```

[Federal Register Volume 78, Number 24 (Tuesday, February 5, 2013)]
[Proposed Rules]
[Pages 8273-8294]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01858]

[[Page 8273]]

Vol. 78

Tuesday,

No. 24

February 5, 2013

Part III

Environmental Protection Agency

-----------------------------------------------------------------------

40 CFR Part 49

Approval of Air Quality Implementation Plans; Navajo Nation; Regional 
Haze Requirements for Navajo Generating Station; Proposed Rule

Federal Register / Vol. 78 , No. 24 / Tuesday, February 5, 2013 / 
Proposed Rules

[[Page 8274]]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 49

[EPA-R09-OAR-2013-0009; FRL-9774-1]

Approval of Air Quality Implementation Plans; Navajo Nation; 
Regional Haze Requirements for Navajo Generating Station

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is proposing a 
source-specific federal implementation plan (FIP) requiring the Navajo 
Generating Station (NGS), located on the Navajo Nation, to reduce 
emissions of oxides of nitrogen (NOX) under the Best 
Available Retrofit Technology (BART) provision of the Clean Air Act 
(CAA or Act) in order to reduce visibility impairment resulting from 
NGS at 11 National Parks and Wilderness Areas. NGS, which was built 
over 35 years ago, is the largest coal-fired power plant in the West in 
terms of generating capacity. It is central to the economies of the 
Navajo Nation and Hopi Tribe and supplies power to the states of 
Arizona, Nevada, and California. Electricity produced by NGS is also 
used to power the Central Arizona Project, which supplies surface water 
to three counties and numerous Indian tribes in Arizona. NGS is 
projected to continue operating at least until 2044. EPA is proposing 
to require NGS to achieve a nearly 80 percent reduction of its current 
overall NOX emission rate. Our analysis indicates that 
installation of controls to achieve this reduction would result in 
significant visibility improvement that is well-balanced with the cost 
of those controls. For a number of reasons, including the importance of 
NGS to numerous Indian tribes located in Arizona and the federal 
government's reliance on NGS to meet the requirements of water 
settlements with several tribes, EPA is proposing an alternative to 
BART that would provide flexibility to NGS in the schedule for the 
installation of new control equipment. We also describe other 
compliance schedules for consideration and comment. We recognize that 
there may be other approaches that could result in equivalent or better 
visibility benefits over time and that there may be changes in energy 
demand, supply or other developments over the next several decades that 
may change electricity generation on the Navajo Nation. EPA encourages 
a robust public discussion of our proposed BART determination and 
alternative, the additional alternatives described herein, and other 
possible approaches. EPA is prepared to issue a supplemental proposal 
if approaches other than the proposed BART determination or proposed 
alternative articulated in this notice are identified as satisfying the 
requirements of the Clean Air Act and meeting the needs of the 
stakeholders. EPA is committed to continuing to engage with 
stakeholders to develop a final FIP that maintains benefits to tribes 
and the regional economy while improving visibility in many of our 
nation's most treasured National Parks and Wilderness Areas.

DATES: Comments must be submitted no later than May 6, 2013.

ADDRESSES: Submit comments, identified by docket number EPA-R09-OAR-
2013-0009, by one of the following methods:
    Federal eRulemaking Portal: www.regulations.gov. Follow the on-line 
instructions.
    Email: r9ngsbart@epa.gov.
    Mail or deliver: Anita Lee (Air-2), U.S. Environmental Protection 
Agency Region 9, 75 Hawthorne Street, San Francisco, CA 94105-3901.
    Instructions: All comments will be included in the public docket 
without change and may be made available online at www.regulations.gov, 
including any personal information provided, unless the comment 
includes Confidential Business Information (CBI) or other information 
whose disclosure is restricted by statute. Information that you 
consider CBI or otherwise protected should be clearly identified as 
such and should not be submitted through www.regulations.gov or email. 
www.regulations.gov is an ``anonymous access'' system, and EPA will not 
know your identity or contact information unless you provide it in the 
body of your comment. If you send an email directly to EPA, your email 
address will be automatically captured and included as part of the 
public comment. If EPA cannot read your comment due to technical 
difficulties and cannot contact you for clarification, EPA may not be 
able to consider your comment.
    Hearings: EPA intends to hold public hearings to accept oral and 
written comments on the proposed rulemaking. EPA will provide notice 
and additional details at least 30 days prior to the hearings in the 
Federal Register, on our Web site, and in the docket.
    Docket: The index to the docket for this action is available 
electronically at www.regulations.gov and in hard copy at EPA Region 9, 
75 Hawthorne Street, San Francisco, California. While documents in the 
docket are listed in the index, some information may be publicly 
available only at EPA Region 9 (e.g., maps, voluminous reports, 
copyrighted material), and some may not be publicly available in either 
location (e.g., CBI). To inspect the hard copy materials, please 
schedule an appointment during normal business hours with the contact 
listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Anita Lee, EPA Region 9, (415) 972-
3958, r9ngsbart@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, ``we'', ``us'', 
and ``our'' refer to EPA.

Table of Contents

I. Background
    A. Navajo Generating Station
    B. Significance of NGS and Federal Collaboration
    C. Statutory and Regulatory Framework for Addressing Visibility
    D. Statutory and Regulatory Framework for Addressing Sources 
Located in Indian Country
    E. Statutory and Regulatory Framework for BART Determinations
    F. Relationship of Air Pollutants to Visibility Impairment
    G. EPA's Advanced Notice of Proposed Rulemaking
    i. Information from Tribes
    ii. Information from NGS Owners
    iii. Comments from Other Stakeholders
    iv. Involvement of Other Federal Agencies
II. EPA's Proposed Action
    A. A NOX BART Determination for NGS Is ``Necessary or 
Appropriate''
    B. Available and Feasible Control Technologies and Five Factor 
Analysis for NOX Emissions
    i. Factor 1: Cost of Compliance
    ii. Factor 2: Energy and Non-Air Quality Impacts
    a. Affordability Analysis
    b. Electricity and Water Rate Analysis
    c. Summary of EPA's Affordability and Rate Impacts Analyses
    iii. Factor 3: Existing Controls at the Facility
    iv. Factor 4: Remaining Useful Life of Facility
    v. Factor 5: Degree of Visibility Improvement
    C. EPA's Proposed NOX Emission Limit for NGS
    D. EPA's Proposed BART Alternative
    i. Compliance Flexibility Is Necessary or Appropriate
    ii. Background on Alternative Measures to BART
    iii. Legal Rationale for Extending Compliance Schedule for 
Alternative Measures for NGS
    iv. Description and Analysis of a Proposed Alternative Measure 
to BART
    E. Analysis of Additional Alternative Compliance Schedules
    F. Solicitation of Comments
III. Administrative Requirements
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive

[[Page 8275]]

Order 13563: Improving Regulation and Regulatory Review 13563B.
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations

I. Background

A. Navajo Generating Station

    The Navajo Generating Station (NGS) is a coal-fired power plant 
located on the Navajo Nation Indian Reservation, just east of Page, 
Arizona, approximately 135 miles north of Flagstaff, Arizona. The three 
750 MW units at NGS were constructed over 1974--1976. At a capacity of 
2250 MW, NGS is the largest coal-fired power plant in the western 
United States.
    NGS is located near many of our most treasured National Parks and 
Wilderness Areas. Congress mandated heightened protection for these 
areas in designating them as mandatory Class I Federal areas. Eleven 
Class I areas are located within 300 km of NGS: Arches National Park 
(NP), Bryce Canyon NP, Canyonlands NP, Capitol Reef NP, Grand Canyon 
NP, Mazatzal Wilderness Area (WA), Mesa Verde NP, Petrified Forest NP, 
Pine Mountain WA, Sycamore Canyon WA, and Zion NP. These areas support 
an active tourism industry drawing over 4 million visitors to the Grand 
Canyon National Park alone in 2011.\1\ In addition to EPA's role 
implementing the Regional Haze program, the Federal Land Managers of 
these areas, the National Park Service and the U.S. Fish and Wildlife 
Service, under the Department of the Interior, and the U.S. Forest 
Service, under the Department of Agriculture, also play important roles 
in the protection of visibility in the mandatory Class I Federal areas.
---------------------------------------------------------------------------

    \1\ See document titled ``Grand Canyon Annual Visitation.pdf'' 
in the docket for this proposed rulemaking, available through 
https://irma.nps.gov/Stats/.
---------------------------------------------------------------------------

    NGS is co-owned by six entities: The U.S. Bureau of Reclamation 
(Reclamation)--24.3 percent, Salt River Project (SRP), which also acts 
as the facility operator--21.7 percent, Los Angeles Department of Water 
and Power (LADWP)--21.2 percent, Arizona Public Service (APS)--14 
percent, Nevada Power Company (NPC)--11.3 percent, and Tucson Electric 
Power (TEP)--7.5 percent. NGS uses hot-side electrostatic precipitators 
(hot-side ESPs) to control emissions of particulate matter (PM) and 
flue gas desulfurization units (FGDs) to control emissions of sulfur 
dioxide (SO2). Over the 2009--2011 period, the owners of NGS 
voluntarily installed modern low-NOX burners with separated 
over-fire air (LNB/SOFA) to reduce emissions of NOX.

B. Significance of NGS and Federal Collaboration

    Federal participation in NGS was authorized in the Colorado River 
Basin Project Act of 1968 as a preferred alternative to building 
hydroelectric dams in the Grand Canyon for providing power to the 
Central Arizona Project.\2\ The Central Arizona Project (CAP) is a 336-
mile water distribution system that delivers about 1.5 million acre-
feet (AF) per year of Colorado River water from Lake Havasu in western 
Arizona to non-tribal agricultural water users in central Arizona, 
Indian tribes located in Arizona, and municipal water users in 
Maricopa, Pinal, and Pima counties.\3\ This CAP water is used to meet 
the terms of a number of Indian water rights settlements in central 
Arizona and to reduce groundwater usage in the region.\4\ Electricity 
from NGS powers the pumps that move CAP water to its destinations along 
the distribution system.
---------------------------------------------------------------------------

    \2\ See information on the Central Arizona Project at http://
www.usbr.gov/projects/Project.jsp?proj--
Name=Central+Arizona+Project. See also report by the National 
Renewable Energy Lab (NREL), discussed in more detail in Section 
G.iii of this notice, titled ``Navajo Generating Station and Air 
Visibility Regulations: Alternatives and Impacts'', revision dated 
March 2012 (NREL report) in the docket for this proposed rulemaking.
    \3\ See Section titled ``Welcome'' on CAP homepage: http://www.cap-az.com/
    \4\ See, for example, Section 4 of the NREL report and Comments 
from the Central Arizona Water Conservation District on the NREL 
report to DOI and EPA dated February 23, 201[2], in the docket for 
this proposed rulemaking.
---------------------------------------------------------------------------

    Several tribes located in Arizona have allocations of CAP water 
through water settlement agreements that have been approved through 
acts of Congress.\5\ In exchange for allocations of CAP water at 
reduced cost and access to funds for the development of water 
infrastructure, these tribes have released their claims to other water 
in Arizona. Excess NGS power owned by Reclamation that is not used by 
CAP is sold and profits are deposited into a fund to support the tribal 
water settlement agreements.\6\ The Department of the Interior (through 
the Bureau of Reclamation) plays an important role in the 
implementation of these settlement agreements and the management of the 
funds set aside for water infrastructure development for tribes.
---------------------------------------------------------------------------

    \5\ See, for example, Section 6 of the NREL report.
    \6\ Id.
---------------------------------------------------------------------------

    The coal used by NGS is supplied by the Kayenta Mine, operated by 
Peabody Energy and located on reservation lands of both the Navajo 
Nation and the Hopi Tribe. Taxes and royalties from NGS and the Kayenta 
Mine paid to the Navajo Nation and Hopi Tribe contribute significantly 
to the annual revenues for both governments.\7\
---------------------------------------------------------------------------

    \7\ Id.
---------------------------------------------------------------------------

C. Statutory and Regulatory Framework for Addressing Visibility

    Part C, subpart II, of title I of the CAA as amended in 1977 
establishes a visibility protection program that sets forth ``as a 
national goal the prevention of any future, and the remedying of any 
existing, impairment of visibility in mandatory class I Federal areas 
which impairment results from manmade air pollution.'' 42 U.S.C. 
7491A(a)(1). The terms ``impairment of visibility'' and ``visibility 
impairment'' are defined in the Act to include a reduction in visual 
range and atmospheric discoloration. Id. 7491A(g)(6). A fundamental 
requirement of the visibility protection program was for EPA, in 
consultation with the Secretary of the Interior, to promulgate a list 
of ``mandatory class I Federal areas'' where visibility is an important 
value. Id. 7491A(a)(2). These areas include national wilderness areas 
and national parks greater than six thousand acres in size. Id. 
7472(a).
    On November 30, 1979, EPA identified 156 mandatory Class I Federal 
areas where visibility is an important value, including: Grand Canyon 
NP in Arizona (40 CFR 81.403); Mesa Verde NP in Colorado (Id. 81.406); 
and Arches, Bryce Canyon, Canyonlands, Capitol Reef, and Zion NP in 
Utah (Id. 81.430). These mandatory Class I Federal areas are among the 
11 Class I areas within an approximately 300 km radius of NGS.
    On December 2, 1980, EPA promulgated the first phase of the 
required visibility regulations addressing visibility impairment that 
is reasonably attributable to a single source or a small group of 
sources, codified at 40 CFR 51.300-307. 45 FR 80084. The 1980 
regulations deferred regulating regional haze (i.e., widespread haze 
from a multitude of sources which impairs visibility in every direction 
over a large area), based

[[Page 8276]]

on a finding that the scientific data were inadequate at that time. Id. 
at 80086.
    Congress added Section 169B to the Act in the 1990 CAA Amendments, 
requiring EPA to take further action to reduce visibility impairment in 
broad geographic regions. 42 U.S.C. 7492. In 1993, the National Academy 
of Sciences released a comprehensive study required by the 1990 
Amendments concluding that ``current scientific knowledge is adequate 
and control technologies are available for taking regulatory action to 
improve and protect visibility.'' \8\
---------------------------------------------------------------------------

    \8\ Protecting Visibility in National Parks and Wilderness 
Areas, Committee on Haze in National Parks and Wilderness Areas, 
National Research Council, National Academy Press (1993). Available 
through: http://www.nap.edu/openbook.php?record_id=2097&page=R2
---------------------------------------------------------------------------

    EPA promulgated regulations to address regional haze on April 22, 
1999. 64 FR 35765. Consistent with the statutory requirement in 42 
U.S.C. 7491(b)(2)(A), EPA's 1999 regional haze regulations (RHR) 
include a provision that states must require certain major stationary 
sources ``in existence on August 7, 1977, but which ha[ve] not been in 
operation for more than fifteen years as of such date'' which emit 
pollutants that are reasonably anticipated to cause or contribute to 
any visibility impairment to procure, install and operate BART. In 
determining BART, states are required to take into account five factors 
identified in the CAA and EPA's regulations. 42 U.S.C. 7491(g)(2) and 
40 CFR 51.308. These five factors are the cost of controls, the energy 
and non-air quality impacts of controls, the existing controls at the 
source, the remaining useful life of the source, and the anticipated 
visibility benefits of controls. The CAA and RHR require BART to be 
installed and operated as expeditiously as practicable, but in no event 
later than five years from the date of the approved plan. 42 U.S.C 
7491(b)(2)(A), 42 U.S.C 7491(g)(4), and 40 CFR 51.308(e)(1)(iv). EPA 
made revisions to the RHR after 1999 and those revisions together with 
the RHR are codified at 40 CFR Part 51, Subpart P and Appendix Y. The 
regulations allow EPA to promulgate an alternative to BART provided the 
alternative results in greater reasonable progress than will result 
from installation and operation of BART. 40 CFR 51.308(e)(2).

D. Statutory and Regulatory Framework for Addressing Sources Located in 
Indian Country

    When the CAA was amended in 1990, Congress included a new 
provision, Section 301(d), granting EPA authority to treat Indian 
tribes in the same manner as states where appropriate. See 40 U.S.C. 
7601(d). Congress also recognized, however, that such treatment may not 
be appropriate for all purposes of the Act and that in some 
circumstances, it may be inappropriate to treat tribes identically to 
states. Therefore, Section 301(d)(2) of the Act directed EPA to 
promulgate regulations ``specifying those provisions of [the CAA] for 
which it is appropriate to treat Indian tribes as states.'' Id. 
7601(d)(2). In addition, Congress provided that ``[i]n any case in 
which [EPA] determines that the treatment of Indian tribes as identical 
to states is inappropriate or administratively infeasible, the 
Administrator may provide, by regulation, other means by which the 
Administrator will directly administer such provisions so as to achieve 
the appropriate purpose.'' Id. 7601(d)(4).
