## Technical Support Document

for the

PNM BART Revision to the New Mexico Regional Haze State

Implementation Plan and Fed eral Implementation Plan

Prepared and Reviewed by:

Michael Feldman Brian Tomasovic

April 20142 

### T ABLE OF 

### C ONTENTS

I. Relationship of this TSD to our Proposal ................................................................................... . 5

II. Background to Regional Haze and Requireme nts for Best Available Retrofit Technology ...... 5

III. Evaluation of State Submittal ............................................................................................ ..... 11 A. Provisions for stationary source emissi ons of NOx and PM: 40 CFR 51.309(d)(4)(vii) ..... 12 A.1. BART Five Factor Determinati on: 40 CFR 51.308(e)(1)(ii)(A)-(B) ........................... 12 A.1.a New Mexico’s NOx BART Analysis for the SJGS ................................................ 15 A.1.b. NMED’s NOx BART Determination: .................................................................... 26 A.1.c EPA’s Evaluation Regarding NOx BART Determination for SJGS ....................... 29 A.2. Installation of BART: 40 CFR 51.308(e)(1)(iv) – (v) ................................................... 383 

### T ABLES Table 1. SJGS Operatio nal Characteristics .................................................................................. 1 3
Table 2. New Mexico’s determination of NOx Control Effectiveness ......................................... 17
Table 3. NOx Control Effectiveness for Add itional Control Technology Alternatives ............... 17 Table 4. New Mexico’s Analysis of the Imp acts and Cost Effectiveness of NOx Control Technologies .................................................................................................................. ............... 18 Table 5. New Mexico’s Analysis of Impacts and Cost Effectiveness of the Three NOx Control Scenarios ..................................................................................................................... .................. 20 Table 6. Updated Visibili ty Modeling Scenarios ........................................................................ 22 Table 7. Key CALPUFF modeli ng options and inputs ................................................................. 23
Table 8. Modeled Emissi on Rates (lb/hr) ..................................................................................... 2 4 Table 9. Modeled Stack Parameters ............................................................................................. . 25 Table 10. Modeled Average Visibility Improvement of the 98 th Percentile Delta-dv Impacts from 2001-2003 ..................................................................................................................... ................ 25 Table 11. Baseline Visibility Results, 98 th percentile (dv) ........................................................... 31 Table 12. 4 SCR Visibility Results, 98 th percentile (dv) .............................................................. 32 Table 13. 4 SNCR Visibility Results, 98 th percentile (dv) ............................................................ 33 Table 14. State Alternative 2 SNCR/2 Shutdown Visibility Results, 98 th percentile (dv) ........... 33 Table 15. 2001-2003 average percent reduc tion in visibility impairment (98 th percentile) from the baseline to the 3 evalua ted control scenarios. ......................................................................... 34 Table 16. Average number of days impacted over 0.5 and 1.0 dv ............................................... 35
Table 17. Incremental Cost-Effectiveness ................................................................................... 3 7 Table 1. SJGS Operatio nal Characteristics .................................................................................. 1 3
Table 2. New Mexico’s determination of NOx Control Effectiveness ......................................... 17
Table 3. NOx Control Effectiveness for Add itional Control Technology Alternatives ............... 17 Table 4. New Mexico’s Analysis of the Imp acts and Cost Effectiveness of NOx Control Technologies .................................................................................................................. ............... 18 Table 5. New Mexico’s Analysis of Impacts and Cost Effectiveness of the Three NOx Control Scenarios ..................................................................................................................... .................. 20 Table 6. Updated Visibili ty Modeling Scenarios ........................................................................ 22 Table 7. Key CALPUFF modeli ng options and inputs ................................................................. 23
Table 8. Modeled Emissi on Rates (lb/hr) ..................................................................................... 2 4 Table 9. Modeled Stack Parameters ............................................................................................. . 254 Table 10. Modeled Average Visibility Improvement of the 98 th Percentile Delta-dv Impacts from 2001-2003 ..................................................................................................................... ................ 25 Table 11. Baseline Visibility Results, 98 th percentile (dv) ........................................................... 31 Table 12. 4 SCR Visibility Results, 98 th percentile (dv) .............................................................. 32 Table 13. 4 SNCR Visibility Results, 98 th percentile (dv) ............................................................ 33 Table 14. State Alternative 2 SNCR/2 Shutdown Visibility Results, 98 th percentile (dv) ........... 33 Table 15. 2001-2003 average percent reduc tion in visibility impairment (98 th percentile) from the baseline to the 3 evalua ted control scenarios. ......................................................................... 34 Table 16. Average number of days impacted over 0.5 and 1.0 dv ............................................... 35
Table 17. Incremental Cost-Effectiveness ................................................................................... 3 7



### F IGURES Figure 1 - Map of Class I Areas ............................................................................................... ....... 6 Figure 2 - Location of the Class I Areas in New Mexico ............................................................... 7 Figure 3 - Map of Regional Planni ng Organization Boundaries .................................................... 8 Figure 4. Class I areas within 300km of the San Juan Generating Station ................................... 22 Figure 5. Comparison of Visibility Improvement of Alternatives at San Juan Generating Station

............................................................................................................................... ........................ 26 Figure 6. Visibility Impact Results (Figure 7-2 of 2013 PNM Report) ........................................ 345 New Mexico Regional Haze Technical Support Document (TSD)

I. Relationship of this TSD to our Proposal

The Environmental Protection Agency (EPA) is proposing to approve revisions to the New Mexico Regional Haze State Im plementation Plan that address the Best Available Retrofit Technology (BART) requirement for oxides of ni trogen (NOx) for the Public Service of New Mexico (PNM) San Juan Generating Station (SJG S) in San Juan County, New Mexico and the New Mexico Visibility Transport SIP that address impacts of emissions from SJGS, as required by the Federal Clean Air Act (CAA) mandate to ensure that emissions from sources in New Mexico do not interfere with programs in other stat es to protect visibility . In conjunction with these proposed approvals, we propose to withdraw the federal implementation plan (FIP) that addresses the NOx BART and visibility transport requirements for the SJGS.

Pursuant to 40 CFR 51.309(d)(4)(vii), a regional haze SIP submitted under the 309 program to address SO2 emissions must contain any necessary long-term strategies and BART requirements for PM and NOx. These BART determinations must be submitted pursuant to 40 CFR 51.308(e).

This TSD is not meant to be a complete rationale for the proposal. It merely provides additional information for some of the technical aspects of the basis for this proposal when needed. In some of the non-technical areas, the Fe deral Register notice provides more detail than does this TSD. Also, this TSD evaluates the requ irements of section 51.308(e) in the order in which they appear in that regulation, wher eas our Federal Regist er notice groups the requirements into related areas so the concepts can be understood more easil y. In this regard, the TSD can serve as a checklist of whether the requi rements have been addressed. Lastly, the TSD attempts to refer the reader to the specific portions of the 2013 New Mexico RH SIP submittal that we relied upon for our analysis of partic ular portions of secti on 51.309(d)(4)(vii).

This document often uses language such as, "we find ” or other similar phrases that on the surface would suggest a final dete rmination has been made. Howe ver, all aspects of the TSD should be considered to be pa rt of our proposal and are subj ect to change based on comments and other information received during the public comment period.

II. Background to Regional Haze and Requiremen ts for Best Available Retrofit Technology

In Section 169A of the 1977 Amendments to the Clean Air Act (CAA), Congress set forth a program for protecting visibility in Fede ral Class I areas which calls for the “prevention6 of any future, and the remedying of any existing, impairment of vi sibility in mandatory Federal Class I areas which impairment results from manmade air pollution.” Congress adopted the visibility provisions to protec t visibility in 156 Federal Cla ss I areas, which include certain national parks, memorial parks, and wilderness areas over a certain size, and all international parks. These areas are defined at 40 CFR 81.400, are listed by State at 40 CFR 81.401-81.437, and are depicted in Figure 1, with the Class I ar eas in New Mexico depicted in Figure 2. Figure 4, later in this TSD, shows the Cla ss I areas within 300 km of PNM’s San Juan Generating Station.

. Figure 1 - Map of Class I Areas7 Figure 2 - Location of the Class I Areas in New Mexico

On December 2, 1980, we promulgated regulati ons to address visibility impairment that is “reasonably attributable ” to a single source or small group of sources. (45 FR 80084) These regulations represented the first phase in addre ssing visibility impairment and deferred action on regional haze that emanates from a variety of sources until monitoring, modeling and scientific knowledge about the relationships between polluta nts and visibility impairment improved.

In the 1990 Amendments to the CAA, Congre ss added Section 169B and called on us to issue Regional Haze rules. The RH rule that we promulgated on July 1, 1999 (64 FR 35713) revised the existing visibility regulations to integrate provisions addressing regional haze visibility impairment and establish a comprehensive visibility protection program for Federal Class I areas. These regulations represented the se cond phase in addressing visibility impairment. States were required to submit st ate implementation plans (SIPs) to us that set out each state’s plan for complying with the RH Rule, including consultation and coordination with other states and with Federal Land Managers (F LMs). States were required to submit a Regional Haze SIP to us within three years after the date of desi gnation of areas under th e National Ambient Air Quality Standard (NAAQS) for fine particulate matter (PM 2.5 ). We promulgated PM 2.58 designations on December 17, 2004, and thus, regiona l haze SIPs were to be submitted to us by December 17, 2007, which is also sp ecified at 40 CFR 51.308(b).

The RH rule addressed the combined visibility effects of various pollution sources over a wide geographic region. Conse quently, all 50 states, including those without Class I areas, Washington, D.C., and the Virgin Islands, were required to submit Regional Haze SIPs (40 CFR 51.300(b)(3)). We designated five Regional Planni ng Organizations (RPOs) to assist with the coordination and cooperation needed to address the visibility i ssue, as shown by Figure 3.

Figure 3 - Map of Regional Plan ning Organization Boundaries

New Mexico, through the NMED joined st ate air agencies from Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montan a, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming in fo rming the WRAP, in 1997 to implement the Grand Canyon Visibility Transport Co mmission’s recommendations to EPA 1 . WRAP also includes federally recognized Indian tribes located within the geogr aphic boundaries of its

1 Recommendations for Improving Western Vistas, Report of the Grand Canyon Visibility Transport Commission to the EPA, June 1996. Available at: http://www.wrapair.org/WRAP/reports/GCVTCFinal.PDF9 member states. The State of New Mexico and its agency, the NMED, chose to participate in the WRAP to develop the technical analyses needed to fulfill the requirements of the RH Rule.

