

Under the Clean Air Act and its implementing regulations, EPA was required to include in the proposed PSD Permit emissions limits consistent with “best available control technology” for each pollutant subject to regulation under the
Act. 59 As shown below, the proposed PSD Pe rmit lacks a BACT analysis and permit limits for emissions of greenhouse gases. Also shown below, the proposed BACT limits for criteria pollutants suffer from a va riety of other errors such as the failure to follow the top-down BACT procedure. Fi nally, the proposed em ission limits for PM10 (as a surrogate for PM2.5) and for CO suffer from the same fundamental flaw, i.e

. the failure to set a BACT limit based on the maximum degree of reduction
that is achievable.

A. The Proposed PSD Permit Lacks a BACT Analysis and Permit
Limits for Greenhouse Gas Emissions

The Project will emit greenhouse ga ses, primarily carbon dioxide (“CO 2 ”) and nitrous oxide (“N 2 O”) from combustion processes, and methane (“CH 4 ”) from unburned natural gas due to leakage fr om the natural gas pipelines. Other greenhouse gas emissions associated with the Project include sulfur hexafluoride (“SF6”), which is used as a gaseous insula tor in the Project’s high-voltage circuit breakers, and hydrofluorocarbons (“HFCs”) and perfluorocarbons (“PFCs”), which are used in its refrigeration/chiller equipment. 60 The Applicant estimated 2,020,664
metric tons of annual CO 2 -equivalent emissions of these pollutants from the Project’s stationary sources and from circuit breaker leaks. 61

59 See 42 U.S.C. § 7475(a)(4).

60 See Exhibit 1, pp. 78, 110 and 119-120.

61 Inland Energy, Inc., Victorville 2 Hybrid Power Project, Responses to CURE Data Requests, Set 2, August 2007, pp. AQ-19 – AQ-20; cited pages attached as Exhibit 5.July 7, 2008 Page 17

1994-034a nts.

o It is now beyond dispute that gree nhouse gases are pollutants subject to regulation under the Clean Air Act. 62 Therefore, PSD permits must include a BACT analysis and a permit limit for gr eenhouse gas emissions. The draft PSD permit contains neither. Accordingly, th e draft permit is deficient and must be
revised because it omitted a BACT limit for these same po lluta

Clearly, the Project will be a “major emitting facility” as defined by the CAA
because it is a “fossil-fuel fired steam el ectric plant” of a size greater than the statutory threshold. 63 Thus, because the Project will be a “major emitting facility” it must incorporate BACT for all regulated pollutants. Accordingly, there is n technical or legal justification for omitting greenhouse gases from the draft permit’s BACT analysis. In fact, the applicant and EPA were required to identify, evaluate, and apply available technologies that wo uld control greenhouse gas emissions, but the draft permit contains no greenhouse gas emission limits whatsoever. EPA was required to impose emission limits fo r greenhouse gases, and was required to include a BACT limit, because Clean Air Ac t section 165(a)(4) requires BACT “for each pollutant subject to regulation” and emitted from regulated facilities such as the Project. 64

EPA has regulated CO2, a primary co mponent of greenhouse gas, under the CAA since 1993 when the agency adopted re gulations for CAA section 821 requiring monitoring, recordkeeping and reporting of facility’s CO2 emission s. Then, in 2007, the Supreme Court held that greenhous e gases are “pollutants” under the CAA. 65 In short, greenhouse gases are now a regula ted pollutant under section 821(a) of the CAA, and EPA is required to impose gr eenhouse gas BACT emission limits in any final PSD permit for the Project. Un der section 821(a) an d its implementing regulations, a “regulated NSR pollutant” is defined as:

(50) Regulated NSR pollutant, for purp oses of this section, means the following:

62 According to the Supreme Court, “greenhouse gases fit well within the Clean Air Act’s capacious definition of air pollutant.” Massachusetts v. EPA , 127 S.Ct. 1438, 1460 (2007).

63 42 U.S.C. § 7479(1).

64 42 U.S.C. § 7475(a)(4).

65 Massachusetts v. EPA , 127 S.Ct. at 1462.July 7, 2008 Page 18

1994-034a (i) Any pollutant for which a national ambient air quality standard has been promulgated and any constituents or precursors for such pollutants identified by the Administrator (e.g., volatile organic compounds and NOx are precursors for ozone);

(ii) Any pollutant that is subject to any standard promulgated under section 111 of the Act;

(iii) Any Class I or II substance subject to regulation under or established by title VI of the Act; or

(iv) Any pollutant that otherwise is subject to regulations under the
Act , except that any or all hazardous air pollutants either listed in section 112 of the Act or added to the list purs uant to section 112(b)(2) of the Act, which have not been delisted pursuant to section 112(b)(3) of the Act, are not regulated NSR pollutants unless the listed hazardous air pollutant is also regulated as a constituent or precursor of a general pollutant listed under
section 108 of the Act. 66

It is unclear whether EPA omitted gr eenhouse gas analysis from the SOB and an emission limitation in the draft permit simply because EPA has not established a major source threshold. 67 Nevertheless, limiting BACT determinations to those air pollutants for which there is a separate, general numerical limitation effectively ignores sect ion (iv) of the above regulation which unequivocally aims to encompass all pollu tants that are “otherwise subject to regulation under the Act.” Thus, as a ma tter of law, the draft permit and SOB which utterly omit any mention, much less analysis, of the project’s CO2 emissions,
is in direct violation of the Clean Air Act.

Based on the foregoing, EPA must perform a BACT analysis and set BACTbased emission limits for CO 2 and other greenhouse gas emissions from the Project. The BACT analysis must include a discussion of available technologies that would

66 40 C.F.R. § 52.21(b)(50) (emphasis added).

67 BACT requirements encompass all pollutants subject to regulation under the CAA whether or not they are independently subject to NAAQS or other limits. See, e.g., Friends of the Chattahoochee v. Georgia Dept of Natural Resources, Docket No. 2008CV146398, p. 7 (June 30, 2008).July 7, 2008 Page 19

1994-034a reduce greenhouse gas emissions. For exa mple, on a per-unit energy basis, the use
of duct burners is far less efficient than using a larger turbine without duct burners
or a small micro- or aeroderivative turbin e for peaking power. These options would produce far less greenhouse gas emissions than the proposed duct-fired system. The proposed “major emitting facility” is still the same kind of statutorily defined “facility” under the Clean Air Act whether it uses duct burners or not. Accordingly, the Project should be prohibited from us ing duct burners because there is a more effective alternative for reducing greenhouse gas emissions. The BACT analysis should therefore analyze Project efficien cy on a unit-energy basis and potential options to increase efficiency such as aban doning the use of duct burners, use of thermally more efficient aeroderivative turb ines instead of duct burners, requiring a higher percentage of solar power generation, use of CO 2 capture and storage technologies, use of oxy-firing, and other innovative technologies.

