# MEMORANDUM

TO: Navajo Generating Station Docket

FROM: Colleen McKaughan, Associate Director, Air Division, EPA Region 9

DATE: March 21, 2013

PARTICIPANTS: See attached sign

‐ in sheet

SUMMARY: Deborah Jordan, Air Division Director, gave the attached presentation on the Navajo

Generating Station proposed BART determination to tribal representatives from Navajo, Hopi, Ak

‐ Chin,

and Gila River. Representatives from the Bureau of Reclamation attended on behalf of DOI. Deborah and

Colleen McKaughan, who also attended, responded to questions from the audience. The meeting was at

the invitation of ITCA.Region 9, Air Permits OfficeOverview of EPA ProposedOverviewofEPAProposedRulemakingforNavajo Generating StationMeeting of the InterTribal Council of ArizonaMarch 21, 2013Deborah JordanDirector, Air DivisionUS E i l P i A R i 91USEnvironmentalProtectionAgency,Region9Region 9, Air Permits Office2Region 9, Air Permits OfficeOverviewNotice of Proposed R lemaking as p blished•NoticeofProposedRulemakingwaspublishedFebruary 5•Three parts:Threeparts:– BART: an emission limit for oxides of nitrogen (NOx)achievable with installation of selective catalyticreduction (SCR) in 5 years;– Alternative to BART: framework to give NGS credit forl NOd ti d id NGS ithearyxreductions andprovideNGSwithmoreflexibility on the timing of compliance;–Discussionofadditionalalternativeso o add t o a a te at es3Region 9, Air Permits OfficeHistory of NGS•Located on Navajo Nation and burns coal that isLocatedonNavajoNationandburnscoalthatismined on Navajo Nation and Hopi Tribe•U.S. Bureau of Reclamation owns 24.3% of NGS forU.S.BureauofReclamationowns24.3%ofNGSforthe benefit of the Central Arizona Project• NGS plays important roles in Arizona:– Employment– Source of revenue to Navajo Nation and Hopi TribeS f l t i it–Source ofelectricity– Electricity also used to pump CAP water and fulfill termsof several water settlement agreements with tribeslocated in Arizona4Region 9, Air Permits OfficeWhy Are We Evaluating NGS?C•ongress required EPA to improve visibility atNational Parks and Wilderness Areas (Class I areas)–Regional Haze ProgramRegionalHazeProgram• Large, old sources of air pollution that affect visibilityin Class I areas must be evaluated to determine ifinClassIareasmustbeevaluatedtodetermineifnew air pollution controls should be required (BestAvailable Retrofit Technology – BART)• NGS affects visibility at 11 Class I areas, includingGrand Canyon and Canyonlands and is subject to theBART i t f th R i l H P5BARTrequirementoftheRegionalHazeProgramRegion 9, Air Permits OfficeHow Do We Improve Visibility?• Air pollutants (for example, gases like NOxthatform particulate matter) cause regional haze• By reducing emissions of air pollutants that causehaze, we can improve visibility• The same pollutants that impair visibility are aconcern for human health, therefore reducinghaze also improves air qualityhazealsoimprovesairquality• EPA or State Agencies evaluate whether newcontrols should be required for all facilities thatcontrolsshouldberequiredforallfacilitiesthatare subject to BART requirement6Region 9, Air Permits OfficeHow is BART determined?• BART is determined based on a 5-factor analysis– Factor 1 – How much would controls cost the facility?– Factor 2 – Are there energy, economic, or otherenvironmental impacts of the control?– Factor 3 – What are the existing controls at the facility?– Factor 4 – What is the remaining useful life of thef ilit ?facility?– Factor 5 – How will visibility improve by addingcontrols?7Region 9, Air Permits OfficeBrief Overview of 5-Factor AnalysisLNB/SOFA SNCR + LNB/SOFA SCR + LNB/SOFA

actor 1Emission Limit 0.24 lb/MMBtu 0.18 lb/MMBtu 0.055 lb/MMBtuEmission Reductions 10,865 tpy 16,608 tpy 28,573 tpyTotal Capital Costs$45million$84 million$541 million

