### PREVENTION OF SIGNIFICAN T DETERIORATION PERMIT PROPOSED PURSUANT TO THE REQUIREMENTS AT 40 CFR § 52.21

U.S. ENVIRONMENTAL PROTEC TION AGENCY, REGION IX

PSD PERMIT NUMBER: SAC 12-01

PERMITTEE: Sierra Pacific Industries P.O. Box 496028 Redding, CA 96049-6028

FACILITY NAME: Sierra Pacific Industries- Anderson

FACILITY LOCATION: 19758 Riverside Avenue Anderson, California 96007

Pursuant to the provisions of the Clean Air Act (CAA), Subchapter I, Part C (42 U.S.C. Section 7470, et. seq. ), and the Code of Federal Regulatio ns (CFR) Title 40, Section 52.21, the United States Environmental Protection Agen cy Region 9 (EPA) is issuing a Prevention of Significant Deterioration (PSD) air quality permit to Sierra Pacific I ndustries (SPI). This Permit applies to the approval to construct and operate a new st oker boiler capable of generating 31 MW of gross electrical output from the combustion of cl ean cellulosic biomass, and related auxiliary equipment.

SPI is authorized to constr uct and operate the 31 MW coge neration unit at SPI-Anderson as described herein, in accordance with the permit application (and plans submitted with the permit application), the federal PSD regulations at 40 CFR § 52.21, and other terms and conditions set forth in this PSD Permit. Failure to comply w ith any condition or term set forth in this PSD Permit may be subject to enforcem ent action pursuant to Section 113 of the Clean Air Act. This PSD Permit does not relieve SPI from the obligation to comply with applicable federal, state, and Shasta County Air Quality Management District (District) air pollu tion control rules and regulations.

Per 40 CFR § 124.15(b), this PSD Permit becomes effec tive 30 days after the service of notice of this final permit decision unless review is requested on the permit pursuant to 40 CFR § 124.19.

Deborah Jordan Date Director, Air DivisionPage 2 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 

### SIERRA PACIFIC INDUSTRIES - ANDERSON (SAC 12-01) PREVENTION OF SIGNIFICAN T DETERIORATION PERMIT PERMIT CONDITIONS

PROJECT DESCRIPTION

Sierra Pacific Industries, Inc. (SPI) applied for the approval to construct and operate a new stoker boiler capable of generating 31 MW of gross electrical output from the combustion of biomass and natural gas, and related auxiliary equipment. The orig inal Prevention of Significant Deterioration (PSD) permit for this lumber ma nufacturing facility was issued in 1994 by the Shasta County Air Quality Management District (District). The site cu rrently contains a woodfired boiler cogeneration unit w ith associated air pollution co ntrol equipment and conveyance systems that produce steam to dry lumber in existing kilns. On March 3, 2003, USEPA revoked and rescinded the District’s au thority to issue and modify fe deral PSD permits for new and modified major sources of attainment pollutants in Shasta County. Therefore, EPA is issuing this PSD permit to authorize SPI to construct and op erate the additional boile r and related auxiliary equipment described in this permit at the SP I-Anderson facility. The PSD permit previously issued by the District to SPI is still in effectand applies to existing equipment at the SPIAnderson site.

Fuel for the new stoker boiler will be generated on site and received from other fuel sources, mainly other SPI facilities, to produce r oughly 250,000 pounds per hour of steam. This steam will be used to dry lumber in existing kilns for the lumber operation, as well as feed a turbine that will drive a generator to produc e electricity for use on site or for sale to the grid. A closedloop three-cell cooling tower will be used to di spose of waste heat from the steam turbine.

This PSD permit for the modification requires the use of Best Ava ilable Control Technology (BACT) to limit emissions of nitrogen oxides (NO x ), carbon monoxide (CO), total particulate matter (PM), PM under 10 micrometers ( μ m) in diameter (PM 10 ), PM under 2.5 μ m in diameter (PM 2.5 ), and greenhouse gases (GHG), to the greatest extent feasible. Air pollution emissions from the modification will not cau se or contribute to violations of any National Ambient Air Quality Standards (NAAQS) or any applicable PS D increments for the pollutants regulated under the permit.