    In 1998, EPA promulgated regulations at 40 CFR Part 49 (which have 
been referred to as the Tribal Authority Rule or TAR) relating to 
implementation of CAA programs in Indian country. See 40 CFR Part 49; 
see also 59 FR 43956 (Aug. 25, 1994)(proposed rule); 63 FR 7254 (Feb. 
12, 1998)(final rule); Arizona Public Service Company v. EPA, 211 F.3d 
1280 (DC Cir. 2000), cert. den., 532 U.S. 970 (2001)(upholding the 
TAR). The TAR allows EPA to treat eligible Indian tribes in the same 
manner as states ``with respect to all provisions of the [CAA] and 
implementing regulations, except for those provisions [listed] in Sec.  
49.4 and the [EPA] regulations that implement those provisions.'' 40 
CFR 49.3. EPA recognized that tribes may, but are not required to 
administer air programs under the CAA, were in the early stages of 
developing air planning programs known as Tribal Implementation Plans 
(TIPs) and would need additional time to develop air quality programs. 
63 FR 7264-65. Thus, EPA determined that it was not appropriate to 
treat tribes in the same manner as states for purposes of those 
provisions of the CAA imposing air program submittal deadlines. See 59 
FR 43964-65; 63 FR 7264-65. Similarly, EPA determined that it would be 
inappropriate to treat tribes in the same manner as states for purposes 
of the related CAA provisions establishing sanctions and federal 
oversight mechanisms where states fail to meet applicable air program 
submittal deadlines. Id. In particular, EPA found that it was 
inappropriate to treat tribes in the same manner as states for the 
purposes of Section 110(c)(1), which requires EPA to promulgate a FIP 
within 2 years after a state fails to make a required plan submission.
    Although EPA determined that it was inappropriate to treat tribes 
in the same manner as states for the purposes of Section 110(c)(1), EPA 
also determined that under other provisions of the CAA, it has the 
discretionary authority to promulgate ``such federal implementation 
plan provisions as are necessary or appropriate to protect air 
quality'' when a Tribe has not submitted a TIP. 40 CFR 49.11. EPA 
determined in promulgating the TAR that it could exercise discretionary 
authority to promulgate FIPs based on Section 301(a) of the CAA, which 
authorizes EPA to prescribe such regulations as are necessary to carry 
out the Act, and Section 301(d)(4), which authorizes EPA to directly 
administer CAA provisions for which EPA has determined it is 
inappropriate or infeasible to treat tribes as identical to states so 
as to achieve the appropriate purpose. 40 CFR 49.11. See also 63 FR 
7265. Specifically, 40 CFR 49.11(a) provides that EPA:

    [s]hall promulgate without unreasonable delay such Federal 
implementation plan provisions as are necessary or appropriate to 
protect air quality, consistent with the provisions of sections 
30[1](a) and 301(d)(4), if a tribe does not submit a tribal 
implementation plan or does not receive EPA approval of a submitted 
tribal implementation plan.

    As described in detail below, EPA has previously promulgated FIPs 
to regulate air pollutants emitted from the two coal-fired electric 
generating facilities on the Navajo Nation, Four Corners Power Plant 
(FCPP) and NGS. In 1991, prior to the promulgation of the TAR, EPA 
revised an existing FIP that applied to Arizona to include a 
requirement for NGS to substantially reduce its SO2 
emissions by installing scrubbers, based on a finding that the 
SO2 emissions were contributing to visibility impairment at 
the Grand Canyon National Park. 56 FR 50172 (October 3, 1991); see also 
Central Arizona Water Conservation District v. United States 
Environmental Protection Agency, 990 F.2d 1531 (9th Cir. 
1993)(upholding EPA's promulgation of the FIP). Then, in 1999, EPA 
proposed a FIP for NGS to fill the regulatory gap that existed because 
SIP rules issued by Arizona to regulate NGS were not applicable or 
enforceable on the Navajo Nation, and the Tribe had not sought approval 
of a TIP covering the plant. 64 FR 48731 (September 8, 1999). EPA did 
not finalize the 1999 proposal and proposed a new FIP for NGS on 
September 12, 2006. 71 FR 53631. EPA finalized the NGS FIP in 2010 
generally making the emission limits from the Arizona SIP

[[Page 8277]]

rules for NGS federally enforceable, with one modification.\9\ 75 FR 
10174 (March 5, 2010). The 2010 NGS FIP was promulgated under the 
authority in the CAA and 40 CFR 49.11(a) that underlies our proposal 
today.
---------------------------------------------------------------------------

    \9\ In the 2010 NGS FIP, EPA finalized federally enforceable 
emission limits for SO2, particulate matter (PM), and 
opacity, and control measures for dust for NGS. The 2010 FIP lowered 
the opacity limit from 40 percent to 20 percent and included 
requirements to control emissions associated with coal and ash 
handling and storage.
---------------------------------------------------------------------------

    Because the Arizona SIP did not contain any NOX emission 
limits for NGS, the final 2010 FIP did not impose any limits on 
NOX. However, NGS is subject to the federal Acid Rain 
Program requirements under title IV of the Clean Air Act. NGS elected 
to comply early as a Phase I NOX facility subject to a 
NOX limit of 0.40 lb/MMBtu, per unit, on an annual basis. 
Over the 2009--2011 timeframe, the owners of NGS voluntarily installed 
new LNB/SOFA at NGS, with a NOX emission limit of 0.24 lb/
MMBtu.

E. Statutory and Regulatory Framework for BART Determinations

    When Congress enacted Section 169A of the CAA in 1977 to protect 
visibility, it directed EPA to promulgate regulations that would 
require applicable implementation plans to include a determination of 
BART for certain major stationary sources that are ``reasonably 
anticipated to cause or contribute to any impairment of visibility in 
any [Class I area]''. 42 U.S.C. 7491(b)(2)(A) & (g). A source is BART-
eligible if it is a fossil fuel-fired steam electric plant of more than 
250 MMBtu/hr heat input or other listed industrial source that has the 
potential to emit 250 tons or more of any visibility-impairing 
pollutant and that came into operation between 1962 and 1977. Id. NGS 
meets these criteria and is a BART-eligible source.
    A BART-eligible source with a predicted visibility impact of 0.5 
deciviews (dv) or more in a Class I area ``contributes'' to visibility 
impairment and is subject to BART. See 70 FR at 39161 (July 6, 2005). 
NGS contributes to visibility impairment at 11 surrounding Class I 
areas in excess of this threshold, and is thus subject to BART.
    In determining BART, states are required to take into account five 
factors identified in the CAA and EPA's regulations. 42 U.S.C. 
7491(g)(2) and 40 CFR 51.308. Those factors are: (1) The costs of 
compliance, (2) the energy and non-air quality environmental impacts of 
compliance, (3) any pollution control equipment in use or in existence 
at the source, (4) the remaining useful life of the source, and (5) 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). 
EPA's guidelines for evaluating BART are set forth in Appendix Y to 40 
CFR Part 51, referred to as the BART Guidelines, and must be followed 
in making BART determinations for fossil fuel-fired electric generating 
plants larger than 750 MW.

F. Relationship of Air Pollutants to Visibility Impairment

    Emissions of NOX contribute to the formation of 
particulate matter (PM), which, in turn, interacts with light to impair 
visibility. The fundamental science of haze formation and visibility 
impairment is described in greater detail in a comprehensive study by 
National Research Council.\10\
---------------------------------------------------------------------------

    \10\ Protecting Visibility in National Parks and Wilderness 
Areas, Committee on Haze in National Parks and Wilderness Areas, 
National Research Council, National Academy Press (1993).
---------------------------------------------------------------------------

    Briefly, the smallest particles in the 0.1 to 1 micron range 
interact with light most strongly as they are about the same size as 
the wavelengths of visible light. The effect of the interaction is to 
scatter light from its original path. Conversely, for a given line of 
sight, such as between a mountain scene and an observer, light from 
many different original paths is scattered into that line. The 
scattered light appears as whitish haze in the line of sight, obscuring 
the view.
    Boiler stacks and material handling are sources of primary PM, or 
PM emitted directly into the atmosphere. Of primary PM emissions, those 
in the smaller particle size range, less than 2.5 microns, tend to have 
the largest impact on visibility. PM emissions from boiler stacks can 
have varying particle size makeup depending on the PM control 
technology. PM from material handling, however, tends to be coarse, 
i.e., around 10 microns, because it is created from the breakup of 
larger particles of coal, soil, and rock.
    PM that is formed in the atmosphere from the photochemical 
transformation and condensation of gaseous chemical pollutants, also 
called secondary PM, tends to be fine, i.e., smaller than 1 micron, 
because it is formed from the buildup of individual molecules. This 
secondary PM tends to contribute more to visibility impairment than 
primary PM because it is in the size range that most effectively 
interacts with visible light. NOX and SO2 
emissions from coal-fired power plants are examples of gaseous chemical 
pollutants that react with other compounds in the atmosphere to form 
secondary PM.
    NOX is a gaseous pollutant that can be oxidized to form 
nitric acid. In the atmosphere, nitric acid in the presence of ammonia 
forms particulate ammonium nitrate. The formation of particulate 
ammonium nitrate depends on temperature and relative humidity, and 
therefore varies by season. Particulate ammonium nitrate can grow into 
the size range that effectively interacts with light by coagulating 
together and by taking on additional pollutants and water.

G. EPA's Advanced Notice of Proposed Rulemaking

    On August 28, 2009, EPA published an Advanced Notice of Proposed 
Rulemaking (ANPRM) regarding EPA's intention to implement the BART 
requirement of the RHR for the two subject-to-BART coal-fired power 
plants located on the Navajo Nation, the Four Corners Power Plant \11\ 
and the Navajo Generating Station. 74 FR 44313. In that ANPRM, EPA put 
forth our analysis of the cost and anticipated visibility benefits 
comparing selective catalytic reduction (SCR) and modern combustion 
controls for both power plants and requested comment. The ANPRM marked 
the beginning of an ongoing process of consultation with tribes and 
discussions with other key stakeholders on the issue of NOX 
control at FCPP and NGS. EPA received over 6,000 comments on the ANPRM, 
most of which were identical electronic mail messages in support of 
requiring stringent air pollution controls at NGS. Comments from tribes 
located in Arizona, the owners of NGS, other stakeholders, and other 
federal agencies are discussed briefly below, and described in more 
detail in the TSD for this proposed rulemaking.
---------------------------------------------------------------------------

    \11\ EPA has taken final action on our BART determination for 
the Four Corners Power Plant. See 77 FR 51620 dated August 24, 2012.
---------------------------------------------------------------------------

i. Information from Tribes
    EPA received numerous comments on the ANPRM from tribes and tribal 
organizations, including the Navajo Nation, Hopi Tribe, Gila River 
Indian Community, Ak-Chin Indian Community, Tohono O'odham Nation, 
Pascua Yaqui Tribe, Fort McDowell Yavapai Nation, Yavapai-Apache 
Nation, and the Inter Tribal Council of Arizona. Comments from the 
Navajo Nation and Hopi Tribe focused on the significant contribution of 
coal-related royalties, taxes, and employment at NGS and the Kayenta 
Mine to the economies of the Navajo Nation and the Hopi Tribe. Comments 
from the Gila River Indian Community, the Tohono

[[Page 8278]]

O'odham Nation, and other tribes located in Arizona focused on the 
importance of continued operation of NGS as a source of power to the 
Central Arizona Water Conservation District (CAWCD), the operating arm 
of CAP, in order for the federal government to meet obligations under 
existing water settlement agreements. The importance to tribes of 
continued operation of NGS and affordable water costs cannot be 
overemphasized. Detailed discussions of tribal interests in NGS, 
including studies submitted by the Hopi Tribe and the Gila River Indian 
Community, are provided in the TSD for this proposed rulemaking.
    EPA has met with tribes on numerous occasions to discuss the 
significance of NGS to tribal economies and tribal water interests in 
Arizona.\12\ Consultations with tribes included potential economic 
impacts associated with a BART determination for NGS, as well as 
potential impacts from EPA's Mercury and Air Toxics Standards (MATS) 
rulemaking.
---------------------------------------------------------------------------

    \12\ See document titled ``Timeline of All Tribal Consultations 
on NGS.docx'' in the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    In recognition of the unusual complexity of regulating NGS, 
representatives from EPA, including the Assistant Administrator and the 
Deputy Assistant Administrator for the Office of Air and Radiation and 
the Regional Administrator for Region 9, visited NGS and affected 
communities in the area. EPA officials have also met with additional 
stakeholders, at various locations, including EPA offices in San 
Francisco, California and Washington, DC, and offices of individual 
tribal governing councils and the Inter Tribal Council of Arizona.
ii. Information from NGS Owners
    SRP, operator and part-owner of NGS, provided information to EPA 
outlining several uncertainties that significantly increase the 
financial risk of near-term investments in new air pollution controls, 
including uncertainties in plant ownership and lease agreements.\13\
---------------------------------------------------------------------------

    \13\ See March 12, 2012 letter from four owners of NGS to EPA 
regarding Pending BART Determination for Navajo Generating Station, 
in the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    One of the owners of NGS is the Los Angeles Department of Water and 
Power (LADWP), a public utility located in California. Under California 
law (Senate Bill 1368),\14\ long-term investments in base load 
generation by California utilities must meet a carbon dioxide emission 
performance standard based on a combined cycle natural gas-fired base 
load power plant. NGS and other traditional coal-fired power plants 
that operate without carbon capture and sequestration do not meet this 
standard. Therefore, LADWP will be prohibited from continued 
participation and long-term investments in NGS beyond its current 
contract term of 2019. As a result, LADWP has indicated its intention 
to sell its 21.2 percent ownership stake in NGS. The future owner of 
LADWP's share of NGS is currently uncertain.\15\
---------------------------------------------------------------------------

    \14\ See information on SB 1368 Emission Performance Standards 
at http://www.energy.ca.gov/emission_standards/
    \15\ See, for example, 2012 Draft Integrated Resource Plan 
Executive Summary available at https://www.ladwp.com/ladwp/faces/wcnav_externalId/a-p-doc?_adf.ctrl-state=a8ti68apu_29&_afrLoop=234058941927000, or in the docket for this proposed 
rulemaking.
---------------------------------------------------------------------------

    In addition, NGS's current site lease with the Navajo Nation, as 
well as several other agreements and contracts, expire in 2019. Table 1 
lists several leases, agreements, and contracts that must be renewed to 
ensure continued operation of NGS into the future.\16\ Although the 
owners of NGS are in negotiations with the Navajo Nation for a lease 
renewal to extend to 2044 and with Peabody Energy for a renewed coal 
supply contract, the outcomes of these negotiations are also not yet 
finalized.
---------------------------------------------------------------------------

    \16\ Information in Table 1 is based on Table 1-3 on page 13 of 
the NREL report.

 Table 1--Leases, Agreements, and Contract Renewals for NGS and Kayenta
                                  Mine
------------------------------------------------------------------------
                                                                 Renewal
                          Description                             year
------------------------------------------------------------------------
Peabody Lease Renewal with Navajo Nation and Hopi Tribe.......      2017
Coal Supply Contract between Peabody and NGS..................      2019
NGS Project Lease Renewal with Navajo Nation (Federal Rights        2019
 of Way)......................................................
Water Intake/Water Line Renewal (Federal Rights of Way).......      2019
Railroad and Transmission Line Renewals (Federal Rights of          2021
 Way).........................................................
Southern Transmission Line Easement (Federal Rights of Way)...      2022
------------------------------------------------------------------------

    Because NGS is located in Indian country, lease and other rights-
of-way agreement renewals must be approved by the Department of the 
Interior. These approvals, which are an unusual requirement for 
continued operation of a power plant, are federal actions that trigger 
review under the National Environmental Protection Act (NEPA).\17\ For 
actions significantly affecting the environment, NEPA review requires 
the development of an Environmental Impact Statement (EIS) and includes 
a substantial process for public involvement. The Department of the 
Interior estimates that NEPA review for approval of leases and other 
rights-of-way agreements may require approximately five years to 
complete.\18\ Therefore, even if the Navajo Nation and the owners of 
NGS reach agreement on renewed leases and other rights-of-way shortly, 
the owners of NGS may not have a lease fully approved by the Department 
of the Interior until 2019 or later.
---------------------------------------------------------------------------

    \17\ Id.
    \18\ See email and attachment from Letty Belin, DOI to Janet 
McCabe, EPA, dated August 20, 2012, in the docket for this proposed 
rulemaking.