B. The EPA Failed to Follow Its Ow n Procedures in Establishing
BACT Limits

The Statement of Basis provided the definition of BACT under the Clean Air
Act and outlined the mechanics of the fi ve steps involved in a top-down BACT analysis. EPA verified that the five-step top-down procedure has been consistently followed by the Environmental Appeals Board in adjudicating PSD permit appeals. 68

Unfortunately, beyond this generic explanation, the Statement of Basis did not follow the five-step top-down BACT analys is for the Project, but instead merely provided short summaries and conclusions fo r each of the Project’s emission units and pollutants. Specifically, EPA omitte d the required in-depth analysis and support for its conclusions, and as such did not follow the five steps for a Projectspecific top-down BACT analysis. 69 As discussed in section I above, the Statement of Basis, did not cite to or reference th e supporting documents; thus, the analytic path EPA traveled to derive its unsupported conclusions is entirely unclear to the public. Perhaps, EPA simply relied on the BACT analyses contained in the Applicant’s PSD Application, and severa l later documents, as well as numerous documents contained on the California Energy Commission’s website including the Preliminary Staff Assessment, the Final Staff Assessment, and an unidentified

68 Statement of Basis, pp. 10-11.

69 Statement of Basis, pp. 14-17.July 7, 2008 Page 20

1994-034a “Supplemental Information” document. In any case, members of the public have no way of knowing.

The problem is compounded by the A pplicant’s own failure to follow the established five-step top-down BACT proc edure, rendering the Applicant’s own BACT determination fatally flawed. As sh own below, there has been no top-down BACT analyses for: the CO BACT determin ation for the CTGs, the PM and PM2.5 BACT determination for the CTGs, and the BACT determinations for the auxiliary boiler, the auxiliary heater, emergency di esel engine, and the firewater pump.

C. The CO BACT Determination for CTGs Is Flawed

The Statement of Basis contained th e following paragraph as a CO BACT analysis for the CTGs:

Carbon monoxide (CO) occurs due to in complete combustion of natural gas in the gas turbine, and in the duct bu rners when they are operated. The applicant has proposed to install an oxidation catalyst to control CO. The application states that the facility will achieve 2.0 ppmvd CO over a 1-hour averaging period when it does not use duct burning, excluding startups and shutdowns. BACT for periods of star tup and shutdown are discussed in Section 7.1.4. We believe 2.0 ppmvd CO is the lowest emission rate that has been included in a permit for a facility of this type. The application also requests a slightly higher 3.0 ppmvd CO emission rate when duct burning is used, due to higher CO concentrations from the duct burners. While the facilities we reviewed generally have hi gher emission rates, there are some facilities with a 2.0 ppmvd CO limit that applies at all times. We believe that the combination of emission rates propos ed by the applicant falls within the
stricter end of th e range of emission rates acceptable as BACT for CO, based
on our review of data in the RBLC. Re placing duct burning with solar energy, when available, will reduce the amount of time that the facility would use duct burning with the higher CO emission rates. 70

1. The Above CO BACT Determ ination Did Not Follow the Top-down Procedure Established as a Standard for BACT

Determination

70 Statement of Basis, Section 7.1.2 Carbon Monoxide, p. 14.July 7, 2008 Page 21

1994-034a Neither the EPA’s one paragraph CO BACT determination nor the CO BACT determination contained in the PSD Application for the Project’s CTGs included any of the five steps followed in a top-down BACT analysis, i.e

. 1) identify available control options; 2) eliminate technically in feasible options; 3) rank the remaining control technologies; 4) evaluate the most e ffective control alternative; and, 5) select
BACT. 71 In fact, neither the Statement of Basis nor the PSD Application even mentioned which technologies are available to reduce CO emissions from the CTGs.

Available control technologies that should have been analyzed include good combustion practices, alternatives to du ct burning, catalytic oxidation, thermal oxidation, and SCONOX. (Presumably, du ct burning and the use of solar power would occur concurrently during periods of high demand. Therefore, solar energy
would not reduce the amount of time that the facility would use duct burning in the summer, contrary to the EPA’s suggestion. Further additional solar could be added.) Instead, the PSD Application’s CO BACT determination contained a “Topdown Ranking of Achievable Control Levels,” which simply excerpted CO permit
limits for a number of facilities from th e South Coast Air Quality Management
District’s BACT Guidelines and th e EPA’s RACT/BACT/LAER Clearinghouse. 72 This approach is inadequate. The provided documents do not discuss which control technologies these facilities employ to comply with their CO permit limits. 73 EPA’s approach was neither legally or techni cally consistent with the NSR Manual’s longstanding methodology.

The Application’s CO BACT determinat ion proposed CO limits and then concluded that the facility would use an oxidation catalyst to comply with the proposed limits. As such, the Applicant’s CO BACT analys es omitted explanation of
how it determined that the use of an oxid ation catalyst would constitute BACT, and why other control technologies, or combinat ions of control technologies, would not
be feasible. 74 This “analysis” is insufficient to determine that the proposed permit

71 New Source Review Workshop Manual, Prevention of Significant Deterioration and Nonattainment Area Permitting, Chapter B, (1990); City of Victorville, Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project, April 2007, Docket No. EPAR09-OAR-2008-0406-0001, p. 4-4.

72 Ibid

.

73 Ibid and Appendix B to Application, Control Technology Listings, Docket No. EPA-R09-OAR-2008- 0406-0003, Table B-2.

74 Ibid

.July 7, 2008 Page 22

1994-034a limits are indeed BACT for CO emissions from the CTGs, especially because the EPA erred in determining BACT for the CT Gs. The Permit and Statement of Basis
must be revised.