Additional equipment includes the construction of an additional cooling tower and an emergency natural gas engine to power the em ergency boiler recirculation pump.Page 3 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 

### EQUIPMENT LIST

Table 1 lists the new equipment that will be regulated by the proposed PSD permit:

Table 1 - New Equipment List Regulated by the PSD Permit
ID Unit Description U1 One Stoker Boiler with Grate  Biomass-fired with natural gas burners for start-up

 Maximum annual average heat input of approximately 468 MMBtu/hr and steam generation rate of 250,000 lbs/hr

 Equipped with two natural gas burners, each with a maximum rated heat input of 62.5 MMBtu/hr

 Equipped with selective non-catalytic reduction (SNCR) system to reduce NO x , and multiclone with an electrostatic precipitator (ESP) to control PM emissions U2 Cooling Tower  Composed of three cells with an expected wate r load of 4.24 gallons per minute per square foot. U3 Emergency Engine  256 hp at 1,800 rpm

 Spark-ignition internal combustion, natural gas-fired

 Powers emergency boiler recirculation pump

 40 CFR Part 60 - Subpart JJJJ Compliant

Table 2 lists the existing equipment that is not incl uded in this PSD permit. The equipment listed below is permitted by the District and the Pe rmittee must comply with all applicable requirements of the PSD permit (Permit No. 94-PO-18) issued by the District

. Table 2 is provided for reference purposes only:

Table 2 - Existing Equipment List
ID Unit Description U4 One Wellons Stoker Boiler  Biomass-fired with natural gas burners for start-up

 Maximum annual average heat input of approximately 116.4 MMBtu/hr

 Equipped with SNCR system to reduce NO x , and multiclone with ESP to control PM emissions

 Equipped with one 30,400 ft 3 , fuel storage bin, 2 hog fuel bins, 2 wood chip fuel bins U5 One Conveyance System  (2) Cyclones with combined flow rate of 51.004 scfm

 (1) 7,118 ft 2 MAC Pulse Jet Baghouse with 300hp Blower

 (1) 35” x 45” Rotary Airlock

 (1) Buhler en-masse, 19”, 22tph Conveyor

 (2) Each overhead storage bins with enclosed sides U6 One Spray Unit  Closed loop unit equipped with integrated, negative pressure, mist collection system and 65’ exhaust stack U7 One Wood Chip Loading Facility  (1) Platform truck dumper

 (1) Wood chip conveying system with dust containment hood

 (1) 200hp, 59,000CFM Rader blower U8 Seven De-greasing Tanks  Non-solvent based tanks U9 One Gas Storage Tank  Above ground with 10,000 gallon capacity tank U10 One Painting Operation  Miscellaneous painting operation U11 Drying Kilns  (8) steam-heated, double-track, lumber drying kilns Formatt e

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Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 

### PERMIT CONDITIONS

I. PERMIT EXPIRATION As provided in 40 CFR § 52.21(r), this PSD perm it shall become invalid if construction:

A. is not commenced (as defined in 40 CFR § 52.21(b)(9)) within 18 months after the approval takes effect; or

B. is discontinued for a period of 18 months or more; or

C. is not completed within a reasonable time.

II. PERMIT NOTIFICATION REQUIREMENTS Permittee shall notify EPA Region IX by letter or by electronic mail, to aeo_r9@epa.gov
, of the:

A. date construction is commenced, postmarke d within 30 days of such date;

B. actual date of initial startup, as defined in 40 CFR § 60.2, postmarked within 15 days of such date;

C. date upon which initial performance tests will commence, in accordance with the provisions of Conditions X.H and I , postmarked not less than 30 days prior to such date. Notification may be provided with the submittal of the performance test protocol required pursuant to Conditions X.H and I ; and

D. date upon which initial performance eval uation of the continuous emissions monitoring system (CEMS) will commence in accordance with 40 CFR § 60.13(c), postmarked not less than 30 days prior to such date. Notification may be provided with the submittal of the CEMS performance test protocol required pursuant to Condition X.I.