---------------------------------------------------------------------------

iii. Comments from Other Stakeholders
    In addition to the identical electronic mail messages from private 
citizens, EPA received general comments, both in support of and in 
opposition to stringent air pollution controls at NGS, from numerous 
individuals, state and local agencies, industry, utility and water 
groups, environmental and community-based organizations, cities and 
municipalities in Arizona, U.S. and State Representatives, and the 
Governor and Treasurer of Arizona. All comments received on the ANPRM 
are available in the ANPRM docket.\19\
---------------------------------------------------------------------------

    \19\ See Docket : EPA-R09-OAR-2009-0598 on 
www.regulations.gov.
---------------------------------------------------------------------------

    Several groups provided separate comment letters on the five-factor 
BART analysis discussed in the ANPRM, including the Arizona Department 
of Environmental Quality, the Utility Air Research Group, and a 
consortium of environmental and Navajo community organizations. The 
Colorado Department of Public Health and the Environment and the 
Attorney General of New Mexico submitted separate comments on potential 
co-benefits to mercury reduction resulting from certain NOX 
controls. Numerous groups and individuals, including elected officials 
in Arizona, stressed the importance of NGS to the Arizona economy and 
raised concerns that a stringent BART determination such as SCR might 
force closure of NGS or otherwise result in economic harm to cities, 
tribes, and agricultural water users in Arizona. Other commenters 
stressed the importance of reducing the plant's contribution to 
regional haze. EPA discusses comments, both in support of and in 
opposition to stringent controls at NGS, in more detail in the TSD for 
this proposed rulemaking.

[[Page 8279]]

iv. Involvement of Other Federal Agencies
    Following the ANPRM, EPA received comments from other federal 
agencies that have authority to oversee interests and activities 
related to NGS. The Bureau of Reclamation, under the Department of the 
Interior, is a part-owner of NGS. However, Reclamation and four 
additional Interior agencies (National Park Service, Bureau of Indian 
Affairs, Office of Surface Mining, and U.S. Fish and Wildlife Service) 
also have regulatory authorities relating to NGS or the Kayenta coal 
mine that serves it. The U.S. Forest Service, an agency within the 
Department of Agriculture, has authority to protect visibility in the 
Class I areas in its jurisdiction. EPA has Clean Air Act authority to 
maintain air quality and improve visibility. The Department of Energy 
(DOE) Office of Energy Efficiency and Renewable Energy, Office of 
Indian Energy Policy and Programs, and National Laboratories have 
technical expertise and other resources related to clean energy 
development and production in Indian country.
    In 2011, DOI entered into an interagency agreement with DOE to 
commission the National Renewable Energy Laboratory (NREL) to conduct a 
study with the goal of providing an objective assessment of issues 
related to the power sector that are important for understanding the 
potential impacts on power and water rates of BART options for NGS. 
Under phase 1 of an intended two-phase study, NREL conducted an 
analysis focusing on the potential effects from costs associated with 
NOX control options or NGS closure. NREL completed the first 
part of its study in January 2012 and provided public comments it 
received on the study to EPA in March 2012.\20\ In June 2012, NREL 
completed a final chapter as part of its phase 1 study that provides a 
high-level examination of alternatives to NGS.\21\
---------------------------------------------------------------------------

    \20\ See ``March 2012 Revision to NREL Report.pdf'' and 
``Comments on NREL Report.pdf'' in the docket for this proposed 
rulemaking.
    \21\ See June 2012 report by NREL titled ``Navajo Generating 
Station and Clean-Energy Alternatives: Options for Renewables'' in 
the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    Given the extent of federal and tribal interests in NGS, on January 
4, 2013, EPA, DOI, and DOE signed a joint federal agency statement 
committing to collaborate on several short- and long-term goals, 
including analyzing and pursuing strategies for providing clean, 
affordable and reliable power, affordable and sustainable water, and 
sustainable economic development to key stakeholders who currently 
depend on NGS.\22\ The agencies will work together with stakeholders to 
identify and undertake actions that support implementation of BART, 
including seeking funding to cover expenses for pollution control or 
other necessary upgrades for the federal portion of NGS. The agencies 
will also work to jointly support a phase 2 report to analyze a full 
range of clean energy options for NGS over the next decades and work 
with stakeholders to develop a roadmap for achieving long-term, 
innovative clean energy solutions for NGS. This collaboration may span 
several years and EPA expects alternative strategies resulting from the 
collaboration may contribute to reductions in NOX emissions 
at NGS.
---------------------------------------------------------------------------

    \22\ See Joint Federal Agency Statement Regarding Navajo 
Generating Station, dated January 4, 2013, in the docket for this 
proposed rulemaking.
---------------------------------------------------------------------------

II. EPA's Proposed Action

A. A NOX BART Determination for NGS Is ``Necessary or 
Appropriate''

    The numerous Class I areas that surround NGS are sometimes known as 
the Golden Circle of National Parks.\23\ Millions of tourists visit 
these areas, many visiting from other countries, to view the unique 
vistas of the Class I areas in this region.
---------------------------------------------------------------------------

    \23\ See Navajo National Monument: A Place and its People, An 
Administrative History, Hal K. Rothman, 1991, National Park Service, 
Chapter IV: ``Land-Bound:'' 1938-1962, available at: http://www.nps.gov/history/history/online_books/nava/adhi/adhi4e.htm.
---------------------------------------------------------------------------

    As Congress recognized, visibility is an important value and must 
be protected in these areas. Currently, air quality and visibility are 
impaired in the Class I areas surrounding NGS. The National Park 
Service noted in 2008 that ``[v]isibility is impaired to some degree at 
all units where it is being measured and remains considerably higher 
than the target natural conditions in many places, particularly on the 
haziest days.'' \24\ Of the 11 mandatory Class I federal areas located 
within 300 km of NGS, eight national parks, including Grand Canyon, 
Canyonlands, and Capitol Reef, are among the areas monitored by the 
National Park Service.\25\ NGS is one of many contributors to regional 
haze in these areas and Congress recognized that all sources that emit 
air pollutants that may reasonably be anticipated to cause or 
contribute to visibility impairment would need to do their part to 
address the problem.
---------------------------------------------------------------------------

    \24\ Air Quality in National Parks, 2008 Annual Performance & 
Progress Report, National Resource Report NPS/NRPC/ARD/NRR--2009/
151, September 2009, p. 30, in the docket for this proposed 
rulemaking.
    \25\ Id. Appendix B. Note that the other three mandatory Class I 
Federal areas located within 300 km of NGS are Wilderness Areas that 
are managed by the U.S. Forest Service.
---------------------------------------------------------------------------

    Because NGS is a subject-to-BART source that would undergo a BART 
determination if located on state land, and based on the importance of 
visibility in the Golden Circle of National Parks, EPA is proposing to 
find that a BART determination for NOX emissions from NGS is 
``necessary or appropriate'' under the TAR. See 40 CFR 49.11.
    Emissions of PM and SO2 at NGS are controlled by hot-
side electrostatic precipitators (HS-ESPs) and wet scrubbers, 
respectively. EPA finalized emission controls and limits for 
SO2 and PM in our FIPs in 1991 and in 2010 (75 FR 10174). On 
February 16, 2012, EPA finalized the MATS rulemaking that set a lower 
emission limit for PM (77 FR 9304). The emission limits EPA established 
for SO2 in 1991 were determined to achieve greater 
reasonable progress than would BART,\26\ therefore the reasonable 
progress goals of CAA Section 169A(b)(2) for SO2 at NGS are 
already satisfied. Because emissions of PM are well controlled at NGS 
through federally enforceable limits, EPA is not proposing that it is 
``necessary or appropriate'' under the TAR to determine BART for PM 
emissions at NGS.
---------------------------------------------------------------------------

    \26\ See 56 FR 50172 (October 3, 1991) and 75 FR 10174 (March 5, 
2010).
---------------------------------------------------------------------------

B. Available and Feasible Control Technologies and Five Factor Analysis 
for NOX Emissions

    Reducing NOX emissions from electric generating units 
generally involves: (1) Combustion controls to reduce the production of 
NOX from fuel-bound nitrogen and as a by-product of high 
temperature combustion reactions between atmospheric nitrogen 
(N2) and oxygen (O2) in the air; or (2) 
combustion controls in combination with post-combustion add-on controls 
to reduce the amount of NOX emitted in flue gas by 
converting NOX to diatomic nitrogen (N2) via a 
catalytic or non-catalytic process.
    As discussed in detail in the TSD for this proposed rulemaking, SRP 
submitted to EPA a BART analysis in 2008 and several revisions 
thereafter. SRP identified the following control options as technically 
feasible at NGS for reducing NOX emissions: LNB/SOFA, flue 
gas recirculation (FGR), selective non-catalytic reduction (SNCR), and 
selective catalytic

[[Page 8280]]

reduction (SCR).\27\ The option that achieves the largest reduction in 
NOX emissions is a combination of combustion controls and 
post-combustion add-on controls, i.e., LNB/SOFA in combination with 
SCR. Although SRP identified FGR as technically feasible, it did not 
conduct additional analysis on FGR, based on its determination that FGR 
is less effective than LNB/SOFA.
---------------------------------------------------------------------------

    \27\ BART Analysis for the Navajo Generating Station Units 1--3, 
Prepared for Salt River Project--Navajo Generating Station by 
ENSRAECOM, Document Number 05830-012-300, dated November 2007.
---------------------------------------------------------------------------

    For the control of NOX emissions, EPA has determined 
that the technologies identified by SRP are the main technically 
feasible NOX control technologies. For the most stringent 
control option (LNB/SOFA in combination with SCR), SRP determined that 
a 2+2 catalyst system (four-catalyst layer design with initial 
deployment of two catalyst layers) could achieve an emission rate of 
approximately 0.05 lb/MMBtu under ideal operating conditions in order 
to ensure compliance with an emission limit of 0.07--0.08 lb/MMBtu on a 
30-day rolling average. SRP suggested that the 60 percent compliance 
margin between its intended design target (0.05 lb/MMBtu) and its 
suggested NOX emission limit (0.08 lb/MMBtu) is needed to 
allow for normal operating fluctuations associated with minor equipment 
upsets, fuel characteristics impacting NOX production, and 
SCR process delays due to load changes.
    As discussed in more detail in the TSD for this proposed 
rulemaking, for several reasons, including information from a catalyst 
vendor that an SCR system at NGS using three layers of catalyst can 
meet a limit of 0.08 lb/MMBtu and four layers of catalyst can meet a 
limit of 0.05 lb/MMBtu, EPA is proposing to determine that Units 1--3 
can meet an emission limit of 0.055 lb/MMBtu using four layers of 
catalyst. EPA expects this proposed emission limit of 0.055 lb/MMBtu to 
provide an adequate compliance margin for normal fluctuations because 
compliance will be measured on a plant wide rolling average basis of 30 
boiler operating days. EPA understands that Units 1--3 at NGS currently 
operate on a 3-year outage cycle and that if SCR is installed, catalyst 
replacement would be timed to coincide with outage cycles to reduce 
costs. EPA is specifically requesting comment on whether NGS can 
maintain its current 3-year outage cycle with four layers of catalyst 
to meet a limit of 0.055 lb/MMBtu and on the adequacy of the margin of 
compliance provided by the limit.
i. Factor 1: Cost of Compliance
    The cost of compliance is expressed as the total capital cost of 
controls, the total annual cost of controls (i.e., annual operating 
costs plus amortized capital costs), and the cost effectiveness of 
controls. Cost effectiveness is expressed in cost per ton of pollutant 
reduced ($/ton), and is calculated by dividing the total annual cost by 
the total amount of pollutant reduced per year. 40 CFR Part 51, 
Appendix Y, IV.D.4.c.
    For this proposed rulemaking, EPA evaluated the total capital and 
total annual cost estimates SRP submitted to EPA for SCR (excluding 
additional costs for LNB/SOFA) in 2010 against the EPA Control Cost 
Manual.\28\ EPA has generally accepted the total capital and total 
annual cost estimates submitted by SRP, except that we have used an 
interest rate that is consistent with EPA cost analyses and eliminated 
three line item costs that are not included in the EPA Control Cost 
Manual. The costs presented in Table 2 for SCR+LNB/SOFA with four 
layers of catalyst represent EPA's estimate for SCR+LNB/SOFA at 0.055 
lb/MMBtu. The TSD for this proposed rulemaking describes our analysis 
and rationale to support our revised cost analysis for SCR at NGS, as 
well as our cost analyses for SCR with 3 layers of catalyst at a level 
of 0.08 lb/MMBtu.
---------------------------------------------------------------------------

    \28\ See Salt River Project--Navajo Generating Station Units 1, 
2, 3 SCR and Baghouse Capital Cost Estimate Report, Prepared by 
Sargent and Lundy, Project Number 12656-001, August 17, 2010, in the 
docket for this proposed rulemaking.
---------------------------------------------------------------------------

    In January 2012, SRP provided updated cost estimates for SNCR and 
LNB/SOFA.\29\ EPA did not make any revisions to these estimates. 
Although SRP's 2010 cost estimate for SCR and their 2012 cost estimate 
for SNCR excluded the costs of LNB/SOFA, the values shown in Table 2 
are for SCR+LNB/SOFA and SNCR+LNB/SOFA. Between 2008 and 2012, SRP has 
suggested different emission rates achievable with SNCR, ranging from 
0.15 lb/MMBtu to 0.20 lb/MMBtu. EPA evaluated SNCR+LNB/SOFA at a level 
of 0.18 lb/MMBtu, and LNB/SOFA at a level of 0.24 lb/MMBtu. Our 
evaluation of SNCR+LNB/SOFA at 0.18 lb/MMBtu is generally consistent 
with levels achieved at NGS during a SNCR demonstration test (0.16--
0.17 lb/MMBtu), but lower than the emission limit of 0.20 lb/MMBtu SRP 
suggested as providing an adequate margin of compliance.\30\
---------------------------------------------------------------------------

    \29\ See Updated Best Available Retrofit Technology Analysis, 
Navajo Generating Station, from Kelly J. Barr, SRP to Deborah 
Jordan, EPA dated January 20, 2012, in the docket for this proposed 
rulemaking.
    \30\ See letter from Kelly J. Barr, SRP to Deborah Jordan, EPA 
dated July 20, 2012, in the docket for this proposed rulemaking.

                Table 2--Total Capital and Total Annual Costs of NOX Controls on Units 1-3 at NGS
----------------------------------------------------------------------------------------------------------------
                                                                                   SCR+ LNB/SOFA   SCR+ LNB/SOFA
                                                     LNB/SOFA*    SNCR+ LNB/SOFA  (EPA estimate)  (SRP estimate)
----------------------------------------------------------------------------------------------------------------
Total Capital Cost ($ millions).................             $45             $84            $541            $589
Total Annual Costs..............................              $5             $29             $64             $80
($ millions)....................................
Annual NOX Reductions Estimated by EPA (tpy)....          10,865          16,608          28,573          26,180
----------------------------------------------------------------------------------------------------------------
* Costs for LNB/SOFA are actual costs expended over 2009--2011.

    Average cost effectiveness and incremental cost effectiveness of 
SCR+LNB/SOFA, SNCR+LNB/SOFA, and LNB/SOFA are presented in Table 3. The 
SRP average and incremental cost effectiveness numbers reported in 
Table 3 come from SRP and are generally based on the assumption that 
SCR+LNB/SOFA would achieve an emission limit of 0.08 lb/MMBtu.\31\ The 
EPA cost effectiveness values in Table 3 for SCR+LNB/SOFA are based on 
a NOX emission limit of 0.055 lb/MMBtu and the EPA estimates 
for total annual cost

[[Page 8281]]

in Table 2. EPA did not revise SRP cost estimates for LNB/SOFA or 
SNCR.\32\
---------------------------------------------------------------------------

    \31\ See Updated Best Available Retrofit Technology Analysis, 
Navajo Generating Station, from Kelly J. Barr, SRP to Deborah 
Jordan, EPA, dated January 20, 2012, in the docket for this proposed 
rulemaking.
    \32\ See TSD for this proposed rulemaking for a discussion of 
small differences in cost effectiveness values for LNB/SOFA and 
SNCR+LNB/SOFA calculated by EPA and SRP, and shown in Table 3.

 Table 3--Average and Incremental Cost Effectiveness for NOX Controls on Units 1-3 at NGS Calculated by EPA and
                                                       SRP
----------------------------------------------------------------------------------------------------------------
                                               LNB/SOFA          SNCR+LNB/SOFA ($/ton)     SCR+LNB/SOFA ($/ton)
----------------------------------------------------------------------------------------------------------------
                               Average Cost Effectiveness (Average for Units 1--3)
----------------------------------------------------------------------------------------------------------------
EPA..................................  $486 per ton...........  $1,745 per ton.........  $2,240 per ton.
SRP..................................  $519 per ton...........  $1,481 per ton.........  $2,926 per ton.