2. Lower CO Limits Have Been Permitted Under All Firing
Conditions

The Draft PSD Permit limits CO emissi ons from the CTGs to 2.0 ppm when
the duct burners are not in use and to 3.0 ppm when the duct burners are firing
based on the use of an oxidation ca talyst and averaged over one hour. 75

Other similar combined-cycle projects th at incorporate duct firing have been permitted at 2.0 ppm with no CO limit adjustment or a lower CO limit when duct firing. ( See attached Table A-2 for a partial list of these Projects.) In fact, the Applicant’s summary of BACT determinations obtained from the EPA’s RBLC
database shows 11 such determinations. 76 The lowest CO limits were permitted for Kleen Energy Systems, CT, whose two Siemens SGT6-5000 F turbines were permitted at 0.9 ppm CO with the duct burners off and at 1.7 ppm CO when firing
the 445 MMBtu/hr duct burners. 77 The Applicant did not mention the permit limits for Kleen Energy Systems. In addition, CPV Warren, VA, was permitted with two of either GE7FA, GE207FA, or Siemens ST G6-5000F turbines at 1.8 ppm CO with the duct burners off and at 2.5 ppm CO with the duct burners firing. Based on the Applicant’s RBLC summary table, ten power pl ants in Arizona, Ca lifornia, Georgia, Michigan, Oregon, and Washington have b een permitted at 2.0 ppm CO with no CO limit adjustment for the duct burners. These include COB Energy Facility, OR, Duke Energy Arlington Valley II, AZ, Vernon City’s Malburg Generating Station, CA, Magnolia Power Project, CA, and McI ntosh Combined Cycle Facility, GA. Finally, the BP West Coast Products Cher ry Point Cogeneration Project, WA, was also permitted at 2.0 ppm under all firing conditions. Several power plants have demonstrated compliance with these low permitted limits as discussed below.

75 Proposed PSD Permit, Conditio n IX.B and IX.C.1, pp. 4-5.

76 City of Victorville, Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project, April 2007, Appendix B, Docket No. EPA-R09-OAR-2008-0406-0003, Table

B-2.

77 U.S. Environmental Protection Agency, RA CT/BACT/LAER Clearinghouse (RBLC), 15.210 Natural Gas Fired, Combined-Cycle and Cogeneration(>25 MW).July 7, 2008 Page 23

1994-034a The Applicant’s CO BACT determinatio n for the CTGs merely stated that duct burners would emit additional CO, increasing the uncontrolled emission levels entering the oxidation catalyst. The App lication failed to reasonably explain why the Project, with similar turbines, can not comply with the lower limits. 78 The Statement of Basis, while recognizing that several facilities have been permitted with a lower CO limit of 2.0 ppm that app lies at all times, including when the duct burners are firing, impermissibly rationaliz ed the proposed higher CO limit for the Project of 3.0 ppm when the duct burner s are firing, on grounds that “the combination of emission rates proposed by the applicant falls within the stricter range of emission rates acceptable as BACT for CO.” 79 However, there is no justification for a higher CO limit while du ct firing. Clean Air Act section 169(3)
defines BACT as “an emission limitation based on the maximum degree of reduction ... achievable for such source,” 80 not a “ range of emission rates” as applied by
the EPA.

3. Lower CO Emissions Have Been Demonstrated in Practice

Finally, basing BACT limits on previously permitted limits is a self-fulfilling prophecy that contravenes the technology-forcing nature of BACT. A BACT limit must represent the lowest limit “ achievable” for the source—not the lowest limit previously achieved by sources in the past. 81 This forward-looking emphasis is the “most important” mechanism promoting the Clean Air Act’s “philosophy of encouragement of technology development.” 82 The BACT standard is intended to require use of “the latest technological developments [in pollution control] as a requirement in granting the permit,” so as to “lead to rapid adoption of improvements in technology as new sources are built,” rather than “the stagnation that occurs when everyone works agains t a single national standard for new
sources.” 83

78 City of Victorville, Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project, April 2007, Appendix B, Docket No. EPA-R09-OAR-2008-0406-0003, Section 4.1.2.2. Top-down Ranking of Achievable Control Levels.

79 Statement of Basis, p. 14.

80 See also 40 CFR 52.21(b)(12), emphasis added.

81 40 CFR 52.21 (b)(12); emphasis added.

82 S. Rep. No. 95-127 at 18; see also Alabama Power v. Costle , 636 F.2d 323, 372 (D.C. Cir. 1980) (noting that Prevention of Significant Deterioration Program is intended to be “technology forcing”).

83 S. Rep. No. 95-127 at 18.July 7, 2008 Page 24

1994-034a Here, the CO BACT determination impermissibly relied on emission levels that have been permitted in the past or demonstrated in the past at other sources. The record contained no evidence that an analysis was conducted to determine
emission levels that are “achievable” with the selected BACT technology, as opposed to achieved. The Applicant and the EPA sh ould have collected and evaluated test data reported to the EPA under various regulatory programs, discussed technology performance and guarantees with vendors, and then made an engineering judgment based on physical and chemical principles using this data as to which limits are “achievable” for the Project to fulfill th e technology forcing nature of BACT. The permit limits for plants built in the past serve only as the starting point for the BACT analysis for what is achievable for a fu ture plant. Those limits cannot also be the end of the BACT analysis; limits achieved in the past are a floor, not the ceiling,
for the BACT determination of what is “achievable” for a new source.

For example, CO concentrations of 0.046 and 0.043 ppm at 15% oxygen were
measured on the two GE Frame 7FA turb ines at the Los Medanos Energy Center, at full load with duct burners on, during October 2001 compliance testing. 84 CO concentrations of 0.12 and 0.04 ppm were measured on the two SW 501FD turbines at the Sutter Power Project, at fu ll load with duct burners on and power augmentation operational, during June 2001 compliance testing. 85 Numerous such
source tests demonstrate that much lower CO limits are routinely achieved at other
similar facilities. The EPA has access to th is data and should collect and analyze it to make a fresh CO BACT determination that complies with the statutory and regulatory definition of BACT which re quire an emission limit based on the maximum degree of reduction that is achievable.

D. The PM and PM10 (as a Surrogate for PM2.5) BACT
Determination for CTGs Was Flawed

According to the Statement of Basis, absent full explanation, no add-on particulate emission controls have been demonstrated in practice for this type of source, and that BACT for PM and PM2.5 em issions from this Pr oject’s two General

84 The Avogadro Group, Los Medanos Energy Center Report for Initial Emission Compliance Tests, January 22, 2002; attached as Exhibit 6.

85 The Avogadro Group, Revised Report for Star tup Emission Compliance Tests and CEMS Part 60 and Part 75 RATA, Sutter Power Project, Yuba City, California, January 2002; attached as
Exhibit 7.July 7, 2008 Page 25

1994-034a Electric (“GE”) 7FA CTGs would be the use of natural gas with a sulfur content of 0.2 grains per 100 dry standard cubic feet (“g/100 dscf”) or le ss to limit sulfate particulate emissions. 86

1. The PM and PM2.5 BACT Determinations Did Not Follow the Top-down Procedure Established as Standard for BACT Analyses

The EPA’s meager BACT analysis for PM and PM2.5 was presumably based on the Applicant’s equally short BACT anal ysis found in a supplement to the PSD Application for PM2.5. 87 The Applicant’s PM and PM2.5 BACT determinations also
did not follow the establishe d five-step top-down BACT proc edure. (The additional supplement to the PSD Application for PM did not contain a BACT analysis, but rather relied on the PM2.5 supplement because PM emissions are assumed to be equal to the PM10/PM2.5 emissions. 88 ) Based on this scant data, the Statement of Basis and the Applicant’s PM2.5 BACT anal ysis concluded that BACT for both PM and PM10 (as a surrogate for PM2.5) emissi ons from the CTGs is 12.0 pounds per hour (“lb/hour”) without the duct burner firing and 18.0 lb/hour with the duct burner firing. 89 There is no support in EPA’s administrative record for this conclusion, as neither the Statement of Basis nor the Applicant’s documents contain any discussion of achievable PM10 and PM2.5 emission levels, permitted PM and PM10 emission limits at similar facilities, or results of source tests. As such, the entire analysis is deficient an d flawed and must be redone.