Regional haze SIPs must assure reasonabl e progress towards the national goal of achieving natural visibility conditions in Cla ss I areas. Section 169A of the CAA and our implementing regulations require states to esta blish long-term strategi es for making reasonable progress toward meeting this goal. SIPs must also give specific attention to certain stationary sources that were in existence on August 7, 1977, but were not in operation before August 7, 1962, and require these sources, where appropriate, to install BART controls for the purpose of eliminating or reducing visibility impairment.

Pursuant to 40 CFR 51.309(d)(4)(vii), a regional haze SIP submitted under the 309 program must contain any necessa ry long term strategies and BART requirements for PM and NOx These BART provisions must be submitted pursuant to 40 CFR 51.308(e). We promulgated regulations addressing RH in 1999, 64 FR 35714 (July 1, 1999), codified at 40 CFR part 51, subpart P. 2 These regulations require all states to submit implementation plans that, among other measures, contain either emission limits repr esenting BART for certain sources constructed between 1962 and 1977, or alternativ e measures that provide for gr eater reasonable progress than BART. 40 CFR 51.308(e). States are directed to conduct BART determinations for such sources that may be anticipated to cause or contribute to any visibility impairment in a Class I area. Rather than requiring source-specific BART contro ls, states also have the flexibility under 40 CFR 51.308(e)(2) to adopt an emissi ons trading program or other a lternative program as long as the alternative program provides greater reason able progress towards improving visibility than BART. The discussion below specifically applies to regional haze SIPs that opt to require BART on sources subject to the BART requirements, rather than satisfying the requirements for alternative measures that would be evaluated under 40 CFR 51.308(e)(2).

On July 6, 2005, the EPA published the Guidelines for BART Determinations Under the Regional Haze Rule at Appendix Y to 40 CFR Part 51 (her einafter referred to as the “BART Guidelines”) to assist states in determining whic h of their sources should be subject to the BART requirements and the appropriate emission lim its for each applicable source. The BART Guidelines are not mandatory for all sources. Ho wever, in making a BART determination for a fossil fuel-fired electric generati ng plant (EGU) with a total gene rating capacity in excess of 750 megawatts, a state must use the approach set fo rth in the BART Guidelines. See CAA section 169A(b)(2) A state is encouraged, but not require d, to follow the BART Guidelines in making BART determinations for other types of sources.

2 In American Corn Growers Ass’n v. EPA , 291 F.3d 1 (D.C. Cir. 2002), the U.S Court of Appeals for the District of Columbia Circuit issued a ruling v acating and remanding the BART provisions of the regional haze rule. In 2005, we issued BART guidelines to address the court’s ruling in that case. See 70 FR 39104 (July 6, 2005).10 The process of establishing BART emission limitations can be logically broken down into three steps: first, states identify those sources which meet the definition of ‘‘BART-eligible source’’ set forth in 40 CFR 51.301 3 ; second, states determine whether such sources ‘‘emit[] any air pollutant which may reasonably be anticipated to cause or contribute to any impairment of visibility in any such area’’ (a source that fits th is description is “subject to BART,”) and; third, for each source subject to BART, states identify th e appropriate type and th e level of control for reducing emissions.

Under the BART Guidelines, states may select a visibility impact threshold, measured in deciviews (dv), below which a BART-eligible source would not be e xpected to cause or contribute to visibility impairment in any Class I area. The state must document this threshold in the SIP and state the basis for its selection of that value. Any sour ce with visibility impacts that model above the threshold value would be subjec t to a BART determination review. The BART Guidelines acknowledge varying circumstances a ffecting different Class I areas. States should consider the number of emission sources affecting the Class I areas at issue and the magnitude of the individual sources’ impacts. Any visibility impact threshol d set by the state should not be higher than 0.5 dv. See 40 CFR pt . 51, app. Y, section III.A.1.

The BART Guidelines establish the dv as the principal metric for measuring visibility. Id

. This visibility metric expresse s uniform changes in visibility impairment in terms of common increments across the entire range of visibili ty conditions, from pris tine to extremely hazy conditions. Visibility is someti mes expressed in terms of the vi sual range which is the greatest distance, in kilometers or miles, at which a dark object can just be dis tinguished against the sky. The dv is a more useful measure for tracking progress in improving visibility because each dv change is an equal incremental change in visibility perceived by the human eye.

In their SIPs, states must identify subj ect-to-BART sources an d document their BART control determination analyses In making BART determinations, section 169A(g)(2) of the CAA requires that states consider the following factor s: (1) the costs of compliance; (2) the energy and non-air quality environmental impacts of co mpliance; (3) any existing pollution control technology in use at the source; (4 ) the remaining useful life of th e source; and (5) the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology. States are free to determ ine the weight and significance to be assigned to each factor.

3 BART-eligible sources are those sources that have the potential to emit 250 tons or more of a visibility-impairing air pollutant, were put in place between August 7, 1962 and A ugust 7, 1977, and whose oper ations fall within one or more of 26 specifically listed source categories.11 A regional haze SIP must include source-sp ecific BART emission limits and compliance schedules for each source subject to BART. Once a state has made its BART determination, the BART controls must be installed and operated as expeditiously as practi cable, but no later than five years after the date of the EPA approval of the regional haze SIP. CAA section 169(g)(4); 40 CFR 51.308(e)(1)(iv). In addition to what is required by the RH R, general SIP requirements mandate that the SIP must also include all regulatory requirements related to monitoring, recordkeeping, and reporting for th e BART controls on the source. See CAA section 110(a).

III. Evaluation of State Submittal

In our past evaluations of New Mexico RH SIP submittals, as well as the RH SIP revision under review in the proposal associated with this TSD, we reviewed all the parts of the document, including the body of the SIP revision itself, and the submitted appendix D, and all other submitted documents. In addition, our evaluation drawsupon the following documents that may not otherwise be specifically discussed in our TSD and/or the Federal Register publication(s) of our proposal:

1. 40 CFR Part 51. 2. Appendix V to 40 CFR Part 51. 3. The “BART Guidelines ” in Appendix Y to Part 51—Guidelines for BART Determinations Under the Regional Haze Rule, 70 FR 39104, July 6, 2005. 4. Guidance for Tracking Progress Under the Regional Haze Rule, EPA-454/B-03-004, September, 2003. 5. Guidance for Demonstrating Atta inment of Air Quality Goals for PM 2.5 and Regional Haze, January 2, 2001. 6. Guidance for Estimating Natural Visibility Conditions Under the Regional Haze Rule, EPA- 454/B-03-005, September 2003. 7. The “Baseline Memo,” which is entitled, “2002 Base Year Emi ssion Inventory SIP Planning: 8-Hour Ozone, PM2.5 and Re gional Haze Programs, da ted 11/18/2002, from Lydia Wegman to the Regional Air Directors. ” 8. Guidance for Setting Reasona ble Progress Goals Under the Re gional Haze Program, dated June 1, 2007. 9. Visibility Monitoring Guid ance, EPA-454/R-99-003, June 1999. 10. Emissions Inventory Guidance for Implementation of Ozone and Particulate Matter National Ambient Air Quality Standards (NAA QS) and Regional Haze Regulations, EPA-454/R-05- 001, dated August, 2005. 11. Interim Air Quality Policy on Wildland and Prescribed Fires, April 23, 1998.12 A. Provisions for stationary source emis sions of NOx and PM: 40 CFR 51.309(d)(4)(vii)

Pursuant to 40 CFR 51.309(d)(4)(vii), a re gional haze SIP submitted under the 309 SIP program must contain any necessa ry long term strategies and BART requirements for PM and NOx. These BART provisions must be submitte d pursuant to 40 CFR 51.308(e).New Mexico must submit a SIP containing emission limitations representing Best Available Retrofit Technology (BART) and schedules for compliance with BART for each BART eligible source that may reasonably be anticipated to cause or contribute to any impairment of visibility in any mandatory Class I Federal area, unless it demonstr ates that an emissions trading program or other alternative will achieve great er reasonable progress toward na tural visibility conditions.

Section 40 CFR 51.308(e)(2) – (3 ) concerning the use of a trading program or other alternative to BART to satisfy the requirements of BART for PM and NOx are not applicable to the NM RH SIP revision evaluated here. Section 309 provides an alternative method of satisfying the Section 308 SO 2 BART requirements with emission milestones and a backstop trading program (40 CFR 51.309(d)(4)). The milestones must be shown to provide for greater reasonable progress than would be achieved by application of BART pursuant to 40 CFR 51.308(e)(2).

In our prior review and action on the New Me xico 2011 RH SIP revision, we agreed with New Mexico’s identification of sources that ar e BART-eligible and subject to BART, including Units 1,2,3 and 4 of the SJGS. 77 FR 70693 (Novemb er 27, 2012). We approved the State’s PM BART determinations and emission limits for these units, as well as the State’s participation in the SO 2 emission reduction milestones and backst op trading program, while taking no action on the State’s NOx BART determinations and emission limits for these units. The State’s conclusions were also consistent with the determinations that the EPA made in the course of promulgating its FIP for the SJGS. In that fina l action we found that units 1, 2, 3, and 4 of the SJGS comprise the only New Mexico source subject to BART. 77 FR 70693 (November 27, 2012).The focus of our current review is on th e third component—the determination of NOx BART controls for these units. Specifically, this proposal addresses New Mexico’s duty to address the following sections of the RH rule:

• 51.308(e)(1)(ii)(A) - BART five factor determination • 51.308(e)(1)(ii)(B) - BART for larger fossil fuel power plants • 51.308(e)(1)(iv)-(v) – in stallation of BART

A.1. BART Five Factor Determinat ion: 40 CFR 51.308(e)(1)(ii)(A)-(B)13 NMED must make a determination of BA RT for each BART-eligible source in New Mexico that emits any air pollutant which may r easonably be anticipated to cause or contribute to any impairment of visibility in any mandato ry Class I Federal area. All such sources are subject to BART. The determination of BART must be based on an analysis of the best system of continuous emission control technol ogy available and associated emission reductions achievable for each BART-eligible source that is subject to BART within the State. In this analysis, New Mexico must take into consideration the tec hnology available, the costs of compliance, the energy and non-air quality environmental impa cts of compliance, any pollution control equipment in use at the source, the remaining useful life of the sour ce, and the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology.