----------------------------------------------------------------------------------------------------------------
                             Incremental Cost Effectiveness (Average for Units 1--3)
----------------------------------------------------------------------------------------------------------------
                                       SNCR+LNB/SOFA (vs. LNB/  SCR+LNB/SOFA (vs.        SCR+LNB/SOFA (vs. LNB/
                                        SOFA).                   SNCR+LNB/SOFA).          SOFA)
----------------------------------------------------------------------------------------------------------------
EPA..................................  $4,110 per ton.........  $2,933 per ton.........  $3,315 per ton.
SRP..................................  $3,135 per ton.........  $5,282 per ton.........  Not calculated.
----------------------------------------------------------------------------------------------------------------

    The average cost effectiveness of SCR+LNB/SOFA estimated by EPA is 
not substantially higher than the average cost effectiveness of 
SNCR+LNB/SOFA, and the incremental cost effectiveness of SCR+LNB/SOFA 
is lower than SNCR+LNB/SOFA (see Table 3).
    The cost effectiveness values calculated by both EPA and SRP for 
SCR+LNB/SOFA are lower than or within the range of other BART 
evaluations that required SCR. For example, BART analyses for other 
electric generating facilities requiring SCR had a range of costs: Four 
Corners Power Plant (on the Navajo Nation) Units 1--5: $2,500--$3,200 
per ton of NOX removed;\33\ PacifiCorp Naughton Plant Unit 3 
(Wyoming): $2,830 per ton of NOX removed;\34\ and Hayden 
Station (in Colorado) Units 1 and 2: $3,400--$4,100 per ton of 
NOX removed.\35\
---------------------------------------------------------------------------

    \33\ 77 FR 51619 (August 24, 2012).
    \34\ 77 FR 33021 (June 4, 2012).
    \35\ See Colorado Department of Public Health BART Determination 
for Public Service Company--Hayden Station, available at http://www.colorado.gov/cs/Satellite/CDPHE-AP/CBON/1251595092457, and in 
the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    Based on EPA's cost estimates and our analysis of average and 
incremental cost effectiveness, EPA has determined that SCR is cost 
effective at NGS.\36\
---------------------------------------------------------------------------

    \36\ EPA's Cost Control Manual does not include indirect or 
ancillary costs such as water rates in the evaluation of cost-
effectiveness under factor 1. EPA is considering those costs under 
factor 2.
---------------------------------------------------------------------------

ii. Factor 2: Energy and Non-Air Quality Impacts
    The BART Guidelines describe the second factor, the energy and non-
air quality environmental impacts of compliance, as an examination of 
whether the use of the control technology would result in direct energy 
penalties or benefits, and whether there are environmental impacts 
other than air quality due to emissions of the pollutant in question or 
due to the control technology. The BART Guidelines also state that 
under the energy impacts analysis, the reviewing authority may consider 
``whether a given alternative would result in significant economic 
disruption or unemployment.'' 70 FR 39169. In selecting a ``best'' 
alternative, the BART Guidelines further state that ``there may be 
unusual circumstances that justify taking into consideration the 
conditions of the plant and the economic effects of requiring the use 
of a given control technology.'' 70 FR 39171. Thus, although neither 
the CAA nor the RHR require states or EPA to consider the affordability 
of controls or ratepayer impacts as part of a BART analysis, the BART 
guidelines allow (but do not require) consideration of 
``affordability'' in the BART analysis.
    EPA is exercising its discretion to include in this second factor 
an analysis to examine the viability of NGS's continued operation if 
new NOX controls are required. This analysis compares 
electricity generation costs after installing new NOX 
controls at NGS against the cost to purchase an equivalent amount of 
power on the wholesale market. Because stakeholders have expressed 
concern that installation of new controls at NGS may cause the facility 
to close, the purpose of this analysis is to assess whether it would be 
more economical for the owners of NGS to install controls and continue 
operation, or to retire the facility and purchase power in order to 
meet their obligations to supply electricity to their customers. EPA 
has also included an analysis to estimate potential indirect impacts to 
ratepayers who use electricity supplied by SRP or water supplied by 
CAP. A complete discussion of other energy and non-air quality impacts 
is provided in the TSD for this proposed rulemaking.
    As discussed previously, NGS is unique because it was constructed 
and is owned in part by the federal government to provide electricity 
to distribute water to tribes located in Arizona and a diverse group of 
other water users. NGS is also located on the Navajo Nation and the 
Kayenta Mine that supplies its coal is located on the reservation lands 
of both the Navajo Nation and the Hopi Tribe.
    The Navajo Nation and the Hopi Tribe have expressed concern that 
requiring additional controls at NGS could result in lost employment, 
taxes, and royalties to their tribal governments if the owners of NGS 
chose to retire units or curtail operations rather than install new air 
pollution controls.
a. Affordability Analysis
    As mentioned above, EPA conducted an analysis to estimate 
electricity generation costs if SCR or SNCR were installed at NGS 
within 5 years of a final rulemaking (i.e., by 2018 if this rule is 
finalized in 2013) \37\ compared to costs to purchase an equivalent 
amount of power on the wholesale market. This analysis assumes that the 
owners of NGS would choose the least costly option for providing power 
to their

[[Page 8282]]

customers. The results of this analysis are summarized briefly here.
---------------------------------------------------------------------------

    \37\ Given the time that will likely be required for full public 
discussion of this proposal, consideration of the information 
submitted during the public comment, and the possibility of a 
supplemental proposal following comments we receive on Alternatives 
2 and 3, it is possible that this rule may not be finalized until 
2014, in which case the timeframe for compliance would also shift, 
from 2018 to 2019.
---------------------------------------------------------------------------

    Our analysis is based on a 25-year discounted cash flow model that 
calculates the net present value (NPV) of the total revenue required to 
generate electricity at NGS over 2012-2036 for several different 
operating scenarios. The model assumes a 20-year amortization period 
for scenarios involving installation of new air pollution controls and 
uses a 25-year discounted cash flow to account for the approximate 5-
year period between the present day and the installation of new 
controls. The scenarios include: The current Business As Usual (BAU) 
scenario that accounts for installation in 2009--2011 of LNB/SOFA, the 
installation of SNCR on all units at NGS by 2018, the installation of 
SCR on all units by 2018, and the scenario of purchasing energy on the 
wholesale market beginning in 2018 and thereafter.\38\ The results are 
shown in Table 4.
---------------------------------------------------------------------------

    \38\ The results reported here assume that LADWP's share of NGS 
is purchased by another publicly-owned utility. Results from other 
scenarios (e.g., if LADWP's share is purchased by an investor-owned 
utility) are discussed in the TSD for this proposed rulemaking.

   Table 4--Net Present Value (NPV) of Total Revenue Required to Generate Electricity Over 2012-2036 With NOX
                        Controls Compared to Equivalent Wholesale Market Power Purchases
----------------------------------------------------------------------------------------------------------------
                                                                            Increase from BAU if power purchased
                                    Business as    Increase     Increase                 on market
                                    usual (BAU)  from BAU if  from BAU if --------------------------------------
                                     (LNB/SOFA)      SNCR         SCR          Low          Mid          High
----------------------------------------------------------------------------------------------------------------
NPV ($ millions)..................       $7,766         $278         $648         $673         $951       $1,040
Percent Increase compared to BAU..          n/a           4%         8.3%         8.7%        12.2%        13.4%
----------------------------------------------------------------------------------------------------------------

    We estimate that the retrofit of all three units at NGS with SCR 
would result in an incremental increase in the NPV of the revenue 
required to generate electricity at NGS of $648 million over the 
business as usual (BAU) case, which is lower than the increase over BAU 
of the cost to purchase the equivalent amount of electricity on the 
wholesale market considering the low, mid, and high market trends 
($673--$1,040 million). These results shows that although SCR would 
increase the cost of electricity generation by 16 percent in 2018 (see 
Table 5), on a 25-year NPV basis, installation and operation of SCR 
remains less than the total cost to purchase electricity on the 
wholesale market from elsewhere in the West. The analysis conducted by 
NREL shows similar results that also indicate that installation of SCR 
at NGS by 2018 would likely cost less than replacing it with power 
purchased from elsewhere in the West.\39\
---------------------------------------------------------------------------

    \39\ NREL further concludes that even with electricity 
generation rate increases resulting from SCR, NGS would still be one 
of the lowest cost generators in the Desert Southwest.

                Table 5--Increase in Electricity Generation Costs in 2018 if SCR Installed at NGS
----------------------------------------------------------------------------------------------------------------
                                                                                                       Percent
                                                Business as usual       Electricity generation cost    increase
                                           electricity generation cost            with SCR           compared to
                                                                                                         BAU
----------------------------------------------------------------------------------------------------------------
Bureau of Reclamation....................  3.27 cents/kWh.............  3.73 cents/kWh.............           14
Publicly-Owned Utilities (SRP, LADWP)....  3.49 cents/kWh.............  3.97 cents/kWh.............           14
Investor-Owned Utilities (APS, TEP, NPC).  3.88 cents/kWh.............  4.61 cents/kWh.............           19
                                          ----------------------------------------------------------------------
    Average Total Plant..................  3.56 cents/kWh.............  4.13 cents/kWh.............           16
----------------------------------------------------------------------------------------------------------------

    Table 5 shows that the increase in electricity generation cost for 
the owners of NGS, ranging from a 14 percent increase for Reclamation 
and the publicly-owned utilities to an estimated 19 percent increase 
for the investor-owned utilities, would differ based on how each owner 
recovers capital investments. In other words, the increase in 
electricity generation costs for investor-owned utilities is higher 
because the capital recovery includes a rate of return for investors.
b. Electricity and Water Rate Analysis
    In order to determine how the projected increase in electricity 
generation cost would affect retail customers, EPA also estimated the 
potential increase in retail electricity rates for SRP customers, and 
the potential increase in CAP water rates.\40\
---------------------------------------------------------------------------

    \40\ The NREL analysis commissioned by DOI, as well as separate 
studies commissioned by other stakeholders, conducted similar rate 
analyses. Two studies by Harvey Economics, one commissioned by SRP 
and the other commissioned by the Gila River Indian Community 
examined potential impacts to electricity rates and Tribal and non-
Tribal CAP water users in Arizona. A third study by Arizona State 
University commissioned by SRP examined the contribution of NGS and 
the Kayenta Mine to the broader regional and Arizona economy. 
Although EPA has included these studies in the docket for our 
proposed rulemaking, EPA is not providing a critical review or 
assessment of the methodologies of those studies.
---------------------------------------------------------------------------

    As discussed previously, Reclamation owns 24.3 percent of NGS for 
the benefit of the CAP. Power from NGS is used by CAP to pump surface 
water from the Colorado River to much of Arizona. Construction of CAP 
was authorized by Congress in 1968 under the Colorado River Basin 
Project Act to deliver Arizona's surface water entitlement of the 
Colorado River to the state.
    Under the Colorado River Basin Project Act, any electricity owned 
by Reclamation based on its percentage ownership of NGS that is not 
used by CAP (excess power) is sold. The Colorado River Basin Project 
Act requires profits from Reclamation's excess power sales to be 
deposited in the Lower Colorado River Basin Development Fund 
(Development Fund). The Development Fund was originally authorized 
under the

[[Page 8283]]

Colorado River Basin Project Act to repay construction costs of CAP to 
the federal government. Subsequent settlement acts with several tribes, 
however, have authorized use of the Development Fund to pay the 
delivery portion of the cost of CAP water (also called fixed operation, 
maintenance and replacement costs, or OM&R costs) \41\ for certain 
Indian tribes, and to pay the costs to construct the delivery systems 
to bring CAP water to certain Indian tribes.
---------------------------------------------------------------------------

    \41\ CAWCD calls the delivery portion of water costs the ``fixed 
OM&R'' costs and the energy portion of water costs (the portion 
associated with NGS power costs) the ``variable OM&R'' costs.
---------------------------------------------------------------------------

    CAP's 336-mile water delivery system was completed in 1993 and 
delivers 1.5 million AF of water annually to Maricopa, Pima, and Pinal 
Counties through a series of canals and pumping stations. The CAP water 
delivery system is required to pump water up an elevation of 3,000 feet 
from Lake Havasu to the city of Tucson. The Central Arizona Water 
Conservation District (CAWCD) is the operating entity for CAP. 
According to CAWCD, CAP water currently meets over 20 percent of 
Arizona's total water demands, and within CAP's service area, which 
encompasses about 80 percent of Arizona's water users and taxpayers, 
CAP water meets about 50 percent of the municipal demands. 
Approximately 40 percent of CAP's water delivery supply is dedicated to 
Native American use.
    Our analysis indicates that, although SRP's cost to generate 
electricity would increase by 16 percent if SCR were installed (Table 
5), the maximum increase for SRP's retail customers is estimated to be 
0.06 cents per kWh, an increase of 0.66 percent (Table 6). For 
customers of the utilities that have a portfolio of power generating 
sources, e.g., all NGS owners except Reclamation,\42\ the increased 
electricity generation cost at NGS from installation of SCR would flow 
into a broader consumer retail rate calculation based on the entire 
portfolio of the utility's electricity generation assets and purchase 
power contracts, which typically include coal (including other coal 
plants in addition to NGS), natural gas, nuclear, and some renewable 
energy. Therefore, the increase in retail rates paid by SRP customers 
is not expected to be proportional, on a percentage basis, to SRP's 
increase in electricity generation costs at NGS.
---------------------------------------------------------------------------

    \42\ Although the Bureau of Reclamation has constructed dams 
that generate hydroelectric power, EPA understands that CAP's main 
source of power comes from Reclamation's ownership share in NGS.
---------------------------------------------------------------------------

    In contrast, Reclamation's share of power produced by NGS is used 
by CAP or sold for the benefit of the Development Fund. CAP relies on 
NGS for over 90 percent of its power needs. The estimated 14 percent 
increase in the electricity generation cost for Reclamation (Table 5), 
would translate into a 14 percent increase in the portion of the CAWCD 
water rate associated with the electrical cost of pumping water (energy 
costs, or variable OM&R), as shown in Table 6, because NGS is CAP's 
main source of power.

           Table 6--Projected Electricity and Water Rates in 2018 if NOX Controls Are Installed at NGS
----------------------------------------------------------------------------------------------------------------
                                                                 SNCR                           SCR
                                                    ------------------------------------------------------------
                                   BAU  (LNB/SOFA)                       Percent                        Percent
                                                       Rate increase     increase    Rate increase     increase
----------------------------------------------------------------------------------------------------------------
Electricity Rate to SRP          9.26 cents/kWh....  0.02 cents/kWh...        0.2  0.06 cents/kWh...        0.66
 Customers.
CAWCD Water Rate paid by M&I     $141/AF...........  $2.99/AF.........        2.1  $8.40/AF.........        6.0
 Users.
(fixed + variable OM&R)........
CAWCD Water Rate paid by Tribal  $58/AF............  $2.99/AF.........        5.2  $8.40/AF.........       14
 and Agricultural Users.
(variable OM&R)................
----------------------------------------------------------------------------------------------------------------

    Municipal and industrial (M&I) users of CAP water pay not only 
energy costs (variable OM&R) but also delivery costs (fixed OM&R) of 
water. Total water rates in 2018 for M&I users are projected by CAWCD 
to be $141 per AF; therefore, a rate increase from SCR of $8.40 per AF 
represents a 6 percent increase in CAP water rates.\43\ However, the 
actual increase to total water costs would depend on the user's 
individual degree of reliance on CAP water. For example, the city of 
Phoenix relies on CAP for 45 percent of its water supply. Therefore, a 
6 percent increase in CAP water rates would effectively result in a 4 
percent overall water cost increase to customers in Phoenix because CAP 
water represents only a portion of its water.
---------------------------------------------------------------------------

    \43\ For comparison, two Navajo non-governmental organizations, 
the To Nizhoni Ani and Black Mesa Water Coalition, provided 
information on their water costs to EPA in the docket for this 
proposed rulemaking. This information stated that members of the 
Navajo Nation, who do not get water from CAP, pay much higher costs 
for water than CAP customers, ranging from one to four cents per 
gallon (equivalent to over $3,000 to over $13,000 per acre foot of 
water).
---------------------------------------------------------------------------

    In contrast to M&I users, as part of the Arizona Water Settlements 
Act of 2004, agricultural water users and tribes pay only the energy 
costs of CAP water; therefore, the same $8.40 per AF increase in water 
rates represents a 14 percent increase. EPA is aware of 13 tribes 
located in Arizona that currently have CAP water allocations through 
settlement agreements or use CAP water under contract (see Table 7 and 
the TSD for this proposed rulemaking for additional information and 
references). EPA does not have information regarding the degree of 
reliance on CAP water for tribes or agricultural water users. However, 
agricultural or tribal customers that have non-CAP sources of water 
will experience a smaller percentage increase in total water costs than 
users that rely entirely on CAP water (e.g., see Phoenix example 
discussed above).