III. FACILITY OPERATION

A. At all times, including periods of star tup, shutdown, shakedown, and malfunction, Permittee shall, to the extent practicable, maintain and operate the Facility, including associated air pollution control equipment, in a manner consis tent with good air pollution control practice for minimizing em issions. Determination of whether acceptable operating and maintenance procedures are being used will be based on information available to EPA, which may include, but is not limited to, monitoring results, opacity observations, review of operating maintenance procedures andPage 5 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 inspection of the Facility.

B. The Permittee shall operate and maintain U1, U2 and U3 in a manner consistent with good engineering practices fo r its full utilization.

C. As soon as practicable following initial start up of the facility (a s defined in 40 CFR § 60.2) but prior to commencement of comme rcial operation (as defined in 40 CFR § 72.2), and thereafter, the Permittee shall develop and implement an operation and maintenance plan for U1, U2 and U3. At a minimum, the plan shall identify measures for assessing the performance of U1, U2, and U3, the acceptable range of performance measures for achieving the de sired output, the methods for monitoring the performance measures, and the routine pr ocedures for maintaining U1, U2 and U3 in good operating condition.

IV. MALFUNCTION REPORTING

A. Permittee shall notify EPA at aeo_r9@epa.gov within two (2) working days following the discovery of any failure of air pollution control equipment or process equipment, or failure of a process to opera te in a normal manner, which results in an increase in emissions above the a llowable emission limits stated in Section X of this permit.

B. In addition, Permittee shall provide an addi tional notification to EPA in writing or electronic mail within fifteen (15) days of any such failure described under Condition IV.A . This notification shall include a desc ription of the malfunctioning equipment or abnormal operation, the date of the initial malfunction, the period of time over which emissions were increased due to the failure, the cause of the failure, the estimated resultant emissions in ex cess of those allowed in Section X , and the methods utilized to mitigate emissions and restore normal operations.

C. Compliance with this malfunction notificati on provision shall not ex cuse or otherwise constitute a defense to any violation of this permit or any law or regulation such malfunction may cause.

V. RIGHT OF ENTRY The EPA Regional Administrator, and/or an authorized representative, upon the presentation of credentials, shall be permitted:

A. to enter the premises where the Facility is located or where an y records are requiredPage 6 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 to be kept under the terms and conditions of this PSD Permit;

B. during normal business hours, to have access to and to copy any records required to be kept under the terms and conditions of this PSD Permit;

C. to inspect any equipment, operation, or met hod subject to requirements in this PSD Permit; and

D. to sample materials and emissions from the source(s).

VI. TRANSFER OF OWNERSHIP In the event of any changes in control or ow nership of the Facility, this PSD Permit shall be binding on all subsequent owners and operato rs. Within 14 days of any such change in control or ownership, Permittee shall no tify the succeeding owner and operator of the existence of this PSD Permit and its conditions by letter. Permitt ee shall send a copy of this letter to EPA Re gion IX within 30 days of its issuance.

VII. SEVERABILITY

The provisions of this PSD Permit are severa ble, and, if any provision of the PSD Permit is held invalid, the remainder of th is PSD Permit shall not be affected.

VIII. ADHERENCE TO APPLICATION AND COMPLIANCE WITH OTHER ENVIRONMENTAL LAWS

Permittee shall construct the Project in complia nce with this PSD permit, the application on which this permit is based, and all other app licable federal, state, and local air quality regulations. This PSD permit does not rel ease the Permittee from any liability for compliance with other applicable federal, state and local environmental laws and regulations, including the Clean Air Act.

IX. RESERVED

X. SPECIAL CONDITIONS

A. Boiler Annual Emission Limits

1. Annual emissions from U1, in tons per year (tpy) (12-month rolling sum basis), shall not exceed the following emission limits. These limits shall a pply at all times, including during startup and shutdown periods.Page 7 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 Table 3 - U1 Rolling 12-Month Emission Limits NO x CO PM PM 10 PM 2.5 267 472 41 41 41

2. CO 2 e emissions from U1 shall not exceed 0.36 lb CO 2 e/lb steam produced (12-month annual rolling average basis). This CO 2 e limit shall apply at all times, including during startup and shutdown periods.