86 Statement of Basis, pp. 14-15.

87 Sara Head, ENSR, Letter to Ed Pike, U.S. Envi ronmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project (VV2), June 25, 2007; Docket No. EPA-R09-OAR-2008-0406-0009.

88 Thomas Barnett, Inland Energy, Inc., Letter to Anita Lee, U.S. Environmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration (PSD) Permit for Victorville 2 Hybrid Power Pr oject, January 28, 2008; Docket No. EPA-R09-OAR2008-0406-0010.

89 Statement of Basis, pp. 14-15; Thomas Barnett, Inland Energy, Inc., Letter to Anita Lee, U.S. Environmental Protection Agency, San Francisco, CA, Subject: Supplement to Application for Prevention of Significant Deterioration (PSD) Permit for Victorville 2 Hybrid Power Project, January 28, 2008; Docket No. EPA-R09-OAR-2008-0406-0010.July 7, 2008 Page 26

1994-034a 2. Lower PM10 Emissions Limits Have Been Permitted

A number of natural gas-fired power plan ts with substantially similar F-class turbines have been permitted by the EPA and licensed by the California Energy Commission with considerably lower PM10 emissions limits for the CTGs and
associated duct burners than those EPA proposed here. In California, these facilities include the Blythe Energy Proj ect Phase II, the Cosumnes Power Plant Phase I, the Los Medanos Energy Facility, the Russell City Energy Center, the Moss Landing Power Plant Project, the Metcalf Energy Center, the Mountainview Power Plant Project, and the Inland Empire Energy Center. Turbine and duct burner characteristics and permit limit s for these facilities are summarized in
attached Table A-1 and some facilities are discussed in more detail below.

Particularly noteworthy is the Blythe Energy Project Phase II, which employed Siemens Westinghouse F-class turb ines. This facility was licensed by the Energy Commission in 2005 and permitted by the EPA in 2007 with an emission limit of 6.0 lb/hour of PM10 emissions per turbine with and without firing the duct burners and using natural gas with more than twice as much sulfur content as proposed for Victorville II. 90

, 91

, 92 The Energy Commission required testing of the permitted PM10 limits based on EPA Methods 5 and 202, 93 the same testing methods as proposed for this Project. 94 On a unit energy-bas is, the Blythe Energy Plant is permitted to emit 0.0034 lb/MMBtu of PM10 with the duct burners off and
0.0031 lb/MMBtu with the duct burners firing, less than half of the PM10 emissions the EPA proposed here, i.e. 0.0069 lb/MMBtu with the duct burners on and 0.0083 lb/MMBtu with the duct burners firing , and determined with the same test

90 California Energy Commission, Blythe Energy Project Phase II, Application for Certification (02-AFC-1), Commission Decision, CEC-800-2005-005-CMF, December 2005, Condition AQ-4.e, p. 35; cited pages attached as Exhibit 8.

91 U.S. Environmental Protection Agency, Region IX, Caithness Blythe II, L.L.C. (Blythe II), Authority to Construct, Issued Pursuant to Prevention of Significant Deterioration (PSD) Requirements at 40 CFR §52.21, PSD Permit Number SE 02-01, April 25, 2007, Condition D, p. 6; cited page attached as Exhibit 9.

92 Construction of the facility is currently on hold. See California Energy Commission, Energy Facility Status, Projects Since 1997, Updated: 6/20/2008; http://energy.ca.gov/sitin gcases/all_projects.html ; attached as Exhibit 10.

93 The CEC additionally permits the use of CARB Method 5; see Exhibit 8, Condition AQ-4.e, p. 35.

94 See Exhibit 2, Condition AQ-14.e, p. 38.July 7, 2008 Page 27

1994-034a methods. 95 The EPA should explain, based on physical and chemical properties of the exhaust gases, why these lower emissi on levels cannot be achieved at this Project.

3. Lower PM10 Emissions Have Been Demonstrated in

Practice

The Cosumnes Power Plant Phase I, wh ich employed two GE 7FA turbines with no duct burners, was licensed by the Energy Commission in 2003 with an emissions limit of 9.0 lb/hr PM10 per turbine based on an emission factor of 0.00483
lb/MMbtu. 96 The Cosumnes Power Plant Phase I is operational and has demonstrated compliance with this emissi on limit. The most recent stack tests measured average PM10 emission rates of 4.0 and 3.3 lb/hr from the two turbines, respectively, with EPA Methods 201A and 202. On a unit energy-basis, average PM10 emissions were determined to be 0.00235 and 0.00195 lb/MMBtu, respectively, less than a third of the proposed PM10 emissions for this Project. 97

The Los Medanos Energy Center, which employed two GE S207FA turbines, was initially licensed with PM10 emission limits of 16.3 lb/hr per turbine train with and without duct burner operation. In 2006, the project owner requested lowering the PM10 permit limits to 9.0 lb/hr based on stack tests repeatedly demonstrating PM10 emissions considerably below 9.0 lb/hr. As a result, the Energy Commission approved revised turbine PM10 emission li mits of 9.0 lb/hr or 0.0040 lb/MMBtu per turbine including when the 330 MMBtu/hr duct burner is firing. 98

95 Blythe II: (6.0 lb/hr) / (1,776 MMBtu/hr turbine) = 0.0034 lb/MMBtu (6.0 lb/hr) / (1,776 MMBtu/hr turbine + 132 MMBtu/hr duct burner) = 0.0031
lb/MMBtu ;
Victorville II: (12.0 lb/hr) / (1,736.4 MMBtu/hr turbine) = 0.0069 lb/MMBtu (18.0 lb/hr) / (1,736.4 MMBtu/hr turbine + 424.3 MMBtu duct burner) = 0.0083
lb/MMBtu

.

96 California Energy Commission, Cosumnes Powe r Plant Project, Sacramento County, Application for Certification (01-AFC-19), Commission Decision , P800-03-013, September 2003, Condition AQ-17, pp. 27-28; cited pages attached as Exhibit 11.