          Table 7--Tribes With CAP Allocations or CAP Contracts
------------------------------------------------------------------------
                                                                 CAP
                                                              Allocation
                                                             or contract
                           Tribe                                volume
                                                              (acre feet
                                                              per year)
------------------------------------------------------------------------
Gila River Indian Community................................      311,800
Ak-Chin Indian Community...................................       85,000
Tohono O'odham Nation......................................       74,000
San Carlos Apache Tribe....................................       60,665
White Mountain Apache Indian Tribe.........................       23,782
Fort McDowell Yavapai Nation...............................       18,233
Salt River Pima-Maricopa Indian Community..................       13,300
Navajo Nation..............................................        6,411
Yavapai-Apache Nation (Camp Verde).........................        1,200
Hopi Tribe.................................................        1,000
Pascua Yaqui Tribe.........................................          500
Yavapai-Prescott Tribe.....................................          500
Tonto Apache Nation........................................          128
------------------------------------------------------------------------

[[Page 8284]]

    In its analysis, NREL estimated a low and high range of potential 
water rate increases based on SCR installation and operation cost 
estimates from the National Park Service and from SRP (see Table 8). 
NREL's estimates of increased water rates from the installation and 
operation of SCR are consistent with our estimates. Separate analyses 
for the Gila River Indian Community and SRP by Harvey Economics 
estimated pumping cost increases that are slightly lower than NREL and 
EPA estimates.

 Table 8--Comparison of Projected Water Rate Increases From SCR Installation Estimated by EPA and Other Studies
----------------------------------------------------------------------------------------------------------------
                                     NREL High              EPA              NREL Low              Harvey
----------------------------------------------------------------------------------------------------------------
CAP Water Rate Increase.......  $8.58/AF..........  $8.40/AF..........  $7.10/AF.........  $6.60/AF
Increase to M&I Users.........  7%................  6%................  6%...............  Not calculated
Increase to Tribes and          16%...............  14%...............  13%..............  11%
 Agricultural Users.
----------------------------------------------------------------------------------------------------------------

c. Summary of EPA's Affordability and Rate Impacts Analyses
    Based on our analyses, the 25-year NPV of costs to produce power at 
NGS with SCR installed and operated on all units should be below the 
market prices of wholesale power.
    However, as discussed previously in section I.G.ii, EPA understands 
that the timing of regulatory compliance is an important consideration 
given potential ownership changes and that the current term of NGS's 
lease with the Navajo Nation, as well as other leases and rights-of-way 
agreements, extend only to 2019. Based on public statements made by 
stakeholders, and as indicated in the March 2012 NREL report, the 
owners of NGS intend to pursue a renewed lease agreement with the 
Navajo Nation that extends to 2044. However, until a renewed lease that 
supports continued long-term operation of NGS is negotiated and 
approved by DOI, significant capital investment needed to modernize NGS 
with new air pollution controls may be viewed unfavorably without 
additional certainty that the costs can be recovered over a reasonable 
amortization period.
    Our analysis also shows that increased electricity rates to 
customers of the utilities that own NGS should be relatively low. 
However, because of CAP's nearly complete reliance on NGS for power, we 
estimate that CAP water rates would increase by $8.40 per AF, 
representing a 6 percent increase in rates to M&I users and a 14 
percent increase to tribes and agricultural water users.
    EPA understands that a potential increase in water rates to tribes 
is a critical issue for them. We note that, as described in the 
following section, past pollution control investments at this facility 
have made use of alternative financing methods that limited impacts on 
CAP water rates. Furthermore, the NREL report indicated that mechanisms 
may exist to help avoid or mitigate the estimated level of impact. EPA, 
in conjunction with DOI and DOE, have committed to work together on 
several short- and long-term goals, including innovative clean energy 
options for electricity generation and seeking funding to cover 
expenses for the federal portion of pollution control at NGS. However, 
it is not clear at this time whether or what type of mechanisms might 
be available to lessen increased costs. Therefore, as explained further 
below, EPA believes that the potential economic impacts discussed in 
this section argue for thoughtful consideration of how flexibility in 
the compliance timeframe can be provided consistent with the air 
quality goals of the Clean Air Act.
    EPA seeks comment on opportunities to reduce and/or avoid 
significant impacts on tribes while ensuring visibility protection for 
the 11 affected Class I areas.
iii. Factor 3: Existing Controls at the Facility
    As stated previously, NGS currently uses hot-side ESPs to control 
PM. To reduce emissions of SO2, SRP installed wet limestone 
FGDs over the period 1997-1999 on each unit, as required under a FIP 
issued by EPA on October 3, 1991 (56 FR 50172, codified at 40 CFR 
49.5513(d)(1)), to remedy visibility impairment at the Grand Canyon 
National Park that was reasonably attributable to NGS. The total cost 
of the FGD units was $420 million. Reclamation's 24.3 percent share of 
the FGD units was funded through CAP construction appropriations and 
CAWCD is repaying these costs to the federal government as part of 
total CAP project costs over a 50-year period. The 1991 FIP set an 
emission limit for SO2 of 0.10 lb/MMBtu on a plant-wide 
rolling annual average basis. On March 5, 2010 (75 FR 10174), EPA 
issued a gap-filling FIP for NGS to federalize emission limits for PM 
of 0.06 lb/MMBtu on a plant-wide 3-hour average basis, an opacity limit 
of 20 percent, and a 3-hour average SO2 limit of 1 lb/MMBtu. 
The SO2 emission limit in the final 2010 FIP ensures that 
actual SO2 emissions from NGS will remain 90 percent lower 
on an annual basis than they were before the scrubbers were installed 
to comply with the 1991 visibility FIP. Additionally, EPA's final MATS 
rule set a filterable PM limit of 0.03 lb/MMBtu. This limit applies to 
Units 1-3 at NGS.
    Prior to 2009, NGS used close-coupled over fire air (CCOFA) to 
control NOX emissions. In April 2009, SRP submitted a 
Prevention of Significant Deterioration (PSD) permit application to EPA 
Region 9 to voluntarily install and operate advanced combustion 
controls (LNB/SOFA) on Units 1--3. The LNB/SOFA triggered PSD review 
for significant increases in emissions of carbon monoxide (CO). 
Reclamation's share of the LNB/SOFA installation was funded from the 
Development Fund. These costs were then reimbursed by SRP on an 
amortized basis and the remaining balance was reimbursed by CAWCD.\44\ 
Because SRP submitted its permit application for the LNB/SOFA 
modification after EPA had begun its BART analysis for NGS, in the 
Ambient Air Quality Impact Report (AAQIR) \45\ for the proposed PSD 
permit (AZ 08-01) EPA stated that:
---------------------------------------------------------------------------

    \44\ See page 22 of NREL report.
    \45\ See EPA's Ambient Air Quality Impact Report, dated October 
2008, for the proposed PSD permit for NGS, in the docket for this 
proposed rulemaking.

    The early installation of the LNB/SOFA systems will not affect 
the baselines for cost or visibility improvements in the BART 
determination, and therefore will not influence EPA's determination 
of the proper NOX reductions required to be achieved from 
---------------------------------------------------------------------------
BART.

    Additionally, in an agreement \46\ regarding the EPA proposed PSD 
permit AZ 08-01, signed November 19, 2008, by Bill Heddon, Executive 
Director of Grand Canyon Trust (GCT) and Richard

[[Page 8285]]

Hayslip, Associate General Manager of SRP, GCT agreed to withdraw its 
November 14, 2008, comment letter to EPA, provided SRP understood that:
---------------------------------------------------------------------------

    \46\ See Agreement between Grand Canyon Trust and Salt River 
Project on NGS dated November 19, 2008, in the docket for this 
proposed rulemaking.

    Grand Canyon Trust stands by its support for the installation of 
low-NOX burners and separated overfire air at the Navajo 
Generating Station as long as their installation and operation will 
not prejudice in any way the implementation of more effective 
NOX and particulate matter controls (including SCR or 
SNCR, and baghouse technology) to more fully address Navajo's 
visibility impacts under the reasonable attribution and regional 
---------------------------------------------------------------------------
haze programs.

    SRP installed LNB/SOFA combustion controls on Unit 3 in 2009, on 
Unit 2 in 2010, and on Unit 1 in 2011. Therefore, all three units 
currently operate with modern advanced combustion controls and are 
required to meet the NOX limit set in the final PSD permit 
issued by EPA on November 20, 2008, of 0.24 lb/MMBtu on a 30-day 
rolling average.\47\
---------------------------------------------------------------------------

    \47\ See final PSD permit issued by EPA Region 9 dated November 
20, 2008, in the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    Because EPA, GCT, and SRP agreed that the installation of advanced 
combustion controls would not affect or prejudice our BART 
determination for NGS, EPA's analysis of the cost effectiveness of SCR 
used the baseline emission rate from 2001--2003, prior to the 
installation of the LNB/SOFA. However, because EPA's proposed BART 
determination is being issued for public comment in 2013, after the 
installation of advanced combustion controls has been completed on all 
units, EPA is also providing cost effectiveness information calculated 
using LNB/SOFA as the baseline, which is equivalent to calculating 
incremental cost effectiveness of SCR+LNB/SOFA compared to LNB/SOFA 
alone (see Table 3). These values are also discussed as the incremental 
cost effectiveness estimates in Section 3 of the TSD for this proposed 
rulemaking. The affordability and rate impact analysis, discussed 
above, considers the installation of LNB/SOFA over the period of 2009--
2011 as expenditures that have already occurred; therefore, additional 
calculations for the analysis using LNB/SOFA as baseline are not 
needed.
    Based on the information above, EPA is proposing to determine that 
consideration of the existing controls at NGS does not warrant 
eliminating SCR as the top technically feasible and cost effective 
NOX emission control technology for NGS.
iv. Factor 4: Remaining Useful Life of Facility
    EPA is proposing to determine that the appropriate remaining useful 
life for NGS, as used as an amortization period for the cost of 
controls, should be 20 years. The various uncertainties currently 
facing NGS, including ownership changes and current lease and right-of-
way agreement negotiations, could affect NGS's ability to operate into 
the future; however, without an enforceable obligation for a shorter 
useful life, EPA has determined it is most appropriate to rely on a 20-
year useful life as the default for amortization purposes.
    EPA also understands from recent discussions on the lease renewal 
for NGS that the owners may be negotiating the renewal lease period to 
end in 2044 (over 30 years from 2013). Although a 30-year amortization 
period may be more realistic for NGS, a longer amortization period 
would reduce the annualized cost of capital improvements and, thus, 
decrease the $/ton cost effectiveness value. Because the use of the 
shorter amortization period is more conservative (increases the $/ton 
cost effectiveness value), EPA's calculations of cost effectiveness in 
our analysis rely on a 20-year amortization period. However, EPA 
recognizes that if the capital costs of controls can be amortized over 
a longer period, the cost effectiveness of new controls would appear 
more favorable.
    The default amortization period used in the EPA Control Cost Manual 
is 20 years,\48\ and given the indications that the remaining life of 
NGS could be shorter or longer, EPA is proposing to determine that use 
of a 20-year remaining useful life is appropriate.
---------------------------------------------------------------------------

    \48\ See EPA Control Cost Manual, Section 6, page 2-48, 
available from http://www.epa.gov/ttncatc1/dir1/c_allchs.pdf.
---------------------------------------------------------------------------

v. Factor 5: Degree of Visibility Improvement
    The fifth factor to consider under EPA's BART guidelines is the 
degree of visibility improvement from the BART control options. See 59 
FR 39170. The BART guidelines recommend using the CALPUFF air quality 
dispersion model to estimate the visibility improvements from 
alternative control technologies at each nearby Class I area, typically 
those within a 300 km radius of the source, and to compare these to 
each other and to the impact of the baseline (i.e., current) source 
configuration. EPA included in our modeling analysis the 11 Class I 
areas that are within 300 km of NGS. These areas are listed in Table 10 
below, along with estimated visibility impacts.
    Visibility is often described in terms of visual range in 
kilometers or miles. The deciview scale is an alternative measure of 
visibility impairment: lower deciview values represent better 
visibility and greater visual range, while increasing deciview values 
represent increasingly poor visibility.
    EPA's BART guidelines recommend comparing visibility improvements 
between control options using the 98th percentile of 24-hour delta 
deciviews, which is roughly equivalent to the facility's 8th highest 
visibility impact day. The 98th percentile is recommended rather than 
the maximum value to avoid undue influence from unusual meteorological 
conditions. The ``delta'' refers to the difference between total 
deciview impact from the facility including natural background, and 
deciviews of natural background alone, so ``delta deciviews'' is the 
estimate of the facility's impact on visibility. In practice, 
``deciview impact'' is often used in place of ``delta deciview impact'' 
and the two terms should be assumed to have the same meaning.
    In the BART guidelines, EPA noted that a 1.0 deciview impact from a 
source is sufficient to ``cause'' visibility impairment and that a 
source with a 0.5 deciview impact would ``contribute'' to visibility 
impairment.
    CALPUFF modeling is generally performed according to a modeling 
protocol, which sets out the model version, choice of geographic 
domain, input preparation procedures, and the various model settings to 
be used. EPA's modeling for this proposed rulemaking generally followed 
the same approach in SRP's modeling,\49\ which in turn was based on the 
2006 Western Regional Air Partnership (WRAP) protocol,\50\ developed 
for subject-to-BART screening modeling of NGS and other western 
facilities. The WRAP protocol was reviewed by multiple regulatory 
agencies, including EPA, the National Park Service, the U.S. Forest 
Service (USFS), and air agencies of WRAP member states; it was accepted 
by

[[Page 8286]]

WRAP states for use in their Regional Haze SIPs. Differences between 
the SRP approach and the WRAP approach are discussed in more detail in 
the TSD for this proposed rulemaking.
---------------------------------------------------------------------------

    \49\ The SRP approach, and differences from the WRAP protocol, 
are described in Appendix A of Revised BART Analysis for the Navajo 
Generating Station Units 1-3, ENSR Corporation, Document No. 05830-
012-300, January 2009, Salt River Project, Tempe, AZ, in the docket 
for this proposed rulemaking.
    \50\ CALMET/CALPUFF Protocol for BART Exemption Screening 
Analysis for Class I Areas in the Western United States, Western 
Regional Air Partnership (WRAP); Gail Tonnesen, Zion Wang; Ralph 
Morris, Abby Hoats and Yiqin Jia, August 15, 2006. Available on UCR 
Regional Modeling Center web site, BART CALPUFF Modeling, http://pah.cert.ucr.edu/aqm/308/bart.shtml.
---------------------------------------------------------------------------

    While EPA generally followed the SRP approach, EPA used different 
ammonia background concentrations and a different method for converting 
CALPUFF concentrations to visibility impact estimates. These 
differences, described in detail below, result in substantial 
differences in predicted visibility impacts.
    The values of ammonia background concentrations are important 
because ammonia is a component of particulate ammonium sulfate and 
ammonium nitrate, both of which degrade visibility. Ammonia is present 
in the air from both natural and anthropogenic sources. The latter may 
include motor vehicles, livestock operations, fertilizer application 
associated with farming, and ammonia slip from the use of ammonia in 
SCR and SNCR technologies to control NOX emissions. 
Sensitivity of the model results to other ammonia assumptions are 
discussed in the TSD, and do not change the ranking of control options 
for evaluating visibility improvement, or the overall conclusions of 
the visibility analysis.
    The U.S. Forest Service informed EPA that the ammonia background 
concentrations modeled by Arizona Public Service for the Four Corners 
Power Plant in January 2008 were lower than observed 
concentrations.\51\ The USFS recommended a method of back-calculating 
the ammonia background based on monitored values of sulfate and 
nitrate. EPA's ANPRM provided modeling results based on using the 
USFS's back-calculation methodology, for both Four Corners and NGS.
---------------------------------------------------------------------------

    \51\ Letter from Rick Cables (Forest Service R2 Regional 
Forester) and Corbin Newman (Forest Service R3 Regional Forester) to 
Deborah Jordan (EPA Region 9 Air Division Director) dated March 16, 
2009, document number 0016 in the docket for the ANPRM: EPA-R09-OAR-
2009-0598.
---------------------------------------------------------------------------

    The visibility modeling supporting today's proposal for NGS uses a 
constant ammonia background of 1 ppb, which is the default value 
recommended for western areas by the Interagency Workgroup on Air 
Quality Modeling.\52\ The TSD describes the results of sensitivity 
simulations using different concentrations of background ammonia. This 
includes supplemental modeling using a range of 0.2-1 ppb ammonia 
background concentrations as used by SRP, as well as supplemental 
modeling using back-calculated ammonia concentrations,\53\ with a 
thorough discussion of the back-calculation methodology.