The third step of a BART evaluation is to pe rform the BART analysis. The BART Guidelines 4 describe the BART analysis as consis ting of the following five basic steps: • Step 1: Identify All Availabl e Retrofit Control Technologies, • Step 2: Eliminate Techni cally Infeasible Options, • Step 3: Evaluate Control Effectiven ess of Remaining Control Technologies, • Step 4: Evaluate Impacts and Document the Results, and • Step 5: Evaluate Visibility Impacts.

The SJGS consists of four coal-fired genera ting units and associated support facilities. Each coal-fired unit burns pulverized coal and N o. 2 diesel oil (for star tup) in a boiler, and produces high-pressure steam that powers a steam turbine coupled with an electric generator. Electric power produced by the units is supplied to the electric power grid for sale. Coal for the units is supplied by the adjacent San Juan Mine . Units 1 and 2 have a unit capacity of 350 and 360 MW, respectively. Units 3 and 4 each have a unit capacity of 544 MW. The BART determination for SJGS, as a fossil-fuel fire d power plant having a to tal generating capacity greater than 750 megawatts, must be made pursu ant to the guidelines in appendix Y of 40 CFR Part 51 (Guidelines for BART Determinations under the Regional Haze Rule)

Table 1. SJGS Opera tional Characteristics Unit #1 Unit #2 Unit #3 Unit #4 Unit Rating, MW (gross) 360 350 544 544

+Boiler Heat Input, MBtu/hr 3,707 3,688 5,758 5,649

Type of Boiler/Manufacturer Wall-fired/ Foster Wheeler Wall-fired/ Foster Wheeler Opposed Wallfired/Babcock & Wilcox Opposed Wallfired/Babcock & Wilcox

4 70 FR 39164.14 Existing emissions contro ls (post-consent decree): NOx LNB/OFA/NN for all units SO2 Wet FGD for all units PM PJFF for all units

On March 10, 2005, PNM entered into a cons ent decree with the Grand Canyon Trust, Sierra Club, and New Mexico Environmental Depa rtment (NMED), resulti ng in the installation of low-NOx burners (LNB) with overfire air (OFA ) ports and a neural network (NN) system to reduce NOx emissions, and a full-si zed pulse jet fabric filter (P JFF) to reduce PM emissions. 5 The wet limestone scrubber was modified to e liminate flue gas bypass, and dibasic acid (DBA) was added to the scrubber process to improve SO 2 removal. Installation of these controls on all four units was completed in the spring of 2009. Prior to installa tion of controls to meet the consent decree, all SGJS units we re equipped with hot-side electro static precipitators (ESP) for PM control, and wet limestone flue gas desulfur ization (FGD) systems for SO2 control. SJGS Units1, 3, and 4 also had LNB controls for NOx pr ior to the installation of controls for the consent decree.

In June 2007, the operator of the SJGS, Pub lic Service Company of New Mexico (PNM) submitted its NOx BART evaluation to NMED. That analysis was added to and revised multiple times to incorporate new information or in response to comments/requests from NMED 6 for additional visibility modeling analyses, contro l technology considerations, and cost analyses. 7 PNM’s April 2013 BART Analysis addendum 8 (referred to hereafter as the “2013 PNM report”) is an addendum and update to th e 2007 evaluation and subsequent re visions. This analysis adds to and updates the previous analyses and consid ers a new scenario not previously evaluated.

The 2013 RH SIP revision under review in this action builds upon the 2011 RH SIP revision and its supporting BART analyses, and examines a new control scenario including unit shutdowns not previously analyze d. For purposes of reviewing the projected visibility benefits and cost-effectiveness, this scenario, called the State Alternative is co mpared to the control scenario in the FIP (SCR on all four units) and the State’s 2011 NOx BART determination (selective non-catalytic reduction (SNCR) on all four units). The State Alternative differs from the NOX BART emission limit of 0.05 lb/MMBtu in the FIP (which can be met by the installation of SCR on all four units) and the State’s earlier submitted, superseded (if the 2013

5 Consent Decree in The Grand Canyon Trust and Sier ra Club, Plaintiffs, The Stat e of New Mexico, PlaintiffIntervenor, v. Public Service Company of New Mexico, Defendant, (CV 02-552 BB/ACT (ACE)), lodged in the United States District Court, District of New Mexico, on March 10, 2005, at 15-16.
6 Correspondence between PNM and NMED concerning these BART analyses is contained in NMED Exhibit 6 of the 2011 RH SIP revision.
7 PNM’s 2007 BART analysis and subsequent analyses are Exhibit 7a through 7t of the NMED’s 2011 RH SIP revision. 8 Public Service of New Mexico, Best Available Retrofit Technology Analysis, Addendum, April 1, 2013, submitted as Exhibit 6 of the 2013 RH SIP revision15 RH SIP revision is fully approved) determin ation of 0.23 lb/MMBtu (which can be met by installation of SNCR on all four units). The State Alternative contains several elements, including among other things, the installation of SNCR on Un its 1 and 4 and enforceable deadlines by which Units 2 and 3 will be permanently retired. Th e emission reductions, visibility improvements, and additional non-air quality envi ronmental benefits due to the unit shutdowns were an important consideration in New Mexico ’s selection of the St ate Alternative as NOx BART for the SJGS. More specifically, th e 2013 RH SIP revision requires the following:

 Fifteen (15) months after the EPA final approval of the 2013 RH SIP revision, but no earlier than January 31, 2016, PNM will co mplete installation of SNCR technology on SJGS Units 1 and 4 and meet an emi ssion limit of 0.23 lb/MMBtu on a rolling 30- day average basis; 9

 Retirement of the SJGS Units 2 and 3 by December 31, 2017;

 The PNM will commence a program of testing and evaluation, after the installation of SNCRs, to determine if additional NOX emission reductions can be achieved. The Testing Program, consisting of SNCR perfor mance testing, fuel performance testing, and long-term performance evaluation, must be completed no later than January 31, 2017. 10

In accordance with section 169A of the CAA, the RHR, and the BART Guidelines, New Mexico weighed the five statutory factors in making its NOX BART determination. New Mexico’s final evaluation is available in the revised Chapter 10 and Appendix D of the 2013 RH SIP revision. We note that the State Alternativ e also results in additional reductions in the emissions of SO 2 on Units 1 and 4. These SO 2 emission reductions occu r separately and apart from the SO 2 backstop trading program that the EPA has already approved as satisfying SO 2 BART. These SO 2 reductions will result in increased vi sibility improvement, and result in permitted emissions substantially below the level needed to prevent SO 2 emissions from New Mexico from interfering with the visibility progra ms of other States, as discussed in our review of the State’s 2013 Visibility Tr ansport SIP in the Federal Re gister notice for this action.

A.1.a New Mexico’s NOx BART Analysis for the SJGS

9 The permit conditions at A112C specify the averagin g time and calculation methodology for the enforceable emission limit for NOX on Units 1 and 4 of 0.23 lb/MMBtu on a boiler operating day basis, averaged across the two units.
10 Unless the long-term performa nce evaluation is delayed due to a delay in EPA approval or per the language in the Term Sheet at paragraph 1(d)(iv) concerning the evaluation period spanning the required number of days during both the summer and winter months.16 In promulgating our FIP, we drew heavily upon the analyses prepared by the NMED and PNM that were available at the time. While we ag reed with some conclusions presented in those analyses, we also disagreed with a number of points that are outlined in the proposed and final FIP Federal Register notices. 76 FR 491 (Ja nuary 5, 2011) and 76 FR 52388 (August 22, 2011). The BART review of the State Alternative in the 2013 RH SIP re vision examines a new control scenario, the State Alternative, and compares it to the control scenarios in the FIP and the 2011 RH SIP revision. As explained a bove, the State Alternative is a new control scenario proposed by the PNM in coordination with the State that includes the shut down of two units at the SJGS by December 31, 2017. Consequently, this control scenario is different than the control scenarios contemplated in the FIP and the 2011 RH SI P revision. Although the EPA’s regulations do not require states to consider a fuel switch or a shut down of an existing unit as part of their BART analyses, a state may include such options in its analysis where a company voluntarily offers such measures as a strategy for reducing emissions.
The SJGS currently has low-NOX burners (LNB ) with overfire air (OFA) and a neural network to reduce NOX emissions and comply with a 2005 consent decree 11 emission limit of 0.30 lb NOX/MMBtu on a daily rolling 30-day average basis. NMED performed a BART five – factor analysis for NOx. A summary of th is analysis is presented below:

State Submittal: Section 10.4, 10.5 and Appendix D

Step 1- Identify All Availabl e Retrofit Control Technologies: To address step 1 of the BART analysis, New Mexico identifie d a number of potentially avai lable NOX control technologies, including SNCR, SCR, SNCR/S CR Hybrid, Natural Gas Rebur n, Nalco Mobotec ROFA and Rotamix, NOxStar, ECOTUBE, PowerSpan ECO, Phenix Clean Combustion, and e-SCRUB. NOxNOx

Step 2- Eliminate Technically Infeasible Options : NMED determined the following potentially available NOx control technologi es are not technically feasib le: Natural Gas Reburn, NOxStar, ECOTUBE, PowerSpan ECO, Phenix Clean Com bustion, and e-SCRUB. This conclusion is consistent with our own analysis in development of the FIP. New Mexico concluded that SCR, SNCR, SNCR/SCR Hybrid, and Nalco Mobotec ROFA and Rotamix are technically feasible control options for the SJGS units.
Step 3- Evaluate Control Effectivenes s of Remaining Control Technologies: Table 2 shows the control effectiveness of each remaining contro l technology in New Mexico’s BART analysis,

11 Consent Decree in The Grand Canyon Trust and Sierra Club, Plaintiffs, The State of New Mexico, PlaintiffIntervenor, v. Public Service Company of New Mexico, Defendant, (CV 02–552BB/ACT (ACE)), lodged in the United States District Court, District of New Mexico, on March 10, 2005, at 15–16.17 based on a baseline emission rate of 0.30 lb/MMB tu. In its 2011 RH SIP revision, New Mexico revised the achievable controll ed emission rate of SNCR from its earlier analysis of 0.24 lb/MMBtu to 0.23 lb/MMBtu, based on tests an d an updated performance guarantee from the vendor. 12 New Mexico previously evaluated SCR at an emission rate of 0.07 lb/MMBtu and a control efficiency of 77%. 13 In its 2013 RH SIP revision, however, New Mexico revised its evaluation of SCR, concluding that at an em ission rate of 0.05 lb/MMBtu and a control efficiency of 83% are achievable, consistent with our own evaluation in the FIP. Table 3 summarizes the control efficiencies and emissions cont emplated in the three anal yzed scenarios.