B. Air Pollution Control Equipment and Operation The Permittee shall construct and operate U1 and its associated equipment with an energy efficient design and use good combus tion practices as described in the Permittee’s permit application and subseque nt submissions to the EPA. This includes, but not limited to, (1) construction and operation of an e fficient, state-ofthe-art, air-cooled, reciprocating st epgrate stoker boiler that ensures good combustion; (2) operation of the boiler as a cogeneration unit at the Facility; and (3) operation and maintenance of the boiler in accordance with the manufacturer’s recommendations.

As soon as practicable following initial star tup of U1 (startup as defined in 40 CFR § 60.2) but prior to commencement of comme rcial operation (as defined in 40 CFR § 72.2), and thereafter, the Permittee shall co ntinuously operate, and maintain the following during boiler operations: an SNCR system for control of NO x , multiclone collectors and an ESP fo r the control of PM, PM 10 and PM 2.5 , and good combustion practices for the control of CO. The Pe rmittee shall also perform any necessary operations to minimize emissions so that emissions are at or below the emission limits specified in this permit.

The Permittee shall also, to the extent practicable, maintain and operate equipment and associated monitoring equipment in a manner consistent with good air pollution control practice for minimizing emissions. Determination of whether such operation and maintenance procedures are being used will be based on information available to the Administrator which may include, but is not limited to, fuel use records, monitoring results, review of operation a nd maintenance procedures, review of operation and maintenance reco rds, review of reports required by this Permit, and inspection of the Facility.

C. Steam Production and Emission Limitations

1. Except as noted below under Condition X.D. , on and after the date of initial startup, Permittee shall not discharge or cause the discharge from U1 into the atmosphere in excess of the following:Page 8 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 Table 4 - U1 Short-Term Emission Limits Pollutant U1

NO x  70.2 lbs/hr (3-hour block average)

 0.13 lbs/MMBtu (12-month rolling basis)

 0.15 lbs/ MMBtu (3-hour block average)

 EPA Method 1-4 and 7E

CO  107.7 lbs/hr (3-hour block average)

 0.23 lb/MMBtu (3-hour block average)

 EPA Method 1-4 and 10
PM, PM 10 , PM 2.5  0.02 lb/MMBtu (3-hour block average)

 9.4 lb/hr (hourly average), corrected to 12% CO 2

2. CO emissions at all times from U1, includ ing startup and shutdown events as defined Conditions X.D.3. and X.D.4. , shall not exceed 432 lbs/hr (hourly average).

3. Steam production from U1 shall not exceed 275,000 lbs/hr (24 hour block average).

4. Visible emissions from U1, except for unc ombined water vapor or during periods defined in Condition X.D. , shall not exceed 20% opacity in any six minute period, as verified by the continuous opaci ty monitoring system (COMS).

5. Visible emissions from the U1 shall not exceed 40% opacity for more than three minutes out of any one 60-minute period.

6. At all times, including equipment start up and shutdown, Permittee shall minimize the cause or discharge of the following emissions:

a. Dust from unpaved roads or any other non-vegetation-covered area. b. Fugitive sawdust from fuel-handlin g devices and/or storage areas.

c. Char and/or bottom ash which is pro cessed by the char handling systems or removed from U1 by other means. d. Accumulation of sawdust or ash on outsi de surfaces including, but not limited to, the main building, U1, ESP, support pads, ro ad areas. Surfaces shall be cleaned on a regular basis to prevent the build-up of ash and/or fugitive dust.

e. Fuel dust or ash spilled due to an upset condition shall be cleaned up in a timely manner. In no event shall spilled dust or ash be allowed to exist beyond 24 hours of the upset.

D. Requirements during Startup and Shutdown

1. Only biomass fuels, as defined in Condition X.G.1 , and Public Utilities Commission (PUC)-quality pipeline natura l gas shall be fired during periods of startup, shutdown, and flame stabilization.Page 9 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 2. For U1, normal operating temperature shal l be defined as the normal operating temperature specified by the unit manufacturer.

3. For U1, startup shall be defined as the pe riod beginning with U1 not in operation and concluding when U1 has reached a normal ope rating temperature. During startup, the generator shall be separated from the electrical grid.

4. For U1, shutdown shall be defined as the period beginning with curtailment of fuel feed and concluding when the recorded s uperheater outlet temperature reaches 150°F and remains so for at least one hour. During shutdown, the generator shall be separated from the electrical grid.