97 The Avogadro Group, LLC, Source Test Report, 2007 Emission Compliance Tests, SFA Cosumnes Power Plant, Herald, California, March 16, 2007, pp. 4 and 11; document without appendices
attached as Exhibit 12.

98 California Energy Commission, In the Matter of: Los Medanos En ergy Center, Order No. 07-0523- 4, Order Approving a Petition to Lower the Annu al PM10 Emissions Limit for the Facility, Docket No. 98-AFC-1C; attached as Exhibit 13.July 7, 2008 Page 28

1994-034a These examples and others given in T able A-1 for similar turbines, including other GE Frame 7FA turbines, demonstrate that the proposed PM10 (as a surrogate for PM2.5) limits of 12.0 lb/hr without and 18.0 lb/hr with duct burners firing are
not BACT for the CTGs. As shown for th e CO BACT determination, the Applicant and the EPA should have collected and evaluated test data reported to the EPA under various regulatory programs, discussed technology performance and guarantees with vendors, and then ma de an engineering judgment based on physical and chemical principles using this data as to what limits are “achievable” for the Project to fulfill the technology-forci ng nature of BACT. The failure to fully employ the top-down BACT procedures rend ered the entire analysis flawed.

4. Demonstrated In Practice Is the Wrong Standard for Emission Control Technologies

The Statement of Basis states without further discussion that no add-on particulate emission controls have been demonstrated in practice. Demonstrated in practice is the LAER standard and does not apply to a BACT analysis. A BACT technology need only be achievable.

The NSR Manual sets out a process to determine the technical feasibility of a control technology that has not been installe d and operated successfully on the type of source under review. NSR Manual, Sec. IV.B. If a technology is “available” and “applicable” it qualifies as a BACT technology that must be included in Step 2 of the top down process. A technology is availabl e if it can be obtained by the applicant through commercial channels or is othe rwise available within the common sense meaning of the term. An available technology is “applicable” if it can reasonably be installed and operated on the source type under consideration. A technology that is available and applicable is technically feasible.

There are a number of technologies that meet these criteria that should have been evaluated and required as BACT for PM 10/PM2.5. These include fabric filter baghouses, Pall filters, wet electrostati c precipitators (“Wet ESP” or “WESP”), 99

99 Candidate Stationary and Area Control Measures, Chicago PM2.5 Workshop, June 21, 2007, Tim Smith, USEPA at slide 15 (recognizing Wet ESP’ s as “innovative PM2.5 controls)”; available at http://earth1.epa.gov/ttn/naaqs/pm/presents/contr ol_measures_stationary_and_area-tim_smith.ppt

.
See also Evaluation of Potential PM2.5 Reductions by Improving Performance of Control Devices: Conclusions and Recommendations, Prepared for: U.S. Environmental Protection Agency by E.H.July 7, 2008 Page 29

1994-034a advanced hybrid particulate collectors, 100 removal of sulfur from the natural gas feed, and use of an ammonia slip cleanup ca talyst. Wet electrostatic precipitators, for example, are widely used in many indu stries and many more are considering the WESP as the maximum achievable control technology (MACT).” The Completeness
Determination must be revoked and the B ACT analysis for PM2.5 redone to cure this serious deficiency.

5. Proposed Test Methods to De termine Compliance Require Lowering the PM and PM10 (as a Surrogate for PM2.5)
BACT Limits

The proposed PSD Permit requires dete rmination of compliance with the PM and PM10 (as a surrogate for PM2.5) perm it limits by measuring PM and PM10 emissions using EPA’s Reference Methods 5 and 202. In lieu of Method 202, the proposed PSD Permit allows the use of EPA Conditional Test Methods for particulate matter, i.e. CTM-039 or CTM-040. 101 There are a number of problems with allowing the Applicant to ch oose from these te st methods.

First, EPA Conditional Test Method CTM-040 has been superseded by OTM27 on May 8, 2008. 102

, 103 Thus, the proposed PSD Pe rmit should be revised to
refer to OTM27 and its succe ssors, rather than CTM-040.

Pechan & Associates, Inc., EPA Contract No. 68-D-00-265 at 23 (September 30, 2005) (“Pechan Report”); available at http://www.epa.gov/pm/measure s/pm25_recommend_2007.pdf (describing Wet ESP as an “innovative control system” that “yield [s] higher PM2.5 emissions reductions than the methods identified to improve existing control device performance”); CIBO Industrial Emissions Control Technology II Conference, August 2 - 4, 2004 Portland, Maine at 6 (explaining that Wet ESP’s are an effective control technology for PM2.5: “There are no moving parts in a wet ESP. The [fine] particles never really reach the electrode and are constantly washed away by the water flow);”
available at http://www.cibo.org/emissions/2004/summary.pdf

.

100 Since its original development, the name of this technology has been changed to “Advanced HybridTM.” The name was trademarked by W.L. Gore and Associates, Inc. See “Demonstration of a Full-Scale Retrofit of the Advanced Hybrid Partic ulate Collector Technology,” U.S. Department of Energy (February 2007); available at http://204.154.137.14/technologies/coalpower/cctc/PPII/bibliography/d emonstration/environmental/ott er/PPA_Otter%20Tail_PPA_Final%20for%20Posting.pdf

.

101 Proposed PSD Permit, p. 10.

102 See U.S. Environmental Protection Agency, Conditional Test Methods, CTM-040: “Draft Method
for Determination of PM10/PM2.5 has been superseded by OTM027”; http://www.epa.gov/ttnemc01/ctm.html

.July 7, 2008 Page 30

1994-034a Second, the use of these test methods results in considerably different PM10
measurements for the same source. EPA Method 5 for filterable particulate matter and Method 202 for condensable particul ate matter are known to overestimate PM10 emissions from gas turbines and other fired sources. 104

, 105 Method 5 measures total particulate matter, rather than PM10, thus overestimating actual
PM10 emissions. Method 202 overestimates condensable PM10 due to the formation of artifacts in the wet imping er train, such as the oxidation of SO 2 to SO 3 . The artifact problems with Method 202 can be minimized by selecting options listed in the method, such as nitrogen purge, which is required to determine compliance for Victorville II. 106

, 107

, 108 To address these arti fact problems, the U.S. EPA has developed alternative test meth od CTM-039 for total PM10, which employs
a dilution tunnel method and measures both total PM10 and PM2.5, and is currently developing an alternate for Method 202. 109

Most stack tests at other facilities in the past used EPA Method 5 and 202 without the nitrogen purge. 110 Thus, the resulting measured emissions are artificially high and BACT determinations made using this data report emission limits are artificially high. If these fac ilities were stack-tested with EPA Method 202 using a nitrogen purge or with CTM- 039, lower PM10 emissions rates would be
measured. These lower PM10 emissions sh ould result in lower BACT emission limits. Therefore, the proposed PSD Permit should have established separate permit limits for PM10 depending on the test method used to determine compliance.