Table 2. New Mexico’s determinatio n of NOx Control Effectiveness
Control Technology Control Efficiency (%) Controlled Emission Rate (lb/MMBtu) ROFA 13% 0.26 Rotamix (SNCR) 23% 0.23 SNCR 23% 0.23 ROFA/Rotamix 33% 0.20 SCR/SNCR Hybrid 40% 0.18 SCR 83% 0.05

Table 3. NOx Control Effectiveness for Additional Control Technology Alternatives 14
Unit 1 Unit 2 Unit 3 Unit 4 Facility 15 Total Emissions Design Basis Heat Input 3707 MMBtu/hr 3688 MMBtu/hr 5758 MMBtu/hr 5649 MMBtu/hr

lb/ MMBtu tpy lb/ MMBtu tpy lb/ MMBtu tpy lb/ MMBtu tpy tpy

Baseline 0.30 4410 0.30 4419 0.30 6431 0.30 6309 21000

SCR 0.05 690 0.05 687 0.05 1072 0.05 1052 3502 SNCR 0.23 3174 0.23 3158 0.23 4931 0.23 4837 16100 SNCR with Retired Units 0.23 3174 --- --- --- --- 0.23 4837 8011

12 Public Service Company of New Mexico, San Juan Generating Station, Revised SNCR Analysis, February 11, 2011 (2011 NM RH SIP, NMED Ex. 7t) 13 As we discuss in our FIP regarding NOx BART for the SJGS, we found that SCR is capable of achieving an emission limit of 0.05 lbs/MMBtu on each of the units of the SJGS, based on a 30 boiler operating day average. 76 FR 52388.
14 From Table 5-1 of Best Available Retrofit Technology Analysis Addendum, Public Service of New Mexico, April 1, 2013 submitted as Exhibit 6 of the 2013 RH SIP revision. 15 Calculated based on 85% annual unit capacity18 Step 4- Evaluate Impacts and Document the Results : The BART Guidelines require that the cost of compliance, energy impacts, non -air quality environmental imp acts, and remaining useful life of the facility be analyzed for each potential control technology in step 4. Table 4, which is found as Table 10 of the revised Appendix D of the 2013 RH SIP revision, summarizes the unit specific cost analysis results submitted to NM ED by PNM. The control effectiveness for SCR and SNCR in this analysis have been updated and the costs of these two options have also been revised to reflect more recent cost information submitted by PNM 16 to NMED for evaluation. The costs associated with ROFA, ROFA/Rotam ix and Rotamix are based on the 2008 vendor quotes 17 and later adjusted to 2010 dollars. 18 The cost of sorbent injection is included in the cost analysis for SCR. 19 We note that costs for the SCR a nd SNCR options are in 2013 dollars and annualized over 30 years, while all remaining c ontrol options are in 2010 dollars and annualized over 20 years. Because the rate of inflation between 2013 and 2010 was minimal (1.07 percent), the costs are comparable.

Table 4. New Mexico’s Analysis of the Imp acts and Cost Effectiveness of NOx Control Technologies

Control Technology Emission Limit lb/MMBtu NO X Emissions

(tpy) NO X Reduction

(tpy) Total Capital Investment

(TCI) (1,000$) Total Annualized Cost (TAC) (1,000$) Cost Effectiveness ($/ton) Incremental Cost Effectiveness ($/ton) Energy Impacts (1,000$) Non-Air Impacts (1,000$)

Unit 1

SCR + sorbent 0.05 690 3,450 180,862 22,165 6,425 6,749 746 NA 1

SNCR/SCR

Hybrid 0.18 2,484 1,656 110,683 16,816 10,154 35,917 706 1,762

ROFA/ Rotamix 0.20 2,760 1,380 30,790 6,902 5,001 7,982 1,413 3

Rotamix (SNCR) 0.23 3,174 966 11,822 3,597 3,723 116 51 4

SNCR 0.23 3,174 966 17,392 5,400 5,590 80 43 NA 1

ROFA 0.26 3,588 552 19,256 3,549 6,429 -- 1,363 NA 1

Consent Decree 0.30 4,140 1,254 14,580 1,422 1,134 NA NA1 NA 1

16 Best Available Retrofit Technology Analysis Addendum, Public Service of New Mexico, April 1, 2013, submitted as Exhibit 6 of the 2013 RH SIP revision
17 PNM San Juan Generating Station BART Analysis of Nalco Mobotec NOx Control Technologies, August 29, 2008. NMED Exhibit 7n of the 2011 RH SIP revision
18 PNM San Juan Generating Station BART Analysis Update, February 11, 2011. NMED exhibit 7t of the 2011 RH SIP revision 19 Table 2 was constructed by PNM to incorporate costs due to sorbent injection, as a means of SO 3 control in conjunction with SCR. This was done by PNM in response to a request by NMED. As NMED notes in its BART analysis, it understands there are S CR catalysts now on the market that are capable of a much smaller SO 2 to SO 3 conversion. Furthermore, our analysis contained in the TSD to the FIP and the FIP indicate that anticipated SO3 emissions to be much lower than estimated by PNM and fi nds that sorbent injection is not necessary. The TSD for our FIP, “Visibility Modeling for BART Determination: San Juan Generating Station, New Mexico,” and the proposed and final FIP are available in the docket to ou r FIP and also included in th e docket for this action.19 Pre-CD 0.43 5,394 NA NA NA NA NA NA NA 1
Unit 2

SCR + sorbent 0.05 687 3,433 203,360 24,562 7,157 7,755 729 NA 1

SNCR/SCR

Hybrid 0.18 2,471 1,648 115,151 17,306 10,503 37,887 346 1,762

ROFA/ Rotamix 0.20 2,746 1,373 30,790 6,902 5,027 8,024 1,413 3

Rotamix (SNCR) 0.23 3,158 961 11,822 3,597 3,742 117 51 4

SNCR 0.23 3,158 961 17,392 5,400 5,618 80 43 NA 1

ROFA 0.26 3,570 549 19,256 3,549 6,462 -- 1,363 NA 1

Consent Decree 0.30 4,119 2,060 14,126 1,378 669 NA NA 1 NA 1

Pre-CD 0.45 6,179 NA NA NA NA NA NA NA 1

Unit 3 SCR + sorbent 0.05 1,072 5,359 264,208 32,585 6,080 6,313 1,107 NA 1

SNCR/SCR

Hybrid 0.18 3,859 2,572 178,759 26,604 10,342 39,171 507 2,658

ROFA/ Rotamix 0.20 4,287 2,144 35,724 9,810 4,576 7,498 2,810 5

Rotamix (SNCR) 0.23 4,931 1,501 13,919 4,988 3,324 -378 84 5

SNCR 0.23 4,931 1,501 17,163 8,224 5,480 -578 51 NA 1

ROFA 0.26 5,574 857 22,081 5,231 6,100 -- 2,725 NA 1

Consent Decree 0.30 6,431 2,573 12,715 1,240 482 NA NA 1 NA 1

Pre-CD 0.42 9,004 NA NA NA NA NA NA NA 1
Unit 4

SCR + sorbent 0.05 1,052 5,257 235,940 29,508 5,613 5,623 1,102 NA 1

SNCR/SCR

Hybrid 0.18 3,786 2,524 171,412 25,808 10,226 38,034 507 2,658

ROFA/ Rotamix 0.20 4,206 2,103 35,724 9,810 4,664 7,643 2,810 5

Rotamix (SNCR) 0.23 4,837 1,472 13,919 4,988 3,388 -385 84 5

SNCR 0.23 4,837 1,472 17,163 8,224 5,587 -590 51 NA 1

ROFA 0.26 5,468 841 22,081 5,231 6,218 -- 2,725 NA 1

Consent Decree 0.30 6,309 2,524 12,870 1,256 498 NA NA 1 NA 1

Pre-CD 0.42 8,833 NA NA NA NA NA NA NA 1

1 PNM performed an impact analysis for thes e technologies and incorporated any monetized energy or non-air envi ronmental impacts into the cost analysis.

The 2013 RH SIP revision includes a new an alysis to inform the State’s BART determination and its weighing of the statutory factors for BART. This analysis contemplates three scenarios, SCR on all four units, SNCR on a ll four units, and the State Alternative, which includes unit shutdowns and SNCR on the remain ing operating units. Table 5 summarizes the20 cost and impact analysis of the three scenario s from Table 4. The remaining useful life of the units with installed control technologies (units not being retired) was determined to be 30 years and therefore, the statutory factor of the remain ing useful life of the source does not weigh in favor of any option over another. New Mexico estimated the cost-effectiveness of the State Alternative at $1,049/ton compared to $6,218/ton for the four SCR scenario, and $5,561/ton for the four SNCR scenario.