---------------------------------------------------------------------------

    \52\ Interagency Workgroup On Air Quality Modeling (IWAQM) Phase 
2 Summary Report And Recommendations For Modeling Long Range 
Transport Impacts (EPA-454/R-98-019), EPA OAQPS, December 1998, 
available at: http://www.epa.gov/scram001/7thconf/calpuff/phase2.pdf, and in the docket for this proposed rulemaking.
    \53\ Ammonia concentrations for Mesa Verde National Park were 
not based on the back-calculation method for these simulations, but 
instead were derived from measured ammonia concentrations in the 
Four Corners area, as described in Mark E. Sather et al., 2008. 
``Baseline ambient gaseous ammonia concentrations in the Four 
Corners area and eastern Oklahoma, USA''. Journal of Environmental 
Monitoring, 2008, 10, 1319-1325, DOI: 10.1039/b807984f).
---------------------------------------------------------------------------

    Aside from the background ammonia assumptions, the other 
significant difference between EPA's modeling approach and the SRP 
approach is the procedure for calculating visibility impacts within 
CALPOST, a CALPUFF post-processor. This difference has two aspects, the 
``visibility method'' used to convert CALPUFF pollutant concentrations 
into deciviews, and the choice of natural background conditions, which 
affects the calculation of delta deciviews.
    A key choice in the visibility method is between Method 6 and 
Method 8, implementing the original and the revised IMPROVE equation, 
respectively. The IMPROVE equation converts monitored or modeled 
pollutant concentrations into extinction, which is the fraction of 
light removed from a sight path; deciviews are calculated from 
extinction. Many BART assessments were performed before the revised 
IMPROVE equation was incorporated into CALPUFF, so the original 
equation was generally used for past assessments. However, in this 
proposal EPA is primarily relying on the revised IMPROVE equation. The 
revised IMPROVE equation is currently preferred by the Federal Land 
Managers,\54\ because it has less bias in estimating visibility under 
the worst visibility conditions.\55\ As discussed in the TSD, EPA 
performed sensitivity simulations and found that using the original 
IMPROVE equation would on average give baseline impacts about 3 percent 
lower than using the revised equation, with a range of 15 percent lower 
to 9 percent higher depending on the Class I area.
---------------------------------------------------------------------------

    \54\ Federal Land Managers' Air Quality Related Values Work 
Group (FLAG) Phase I Report--Revised (2010), U.S. Forest Service, 
National Park Service, U.S. Fish and Wildlife Service, October 2010. 
Available on web page http://www.nature.nps.gov/air/Permits/flag.
    \55\ Pitchford, Marc, 2006, ``New IMPROVE algorithm for 
estimating light extinction approved for use'', The IMPROVE 
Newsletter, Volume 14, Number 4, Air Resource Specialists, Inc.; web 
page: http://vista.cira.colostate.edu/improve/Publications/news_letters.htm; Revised IMPROVE algorithm for Estimating Light 
Extinction from Particle Speciation Data, IMPROVE, January 2006. web 
page: http://vista.cira.colostate.edu/improve/publications/graylit/gray_literature.htm.
---------------------------------------------------------------------------

    The BART Guidelines recommend that visibility impacts should be 
estimated in deciviews relative to natural background conditions, that 
is, in delta deciviews. In accordance with the BART Guidelines, EPA 
used the average of the best 20 percent days as background.\56\
---------------------------------------------------------------------------

    \56\ It is worth noting that an EPA guidance memo suggests that 
the comparison can use either annual average background conditions, 
or the average of the best (cleanest) 20 percent of days. ``Regional 
Haze Regulations and Guidelines for Best Available Retrofit 
Technology (BART) Determinations'', memorandum from Joseph W. 
Paisie, EPA OAQPS, July 19, 2006, p. 2.
---------------------------------------------------------------------------

    Table 9 presents the visibility impacts of the 98th percentile of 
24-hour delta deciviews for each Class I area for each year, averaged 
over 2001-2003.\57\ For each Class I area, the table shows the deciview 
impact for the base case, and the deciview improvement from that 
baseline impact when controls are applied. Also shown are the 
cumulative deciview impacts, which are the simple sum of impacts or 
improvements over all the Class I areas. Table 10 shows the average 
number of days with a baseline impact or improvement of at least 0.5 
dv; it also shows two ``dollars per deciview'' measures of cost 
effectiveness, both of which divide the total annual cost of the 
control in millions of dollars per year by an improvement in deciviews. 
For the first metric, ``$/max dv'', annual cost (Table 2) is divided by 
the 98th percentile deciview improvement at the Class I area with the 
greatest improvement (Table 9). The second metric, ``$/cumulative dv'', 
divides annual cost by the cumulative 98th percentile deciview 
improvement. In assessing the degree of visibility improvement from 
controls, EPA relied heavily on the maximum deciview improvement among 
the Class I areas and the number of areas showing improvement (i.e., 
all 11 Class I areas), with cumulative improvement providing a 
supplemental measure that combines information on the number of areas 
and on individual area improvement. The $/dv metrics shown in Table 10 
provide additional, cost-related information that supplements to the 
cost effectiveness ($/ton) that was considered in Factor 1: Cost of 
Compliance.
---------------------------------------------------------------------------

    \57\ EPA did not average the 98th percentiles from each year as 
did SRP, rather EPA used the 98th percentile from all the daily 
values from the three years taken together. This does not 
significantly affect the overall results.

[[Page 8287]]

    Table 9--EPA Modeling Results--Baseline Impacts and Improvement From NOX Controls, 98th Percentile Delta
                          Deciviews (dv) From 2001-2003, Using 1 ppb Ammonia Background
----------------------------------------------------------------------------------------------------------------
                                  Distance to    Baseline   Improvement from  Improvement from  Improvement from
                                      NGS         impact        LNB/SOFA        SNCR+LNB/SOFA     SCR+LNB/SOFA
          Class I area           -------------------------------------------------------------------------------
                                      (km)         (dv)       (dv)     (%)      (dv)     (%)      (dv)     (%)
----------------------------------------------------------------------------------------------------------------
Arches NP.......................          245          4.5      1.7       37      2.2       50      3.5       77
Bryce Canyon NP.................           96          4.9      1.6       33      2.3       46      3.6       74
Canyonlands NP..................          173          6.0      2.1       35      2.9       48      4.6       76
Capitol Reef NP.................           90          7.7      2.1       28      3.1       40      5.4       71
Grand Canyon NP.................           29          8.4      1.9       23      2.9       35      5.4       64
Mazatzal WA.....................          279          1.5      0.6       41      0.8       52      1.1       75
Mesa Verde NP...................          253          3.2      1.3       42      1.8       55      2.6       81
Petrified Forest NP.............          235          3.4      1.4       41      1.8       54      2.7       78
Pine Mountain WA................          287          1.3      0.5       41      0.7       54      1.0       75
Sycamore Canyon WA..............          204          2.4      0.9       37      1.2       50      1.8       75
Zion NP.........................          134          4.4      1.4       31      2.0       45      3.3       76
                                 -------------------------------------------------------------------------------
    Cumulative..................  ...........           48       16       33       22       45       35       73
----------------------------------------------------------------------------------------------------------------

  Table 10--EPA Modeling Results From 2001-2003, Using 1 ppb Ammonia Background--Additional Visibility Metrics
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                     Baseline
                                      Impact    Improvement From LNB/
                                                        SOFA
                                      Improvement from
                                        SNCR+LNB/SOFA
                                      Improvement From
                                        SCR+LNB/SOFA
----------------------------------------------------------------------------------------------------------------
Average number of days greater             130         27        21%         44        34%         72        55%
 than or equal to 0.5 dv at Class
 I area with most-impacted
 Baseline (Canyonlands NP).......
$/max dv (millions)..............          n/a       $2.5  .........       $9.3  .........      $11.8  .........
$/cumulative dv (millions).......          n/a       $0.3  .........       $1.3  .........       $1.8  .........
----------------------------------------------------------------------------------------------------------------

    As shown in Tables 9 and 10, the modeled visibility benefits of 
SCR+LNB/SOFA are substantially greater than those of SNCR+LNB/SOFA or 
LNB/SOFA. The modeled 98th percentile visibility improvement due to 
installation of LNB/SOFA equals or exceeds 0.5 deciviews at all 11 
Class I areas, exceeds 1 deciview at most of these Class I areas, and 
reaches 2.1 deciviews at two of these Class I areas. For SNCR+LNB/SOFA, 
the modeled visibility improvement exceeds 0.5 deciviews at all 11 
Class I areas, exceeds 1 deciview at most of these Class I areas, and 
reaches roughly 3 deciviews at three of these Class I areas. For 
SCR+LNB/SOFA, the improvement exceeds 1 deciview at all 11 Class I 
areas, exceeds 2 deciviews at most of these areas, and reaches 5.4 
deciviews at two of these areas.
    EPA is proposing to determine that the anticipated visibility 
benefits of NOX controls at NGS supports SCR+LNB/SOFA as the 
most stringent technically feasible and cost effective NOX 
emission control technology for NGS.

C. EPA's Proposed NOX Emission Limit for NGS

    The BART Guidelines give states and EPA discretion in determining 
the relative weight of each factor in making a BART determination. A 
summary of the results of EPA's factor analysis is shown in Table 11.

                        Table 11--Summary of EPA's Five Factor NOX BART Analysis for NGS
----------------------------------------------------------------------------------------------------------------
                Factor                         LNB/SOFA              SNCR+LNB/SOFA             SCR+LNB/SOFA
----------------------------------------------------------------------------------------------------------------
    Limit(lb/MMBtu)..................  0.24...................  0.18...................  0.055.
1 Average Cost Effectiveness.........  $486/ton...............  $1,745/ton.............  $2,240/ton.
    Incremental Cost Effectiveness...  N/A....................  $ 4,110/ton............  $2,933/ton (v. SNCR),
                                                                                          $3,315/ton (v. LNB).
----------------------------------------------------------------------------------------------------------------
2 Comparison of SCR vs. Market         Increase in Net Present Value from SCR = $648 million vs. NPV from Market
 (compliance by 2018).                                         Cases = $673-$1040 million.
----------------------------------------------------------------------------------------------------------------
    SRP Electricity Rate in 2018       9.26[cent]/kWh           9.28[cent]/kWh.........  9.32[cent]/kWh.
     (compliance by 2018).              (Baseline).
    Energy-Only Water Rate in 2018     $58/acre-foot            $61/acre-foot..........  $66/acre-foot.
     (compliance by 2018).              (Baseline).
----------------------------------------------------------------------------------------------------------------
3 Existing Controls..................                       LNB/SOFA installed in 2009-2011
4 Remaining Useful Life..............   EPA Default Amortization Period is 20 years. NGS seeking to extend lease
                                                                         to 2044
----------------------------------------------------------------------------------------------------------------
5 Highest Visibility Benefit of        2.1 dv.................  3.1 dv.................  5.4 dv.
 Controls.
    Sum of Visibility Benefit from 11  16 dv..................  22 dv..................  35 dv.
     Class I areas.
----------------------------------------------------------------------------------------------------------------

[[Page 8288]]

    Based on our five factor analysis, EPA is proposing to determine a 
plantwide emission limit of 0.055 lb/MMBtu as BART for NGS, based on a 
rolling average of 30 boiler operating days, achievable with the 
installation of SCR. We are proposing this emissions limit as BART for 
NOX because: (1) The average and incremental costs of SCR 
are cost effective; (2) EPA anticipates that the installation and 
operation of SCR to meet the proposed BART limit should not cause the 
owners of NGS to retire units and that the history of funding air 
pollution control at NGS suggests that other significant impacts may be 
avoided or mitigated; (3) the voluntary installation of LNB/SOFA in 
2009-2011 at NGS has achieved some NOX reductions, but not 
the level achievable with SCR; (4) NGS is projected to continue 
operation at least to 2044; and (5) the anticipated visibility 
improvements from SCR would be significant at 11 Class I areas. Based 
on these factors, EPA is proposing to determine that an emission limit 
of 0.055 lb/MMBtu is BART for NGS. This emission limit represents a 
reduction of nearly 80 percent from the existing permitted 
NOX emission limit.

D. EPA's Proposed BART Alternative

    Under the CAA, compliance with emission limits determined as BART 
must be ``as expeditious as practicable but in no event later than five 
years'' after the effective date of the final BART determination (See 
CAA 169A(b)(2)(A) and (g)(4)). That date would be 2018, if the rule is 
finalized in 2013, or 2019 if, due to a need for extended public 
discussion or a supplemental proposal, the rule is finalized in 
2014.\58\ As previously stated, EPA recognizes that the circumstances 
related to NGS create unusual and significant challenges for a 5-year 
compliance schedule. We therefore have considered other options that 
are consistent with the CAA and RHR, that also provide for a more 
flexible, extended compliance schedule.
---------------------------------------------------------------------------

    \58\ For simplicity, EPA has assumed the rule will be finalized 
in 2013 in our analysis of alternatives to BART.
---------------------------------------------------------------------------

    EPA's BART regulations allow an alternative to BART provided the 
alternative results in greater reasonable progress than would have been 
achieved through installation of BART. 40 CFR 51.308(e)(2). The 
regulations provide that an alternative to BART must ensure that all 
necessary emission reductions occur during the period of the first 
long-term strategy for regional haze, or in 2018 for States that were 
required to submit regional haze SIPs in December 2007. 40 CFR 
51.308(e)(2)(iii). Thus, the RHR provided five additional years for the 
implementation of alternatives to BART (known as ``better than BART'').
    In today's proposal, we are proposing a BART alternative 
(Alternative 1) for NGS that would require the plant to meet a 
NOX limit of 0.055 lb/MMBtu on one unit per year in 2021, 
2022, and 2023. We also describe and solicit comment on a framework for 
extending the compliance schedule beyond 2023, and will issue a 
supplemental proposal if we receive comments supporting a later 
compliance date.
i. Compliance Flexibility Is Necessary or Appropriate
    EPA is proposing an alternative to provide the owners of NGS 
options for flexibility in achieving emissions reductions required 
under our proposed BART determination. SRP expressed concern that the 
owners of NGS may choose to retire the facility if faced with the 
financial risk of making a large capital investment within 5 years 
without also having certainty that the lease and contract re-
negotiations would conclude in a timely and favorable manner. EPA 
understands that the owners of NGS face numerous uncertainties and the 
unusual requirement to comply with NEPA for lease and other rights-of-
way approvals, which apply only to NGS and Four Corners Power Plant. 
EPA also understands the importance of the continued operation of NGS 
and the Kayenta Mine to the Navajo Nation and Hopi Tribe as a source of 
direct revenues through lease payments or coal royalties, as well as 
the importance of Reclamation's share of NGS to supply water to many 
tribes located in Arizona in accordance with several water settlement 
acts.
    In this proposal, EPA is proposing Alternative 1 as a ``better than 
BART'' alternative that addresses the uncertainties described in the 
previous section. We are also requesting comment on two other 
alternatives that provide longer schedules for compliance. Because we 
would need additional information to propose to approve a longer 
compliance schedule beyond the timeframe in Alternative 1, we would 
supplement our proposal if we intend to finalize either of the longer 
compliance schedules discussed below. As discussed below, all of the 
alternatives include a NOX emission rate of 0.055 lb/MMBtu, 
but vary in the amount of time provided for compliance. Alternative 1 
and the other two on which we are soliciting comment assume that NGS 
will continue to operate well into the future, but EPA recognizes that 
there may be changes in energy demand or in how energy is supplied in 
this region that could form the basis of other options. EPA welcomes 
comment on our proposed BART determination and proposed alternative 
(Alternative 1), as well as the other alternatives we describe here and 
other options from interested parties.
ii. Background on Alternative Measures to BART
    EPA has previously provided flexibility to the Four Corners Power 
Plant (FCPP), also located on the Navajo Nation, to achieve emission 
reductions of NOX under either BART or an alternative 
measure to BART. 77 FR 51619 (August 24, 2012). Changes in ownership at 
FCPP and differences between the five boilers operated at FCPP, 
contributed, in part, to a decision by the owners of FCPP to put forth 
an alternative emission control strategy that included closure of the 
three smaller and less efficient units and somewhat delayed 
installation of SCR on the two largest units, resulting in greater 
emission reductions than under EPA's proposed BART determination. On 
February 25, 2011, EPA proposed this alternative emission control 
strategy as an alternative measure that would result in more progress 
towards achieving visibility improvements in the surrounding Class I 
areas (76 FR 10530). In that Supplemental Proposal, EPA put forth the 
legal and historical background for proposing a BART Alternative (76 FR 
10533). Briefly, the RHR allows states (and EPA) the ability to 
consider alternatives to BART (40 CFR 51.308(e)(2)). The regulation 
requires a demonstration, based on a weight of evidence evaluation, 
that the alternative measure will achieve greater reasonable progress 
than would have resulted from installation and operation of BART. The 
regulation provides that:

[i]f the distribution of emissions is not substantially different 
than under BART, and the alternative measure results in greater 
emission reductions, then the alternative measure may be deemed to 
achieve greater reasonable progress.