103 U.S. Environmental Protection Agency, Determining PM10 and PM2.5 Emissions from

Stationary Sources (Constant Sampling Rate Procedure), May 8, 2008.

104 See http://www.epa.gov/ttn/emc/ methods/method202.html

.

105 See , for example, G.C. England, Development of Fine Particulate Emission Factors and Speciation Profiles for Oil and Gas-fired Combustion Systems, Technical Memorandum: Conceptual Model of Sources of Variability in Combustion Turbine PM10 Emissions Data, March, 2004.

106 See http://www.epa.gov/ttn/emc/ methods/method202.html

.

107 U.S. Environmental Protection Agency, Conditional Test Method (CTM) 039, Measurement of PM2.5 and PM10 Emissions by Dilution Sampling, (Constant Sampling Rate Procedures), CTM-039 (04_Rev 2), July 2004.

108 Proposed PSD Permit, Condition H.d.iv.a., p. 9.

109 See http://www.epa.gov/ttn/emc/ methods/method202.html

110 See attached Table A-1 and Exhibits 6 and 13.July 7, 2008 Page 31

1994-034a In addition to the comments on th e proposed PM10 BACT limits above, the Agency must revise its BACT determination to address the lower emission rates that would be achieved when using Method 5 with nitrogen purge or CTM-039.

E. BACT Determinations for Auxiliary Boiler, Auxiliary, Heater, Emergency Engine, and Firewater Pump Are Flawed

Most of the Applicant’s analyses for th e auxiliary boiler, the heat transfer fluid (“HTF”) heater, the emergency diesel engine, and the firewater pump engine suffer from the same problems as the CO and PM and PM10 BACT analyses for the turbines, i.e. the failure to follow a top-down BACT procedure, resulting in failure to select proper BACT levels. With the ex ception of the CO BACT determination for the auxiliary boiler and auxiliary heater, the Agency’s and the Applicant’s “BACT analyses” consist of one paragraph per unit with no further support for the
conclusions in the docket.

The EPA must revise the PM and PM10 (as a Surrogate for PM2.5) BACT Determination for CTGs and recirculate the analysis for public comment.

VI. THE PROPOSED PSD PERMIT FAILS TO INCLUDE A PERMIT
LIMIT FOR AMMONIA SLIP

According to the Statement of Basis, the excess ammonia emissions from the CTGs’ selective catalytic reduction (“S CR”) system, the so-called ammonia slip, would be limited to 5 ppmvd. 111 Yet the proposed PSD Permit did not contain any restrictions on the ammonia slip from the SCR. Because ammonia is a precursor to PM2.5 particulate matter emissions, the pr oposed PSD Permit must be revised to provide for monitoring and record keeping of the ammonia slip.

VII. THE PROPOSED PSD PERMIT LIMITS ARE NOT ENFORCEABLE

The proposed permit limits must be enforceable as a practical matter to qualify as legitimate restrictions on em issions. Practical enforceability means the source and/or enforcement authority must be able to show continual compliance (or

111 Statement of Basis, p. 14.July 7, 2008 Page 32

1994-034a noncompliance) with each limitation or requirement. 112 The proposed PM/PM10 limits are not practically enforceable beca use the proposed PSD Permit contains inadequate monitoring requirements.

The EPA has substantial guidance on effectively limiting a source’s potential to emit through enforceable permit conditions. Practical enforceability means the
source must be able to show continuous compliance with each limitation or requirement. 113 Adequate testing, monitoring, and record-keeping must be included in the permit. 114 The permit conditions in the proposed PSD Permit provide no assurance that the proposed limits are enforceable as a practical matter. 115

The NSR Manual includes a chapter on “Effective Permit Writing.” This chapter explains that emission and operat ional limits “must be clearly expressed, easily measurable, and allow no subjectivity ... Such limits should be of a short term nature, continuous and enforceable.” 116 In addition, an NSR Manual appendix further clarifies the meaning of enforceability:

Compliance with any limitation must be able to be established at any given time. When drafting permit limitations, the writer must always ensure that restrictions are written in such a manner that an inspector could verify instantly whether the source is or was complying with the permit conditions. Therefore, short-term averaging ti mes on limitations are essential.

Emission limits should reflect operat ion of the control equipment, be shortterm, and, where feasible, the permit should require a continuous emissions monitor. Blanket emissions limits alone ( e.g. , tons/yr, lb/hr) are virtually impossible to verify or enforce, and are therefore not enforceable as a practical matter.

112 See

, U.S. v. Louisiana-Pacific Corp . 682 F.Supp. 1122 (D. Colorado 1988).

113 See

, e.g. , “Guidance on Limiting Potential to Emit in New Source Permitting,” from Terrell F. Hunt, Associate Enforcement Counsel, OECA, and Jo hn Seitz, Director, OAQPS, to EPA Regional Offices, June 13, 1989, attached as Exhibit 14.

114 NSR Manual, pp. A.5-A.6; see Exhibit 1.

115 In these comments, the terms “enforceable” and “enforceable as a practical matter” are used interchangeably.

116 NSR Manual, p. H.5; see Exhibit 1.July 7, 2008 Page 33

1994-034a When permits contain production or oper ational limits, they must also have requirements that allow a permitting ag ency to verify a source’s compliance
with its limits. These additional cond itions dictate enforceability and usually take the form of recordkeeping requirements. 117

As explained below, the proposed PSD Permit is not enforceable because it failed to specify monitoring requirements and did not contain adequate monitoring or record keeping to assure continuous co mpliance. Some of the limits are also not enforceable because they are based on long averaging periods and/or do not include both an instantaneous limit and an emissions cap.

A. The Testing for PM and PM10 Emission Limits for CTGs in the Proposed Permit Is Not Adequate to Assure Continuous Compliance

The proposed PSD Permit limits PM and PM10 (as a surrogate for PM2.5)
emissions from the CTGs to 12.0 lb/hr when the duct burners are off and 18.0 lb/hr
when the duct burners are fired based on a 12-month rolling average to be verified with annual performance testing (stack test) and monthly natural gas fuel testing. 118 This condition as written cannot ensure continual compliance with the permit limits. According to the NSR Manua l, “BACT emission limits or conditions must be met on a continual basis at all levels of operation (e.g

. , limits written in pounds/MMBtu or percent reduction achiev ed), demonstrate protection of short term ambient standards (limits written in pounds/hour) and be enforceable as a practical matter (contain appropriate av eraging times, compliance verification procedures and recordkeeping requirements).” 119

A stack test normally lasts only a few hours (3 to 6 hours) and is conducted under ideal, prearranged conditions. Staged annual or other periodic testing is not indicative of emissions during routine op eration or startups and shutdowns on the other 364 days of the year, or 8,750-plus hour s. One 3-hour test per year over a 50- year facility life at 85% capacity amounts to testing only about 0.04% of the operating hours. Thus a stack test is not adequate to demonstrate continuous compliance.