Table 5. New Mexico’s Analysis of Impacts and Cost Effectiveness of the Three NOx Control Scenarios

Control Scenario NOx Emission Level NOx Emissions (TPY) NOx Emission Reduction (TPY) Total Capital Investment (TCI) (1000$) Total Annualized Cost (TAC) (1000$) Cost Effectiveness
($/ton) Energy Impacts

SCR All Units (FIP)

SJGS 1 – SCR 0.05 690 3,450 180,862 22,165 6,425 746

SJGS 2 – SCR 0.05 687 3,433 180,862 24,562 7,157 729

SJGS 3 – SCR 0.05 1,072 5,359 264,208 32,585 6,080 1,107

SJGS 4 – SCR 0.05 1,052 5,258 235,940 29,508 5,613 1,102

Total 3,500 17,500 861,871 108,820 6,218 3,683

SNCR All Units (State’s 2011 BART Determination)

SJGS 1 – SNCR 0.23 3,174 966 17,392 5,400 5,590 43

SJGS 2 – SNCR 0.23 3,158 961 17,392 5,400 5,618 43

SJGS 3 – SNCR 0.23 4,931 1,501 17,163 8,224 5,480 51

SJGS 4 – SNCR 0.23 4,837 1,472 17,163 8,224 5,587 51

Total 16,100 4,900 69,111 27,248 5,561 187

SNCR Units 1&4 (State Alternative)

SJGS 1 – SNCR 0.23 3,174 966 17,392 5,400 5,590 43

SJGS 2 – retire n/a n/a 4,119 n/a n/a n/a n/a

SJGS 3 – retire n/a n/a 6,431 n/a n/a n/a n/a

SJGS 4 – SNCR 0.23 4,837 1,472 17,163 8,224 5,587 5121 Total 8,011 12,989 34,556 13,624 1,049 94

New Mexico also examined the energy and non- air quality environmental impacts of the three scenarios. Compared to current operations and the four SCR and four SNCR scenarios, the State Alternative results in:

 up to a 53% decrease in wate r usage at the facility (fro m 21,000 acre-feet to 10,161 acrefeet);

 a wastewater generation reduction of up to 50%;

 reduced energy and non-air quality environmental impacts from decreased raw material usage and resource savings, including redu ced limestone mining, diesel refining, carbon activation, and coal mining associ ated with operations at SJGS; 20 and

 50% reduction in solid waste (f rom 1.71 million tons per year to 854,130 tons per year). New Mexico determined that these energy and non-air quality environmental benefits weighed heavily in favor of the State Alterna tive over the four SCR and four SNCR scenarios.
In addition to the energy and non-air quality environmental benefits outlined above, New Mexico noted that the State Alternative will also result in a substantial decrease in PM emissions from coal processing, handling, and transporta tion, as well as reductions in greenhouse gas emissions, mercury and other hazardous air pollut ant emissions, and acid gas emissions from the facility.

Step 5- Evaluate Visibility Impacts : The final factor to consider in the BART analysis is the degree of visibility improvement anticipated to result from the BART control options. The BART guidelines recommend use of the CALPUFF ai r quality dispersion model to estimate the visibility improvements at each Class I area, typi cally within a 300 km (186 mile) radius of the source, of alternative control tec hnologies, and to compare these to each other and to the impact of the baseline, or current, source configura tion. As part of its 2011 RH SIP revision, New Mexico submitted the initial and revised visibi lity modeling performed by PNM for the SJGS that included modeled visibility im pacts at the sixteen Class I Areas within 300 km of the facility (Figure 4). For a detailed descri ption and our review of this modeling, see the Technical Support Document (TSD) that accompanied the proposed FI P (referred to as the “2011 EPA TSD”). In this earlier analysis, SCR was modeled at an emission rate of 0.07 lb/MMBtu.

20 Table 23 of Appendix D of the 2013 RH SIP revision quantifies the reduction in raw material usage.22 Figure 4. Class I areas within 300km of the San Juan Generating Station

The PNM submitted an updated visibility analysis (see Exhibit 6 of the 2013 RH SIP revision) to New Mexico for evaluation that included revi sed emission rates for SO2, and H2SO4, and a revised background ammonia con centration of 1 ppb. The backgr ound ammonia concentration of 1 ppb is consistent with the background ammoni a concentration used in our earlier modeling analysis and detailed in the 2011 EPA TSD. The SO2 emission rate for the four SCR and four SNCR control scenarios was updated to 0.15 lb/MMB tu, consistent with the EPA modeling in support of the FIP, reflective of the emission rate determined by the EPA in its August 22, 2011, final action to be necessary to satisfy the CAA’s visibility transport requirements, and set in the submitted 2011 VT SIP revision. The SO2 emission ra te for the State Alternative was updated to reflect the more stringent SO2 limit that results from implementation of the State Alternative. The H2SO4 modeled emission rates were revised to be consistent with the estimated current emission rates calculated by the EPA and detaile d in the 2011 EPA TSD. The 2013 analysis used the same modeling protocol followed by the EPA in support of the FIP and detailed in the 2011 EPA TSD. This modeling compared the thre e control scenarios mentioned above. These modeling scenarios are summarized in Table 6 below (Table 21 of Appendix D of the 2013 RH SIP revision).

Table 6. Updated Visib ility Modeling Scenarios23 Scenario Operating conditi on and emissions modeled. Baseline Units 1-4 operating only with existing air pollution control technology and new permitted SO 2 and Total Particulate Matter (TPM) emission rates of 0.15 lb/MMBtu and 0.034 lb/MMBtu, respectively. Sulfuric Acid (H 2 SO 4 ) emission rate of 0.000046 lb/MMBtu 4 SCR Units 1-4 operating with existing air pollu tion control technology and with new SCR installation; NOx at 0.05 lb/MMBtu and new permitted SO 2 and TPM emission rates of 0.15 lb/MMBtu and 0.034 lb/MMBtu, respectively. Sulfuric Acid (H 2 SO 4 ) emission rate of 0.00026 lb/MMBtu 4 SNCR Units 1-4 operating with existing air pollu tion control technology and with new SNCR installation; NOx at 0.23 lb/MMBtu and new permitted SO 2 and TPM emission rates of 0.15 lb/MMBtu and 0.034 lb/MMBtu, respectively. Sulfuric Acid (H 2 SO 4 ) emission rate of 0.000046 lb/MMBtu 2 SNCR/2shut down Units 2 & 3 retired, Units 1 & 4 operating w ith existing air pollution control technology and with new SNCR installation; NOx at 0.23 lb/MMBtu, permitted TPM emission rate of 0.034 lb/MMBtu, and a reduced SO 2 emission rate of 0.10 lb/MMBtu. Sulfuric Acid (H 2 SO 4 ) emission rate of 0.000046 lb/MMBtu

A description of the modeling protocol followe d for the 2011 and 2013 analysis can be found in Appendix D of the 2013 NM RH SIP beginning page 19 and is summarized below in Table 7. A summary of visibility modeling inputs from both the 2011 modeling analysis and the 2013 updated modeling analysis can be found in Tables 16 thru 19 of Appendix D of the 2013 NM RH SIP and Section 7.6 of the 2013 PNM report.

Table 7. Key CALPUFF mode ling options and inputs 2011 Modeling 2013 Modeling Model Version CALMET 6.211 5.8 CALPUFF 6.112 5.8 POSTUTIL 1.52 1.56 CALSUM 1.33 1.33 CALPOST 6.131 6.221 Key CALMET settings DGRIDKM Grid spacing (km) 4 4 NZ Number of layers 11 11

NOOBS 1 = use of surface and pr ecipitation (no upper air observations ); 0 = use of surface, precipitation, and upper air observations 1 0

RMAX1 Maximum radius of influe nce (surface layer, km) 50 100 RMAX2 Maximum radius of influence (aloft layers, km) 100 200

R1 Relative weighting of first guess wind field and observation (km) 100 50 R2 Relative weighting aloft 200 10024 Key CALPUFF inputs

Background Ammonia Monthly variable (ppb); [0.2,0.2,0.5,0.5, 1,1,1,1,1,0.5,0.5,0.2] Constant 1ppb

SCR controlled NOx emission rate 0.07 lb/MMBtu 0.05 lb/MMBtu

Sulfuric Acid emission rate assume all inorganic condensable PM is H 2 SO 4 . Electric Power Research Institute

methodology CALPOST Method 6 utilizes the IMPROVE equation; Method 8 utilizes the “revised” IMPROVE equation Method 6 Method 8

Table 8. Modeled Emission Rates (lb/hr) Unit 1 Unit 2 Unit 3 Unit 4 Baseline (post-consen t decree controls) SO 2 556.1 553.2 863.7 847.4 SO 4 0.17 0.17 0.27 0.26 NOx 1223.3 1217.0 1900.1 1864.2 SOA 14.09 14.01 21.88 21.47 PM fine 30.56 30.40 47.46 46.59 PM coarse 23.57 23.49 36.67 35.95 EC 1.51 1.51 2.38 2.30 4 SCR control scenario SO 2 556.1 553.2 863.7 847.4 SO 4 0.96 0.96 1.50 1.47 NOx 185.4 184.4 287.9 282.5 SOA 14.09 14.01 21.88 21.47 PM fine 30.56 30.40 47.46 46.59 PM coarse 23.57 23.49 36.67 35.95 EC 1.51 1.51 2.38 2.30 4 SNCR control scenario SO 2 556.1 553.2 863.7 847.4 SO 4 0.17 0.17 0.27 0.26 NOx 852.6 848.2 1324.30 1299.30 SOA 14.09 14.01 21.88 21.47 PM fine 30.56 30.40 47.46 46.59 PM coarse 23.57 23.49 36.67 35.95 EC 1.51 1.51 2.38 2.30 2 SNCR/ 2 shutdown control scenario SO 2 370.7 --- --- 564.9 SO 4 0.17 --- --- 0.26 NOx 852.6 --- --- 1299.30 SOA 14.09 --- --- 21.47 PM fine 30.56 --- --- 46.5925 PM coarse 23.57 --- --- 35.95 EC 1.51 --- --- 2.30

Table 9. Modeled Stack Parameters Stack Height (M) Base Elevation (M) Stack Diameter (M) Stack Exit Velocity (M/s) Stack Exit Temp (K)

Unit 1 121.92 1615.44 6.10 21.34 322.83 Unit 2 121.92 1615.44 6.10 21.34 322.83 Unit 3 121.92 1615.44 8.53 17.07 322.83 Unit 4 121.92 1615.44 8.53 16.76 322.83

Table 10 below shows the results of New Mexico ’s visibility modeling. This modeling summary depicts the visibility improve ment for the 98th percentile 21 of modeled results over the baseline for each control scenario. In comparing the four -SCR scenario to the State Alternative, the largest average difference over three years is 0.47 dv at Mesa Verde, 0.24 dv at Canyonlands, and 0.13 dv at Weminuche. The average difference at the 13 other Class I ar eas is less than 0.1 dv between the two control scenarios. Figure 5 be low (figure 10-2 in the NM RH SIP) displays the 2013 visibility modeling analysis results for each modeled year and the average across all 16 Class I areas for each control scenario.