5. For U1, the duration of startup and shutdown periods and emissions of NO x , CO, PM, PM 10 and PM 2.5 shall not exceed the following, as verified by the CEMS and fuel usage data: Table 5 - U1 Startup and Shutdown Limits NO x (8 hour average) CO (8 hour average) PM, PM 10 , PM 2.5 (24 hour average) Duration
Startup 70.2 lb/hr 108 lb/hr 8.93 lb/hr 24 hours
Shutdown 70.2 lb/hr 108 lb/hr 8.93 lb/hr 24 hours

6. For U1, the Permittee must operate the CE MS during startup and shutdown periods.

7. For U1, the Permittee must record the time, date, and duration of each startup and shutdown event.

8. For U1, the Permittee must keep records that include calculations of NO x , CO, PM, PM 10 , PM 2.5 and emissions in lb/hr and lb/MMB tu during each startup and shutdown event based on the CEMS and fuel usage data.

E. Auxiliary Equipment Emissions Limitations

1. Permittee shall not discharge or cause the discharge from each unit into the atmosphere in excess of the following:Page 10 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 Table 6 - U2 and U3 Emission Limits Pollutant U2 U3 NO x N/A  0.78 lb/hr

CO N/A  4.0 g/hp-hr (3-hour block average)

 6.11 lb/hr PM/ PM 10  0.272 lbs/hr (hourly average)  0.0216 lb/hr

2. Except during an emergency, U3 shall be limited to operation for maintenance and testing purposes. Annual hours of operation fo r U3, for maintenan ce and testing, shall not exceed 100 hours per 12-month rolling average.

F. Operating Conditions and Work Practices

1. Low SNCR activation temperature shall be defined as the lowest operating temperature for U1 at which the SNCR system is recommended for operation to reduce NO x emissions as defined by the SNCR ma nufacturer. This temperature value shall be included in the operation and maintenance pl an required by Condition III.C.

2. For U1, SNCR systems for the control of NO x shall be in operation at all times that U1 exceeds the low SNCR activation temperature

.
3. For U1, the multiclones and ESP for the control of PM, PM 10 and PM 2.5 shall be in operation at all times duri ng the combustion process.

4. U3 shall not operate during startup of U1, except when required for emergency operations.

5. Wood waste collection and stor age bin leaks shall be minimized at all times. All identified wood waste collection and storage bin leaks, spills and upsets of any kind shall be corrected or cleaned immediately, within 4 hours, as pr acticable, to correct the leak, spill or upset.

6. Wood waste collection and storage bins shal l be emptied on a schedule that ensures that the cyclone-separator sy stem does not become plugged.

7. Wood waste collection and storage bins, not including the fuel shed, shall remain enclosed to mitigate the fugitive emi ssions from the unloading process.

8. All ash shall be transported in a wet cond ition in covered containers or stored in closed containers at all times.

9. Fugitive dust generated from access and on-site roads shall be minimized by application of water, dust pallia tive, chip-sealing, or paving.Page 11 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 10. Fugitive dust from storage piles, processing area, and disturbed areas shall be minimized by periodic cleanup and/or use of sprinklers, tarps, or dust palliative agents.

11. During periods of high winds, Permittee sh all take immediate action to correct fugitive dust emissions from the chip processing area.

12. All necessary surfaces shall be cleaned or washed sufficiently to prevent wind-blown dust from leaving the property boundaries.

13. All truck loading and unloading conducted atthe facility shall be done in a manner that minimizes spillage, and fugitive emissions.

14. For U2, the drift rate sh all not exceed 0.0005%.

15. Each container holding volatile organic wast e shall be labeled with the contents identified and information noting the date when waste material was added.

16. The Permittee shall inspect all containers hol ding VOCs or waste, at least weekly, for leaks and for deterioration caused by corrosion or other factors.

17. Containers holding ignitable or reactive waste must be located within the property boundary at least 50 feet from the facility’s property line.