117 Ibid , pp. c.3–c.5.

118 Proposed PSD Permit, Conditions IX .C.1, IX.H.1.a.i, and IX.H.1.d.iv.

119 NSR Manual, p. B.56; see Exhibit 1.July 7, 2008 Page 34

1994-034a Further, annual stack testing does no t capture spikes caused by normal process operations. It is well known th at “[m]anual stack tests are generallyperformed under optimum operating conditions, and as such, do not reflect the fulltime emission conditions from a source.” 120 A widely-used handbook on Continuous Emissions Monitoring (“CEMs”) notes, with respect to PM 10 source tests, that: “Due to the planning and preparations necessar y for these manual methods, the source is usually notified prior to the actual testing. This lead time allows the source to optimize both operations and control equipment performance in order to pass the
tests.” 121

An annual stack test does not provide any method to assure that the BACT
limits for PM and PM10 are met on a “conti nual basis.” The Permit must be revised to include an instantaneous permit limit in parts per million (“ppm”) and
installation of a CEMS for PM and PM10 in the stack to address those periods when direct stack testing is not conducted. Annual and quarterly stack testing of the CEMS should be performed to demonstrate its performance.

As discussed, an annual stack test does not provide any method to assure
that the BACT limits for PM and PM10 are met on a “continual basis.” The Permit
should be revised to include an instan taneous permit limit (in, for example, lb/MMBtu) and installation of a CEMS fo r PM and PM10 in the stack to address those periods when direct stack testing is not conducted. Annual and quarterly stack testing of the CEMS should be pe rformed to demonstrate its performance.

B. The Proposed Permit Failed to Require Recordkeeping for Hours of Operation for Duct Burners

The proposed PSD Permit restricted the combined hours of operation for both duct burners to 2,000 hours per year pe r 12-month rolling average in Condition
C.2. 122 Yet, the proposed PSD Permit failed to require any recordkeeping to ensure that the 2,000-hour limit for operation of both duct burners is not exceeded. The Proposed Permit must be revised to incl ude a requirement for record keeping for operations of the two duct burners to be submitted annually to EPA.

120 40 Fed. Reg. 46,241 (Oct. 6, 1975).

121 James A. Jahnke, Continuous Emission Monitoring, 2 nd Ed., John Wiley & Sons, Inc., New York, 2000, at p. 241.

122 Proposed PSD Permit, p. 5.July 7, 2008 Page 35

1994-034a C. The Proposed Permit Contained Insufficient Monitoring for Cooling Tower Emissions

The proposed PSD Permit limited cooling tower PM emissions to 1.6 lb/hr
based on a 0.0005% drift rate with a ma ximum circulation rate of 130,000 gallons per minute and a maximum total dissolved solids (“TDS”) content of 5,000 ppm. 123 The proposed PSD Permit required an a nnual source test for cooling tower PM
emissions. 124 To demonstrate continual complia nce with the PM permit limit, the proposed PSD Permit required calculation of the mass emissions rate based on the TDS content determined by weekly testing of the blow-down water quality and the permitted circulation rate. 125 The proposed PSD Permit further required that a maintenance procedure be established that shows how often and which procedures will be used to guarantee the integrity of the drift eliminators to ensure that TDS limits are not exceeded and to ensure compliance with recirculation rates. 126 These requirements are insufficient to ensure continuous compliance with the proposed PM permit limit.

The EPA must specify the proposed ma intenance procedure for establishing the integrity of the drift eliminators in a plan subject to public review, as part of the permitting process and must require record keeping to assure that the procedure is followed. To ensure continuous complianc e with the proposed PM permit limit of 1.6 lb/hr, it is essential to continuously monitor the cooling tower circulation rate and TDS in the circulating water, and to require periodic testing of PM emissions in the cooling tower drift rate.

D. The Proposed Permit Contained No Restrictions on Hours of Operation and No Compliance Testing for Heater, Boiler, Emergency Use Engine, or Fire Water Pump

The proposed PSD Permit required installation and maintenance of an operational non-resettable totalizing mass or volumetric flow meter in each fuel line for the heater (Unit D5) and the boiler (Unit D6). In addition, the proposed PSD Permit required installation and maintenance of an operational non-resettable

123 Proposed PSD Permit, Condition IX.F, p. 7.

124 Proposed PSD Permit, Condition, IX.H.1.v.

125 Proposed PSD Permit, Conditio n IX.H.2.a through IX.H.2.c.

126 Proposed PSD Permit, Condition IX.H.2.d.July 7, 2008 Page 36

1994-034a elapsed time meter for the heater, the boiler, the emergency use engine (Unit D7), and the firewater pump (Unit D8). 127 The proposed PSD Perm it failed to restrict the operating hours for any of these units, t hus rendering installation of the elapsed time meters meaningless.

Emission estimates for the auxiliary boiler were based on maximum operation of 500 hours per year. 128 Emission estimates for the auxiliary heater were based on maximum operation of 1,000 hours per year. 129 Emission estimates for the emergency use engine and the fi re water pump were based on maximum operation of 50 hours per year. 130 These maximum hours of operation must be written into a permit condition to ensure that actual annual emissions from the Project do not exceed permitted annual emissions.

Beyond requiring installation of the two meters, the Proposed PSD contained no monitoring or source testing requiremen ts for any of these four emissions units. Installation of fuel and elapsed time mete rs alone is insufficient to ensure that
emissions from these units would not exceed the proposed BACT limits. The proposed PSD Permit should be revised to contain a permit condition requiring at
least an initial and annual source test fo r the heater, boiler, emergency use engine, and the firewater pump.

VIII

. THE PROJECT DOES NOT COMP LY WITH THE ENDANGERED
SPECIES ACT

In addition to issuing a PSD permit for the Project, EPA was also responsible for initiating formal consultation under the Endangered Species Act with the Fish and Wildlife Service (Service) for the federa lly threatened desert tortoise. Under

127 Proposed PSD Permit, p. 12.

128 City of Victorville, Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project, April 2007, Appendix C, Docket No. EPA-R09-OAR-2008-0406-0004, Table C-5
“Emissions from Natural Gas Fired Auxiliary Boiler.”