Table 10. Modeled Average Visibility Improvement of the 98 th Percentile Delta-dv Impacts from 2001-2003 22

Class I area Distance to SJGS

(km) Improvement over Baseline Improvement of 4 SCR over 4 SNCR Improvement of 4 SCR over State Alternative 4 SCR 4 SNCR State Alternative Arches 222 1.30 0.48 1.23 0.82 0.07 Bandelier Wilderness 210 0.77 0.28 0.78 0.49 -0.01 Black Canyon of the Gunnison Wilderness 203 0.77 0.28 0.72 0.49 0.05

Canyonlands 170 2.02 0.64 1.78 1.38 0.24 Capitol Reef 232 0.70 0.25 0.74 0.45 -0.04 Grand Canyon 285 0.30 0.10 0.34 0.20 -0.04 Great Sand Dunes National Monument 269 0.77 0.29 0.74 0.48 0.03

La Garita Wilderness 169 1.01 0.37 0.95 0.64 0.06

21 The visibility analysis focuses on the 98 th percentile of modeled results to avoid giving undue weight to any extreme results. See 70 FR 39121.

22 Table 10-4 of the 2103 NM RH SIP.26 Maroon Bells-Snowmass Wilderness 271 0.35 0.13 0.35 0.22 0.00

Mesa Verde 40 2.91 0.61 2.44 2.30 0.47 Pecos Wilderness 248 0.68 0.24 0.69 0.44 -0.01 Petrified Forest 213 0.26 0.11 0.29 0.15 -0.03 San Pedro Parks Wilderness 155 1.38 0.47 1.29 0.91 0.09

West Elk Wilderness 216 0.87 0.31 0.79 0.56 0.08 Weminuche Wilderness 98 1.55 0.47 1.42 1.08 0.13 Wheeler Peak Wilderness 258 0.64 0.25 0.67 0.39 -0.03

Figure 5. Comparison of Visibility Improvement of Alternatives at San Juan Generating Station.

A.1.b. NMED’s NOx BART Determination:

State Submittal (pages 10-14 to 10-16 )

2013 BART Determination27 The Department considered the terms of the non-binding agreement between the EPA, NMED and PNM, signed February 15, 2013 (the “State A lternative”), and the resulting significant environmental improvements of th is alternative and co mpared this scenario to the 4 SNCR and 4 SCR scenarios previously evaluated. The Depar tment’s determination of BART was based on consideration of the BART statutory factors in the context of the following elements of the State Alternative (2 SNCR/2 Shutdown). 1) PNM will retire Units 2 and 3 by December 31, 2017. These retirements do not give rise to control equipment costs requiring am ortization. The remaini ng useful life of the source is defined as 30 years for the thr ee scenarios described (4 SCR, 4 SNCR, 2 SNCR/2 Shutdown). Therefore, the statutory fact or of the remaining useful life of the source does not weigh in favor of any option over another.

2) PNM will obtain the necessary construc tion permit modification to limit the SO2 emission rates at Units 1 and 4 to 0.10 lb/MMBtu on a daily rolling 30-day average basis. These SO2 emission reductions occur se parately and apart from the SO2 backstop trading program that EPA has already appro ved as satisfying BART. In addition to increased visibility improvement, thes e SO2 reductions will lead to non-air quality environmental benefits, such as decreased acid deposition.

3) The retirement of Units 2 and 3 will re duce the facility annual NOx emissions by an additional 10,550 tons. When added to the cont rolled emission rate of Units and 1 and 4, total annual NOx emission will be reduced by 12,989 tons. Additionally, PNM will conduct performance testing to determine if the SNCRs installed on Units 1 and 4 can achieve significantly less than 0.23 lb/MMBtu.

4) The 2 SNCR/2 Shutdown scenario would re sult in less material usage than the 4 SCR and 4 SNCR scenarios. See Table 23. This will result in less limestone required to be transported and mined, less diesel fu el that would need to be refined for this power plant, less coal mined and less carbon that would need to be activated. Closure of two units will result in up to 53 percent less water use d, from 21,000 acre-fee t to 10,161 acre-feet; wastewater generated will be reduced by up to 50 percent, from 41 million gallons to 21 million gallons; and solid waste generated will be reduced by up to 50 percent, from 1.71 million tons per year to 854,130 tons per year.

Table 23: Raw Material Usage Comparison Raw Material 2 SNCR/2 Shutdown (TPY) Baseline, 4 SNCR, and 4 SCR Limestone(1) 86,052 172,104 Activated Carbon(1) 130 26128 Coal(2) 2,667,364 5,334,729 No. 2 Diesel Oil(2) 1,007,336 2,014,671

(1) Based on 2012 material usage data. (2) Based on 2011 material usage data.

The energy and non-air quality environmenta l benefit of these resource savings weighs heavily in favor of the 2 SNCR/2 Shutdown scenario over the 4 SCR and 4 SNCR scenarios.

. 5) The two-unit retirement scenario will resu lt in a substantial decrease in particulate matter emissions from coal processin g, handling and transportation, as well as a substantial reduction in greenhouse gas emi ssions, mercury and other hazardous air pollutant emissions, and acid gas emissions as detailed in Table 24 below. The non-air quality environmental be nefits of these reductions, such as less impact on climate and less deposition of mercury to waterways, weigh heavily in favor of the 2 SNCR/2 Shutdown scenario

6) Table 22 shows the average visibility im provement between the three scenarios of 4 SCR, 4 SNCR and 2 SNCR/2 unit shutdown. Th e 2 SNCR/2 Shutdown scenario achieves significant visibility improvements as com pared to the baseline and installation of SNCR on Units 1-4. The visibility improvements from the State Alternative of SNCR on two units and two units shutdown compare very closely with the SCR insta llation scenario as contained in the FIP (less t han 0.5 dv impact at any Class I area). For the 4 SCR and 2 SNCR/2 Shutdown scenarios, the average differ ence over three years is 0.47 dv at Mesa Verde and 0.24 dv at Canyonlands.

Therefore, with respect to the statutory fact or of the degree of vi sibility improvement anticipated, the 2 SNCR/2 unit shutdown scenario is superior to the 4 S [N] CR scenario, and substantially equivalent to the 4 SCR scenario.

7) Table 10 includes the cost in dollars per t on for SCR and SNCR, as well as other scenarios. The total capital investment of the FIP 4 SCR scenario is estimated at nearly $861,871,000, as compared to $34,556,000 for the inst allation of SNCR at Units 1 and 4. This additional and significant capital expenditu re that would be required to comply with the 4 SCR scenario is not justified given the s light improvement in visibility of the 4 SCR scenario over the 2 SCR/2 Shutdown scenario.

8) Finally, with respect to the statutory requirement to consider existing pollution controls at the source, such existing pollu tion control equipment was evaluated for all29 alternatives beginning in Step 1 of the analysis, and is outlined in Table 10. NMED determined that existing cont rol equipment is not sufficien t to meet BART requirements for NOx at San Juan Generating Station. This fa ctor has no further re levance in selecting among the control options in this case.

Weighing all the above considerations as required by CAA § 169A, the Department has determined that the State Alternative (2 SNCR/2 Shutdown), which achieves substantial environmental benefits beyond the requirements of the FIP (4 SCR), the SIP (4 SNCR) and the requirements of the BART Guidelines at 40 CFR Pa rt 51 Appendix Y at a significantly lower cost than the FIP scenario of 4 SCRs, satisfies th e statutory and regulatory requirements of BART.

A.1.c EPA’s Evaluation Regarding NO x BART Determination for SJGS:

The FIP that became effective on September 21, 2011 previously established NOX BART for SJGS at the emission rate of 0.05 lb/MMBtu on a 30 boiler operating day average, achievable through installation and operation of an SCR retrofit on all four units (76 FR 52388; August 22, 2011). 23 At the outset, we note that the NOX BART determination for the SJGS that was submitted by New Mexico to replace the FIP ca nnot be disapproved solely on the basis that it differs from the determination established in the FIP. The CAA defines a FIP as “a plan (or portion thereof) promulgated by the Administrator to fill all or a portion of a gap or otherwise correct all or a portion of an inadequacy in a [SIP].” CAA section 302(y). Because a FIP is intended as a gap-filling measure, the EPA encourages states to submit approvable SIP revisions that correct the deficiencies that a given FIP re medied. Such a SIP revision need not adopt the same suite of control options and techniques as th e EPA’s FIP, nor does it necessarily have to be as stringent as the EPA’s FIP in all instances. Ra ther, when a State submits a SIP revision to the EPA with the intention of replacing a FIP, the EP A must approve the SIP revision so long as the SIP revision does not “interfere with any applicable requirem ent concerning attainment and reasonable further progress . . . or any other appl icable requirement of [t he Act].” CAA section 110(l). In regards to regional haze SIPs and the statutory requirement to make BART determinations for certain older major stationa ry sources, the EPA must approve a State’s SIP revision so long as the State complies with the C AA’s visibility protection provisions, the RHR, and the BART Guidelines, and makes a reasona ble control determination based on the weighing of the five factors. We have analyzed New Mexico’s new NOX BART determination with these requirements in mind.

23 The proposed FIP, the TSD, and Final Rule are added to the docket for this rule ma king. These records contain significant technical analyses that we consider available to commenters for this proposed action on the State’s submittal.30 The record supports the proposal to conclude that New Mexi co has met the requirements of 40 CFR 309(d)(4)(vii) and the BART Guidelin es in determining NOx BART for SJGS. This conclusion is based on our review of the 2013 RH SIP revision, including the applicable permit conditions and all supporting anal yses identified above. The record also supports the proposal to withdraw the FIP requirements pertaining to re gional haze and rescind the emission limits for NOx and H 2 SO 4 24 , as well as the accompanying complian ce schedule that would otherwise apply to SJGS. Upon final approval of the 2013 RH SIP revision, the FIP requirements may be withdrawn through a separate Administrator-signed final action. Additionally, our final approval action, if finalized as propose d, will moot the 2011 RH SIP re vision concerning the four-SNCR scenario.

New Mexico’s revised BART determinati on includes a control scenario proposed by PNM that includes the shutdown of two of the four units at the SJGS by December 31, 2017. As such, the control scenario in this analysis is di fferent than the control scenarios contemplated in the FIP. Although the EPA’s regulations do not requi re states to consider a fuel switch or a shutdown of an existing unit as pa rt of their BART analyses, a st ate may include such options in its analysis where a company voluntarily offers such measures as a strategy for reducing emissions. As discussed previously, New Mexico determined that the State Alternative was NOX BART for the SJGS. New Mexico made this dete rmination based on an an alysis of the five BART factors. Their analysis of the five BA RT factors included c onsideration of the high incremental cost-effectiveness and low incrementa l visibility improvement of the FIP compared with the State Alterna tive, as well as the additional non-ai r quality environmental and energy benefits of the latter. The energy and non-air qu ality environmental impacts, such as reduced solid waste generation, waste wate r generation, and water and energy usage, associated with the State Alternative scenario support the conclu sion that the State Alternative is BART. 25 New Mexico also noted additional air quality benefi ts associated with shutting down Units 2 and 3. While important, these other air quality benefits , such as reduced ozone and PM formation, reduced greenhouse gases, and reduced mercury deposition, are not among the BART factors, and were not considered in our evaluation of the State’s NOx BART determination.