18. Incompatible wastes must not be placed in the same container. The treatment, storage, and disposal of ignitable or r eactive waste, and the commingling of wastes, or wastes and materials, must be conducted so it does not:

a. Generate extreme heat, pressure, explosion, or violent reaction; b. Produce uncontrolled toxic mists, fumes, dus ts or gases in sufficient quantities to threaten human health;

c. Produce flammable fumes or gase s in sufficient quantities to pose a risk of fire or explosions; d. Damage the structural integrity of the de vice or facility containing the waste; or

e. Through other means threaten human health or the environment.

G. Fuel Restrictions

1. The following biomass fuels shall constitute the only fuel allowed for use as fuel in U1, except during periods defined in Condition X.D. and to counteract upset conditions:

a. Untreated wood pallets, crates, dunn age, untreated manufacturing andPage 12 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 construction wood debris from urban areas; b. All agricultural crops or residues;

c. Mill residues including hog fuel, shavi ngs, sawdust, trimmings, and bark. d. Forest residues including treetops, n on-merchantable sections of the stem, branches, and bark, left on the ground af ter logging or accumulating as a result of a storm, fire, delimbing, or other similar disturbance. b. Non-merchantable forest biomass consisti ng of byproducts and residuals of forest management activities

c.e. Wood and wood wastes identified to follow all of the following practices; (1) Harvested pursuant to an approved ti mber management plan prepared in accordance with the Z'berg-Nejedly Fo rest practice Act of 1973 or other locally or nationally approved plan; and (2) Harvested for the purpose of forest fi re fuel reduction or forest stand improvement.

2. The heat input from pipeline natural gas sh all not exceed 10% of the total heat input to U1 on a 12-month rolling basis.

3. The heat input to U3 shall only be PUC–quality pipeline natural gas

H. Monitoring Conditions

1. For U1, the Permittee shall maintain the fo llowing continuous monitoring systems at all times when the combusti on process is occurring:

a. The Permittee shall install, calibrate, operate and qua lity-assure a Continuous Emissions Monitoring System (CEMS) that measures CO, NO x , and CO 2

. b. The CO and NO x CEMS shall measure and record (i) CO and NO x emissions in ppmv, and (ii) exhaust gas CO and NO x concentrations corrected to 12 percent by volume stack gas CO 2 dry basis.

c. The Permittee shall conduct initial certifi cation of the CEMS in accordance with Condition X.H.2. d. The Permittee shall operate and mainta in a Continuous Opacity Monitoring System (COMS) capable of measuring stack gas opacity.

e. The Permittee shall install a stack gas vol umetric flowrate monitor, and steam production rate monitor.

2. The CEMS and stack gas volumetric flow rate monitor for U1 shall meet the applicable requirements of 40 CFR Part 60.13 and 40 CFR Part 60 Appendix B, and 40 CFR Part 60 Appendix F, Procedure 1.

3. Each CEMS shall complete a minimum of one cycle of operation (sampling, analyzing, and data recording) for eac h successive 15-minute clock-hour period.Page 13 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 4. Data sampling, analyzing, and recording of the CEMS shall also be adequate to demonstrate compliance with emission limits during startup and shutdown.

5. The initial certificati on of the CEMS may either be conduc ted separately or as part of the initial performance te st of U1. The CEMS must undergo and pass initial performance specification testi ng on or before the date of the initial performance test.

6. The CEMS shall be audited quarterly and test ed annually to demonstrate that it meets the specifications in Condition X.H.2. The Permittee shall perform a full stack traverse during the initial run of annual re lative accuracy test auditing of the CEMS, with testing points select ed according to 40 CFR Part 60 Appendix A, Method 1.

7. The Permittee shall submit a CEMS performanc e test protocol to EPA in accordance with Condition X.I.2.d .The Permittee shall submit a CEMS performance test protocol to the EPA no later than 30 days prior to the te st date to allow revi ew of the test plan and to arrange for an observer to be present at the test. The perf ormance test shall be conducted in accordance with the submitted protocol and any changes required by EPA.

8. For U1, opacity shall be monitored by a COMS that meets the applicable requirements of 40 CFR Part 60 Appe ndix B, Performance Specification 1.