    40 CFR 51.308(e)(3). The RHR also requires that emission reductions 
from the alternative program take place during the period of the first 
long-term strategy for regional haze (40 CFR 51.308(e)(2)(iii), which 
ends in 2018. EPA's final action on FCPP required the facility to 
achieve emission reductions under the alternative emission control 
strategy by July 31, 2018.

[[Page 8289]]

iii. Legal Rationale for Extending Compliance Schedule for Alternative 
Measures for NGS
    For NGS, EPA is proposing a BART alternative (Alternative 1) 
consistent with 40 CFR 51.308(e)(2). In particular, EPA is proposing 
that consideration of a compliance schedule beyond 2018 for Alternative 
1 at NGS is appropriate for several reasons, including the singular 
importance of NGS to many tribes located in Arizona and their water 
settlement agreements with the federal government, the numerous 
uncertainties facing the owners of NGS, the requirement for NEPA review 
of a lease extension, and the early and voluntary installation of 
modern combustion controls over the 2009-2011 timeframe. The timeframe 
for compliance would not, in itself, avoid or mitigate increases in 
water rates for tribes located in Arizona; however, it would provide 
time for the collaborating federal agencies to explore options to avoid 
or minimize potential impacts to tribes, including seeking funding to 
cover expenses for the federal portion of pollution control at NGS.
    EPA is exercising its authority and discretion under section 
301(d)(4) of the Clean Air Act, 42 U.S.C. 7601(d)(4), and 40 CFR 
49.11(a) to propose an extended timeframe for an alternative measure 
under the RHR for NGS. EPA considers this extension of time to be 
consistent with the general programmatic requirements. In the 1999 RHR, 
EPA provided states with the flexibility to adopt alternatives to BART 
but required any such alternative to be fully implemented by the end of 
the first planning period. 40 CFR 51.308(e)(2)(iii). States and 
regulated sources accordingly had almost 20 years under the RHR to 
design and implement alternative measures to BART. Because of the 
myriad stakeholder interests and complex governmental interests unique 
to NGS, we are only now addressing the BART requirements for NGS. Given 
the timing of our proposed action, any BART alternative would need to 
be fully implemented on the same timeframe as BART, under the current 
regional haze regulations. For all the reasons explained above, we 
consider it appropriate to consider an extended compliance period for 
NGS. Therefore, notwithstanding the requirements in 40 CFR 
51.308(e)(2)(iii) for BART alternatives to be implemented by 2018 (if 
the rule is finalized in 2013), we are proposing in Alternative 1 to 
require that emission reductions from an alternative to BART at NGS 
take place by 2023.
    Our proposal to require emission reductions by 2023 is also 
supported by the Tribal Authority Rule codified at 40 CFR 49.11(a). The 
TAR reflects EPA's commitment to promulgate ``such Federal 
implementation plan provisions as are necessary or appropriate to 
protect air quality'' in Indian country where a tribe either does not 
submit a tribal implementation (TIP) or does not receive approval of a 
submitted TIP. (Emphasis added.)
    The use of the term ``provisions as are necessary or appropriate'' 
indicates EPA's determination that it may only be necessary or 
appropriate to promulgate a FIP of limited scope. The United States 
Court of Appeals for the Tenth Circuit has previously endorsed the 
application of this approach in a challenge to the FIP for the Four 
Corners Power Plant, stating: ``[40 CFR 49.11(a)] provides the EPA 
discretion to determine what rulemaking is necessary or appropriate to 
protect air quality and requires the EPA to promulgate suc 
rulemaking.'' Arizona Public Service Company v. EPA. The court went on 
to observe: ``Nothing in section 49.11(a) requires EPA * * * to submit 
a plan meeting the completeness criteria of [40 CFR part 51] Appendix 
V.'' Id. While the decision in Arizona Public Service Company focused 
on 40 CFR Part 51 Appendix V, EPA believes the same considerations 
apply to the promulgation of a FIP intended to address the objectives 
set forth in 40 CFR 51.308(e)(2). In particular, EPA has discretion to 
determine if and when a FIP addressing the objectives set forth in 40 
CFR 51.308(e)(2) should be promulgated, which necessarily includes 
discretion to determine the timing for complying with the requirements 
of any such FIP.
iv. Description and Analysis of a Proposed Alternative Measure to BART
    EPA recognizes that the owners of NGS elected to install modern 
LNB/SOFA on one unit per year at the facility over the 2009-2011 
timeframe. The NOX reductions achieved by installing the 
modern LNB/SOFA were not required under any regulatory program of the 
CAA; therefore, installation of new combustion controls (i.e. LNB/SOFA) 
was voluntary. SRP obtained a pre-construction PSD permit from EPA in 
2008 for a significant increase in CO emissions, a criteria pollutant 
that does not impair visibility, as a result of the installation and 
operation of new combustion controls. EPA notes that LNB/SOFA is a 
potential control option evaluated in this BART analysis, and that LNB/
SOFA is typically used in conjunction with installation of SCR or SNCR 
to first reduce emissions of NOX formed during combustion 
before further control by the downstream post-combustion control 
system. EPA recognizes that the owners of NGS could have waited until a 
final BART determination was issued and effective before installing any 
new controls, including the LNB/SOFA.
    SRP's early and voluntary installation of LNB/SOFA over the 2009-
2011 timeframe resulted in more NOX emissions reductions 
during the 2009-2018 period than if LNB/SOFA were installed 
concurrently with SCR by 2018. Our BART proposal requires NGS to 
achieve the BART limit of 0.055 lb/MMBtu no later than 5 years after 
our final rule. For purposes of this evaluation, we are assuming the 
rule is finalized in 2013 and that NGS would be required to meet the 
emissions limit achievable with SCR+LNB/SOFA 5 years after 2013, or by 
2018. EPA is proposing to apply these early and voluntary 
NOX emission reductions as a credit in our analysis of BART 
alternatives. EPA has determined that application of a credit for 
NOX reductions achieved by LNB/SOFA during the 2009-2018 
period is appropriate here because if LNB/SOFA were not already 
installed at NGS, the BART determination EPA is proposing today would 
have incorporated installation of LNB/SOFA in combination with SCR as 
BART. We calculate that the early NOX emission reductions 
achieved by installation of LNB/SOFA in the 2009-2011 timeframe at NGS 
totals 92,715 tons.\59\ EPA is proposing to find that an alternative is 
``better than BART'' if the adjusted total NOX emissions 
over the 2009-2044 timeframe (i.e., emissions remaining after 
subtracting 92,715 tons for the LNB/SOFA credit for early and voluntary 
emission reductions) are less than total emissions under our proposed 
BART determination for the same period (i.e., 358,974 tons).
---------------------------------------------------------------------------

    \59\ See spreadsheet titled ``BART Alternatives.xlsx'' in the 
docket for this proposed rulemaking.
---------------------------------------------------------------------------

    We are proposing in Alternative 1, as an alternative to BART, to 
require NGS to meet a NOX limit of 0.055 lb/MMBtu on one 
unit per year in 2021, 2022, and 2023. EPA notes that the installation 
years for Alternative 1 coincide with scheduled major outages at NGS.
    As shown in Table 12 below, EPA has calculated that the total 
amount of NOX that would be emitted from NGS over the 2009-
2044 timeframe under EPA's proposed BART determination will

[[Page 8290]]

equal 358,974 tons.\60\ EPA has also calculated that the total 
NOX emissions over 2009-2044 under Alternative 1, with the 
credit for the actual early and voluntary emission reductions, will be 
338,189 tons. Based on its adjusted total NOX emissions, 
Alternative 1 meets the ``better than BART'' threshold (i.e., 338,189 
tons is less than 358,974 tons). Therefore, EPA is proposing 
Alternative 1 (compliance with BART emission limits on one unit per 
year in 2021, 2022, and 2023) as a better-than-BART alternative that 
results in greater reasonable progress than would be achieved under 
BART.
---------------------------------------------------------------------------

    \60\ Emissions over 2009-2044 for EPA's proposed BART 
determination are calculated assuming compliance with a proposed 
limit of 0.055 lb/MMBtu by 2018, and actual installation years for 
LNB/SOFA, i.e., 2009-2011 period. EPA has selected the period 2009-
2044 as most appropriate because it includes the early installation 
dates for LNB/SOFA and extends until the anticipated 2044 
termination date of the new site lease currently under negotiation 
between the Navajo Nation and the owners of NGS. Other timeframes 
can be used for the ``better than BART'' analysis (e.g., 2001-2064), 
however, these timeframes are unlikely to materially alter the 
analysis.

             Table 12--Analysis of Proposed BART Alternative
------------------------------------------------------------------------
                                       BART            Alternative 1
------------------------------------------------------------------------
Installation Years............  by 2018..........  2021, 2022, and 2023.
Total Emissions (tons)........  358,974..........  430,904.
LNB/SOFA Credit (tons)........  n/a..............  92,175.
Adjusted Emissions (tons).....  n/a..............  338,189.
Better than BART?.............  n/a..............  Yes.
                                                   (338,189 tons SOFA credit for early NOX 
reductions) exceed total emissions under BART. Table 13 refers to the 
amount by which the alternative exceeds BART as the ``NOX 
emissions reduction deficit.'' For Alternatives 2 and 3, the 
NOX emission reduction deficits are 15,179 tons and 33,160 
tons, respectively, showing that as the compliance dates under a given 
alternative extend further into the future, the NOX emission 
reduction deficit grows. Because Alternatives 2 and 3 do not by 
themselves meet the ``better than BART'' threshold, EPA views 
Alternatives 2 and 3 as viable only if the owners of NGS achieve 
additional emission reductions to bridge the deficit in NOX 
emission reductions. These additional emission reductions could be 
implemented as short-term (e.g., for some subset of the period 2009-
2044) or long-term (e.g., achieved annually until 2044) measures.
    As shown in Table 13, if the owners of NGS complied with the 
schedule under Alternative 2 and implemented a short-term emission 
reduction bridge (for example, over a 10-year period from 2013-2023), 
the owners of NGS would need to achieve additional NOX 
emission reductions of 1,518 tons per year. Similarly, implementing a 
long-term emission reduction bridge (for example, over the period of 
2013-2044) would require additional NOX emission reductions 
of 490 tons per year. The short and long term emission reduction 
bridges in Table 13 provide examples of how additional emission 
reductions might be distributed over time. The actual annual emission 
reductions that NGS would need to bridge the NOX deficit 
would depend, not only on the size of the deficit, but on the specific 
measures and time periods chosen by the owners of NGS. Depending on the 
magnitude of the required emission bridge, EPA anticipates that 
reductions could be achieved without expending substantial funds before 
the lease, NEPA review, and other processes are completed. Such 
reductions could be implemented as NOX reductions achieved 
annually in equal increments to meet the emissions bridge, or some 
other structure that achieves the total emission reductions at 
different intervals. Thus, EPA is soliciting comment on how NGS could 
achieve the emission reduction bridge necessary for these longer 
compliance schedules to meet the ``better than BART'' threshold and 
will supplement our proposal before an alternative with a compliance 
schedule beyond 2023 is finalized.

                                                      Table 13--Analysis of Additional Alternatives
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              BART                           Alternative 2                                  Alternative 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Installation Years.................  by 2018...............  2023, 2024, and 2025.........................  2024, 2025, and 2026.
Total Emissions (tons).............  358,974...............  466,869......................................  484,849.
LNB/SOFA Credit (tons).............  n/a...................  92,175.......................................  92,175.
Adjusted Emissions (tons)..........  n/a...................  374,154......................................  392,134.
Better than BART?..................  n/a...................  No...........................................  No.
Emission Reduction Deficit (tons)..  n/a...................  15,179.......................................  33,160.
Short-term Emission Bridge (tpy)...  n/a...................  1,518 tpy over 2013-2023.....................  3,015 tpy over 2013-2024.
(years in place)...................

[[Page 8291]]

 
Long-term Emission Bridge (tpy)....  n/a...................  490 tpy over 2013-2044.......................  1,070 tpy over 2013-2044.
(years in place)...................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In summary, EPA is requesting comment on technically and 
economically feasible technologies or mechanisms to serve as 
enforceable emission reduction bridges (whether short or long term) 
that would allow consideration of alternatives that would not otherwise 
meet the ``better than BART'' threshold for NOX (e.g., 
Alternatives 2 or 3 or other alternatives suggested by stakeholders 
during the public comment period for this proposed rule). EPA also 
seeks comment on the schedule on which reductions from an emissions 
bridge would need to be achieved. If EPA receives proposals from 
stakeholders during the comment period that put forth a plan for 
specific emission reduction bridges to bring total emissions over 2009-
2044 of an extended compliance schedule (beyond 2023) at or below the 
``better than BART'' threshold of 358,974 tons, EPA may issue a 
supplemental proposal for public comment.

F. Solicitation of Comments

    EPA is requesting comment on our proposed level of BART control of 
0.055 lb/MMBtu for NOX. We are also requesting comment on 
our proposed BART Alternative 1 with a compliance timeframe of 2021-
2023, resulting in greater reasonable progress than would otherwise be 
achieved under BART by crediting NGS for its early and voluntary 
installation of LNB/SOFA.
    EPA is requesting comment on Alternatives 2 and 3 that provide 
additional time for compliance and would require the owners of NGS to 
implement additional emission reductions in order to assure greater 
reasonable progress than would otherwise be achieved under BART. In 
particular, we are requesting comment from stakeholders on potential 
technologies that can serve to bridge the NOX emission 
reduction deficit for compliance schedules that do not, by themselves, 
meet the ``better than BART'' threshold (i.e., Alternatives 2 and 3). 
EPA will publish a supplemental proposal before we would finalize any 
alternative that requires an emission reduction bridge to be ``better 
than BART''.
    In recognition of the importance of NGS to the local and regional 
economy and the multitude of interests and stakeholders involved, EPA 
is providing a 90-day comment period on this proposed rulemaking and 
will continue to engage in consultation with tribes located in Arizona 
during the rulemaking process. EPA seeks comment on the analysis and 
conclusions presented in this proposal and invites suggestions for 
other alternatives that reduce NOX emissions at NGS and its 
contribution to visibility impairment while providing long-term, 
sustainable benefits to tribes.

IV. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review 13563

    This action proposes a source-specific FIP for the Navajo 
Generating Station on the Navajo Nation. Under the terms of Executive 
Order (EO) 12866 (58 FR 51735, October 4, 1993) and EO 13563 (76 FR 
3821, January 21, 2011), because this proposed rule applies to only one 
facility, it is not a rule of general applicability. This proposed 
rule, therefore, is exempt from review under EO 12866 and EO 13563.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Burden is defined at 5 CFR 1320.3(b). Under the Paperwork Reduction 
Act, a ``collection of information'' is defined as a requirement for 
``answers to * * * identical reporting or recordkeeping requirements 
imposed on ten or more persons * * * .'' 44 U.S.C. 3502(3)(A). Because 
the proposed FIP applies to a single facility, Navajo Generating 
Station, the Paperwork Reduction Act does not apply.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's proposed rule on 
small entities, small entity is defined as: (1) A small business as 
defined by the Small Business Administration's (SBA) regulations at 13 
CFR 121.201; (2) a small governmental jurisdiction that is a government 
of a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of this proposed action on 
small entities, I certify that this proposed action will not have a 
significant economic impact on a substantial number of small entities. 
The Navajo Generating Station is not a small entity and the FIP for 
Navajo Generating Station being proposed today does not impose any 
compliance requirements on small entities. See Mid-Tex Electric 
Cooperative, Inc. v. FERC, 773 F.2d 327 (D.C. Cir. 1985). We continue 
to be interested in the potential impacts of the proposed rule on small 
entities and welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act (UMRA)

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 
U.S.C. 1531-1538, requires Federal agencies, unless otherwise 
prohibited by law, to assess the effects of their regulatory actions on 
State, local, and tribal governments and the private sector. Federal 
agencies must also develop a plan to provide notice to small 
governments that might be significantly or uniquely affected by any 
regulatory requirements. The plan must enable officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates and must inform, educate, and advise small 
governments on compliance with the regulatory requirements.
    This rule does not contain a Federal mandate that may result in 
expenditures of $100 million or more for state, local, and tribal 
governments, in the aggregate, or the private sector in any one year.