While the BART Guidelines require states to analyze visibility improvement on a facility-wide basis, 26 states have typically analyzed the costs of compliance and other BART factors for each

24 Since we are proposing to approve the State Alternative that does not include SCR operation, we are also proposing to withdraw the H 2 SO 4 emission limit in the FIP as it is no longer necessary to protect visibility impairment from the facility due to emissions of H 2 SO 4 . 25 [T]he State must take into consideration the technology available, the costs of complia nce, the energy and non-air quality environmental impacts of compliance, any pollution control equipment in use at the source, the remaining useful life of the source, and the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology. 40 CFR 51.308(e)(1)(ii)(A). 26 The BART Guidelines state that “you must conduct a visibility improvement determination for the source(s) as part of the BART determination.” 40 CFR pt. 51, app. Y, section IV.D.5 (emphasis added).31 individual emission unit that comprises the BA RT-eligible source. Nevertheless, we do not interpret the BART Guidelines as requiring states to use this approach wi th regards to analyzing the other BART factors. Instead, we believe that states have the flexibility to analyze these factors on either a unit-specific or facility-wide basis, depending on the unique facts of each case. Here, we believe that New Mexico’s decision to evaluate the BART factors on a facilitywide basis was a reasonable way to take into account the visibility, energy, and non-air quality environmental benefits associated with unit sh utdowns. Had New Mexico used a unit-specific approach, these benefits would have been discounted altogeth er, which would unfairly prevent states and sources from considering unit shut downs as a viable stra tegy for achieving BART. New Mexico’s approach is also consistent with the State’s separate objective to meet the goodneighbor requirement of the CAA for visibility, i.e ., to ensure that collective emissions from the SJGS are not interfering with other stat es’ measures to protect visibility.

i. Visibility Analysis

We reviewed the CALPUFF modeling that suppor ted the visibility impact analysis in the 2013 RH SIP revision. The revi sed CALPUFF modeling follo wed a modeling protocol consistent with the EPA guidance and recommen dations, as well as the modeling performed by the EPA in support of the FIP. Modeled emission rates were revised to reflect SCR control efficiency evaluated in our FIP an alysis, as well as the sulfuric acid emission rate estimated using the EPA’s methodology as described in the 2011 EP A TSD. Please see Appendix D and Exhibit 6 of the 2013 RH SIP revision for more details concerning the modeling inputs, model results, and New Mexico’s evaluation. The visibility mo deling protocol and ke y inputs are summarized in the previous section, and in Tables 6 and 7. We note that New Mexico modeled the visibility improvement from the State Alternative by including the additional SO 2 reductions attributable to the implementation of the State Alternative, but did not include those reductions in the other modeling scenarios. 27 While we have some concerns with the appropriateness of including SO2 reductions from Units 1 and 4 in one of the NOx BA RT control options analyzed, rather than as part of the facility’s baseline emissions, we note th at the visibility benefits associated with the State Alternative are predominately due to NOx reductions resulting from installation of SNCR and the significant emission reductions associated with the shutdown of Units 2 and 3. As a result, we do not think the in clusion of these additional SO 2 emission reductions meaningfully impact our evaluation of the visibility benefits of the evaluated control scenarios.

The modeling results for each modeled scenario are available in section 7.8 of the 2013 PNM report and are reproduced below.

Table 11. Baseline Visibility Results, 98 th percentile (dv)

27 The SO 2 emission limit of 0.10 lb/MMBtu for Units 1 and 4 is effective as of March 5, 2014.32 Class I area 2001 2002 2003 Average Maximum

Arches 3.51 0.96 1.52 1.99 3.51 Bandelier Wilderness 1.40 1.30 1.03 1.24 1.40 Black Canyon of the Gunnison Wilderness 1.36 1.41 0.63 1.13 1.41 Canyonlands 4.66 2.12 2.29 3.02 4.66 Capitol Reef 2.39 0.46 0.66 1.17 2.39 Grand Canyon 0.93 0.26 0.38 0.52 0.93 Great Sand Dunes National Monument 0.85 1.54 1.08 1.16 1.54

La Garita Wilderness 1.39 1.94 1.14 1.49 1.94 Maroon Bells-Snowmass Wilderness 0.71 0.61 0.34 0.55 0.71

Mesa Verde 5.16 5.22 5.02 5.13 5.22 Pecos Wilderness 0.94 1.27 1.03 1.08 1.27 Petrified Forest 0.52 0.46 0.38 0.45 0.52 San Pedro Parks Wilderness 2.21 1.98 2.08 2.09 2.21 West Elk Wilderness 1.59 1.43 0.68 1.24 1.59 Weminuche Wilderness 2.15 2.95 2.02 2.37 2.95 Wheeler Peak Wilderness 1.12 1.10 0.91 1.04 1.12

Table 12. 4 SCR Visibility Results, 98 th percentile (dv)
Class I area 2001 2002 2003 Average Maximum

Arches 1.13 0.49 0.46 0.69 1.13 Bandelier Wilderness 0.49 0.49 0.42 0.47 0.49 Black Canyon of the Gunnison Wilderness 0.42 0.42 0.26 0.36 0.42 Canyonlands 1.57 0.69 0.75 1 1.57 Capitol Reef 0.83 0.25 0.32 0.47 0.83 Grand Canyon 0.33 0.13 0.2 0.22 0.33 Great Sand Dunes National Monument 0.32 0.5 0.35 0.39 0.5

La Garita Wilderness 0.5 0.58 0.36 0.48 0.58 Maroon Bells-Snowmass Wilderness 0.28 0.19 0.14 0.2 0.28

Mesa Verde 2.17 2.15 2.33 2.22 2.33 Pecos Wilderness 0.4 0.48 0.33 0.4 0.48 Petrified Forest 0.2 0.16 0.22 0.19 0.22 San Pedro Parks Wilderness 0.72 0.75 0.67 0.71 0.75 West Elk Wilderness 0.46 0.4 0.23 0.37 0.46 Weminuche Wilderness 0.83 0.92 0.73 0.82 0.92 Wheeler Peak Wilderness 0.42 0.45 0.32 0.4 0.4533 Table 13. 4 SNCR Visibility Results, 98 th percentile (dv)
Class I area 2001 2002 2003 Average Maximum

Arches 2.67 0.72 1.15 1.51 2.67 Bandelier Wilderness 1.08 0.98 0.8 0.96 1.08 Black Canyon of the Gunnison Wilderness 1.01 1.07 0.47 0.85 1.07 Canyonlands 3.71 1.62 1.81 2.38 3.71 Capitol Reef 1.82 0.38 0.56 0.92 1.82 Grand Canyon 0.72 0.24 0.3 0.42 0.72 Great Sand Dunes National Monument 0.65 1.15 0.81 0.87 1.15

La Garita Wilderness 1.05 1.47 0.85 1.12 1.47 Maroon Bells-Snowmass Wilderness 0.53 0.46 0.27 0.42 0.53

Mesa Verde 4.67 4.43 4.47 4.52 4.67 Pecos Wilderness 0.73 1 0.78 0.84 1 Petrified Forest 0.39 0.34 0.31 0.34 0.39 San Pedro Parks Wilderness 1.72 1.56 1.59 1.62 1.72 West Elk Wilderness 1.21 1.07 0.51 0.93 1.21 Weminuche Wilderness 1.74 2.36 1.61 1.9 2.36 Wheeler Peak Wilderness 0.86 0.83 0.67 0.79 0.86

Table 14. State Alternative 2 SNCR/2 Shutdown Visibility Results, 98 th percentile (dv)
Class I area 2001 2002 2003 Average Maximum

Arches 1.37 0.35 0.55 0.76 1.37 Bandelier Wilderness 0.52 0.48 0.39 0.46 0.52 Black Canyon of the Gunnison Wilderness 0.49 0.52 0.22 0.41 0.52 Canyonlands 1.99 0.82 0.91 1.24 1.99 Capitol Reef 0.89 0.16 0.24 0.43 0.89 Grand Canyon 0.33 0.09 0.13 0.18 0.33 Great Sand Dunes National Monument 0.31 0.57 0.39 0.42 0.57

La Garita Wilderness 0.5 0.71 0.41 0.54 0.71 Maroon Bells-Snowmass Wilderness 0.26 0.21 0.12 0.2 0.26

Mesa Verde 2.8 2.65 2.61 2.69 2.8 Pecos Wilderness 0.35 0.47 0.37 0.39 0.47 Petrified Forest 0.19 0.16 0.13 0.16 0.19 San Pedro Parks Wilderness 0.87 0.74 0.79 0.8 0.87 West Elk Wilderness 0.58 0.53 0.25 0.45 0.58 Weminuche Wilderness 0.85 1.21 0.79 0.95 1.21 Wheeler Peak Wilderness 0.4 0.39 0.33 0.37 0.434 Figure 6. Visibility Impact Results (Figure 7-2 of 2013 PNM Report)

The modeling results indicate the largest differences in average 98th percentile impacts over the three modeled years betw een the four-SCR scenario and the State Alternative are 0.47 dv at Mesa Verde, 0.24 dv at Canyonlands, and 0.13 dv at Weminuche. The average difference at the 13 other Class I areas is less than 0.1 dv between the two control scenarios. The largest differences in maximum impacts over the three modeled years are 0.47 dv at Mesa Verde, 0.42 dv at Canyonlands, 0.29 dv at Weminuche, and 0.24 dv at Arches. Table 16 shows the percentage reduction in visibility impairment fr om the baseline for the three control scenarios evaluated. The largest average differences oc cur at Mesa Verde (9%), Canyonlands (7%), and West Elk (7%). At Capitol Reef, Grand Ca nyon and Petrified Forest , the 2 SNCR/2 Shutdown scenario of the State alternative results in greater average reducti on in visibility impairment than the 4 SCR scenario of -10%, -11% and -9%, respec tively.