9. The COMS shall have a span value of 100% and utilize a computer or other facility which has the capability of interpreti ng sampling data and producing output to demonstrate compliance with applicable sta ndards. The span value for the continuous measuring system for measuring opacity sh all be between 60 and 80%. The span for the recording instrumentation for the opacity meter shall be 0 to 100%.

10. The operator/owner shall monitor the follo wing combustion and control parameters for U1 on a continuous basis unless otherwise noted:

a. Combustion temperature (at th e superheater tube area) b. Temperature at air heater outlet

c. Hourly steam production rate

11. The Permittee shall furnish the EPA with a written report of the results of performance tests as identified in this Permit within 60 days of completion.

12. The Permittee shall continuously monitor the ESP for transformer/r ectifier (T/R set) On/Off status and Rapper On/Off status.

13. The Permittee shall record hourly readings of ESP zone voltage (minimum 10 kilovolts, maximum 60 kilovolts) and amps on the operator log.Page 14 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 14. For U3, the Permittee shall install and maintain an operational non-resettable elapsed time meter to record the operating time of the emergency engine.

I. Performance Tests

1. Performance tests shall be performed by an independe nt testing firm, and conducted in accordance with the test methods set forth in 40 CFR Part 60.8 and 40 CFR Part 60-Appendix A, as modified below:

a. EPA Methods 1-4, 18 and 25A for VOC emissions. Methods 18 and 25A may both be used simultaneously to quantify the annual emissions of the organic compounds listed in 40 CFR 51.100(s)(1) (usi ng Method 18) and subtract this amount from the annual total VOC emissions (as determined from Method 25A). b. EPA Methods 1-4 and 6(c) for SO 2 emissions.

c. EPA Methods 1-4 and 10 for CO emissions. d. EPA Methods 1-4 and 7E for NO x emissions.

e. EPA Methods 1-4 and 29 for Lead (Pb) emissions. f. EPA Methods 1-4 and 5 for PM emissions. (This performance test may be done concurrently with EPA Method 29 for Pb emissions.)
g. EPA Methods 1-4, 5 and 202 with a two-hour test run period for each test for PM 10 and PM 2.5 emissions. In lieu of Method 5, the Permittee may use Other Test Method 201A. h. EPA Method 3A for CO 2 emissions. i. The provisions of 40 CFR Part 60.8(f). j. In lieu of the specified test methods, a lternative methods may be used with prior written approval from EPA.

2. For U1,

a. Within 60 days after achieving normal ope ration, but not later than 120 days after the modification, the Permittee shall conduct initial performance tests (as described in 40 CFR Part 60.8) for CO, CO 2 , NO x , Pb, PM, PM 10 , PM 2.5 , SO 2 and VOC emissions. The performance test requirements for CO, NO x , and CO 2 shall be demonstrated using the initial relative accuracy test auditing of the CEMS, for each applicable pollutant, required in Condition X.H.6

. b. For performance test purposes, sampling ports, platforms, and access shall be provided on the emission unit exhaust system in accordance with the requirements of 40 CFR Part 60.8(e).

c. Annual performance tests of PM 10 , CO, CO 2 , and NO x shall be conducted at no less than 90 percent of the facility’s maximum steam production rate of 250,000 lb/hr . The performance test requirements for CO, NO x , and CO 2 shall be demonstrated using the annual relative accuracy test auditing of the CEMS, for each applicable pollutant, required in Condition X.H.6

.Page 15 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 d. The Permittee shall submit a performance test protocol to EPA no later than 30 days prior to a performance test to allow re view of the test plan and to arrange for an observer to be present at the test. The performance test shall be conducted in accordance with the submitted protocol, and any changes required by EPA.

3. For U2, the Permittee sha ll do the following:

a. Perform weekly tests of the blow-dow n water quality using an EPA-approved method. The operator shall maintain a log th at contains the date and result of each blow-down water quality test, th e water circulation rate at the time of the test, and the resulting mass emission rate. This log shall be maintained onsite for a minimum of five years and shall be pr ovided to EPA and District personnel upon request. b. Calculate PM, PM 10 , and PM 2.5 emission rate using an EPA-approved calculation based on the total dissolved solids (T DS) and water circulation rate.

c. Conduct all required cooling tower water qu ality tests in accordance with an EPAapproved test and emissions calculation prot ocol. Thirty (30) days prior to the first such test, the operator shall provide a written test and emissions calculation protocol for EPA review and approval, with a copy to the District as specified in Condition XII

. d. Establish a maintenance procedure that stat es how often and what procedures will be used to ensure the integrity of the drift eliminators and to ensure compliance with recirculation rates. This procedure is to be kept onsite a nd made available to EPA and District personnel upon request. The Pp ermittee shall promptly report any deviations from this procedure.