[[Page 8292]]

EPA anticipates the annual cost to the private sector of this proposed 
rule to be $64 million per year (see Table 2). Thus, this rule is not 
subject to the requirements of sections 202 or 205 of UMRA. This 
proposed rule will not impose direct compliance costs on state, local 
or tribal governments. This proposed action will, if finalized, reduce 
the emissions of NOX from a single source, the Navajo 
Generating Station.
    In developing this rule, EPA consulted with small governments 
pursuant to a plan established under section 203 of UMRA to address 
impacts of regulatory requirements in the rule that might significantly 
or uniquely affect small governments. EPA put forth an Advanced Notice 
of Proposed Rulemaking on August 28, 2009 regarding our intention to 
propose a BART determination for NGS and the Four Corners Power Plant. 
We received comments from numerous small governments, including tribal 
governments, and governments of several towns in Arizona. This proposed 
rule will not impose direct compliance costs on any small governments. 
However, increased electricity and water costs associated with this 
proposed rule may indirectly affect small governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or in the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This action proposes emission 
reductions of NOX at a specific stationary source located in 
Indian country. Thus, Executive Order 13132 does not apply to this 
action.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13175 (65 FR 67249, November 9, 2000), EPA 
may not issue a regulation that has tribal implications, that imposes 
substantial direct compliance costs, and that is not required by 
statute, unless the federal government provides the funds necessary to 
pay the direct compliance costs incurred by tribal governments, or EPA 
consults with tribal officials early in the process of developing the 
proposed regulation and develops a tribal summary impact statement.
    EPA has concluded that this action will have tribal implications, 
and consequently EPA has consulted with tribal officials during the 
process of developing the proposed regulation. The proposed regulation 
will neither impose substantial direct compliance costs on tribal 
governments, nor pre-empt tribal law. However, several tribes located 
in Arizona have expressed concerns regarding the potential impact of 
this regulation on their economic interests. The Navajo Nation and Hopi 
Tribe focused on the significant contribution of coal-related 
royalties, taxes and employment at NGS and the Kayenta Mine to their 
economies. Comments from other Arizona tribes focused on the importance 
of NGS as a source of power to the CAP in order for the federal 
government to meet obligations under existing water settlement 
agreements. The importance to tribes of continued operation of NGS and 
affordable water costs cannot be overemphasized. In Section II.B.ii, 
EPA explains in detail the tribal information that we received and 
considered in this proposed rulemaking.
    In order to understand more fully the concerns of the tribes, 
senior level EPA officials from both Washington, DC and San Francisco 
have personally visited the NGS facility in Page, Arizona. EPA sent 
invitations to all tribes in Arizona to consult with EPA during the 
development of our BART determination for NGS. We received 
correspondence and comments on our ANPRM from officials of numerous 
tribes, including the Navajo Nation, the Hopi Tribe, the Gila River 
Indian Community, the Ak-Chin Indian Community, the Tohono O'odham 
Nation, the Fort McDowell Indian Community, the Pascua Yaqui Tribe, and 
the Salt River-Pima Maricopa Indian Community. On September 16, 2011, 
and February 8, 2012, EPA held consultation sessions about NGS with 
representatives from approximately eleven tribes participating in one 
or both meetings. Additionally, EPA had in-person consultation meetings 
with tribal representatives prior to this proposal on August 7 and 
August 27, 2012. Representatives from nine tribes attended. In addition 
to formal consultation, EPA has had numerous meetings and conference 
calls with tribes at their request throughout the process of developing 
the action we are proposing today. A timeline of all correspondence and 
consultation with tribes on NGS is included in the docket for this 
proposed rulemaking.\61\ EPA will continue to consult with Tribal 
officials during the public comment period on the proposed FIP. Several 
tribes, including the Navajo, submitted comments which EPA considered 
in developing this proposed action. Therefore, EPA has allowed tribes 
to provide meaningful and timely input into the development of this 
proposed rule and will continue to consult with affected tribes prior 
to finalizing our BART determination or any alternative to BART. The 
technical support document for this proposed rulemaking provides a 
detailed discussion of comments received from tribes during the comment 
period for the ANPRM and subsequent consultation and correspondence, 
and EPA's responses to those comments.
---------------------------------------------------------------------------

    \61\ See document titled: ``Timeline of All Tribal Consultation 
on NGS.docx'', in the docket for this proposed rulemaking.
---------------------------------------------------------------------------

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045: Protection of Children from Environmental 
Health Risks and Safety Risks (62 FR 19885, April 23, 1997), applies to 
any rule that: (1) is determined to be economically significant as 
defined under Executive Order 12866, and (2) concerns an environmental 
health or safety risk that EPA has reason to believe may have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, the Agency must evaluate the environmental health or 
safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This proposed rule is not subject to Executive Order 13045 because 
it requires emissions reductions of NOX from a single 
stationary source. Because this proposed action only applies to a 
single source and is not a proposed rule of general applicability, it 
is not economically significant as defined under Executive Order 12866, 
and does not have a disproportionate effect on children. However, to 
the extent that the rule will reduce emissions of NOX, which 
contribute to ozone and fine particulate matter formation as well as 
visibility impairment, the rule will have a beneficial effect on 
children's health be reducing air pollution that causes or exacerbates 
childhood asthma and other respiratory issues.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not subject to Executive Order 13211 (66 FR 28355 
(May 22, 2001)), because it is exempt under Executive Order 12866.

[[Page 8293]]

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, 12 (10) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards (VCS) in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. VCS are technical standards 
(e.g., materials specifications, test methods, sampling procedures and 
business practices) that are developed or adopted by the VCS bodies. 
The NTTAA directs EPA to provide Congress, through annual reports to 
OMB, with explanations when the Agency decides not to use available and 
applicable VCS.
    Consistent with the NTTAA, the Agency conducted a search to 
identify potentially applicable VCS. For the measurements listed below, 
there are a number of VCS that appear to have possible use in lieu of 
the EPA test methods and performance specifications (40 CFR Part 60, 
Appendices A and B) noted next to the measurement requirements. It 
would not be practical to specify these standards in the current 
proposed rulemaking due to a lack of sufficient data on equivalency and 
validation and because some are still under development. However, EPA's 
Office of Air Quality Planning and Standards is in the process of 
reviewing all available VCS for incorporation by reference into the 
test methods and performance specifications of 40 CFR Part 60, 
Appendices A and B. Any VCS so incorporated in a specified test method 
or performance specification would then be available for use in 
determining the emissions from this facility. This will be an ongoing 
process designed to incorporate suitable VCS as they become available.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994), establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this proposed rule, if finalized, will not 
have disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it increases the 
level of environmental protection for all affected populations without 
having any disproportionately high and adverse human health or 
environmental effects on any population, including any minority or low-
income population. This proposed rule requires emissions reductions of 
NOX from a single stationary source, Navajo Generating 
Station.

List of Subjects in 40 CFR Part 49

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Indians, Intergovernmental relations, Reporting 
and recordkeeping requirements.

    Dated: January 17, 2013.
Jared Blumenfeld,
Regional Administrator, Region 9.

    Title 40, chapter I of the Code of Federal Regulations is proposed 
to be amended as follows:

PART 49--[INDIAN COUNTRY: AIR QUALITY PLANNING AND MANAGEMENT]

0
1. The authority citation for part 49 continues to read as follows:

     Authority: 42 U.S.C. 7401, et seq.
0
2. Section 49.5513 is amended by adding paragraph (j) to read as 
follows:

Sec.  49.5513  Federal Implementation Plan Provisions for Navajo 
Generating Station, Navajo Nation.

* * * * *
    (j)(1) Applicability. Regional Haze Best Available Retrofit 
Technology limits for this plant are in addition to the requirements of 
paragraphs (a) through (i) of this section. The provisions of this 
paragraph (j) are severable, and if any provision of this paragraph 
(j), or the application of any provision of this paragraph (j) to any 
owner/operator or circumstance, is held invalid, the application of 
such provision to other owner/operators and other circumstances, and 
the remainder of this paragraph (j), shall not be affected thereby.
    (2) Definitions. Terms not defined in this paragraph (j)(2) shall 
have the meaning given to them in the Clean Air Act or EPA's 
regulations implementing the Clean Air Act and in paragraph (c) of this 
section. For purposes of this paragraph (j):
    (i) Boiler operating day means a 24-hour period between 12 midnight 
and the following midnight during which any fuel is combusted at any 
time in the steam-generating unit. It is not necessary for fuel to be 
combusted the entire 24-hour period.
    (ii) Coal-fired unit means any of Units 1, 2, or 3 at Navajo 
Generating Station.
    (iii) Continuous emission monitoring system or CEMS means the 
equipment required by 40 CFR Part 75 and this paragraph (j).
    (iv) Emissions limitation or emissions limit means the federal 
emissions limitation required by this section.
    (v) Group of coal-fired units means Units 1, 2 and 3 at Navajo 
Generating Station.
    (vi) lb means pound(s).
    (vii) NOX means nitrogen oxides expressed as nitrogen 
dioxide (NO2).
    (viii) Owner(s)/operator(s) means any person(s) who own(s) or who 
operate(s), control(s), or supervise(s) one more of the units of the 
Navajo Generating Station.
    (ix) MMBtu means million British thermal unit(s).
    (x) Operating hour means any hour that fossil fuel is fired in the 
unit.
    (xi) Unit means any of Units 1, 2, or 3 at Navajo Generating 
Station.
    (xii) Valid data means CEMs data that is not out of control as 
defined in 40 CFR Part 75.
    (3) Compliance date. The owner/operator may elect to comply with 
the NOX emission limitations in this paragraph (j) either:
    (i) Within five years of the effective date of the final 
rulemaking, or
    (ii) On one coal-fired unit per year by 2021, 2022, and 2023.
    (4) NOX emission limitations. The owner/operator of each coal-fired 
unit subject to this paragraph (j) shall not emit or cause to be 
emitted NOX in excess of the following:
    (i) Under paragraph (j)(3)(i) of this section: within 5 years of 
the effective of the final rule, 0.055 pounds per million British 
thermal units (lb/MMBtu) from any group of coal-fired units, averaged 
on a rolling average basis over 30-boiler-operating days.
    (ii) Under paragraph (j)(3)(ii) of this section:
    (A) After 2021, 0.178 lb/MMBtu from any group of coal-fired units, 
averaged on a rolling basis over 30-boiler-operating days.
    (B) After 2022, 0.117 lb/MMBtu from any group of coal-fired units, 
averaged on a rolling basis over 30-boiler-operating days.
    (C) On and thereafter 2023, 0.055 lb/MMBtu from any group of coal-
fired units, averaged on a rolling basis over 30-boiler-operating days.
    (5) Continuous emission monitoring system. (i) At all times after 
the dates

[[Page 8294]]

specified in paragraph (j)(3) of this section, the owner/operator of 
each unit shall maintain, calibrate, and operate a CEMS, in full 
compliance with the requirements found at 40 CFR Part 75, to accurately 
measure NOX, diluent, and stack gas volumetric flow rate 
from each unit. Valid data means data recorded when the CEMS is not 
out-of-control as defined by Part 75, as defined in paragraph (j)(2) of 
this section. All valid CEMS hourly data shall be used to determine 
compliance with the emission limitations for NOX in 
paragraph (j)(4) of this section for each unit. If the CEMs data is not 
valid, that CEMs data shall be treated as missing data and not used to 
calculate the emission average. CEMs data does not need to be bias 
adjusted as defined in 40 CFR Part 75. Each required CEMS must obtain 
valid data for at least 90 percent of the unit operating hours, on an 
annual basis.
    (ii) The owner/operator of each unit shall comply with the quality 
assurance procedures for CEMS found in 40 CFR Part 75. In addition to 
these Part 75 requirements, relative accuracy test audits shall be 
calculated for both the NOX pounds per hour measurement and 
the heat input measurement. The calculation of NOX pounds 
per hour and heat input relative accuracy shall be evaluated each time 
the CEMS undergo relative accuracy testing.
    (6) Compliance Determination for NOX. (i) The 30-day rolling 
average NOX emission rate for each group of coal-fired units 
shall be calculated for each calendar day, even if a unit is not in 
operation on that calendar day, in accordance with the following 
procedure: step one, for each unit, sum the hourly pounds of 
NOX emitted during the current boiler-operating day (or most 
recent boiler-operating day if the unit is not in operation), and the 
preceding twenty-nine (29) boiler-operating days, to calculate the 
total pounds of NOX emitted over the most recent thirty (30) 
boiler-operating day period for each coal-fired unit; step two, for 
each unit, sum the hourly heat input, in MMBtu, during the current 
boiler-operating day (or most recent boiler-operating day if the unit 
is not in operation), and the preceding twenty-nine (29) boiler-
operating days, to calculate the total heat input, in MMBtu, over the 
most recent thirty (30) boiler-operating day period for each coal-fired 
unit; step 3, sum together the total pounds of NOX emitted 
from the group of coal-fired units over each unit's most recent thirty 
(30) boiler-operating day period (the most recent 30 boiler-operating 
day periods for different units may be different); step four, sum 
together the total heat input from the group of coal-fired units over 
each unit's most recent thirty (30) boiler-operating day period; and 
step five, divide the total pounds of NOX emitted from step 
three by the total heat input from step four for each group of coal-
fired units, to calculate the 30-day rolling average NOX 
emission rate for each group of coal-fired units, in pounds of 
NOX per MMBtu, for each calendar day. Each 30-day rolling 
average NOX emission rate shall include all emissions and 
all heat input that occur during all periods within any boiler-
operating day, including emissions from startup, shutdown, and 
malfunction.
    (ii) If a valid NOX pounds per hour or heat input is not 
available for any hour for a unit, that heat input and NOX 
pounds per hour shall not be used in the calculation for that 30 boiler 
operating day period.
    (7) Recordkeeping. The owner or operator of each unit shall 
maintain the following records for at least five years:
    (i) All CEMS data, including the date, place, and time of sampling 
or measurement; parameters sampled or measured; and results as required 
by Part 75 and as necessary to calculate each units pounds of 
NOX and heat input for each hour.
    (ii) Each calendar day rolling average group emission rates for 
NOX calculated in accordance with paragraph (j)(5)(i) of 
this section.
    (iii) Each unit's 30 boiler operating day pounds of NOX 
and heat input.
    (iv) Records of quality assurance and quality control activities 
for emissions measuring systems including, but not limited to, any 
records required by 40 CFR Part 75.
    (v) Records of the relative accuracy calculation of the 
NOX lb/hr measurement and hourly heat input.
    (vi) Records of all major maintenance activities conducted on 
emission units, air pollution control equipment, and CEMS.
    (vii) Any other records required by 40 CFR Part 75.
    (8) Reporting. All reports and notifications under this paragraph 
(j) shall be submitted to the Director, Navajo Environmental Protection 
Agency, P.O. Box 339, Window Rock, Arizona 86515, and to the Director 
of Enforcement Division, U.S. EPA Region IX, at 75 Hawthorne Street, 
San Francisco, CA 94105. (i) The owner/operator shall notify EPA within 
two weeks after completion of installation of NOX control 
technology on any of the units subject to this section.
    (ii) Within 30 days after the first applicable compliance date in 
paragraph (j)(3) of this section and within 30 days of every second 
calendar quarter thereafter (i.e., semi-annually), the owner/operator 
shall submit a report that lists for each calendar day, calculated in 
accordance with paragraph (j)(6) of this section, total lb of 
NOX and heat input (as used to calculate compliance per 
paragraph (j)(4) of this section, for each unit's last 30 boiler 
operating days. Included in this report shall be the results of the 
last relative accuracy test audit and the calculated relative accuracy 
for lb/hr NOX and heat input performed 45 days prior to the 
end of that reporting period. The end of the year report shall also 
include the percent valid data for each NOX, diluent, and 
flow monitor used in the calculations of compliance with paragraph 
(j)(4) of this section.
    (9) Enforcement. Notwithstanding any other provision in this 
implementation plan, any credible evidence or information relevant as 
to whether the unit would have been in compliance with applicable 
requirements if the appropriate performance or compliance test had been 
performed, can be used to establish whether or not the owner or 
operator has violated or is in violation of any standard or applicable 
emission limit in the plan.
    (10) Equipment Operations. At all times, including periods of 
startup, shutdown, and malfunction, the owner or operator shall, to the 
extent practicable, maintain and operate the unit including associated 
air pollution control equipment in a manner consistent with good air 
pollution control practices for minimizing emissions. Determination of 
whether acceptable operating and maintenance procedures are being used 
will be based on information available to the Regional Administrator, 
or their designee, which may include, but is not limited to, monitoring 
results, review of operating and maintenance procedures, and inspection 
of the unit.
    (11) The affirmative defense provisions of paragraphs (c)(1) and 
(g)(3) of this section, related only to malfunctions, apply to this 
paragraph (j).
[FR Doc. 2013-01858 Filed 2-4-13; 8:45 am]
BILLING CODE 6560-50-P
```