129 City of Victorville, Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project, April 2007, Appendix C, Docket No. EPA-R09-OAR-2008-0406-0004, Table C-6
“Emissions from Natural Gas Fired HTF Heater.”

130 City of Victorville, Application for Prevention of Significant Deterioration Permit for Victorville 2 Hybrid Power Project, April 2007, Appendix C, Docket No. EPA-R09-OAR-2008-0406-0004, Table C-7 “Emissions from Emergency Diesel Generator” and Table C-8 “”Emissions from Firewater Pump Diesel Engine.”July 7, 2008 Page 37

1994-034a ESA section 7, all federal agencies must initiate consultation under section 7
whenever it undertakes an action that “may affect” a listed species or species’
critical habitat. 131 Because the Project will affect desert tortoise, the Service’s formal consultation resulted in a biologic al opinion and incidental take statement issued on January 23, 2008.

1. The Service Cannot Conclude Formal Consultation Until It Has Approved a Final Translocation Plan

The biological opinion’s incidental ta ke statement allows the City to “take” desert tortoise so long as the City co mplies with the measures described in the biological opinion. The central component of the incidental take statement is the Service’s requirement that the City provid e a translocation plan to the Service for its written approval prior to the onset of ground-disturbing activities. 132 According to the biological opinion, the City can on ly avoid unlawful take in violation of ESA section 9 if it strictly adheres to a Service-approved translocation plan. 133

Unfortunately, the section 7 consultati on process for the Project has been deeply flawed from start to finish. Firs t, the Service was asked and consented to conducting and completing the section 7 consultation process before the City even identified any proposed translocation site options, and well before the public comment period for the proposed PSD Perm it. This backward process led to the Service issuing its final biological opinion and the EPA issuing the proposed PSD Permit months before any specific translocation lands have been identified, approved and secured. In this way, EPA in its PSD permitting capacity and the Service’s biological opinion’s cannot make a finding that only lawful take of desert
tortoise will occur until the Serviced has a approved a final translocation plan. The Service unlawfully allowed the Applicant to defer a final translocation plan until it begins project construction. But the En vironmental Appeals Board has held that
ESA section 7 consultation must be concluded before issuance of the final PSD permit. 134 This action unlawfully presupposed ESA compliance.

131 50 C.F.R. § 402.14(a).

132 Biological Opinion for the Victorville 2 Hybrid Power Project, San Benardino County, California (1-8-07-F-67), p. 32 (January 23, 2008).

133 Id. at p. 33.

134 See In re: Indeck-Ellwood, LLC (Sept. 27, 2006) EAB PSD Appeal No. 03-04, p. 114; see also Center for Biological Di versity, 198 F.Supp.2d 1139, 1154-56 (D. Arizona 2002).July 7, 2008 Page 38

1994-034a 2. The Federal Agencies Are Required to Prepare NEPA Analysis
for this Act

Second, neither the Service nor EPA has performed any environmental analysis of the incidental take statement, and the decision to translocate a listed species. The federal agencies must pr epare an environmental impact statement (“EIS”) under National Environmental Policy Act (“NEPA”). The EIS must look at the final translocation plan in connection with impacts to the recipient lands, impacts to translocated and residential desert tortoise, along with impacts to species and vegetation currently inhabiting the translocation lands. Analyses of disease risk, site carrying ca pacities, food availability, an d a guarantee of long term site management, are among the considerations that must be investigated, but are just examples of impact analyses required under federal law. To date, the City has proposed federal, state and private land as potential translocation sites. It is incumbent on the federal agencies to pr operly and fully evaluate all of the environmental impacts associated with the various options under consideration prior to approving a final translocation plan under ESA section 7.

The concerns raised here are not abstrac t or insignificant. On May 13, 2008, the Fish and Wildlife Service voiced concerns regarding the various types of translocation sites the City has proposed. In effect, the Service rejected all of the City’s translocation options, requesting in stead that the City consider translocating
desert tortoise to areas of critical habi tat within desert wildlife management

areas. 135 The problem with this option is it is directly contrary to the existing desert tortoise recovery plan which does not recommend translocating tortoises into critical habitat areas. Given this contradiction, the Service acknowledged “that the existing recovery plan for the desert to rtoise recommends against translocating desert tortoise into areas that are import ant for recovery (e.g., critical habitat)”. 136 Still, according to the Service, “the City of Victorville [should] strongly consider
areas of critical habitat with desert wildlife areas as a translocation site.” 137 The Service’s May 13 letter did not explain why it was reversing longstanding translocation policy, and what effect this abo ut face may have on desert tortoise and

135 Letter to Gerardo C. Rios Chief, Air Permits Office, Re gion 9, from Carl T. Benz, Assistant Field Supervisor, Fish and Wildlife Service, p.3 (May 13, 2008).

136 Id.

137 Id.July 7, 2008 Page 39

1994-034a other environmental considerations for exis ting critical habitat sites. It appears that the service’s translocating to critica l habitat lands may be the least harmful option available. These issues must be inve stigated in an EIS subject to public and state agency notice and comment. In addi tion, the staff biologists for the Energy Commission and California Department of Fish and Game also raised concerns regarding environmental impacts associated with the Service’s biological opinion. 138

An EIS must evaluate impacts associated with all of the various translocation options the City has proposed and also incl ude a no action alternative. The City’s draft translocation plan acknowledged that an EIS would be required were the Service to approve desert tortoise translocation to BLM lands. 139 However, the draft translocation plan contains an impermissibly cramped interpretation of NEPA. In reality, an EIS is required regardless of the particular land use designation of any proposed site because th e Project is a major federal action under
NEPA. 140

IX. CONCLUSION

As shown above and in the supporting documents, the EPA issued its Completeness Determination prematurely, rendering the determination fatally deficient and thus invalid. Also, the proposed PSD Permit and the supporting
Statement of Basis must be revised to address the shortcomings described above
and in the attached documents and re-circu lated for public review. The Fish and
Wildlife Service cannot conclude its sectio n 7 consultation until the Service has

138 See California Energy Commission’s Evidentiary Hearing Transcript (April 3, 2008); see also California Energy Co mmission’s, Prehearing Conference Transcript (April 1, 2008).

139 Victorville 2 Hybrid Power Project, Final Desert Tortoise Translocation Plan, p. 44 (June 27, 2008).

140 See Ramsey v. Kantor , 96 F.3d 434 (9 th Cir. 1996).July 7, 2008 Page 40

1994-034a approved and finalized the desert tortoise translocation plan, the cornerstone of the incidental take statement. Finally, the fe deral agencies were required to prepare a
NEPA document in connection with the Services section 7 consultation and
incidental take statement.

Sincerely,

/s/

Gloria D. Smith

GDS:bh