FTotalCapitalCosts$45million$84million$541millionAverage Cost Effectiveness $486/ton $1,745/ton $2,240/tonElectricity Rate for SRPCustomers in 20189.26 cents/kWh 9.28 cents/kWh 9.32 cents/kWh2Energy-only Water Rate for CAPCustomers$58/acre-foot $61/acre-foot $66/acre-foot3 Existing Controls LNB/SOFA were installed early and voluntarily in 2009-20114 Remaining Useful Life Amortization Periodof 20 years; Lease extended to 20445Largest Single Class I areaVisibility Improvement2.1 deciviews 3.1 deciviews 5.4 deciviews8Cumulative Visibility Improvement 16 deciviews 22 deciviews 35 deciviewsRegion 9, Air Permits OfficeWhy Did We Propose New Controls?• Based on our 5-factor analysis, EPA determinedthat installation of SCR + LNB/SOFA at NGS tod NOi ireucexemissions:– is cost-effective–would not create a competitive disadvantage for NGS– would result in a perceptible improvement in visibility atth Cl I ff t d b NGStheClassIareas affectedbyNGS9Region 9, Air Permits OfficeWhy is EPA Proposing an Alternative?• Given the importance of NGS to tribes and its location ontribal land, it is appropriate to provide additional flexibilityC li ti f f lt ti t BART d th•Compliancetimeframesfor alternativestoBARTundertheRegional Haze Rule that apply on state land do not applyon tribal land• Under the Tribal Authority Rule, EPA determines if andwhen a FIP is necessary and appropriate, including theti li f l i ith th i ttimelinefor complying withthose requirements10Region 9, Air Permits OfficeTh R i l H R l (RHR) i ith BARTFramework for Considering Alternatives•TheRegionalHazeRule(RHR)requires eitherBARToranalternative measure that will achieve greater reasonableprogress than BART (Better than BART)• EPA is proposing to give NGS credit for early and voluntary NOxreductions in order to extend the compliance date to 2023 formeeting BART limitsmeetingBARTlimits• This alternative is Better than BART•EPA included a framework for stakeholders to consider datesEPAincludedaframeworkforstakeholderstoconsiderdatesbeyond 2023 by implementing additional emission reductions tomeet the Better than BART threshold11Region 9, Air Permits Office550,000BetterthanBARTCalculationsandComparisonofAlternativeComplianceDates450,000500,000550,000350,000400,000

v er 2009 ‐ 2044BetterthanBART Threshold tEmission ReductionBridgeLNBCreditLNBCreditLNBCreditLNBCredit250,000300,000

NOx Emissions o v n g for LNB Credit n g for LNB Credit

n g for LNB Credi t100 000150,000200,000

Total issions Accounti n issions Accounti n

m issions Accounti n050,000100,000 Adjusted Em Adjusted Em

Adjusted E mIfLNBandSCRInstalledConcurrentlyby2018BARTby2018withLNBasInstalledin2009‐2011LNBCredit Alt1(21/22/23) Alt2(23/24/25) Alt3(24/25/26)AlternativeComplianceYearScenarios12Region 9, Air Permits Office•EPA has extended the comment period to August 5 2013What Happens Next?EPAhasextendedthecommentperiodtoAugust5,2013based on requests from Navajo Nation, SRP, and CAWCD• Consultation will be on-goingduringthepublic commentperiodg g p p• EPA will hold public hearings towards the end of the commentperiod• EPA anticipates stakeholders will suggest other Better thanBART alternatives for more time to comply with the BARTlimits• EPA will evaluate suggested alternatives and may put forth asupplemental proposal13Region 9, Air Permits OfficeEPA DOI d DOE h itt d t k t th tJoint Federal Agency Workgroup•EPA,DOI, andDOEhave committedto worktogethertosupport stakeholder interests in NGS–Create a long-term EPA-DOI-DOE WorkingGroup– Work with stakeholders, including the owners of NGS, tribes and otherCAP water users, and environmentaland community groups, to developa roadmapto achieve long-termgoals related to clean energy,ggy,sustainable water supplies, and sustainable economic development– Complete the Phase 2 reporton clean energy options for NGSSupport shorter term investments that align with long term clean energy–Supportshorterterminvestmentsthatalignwithlongtermcleanenergygoals• The Working Group is a separate process from BART14Region 9, Air Permits OfficeWhat Happens After the Comment Period?• EPA will review and consider all comments beforemaking a final decision• We will respond to all comments in writing andincorporate any changes to the proposal as a resultof comments in our final decisionofcommentsinourfinaldecision• Documents will also be posted online and in ourdocket for this rulemakingdocketforthisrulemaking15Region 9, Air Permits OfficeFor Further InformationName Role Phone EmailColleenMcKaughanAssociate Director,Air Division520.498.0118 McKaughan.Colleen@epa.govAirDivisionAnn Lyons Office of RegionalCounsel415.972.3883 Lyons.Ann@epa.govAnita Lee Staff Lead,Air 415.972.3958 Lee.Anita@epa.govDivision@p g16