Table 15. 2001-2003 average percent reduc tion in visibility impairment (98 th percentile) from the baseline to the 3 evaluated control scenarios.

Class I area 4 SNCR 4 SCR 2 SNCR/2 Shutdown Difference between 4 SCR and 2 SNCR/ 2 Shutdown Arches 24% 62% 63% -1% Bandelier Wilderness 23% 62% 63% -1% Black Canyon of the Gunnison Wilderness 25% 66% 64% 2% Canyonlands 22% 67% 60% 7% Capitol Reef 19% 54% 64% -10% Grand Canyon 17% 54% 65% -11%35 Great Sand Dunes National Monument 25% 66% 63% 2% La Garita Wilderness 25% 68% 64% 4% Maroon Bells-Snowmass Wilderness 24% 63% 65% -2% Mesa Verde 12% 57% 48% 9% Pecos Wilderness 23% 63% 63% -1% Petrified Forest 23% 56% 65% -9% San Pedro Parks Wilderness 22% 66% 62% 4% West Elk Wilderness 25% 70% 63% 7% Weminuche Wilderness 20% 65% 60% 5% Wheeler Peak Wilderness 25% 62% 64% -2%

An analysis of the difference in the average number of days with impacts greater than 0.5 dv and 1 dv shows that the State Alternative results in nine fewer days with impacts greater than 0.5 dv at Mesa Verde, but five more days with impacts greater than 1.0 dv. The number of days with impacts greater than 0.5 dv and 1 dv are su mmarized in the table below. Eleven Class I areas show no difference in the number of impacted days over 1 dv between the four-SCR scenario and the State Alternative. The mode led average number of days impacted over 0.5 dv between these two scenarios is 1 day or less for 11 of the Class I areas examined, with several Class I areas experiencing fewer days over th e 0.5 dv threshold under the State Alternative control scenario.

Table 16. Average number of days impacted over 0.5 and 1.0 dv Average number of days impacted over 0.5 dv Average number of days impacted over 1 dv

Class I area 4 SCR State Alternative Difference 4 SCR State Alternative Difference

Arches 13 14 -1 5 8 -3 Bandelier Wilderness 6 7 -1 1 1 0 Black Canyon of the Gunnison Wilderness 4 6 -2 1 1 0 Canyonlands 23 22 1 8 10 -2 Capitol Reef 6 6 0 2 2 0 Grand Canyon 2 2 0 0 0 0 Great Sand Dunes National Monument 3 4 -1 1 1 0

La Garita Wilderness 7 9 -2 0 2 -2Maroon BellsSnowmass Wilderness 0 0 0 0 0 0

Mesa Verde 109 100 9 45 50 -536 Pecos Wilderness 4 4 0 0 0 0 Petrified Forest 1 0 1 0 0 0 San Pedro Parks Wilderness 19 19 0 5 5 0

West Elk Wilderness 3 6 -3 0 1 -1 Weminuche Wilderness 35 41 -6 4 5 -1

Wheeler Peak Wilderness 4 3 1 0 0 0

New Mexico found, and we agree, that the four-SCR scenario in the FIP results in only slightly more visibility benefit than the State A lternative at a few of the examined Class I areas when both modeled improvement at each Class I area and number of days with significant impacts are considered. For many of the Class I Areas, the difference in visibility impacts between the two scenarios is negligible. While we have some concern with the modeled visibility differences between the two c ontrol scenarios for Mesa Verd e and Canyonlands, the record supports a proposal to find that the State’s decisi on to select the State Alternative was ultimately reasonable, especially considering the costs of compliance and the energy and non-air quality environmental impacts of the two scenarios.

ii. Cost Analysis

We also reviewed the cost-effectivene ss analysis submitted with the 2013 RH SIP revision. The BART Guidelines require enha nced documentation to justify costs that significantly deviate from known costs of recent re trofits and to justify departures from the Control Cost Manual. 28 We note that the FIP originally concluded that the PNM had not provided the requisite justificati on or documentation for a variety of cost items in their previous cost analyses. In this instance, the cost eval uation included with the 2013 RH SIP revision is limited to the 2013 PNM Report submitted as Exhibit 6 of the 2013 RH SIP revision and the Sargent and Lundy SNCR and SCR Cost Estimates 29 report, submitted as Appendix C of Exhibit 6. New Mexico has not provided any additional documentation in th e record for the various line items in its updated SCR cost estimates. Therefore, as a general matter, we cannot conclude that certain line items in SCR cost estimates are well supported. In particul ar, some of our more significant areas of concern are: in clusion of costs for a sorbent in jection system, how the cost of the balanced draft system was assigned to SCR costs, assumptions for the amounts of fees and contingencies that account for almost 35% of the total project cost, and some of the assumptions supporting the design of the SCR box a nd projected catalyst demands.

28 See 70 FR 39168 and 39166 n.15. 29 Public Service of New Mexico San Juan Generating Station Units 1, 2, 3 & 4, SNCR and SCR Cost Estimates, Final Report, Sargent and Lundy, March 29, 2013.37 While we continue to have concerns with the updated cost analysis for SCR in the 2013 RH SIP revision, we do not believe that these concerns render New Mexico’s determination unreasonable. Even if we were to use the cost of the four-SCR scenario estimated by the EPA in support of the FIP ($345 million for installation of SCR on all four units), there is a large difference between the four-SCR scenario and the St ate Alternative, which is estimated to cost $34.5 million. Moreover, the small difference in visibi lity benefits between the two scenarios and the environmental and energy benefits of the St ate Alternative continue to support the State’s determination that the State Alternative is BART. New Mexico came to a similar conclusion when considering cost estimates provided by th e National Park Service (NPS), which found that the four-SCR scenario would cost approximately $374 million. 30 Many of our concerns with New Mexico’s SCR cost estimates either are no t applicable to its SNCR cost estimates (e.g., sorbent injection and balanced dr aft) or have a much smaller impact on the total estimated cost. Capital costs comprise a relatively small portion of the total cost of SNCR , where the bulk of the annual costs are due to the cost of sorbent. Consequently, we have chosen to rely on New Mexico’s cost estimates for SNCR.

New Mexico estimated the annualized cost of the State Alterna tive to be $13,624,000/yr to reduce NOx emissions by 12,989 tons/yr, resu lting in a cost-effectiveness of $1,049/ton. New Mexico estimated the annualized cost of the four-SCR scenario to be $108,820,000/yr to reduce NOx emissions by 17,500 tons/yr, resulting in a cost-effectiveness of $6,218/ton. The incremental cost-effectiveness to achieve the additional reduc tion of 4511 tons/yr between the two scenarios is $21,103/ton. If we use the costs for SCR from our FIP, then the annualized cost of the four-SCR scenario becomes $39,265,670/yr, resu lting in an incremen tal cost-effectiveness of $5,684/ton. The latter incremental cost-effectiveness value is in th e range of cost s that states and the EPA have found to be reasonable in other regional haze actions . Nevertheless, when these costs are considered in combination with the other BART factors, including the marginal visibility benefits of the four-SCR scenario at most Cla ss I areas and the unique energy and nonair quality environmental benefits associated with the State Alte rnative, we propose to find that the State made a reasonable determination.

Table 17. Incremental Cost-Effectiveness

Control Scenario Annualized cost NOx Emission Reduction (tpy) Incremental cost - effectiveness

State Alternative $13,624,000/yr 12,989 --------------

30 See NMED response to comments from the NPS available as NMED Exh. 14 of the 2013 RH SIP revision.38 4 SCR (NMED estimate) $108,820,000/yr 17,500 $21,103/ton

4 SCR (EPA estimate) $39,265,670/yr 17,500 $5,684/ton

iii. EPA’s Conclusion

In conclusion, the record supports a proposal to find that when cost, energy and non-air quality environmental impacts, and anticipated vi sibility benefits are ta ken into consideration, New Mexico’s determination that the State Al ternative is BART is reasonable. The State Alternative results in substantia l visibility benefits and energy and non-air quality environmental benefits, and is highly cost-effective. The incremen tal visibility benefit of the four-SCR scenario of the FIP over the State Alternative is small at most Class I areas, and New Mexico reasonably concluded that this small addi tional visibility bene fit did not justify the increase in costs associated with installation of SCR on all four units. The record supports a proposal to approve New Mexico’s 2013 RH SIP revision, including the 2013 permit conditions found at A112C that set the emission limits for Units 1 and 4, provide the methodologies for calculating the two units’ emission rates and showing compliance, require th e shutdown of Units 2 and 3, and establish the testing and monitoring requirements, and the re cord supports a proposal to rescind the FIP requirements for NOX BART. Upon final approval, the FIP re quirements addressing NOx BART for the SJGS, including the H2SO4 emissi on limit, may be withdrawn through a separate Administrator-signed final acti on. Additionally, our final approval action will moot the portions of the 2011 RH SIP revision not rela ted to the State Alternative.

A.2. Installation of BART: 40 CFR 51.308(e)(1)(iv) – (v)

Each source subject to BART must (1) inst all and operate BART as expeditiously as practicable, but in no even t later than 5 years after approval of the SIP revision, and (2) maintain the control equipment required by this subpart and establish procedur es to ensure such equipment is properly operated and maintained.

State Submittal:

New Mexico determined that the schedule provided in the 2013 RH SIP revision will result in the implementation of BART as exped itiously as practicable, as required under 40 CFR 51.308(e)(1)(iv). New Mexico selected a NOX BART emission limit, achievable through installation and operation of an SNCR retrofit on Units 1 a nd 4 and the shutdown of units 2 and39 3, which can be found in the preconstruction permit at A112C. In accordance with the Term Sheet, the permit requires:

 Fifteen (15) months after the EPA fina l approval of the SIP revision, but no earlier than January 31, 2016, the PNM will complete installation of SNCR technology on the SJGS Units 1 and 4 and co mply with an average nitrogen oxide (NOx) emission limit for Units 1 and 4 of 0.23 lb/MMBtu on a daily rolling 30- day average basis.

 Retirement of SJGS Units 2 and 3 by December 31, 2017.

EPA’s Conclusion:

The record supports a proposal to find that NM ED has demonstrated it has the authority and enforceable mechanisms in place to ensure ea ch source subject to BART will (1) install and operate BART as expeditiously as practicable, but in no event later than 5 years after approval of the SIP revision, and (2) maintain the control e quipment required by this subpart and establish procedures to ensure such equipmen t is properly operated and maintained

.