4. For U3, the Permittee shall conduct an init ial performance test (as described in 40 CFR Part 60.4244) for NO x , and CO and emissions and at least every five years beginning ten years after the in itial performance test (within 30 days of the tenth anniversary of the initial performance test date).

5. Upon written request from the Permittee, a nd adequate justification, EPA may waive a specific annual test and/or allow for te sting to be done at less than maximum operating capacity.

J. Recordkeeping and Reporting

1. The Permittee shall maintain a file of all records, data, measurements, reports, and documents related to the operation of the F acility, including, but not limited to, the following: all records or reports pertai ning to adjustments and/or maintenance performed on any system or device at the faci lity; initial performance test data for U1, documents from the fuel supplier for Condition X.D.1. ; and all other information required by this permit recorded in a pe rmanent form suitable for inspection.Page 16 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 2. The Permittee shall calculate and record on a daily ba sis the average boiler heat input in MMbtu/hr (24-hr daily block average) . The calculation shall be based on manufacturer ratio of maximum design heat rating to design steam (maximum design (MMbtu/hr) divided by design steam (lb/hr)) multiplied by the total steam generated each day. The heat input, as determined from this,record the efficiency of U1 daily. The heat input, as determined from th e U1 efficiency and steam production rate, shall not exceed 468 MMBtu/hr on a monthly basis.

3. By the last30 th day of each month, the Permittee shall calculate and record the 12- month rolling sum of CO, NO x , PM, PM 10 , and PM 2.5 emissions in tpy for U1 for the previous 12 months in accordance with Condition X.A.1

.

a. CO and NO x emissions calculations shall be based on emissions data acquired by the CO and NO x CEMS. b. PM, PM 10 , and PM 2.5 shall be based on emission factors from the most recent performance test.

4. By the last30 th day of each month, the Permittee shall calculate and record the 12- month rolling average of CO 2 e in lb CO 2 e/lb steam produced for U1 for the previous 12 months in accordance with Condition X.A.2

.

a. CO 2 emissions calculations shall be base d on emissions data acquired by the CO 2 CEMS, and the applicable calcul ation methodology contained in 40 CFR 98.33(a)(4) in effect on January 1, 2014

. b. CH 4 and N 2 O emissions calculations shall be based on the following: (1) (i) Tt he heat input of the applicable emission unit
., (2) T(ii) t he default CH 4 and N 2 O emission factors in Ta ble C-2 of 40 CFR Part 98, Subpart C as published on November 29, 2013 (78 FR 71952) and effective on January 1, 2014, and pr ovided in the following table.

Fuel Type GHG Pollutant Emission Factor (kg/MMBtu)
Wood and Wood Residuals CH 4 0.0072
N 2 O 0.0036

Natural Gas CH 4 0.001
N 2 O 0.0001 , and b.(3) (iii) Tt he applicable calculation me thodology contained in 40 CFR 98.33 in effect on January 1, 2014

. c. The Permittee shall calculate the CO 2 e emissions based on the procedures and Global Warming Potentials (GWP) cont ained in Greenhouse Gas Regulations, 40 CFR Part 98, Subpart A, Table A-1, as published on November 29, 2013 (78 FRPage 17 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 71948) and effective on January 1, 2014, a nd provided in the following tableas published on October 30, 2009 (74 FR 56395)

.

GHG Pollutant GWP
CO 2 1 CH 4 25 N 2 O 298 Sulfur hexafluoride (SF 6 ) 22,800

c. d. The total CO 2 e shall be based on the sum of the CO 2 e for CH 4 , N 2 O and CO 2

. e. Steam production shall be based on daily records of the hourly steam production rate output monitoring device.

5. For U1, the Permittee shall maintain the following records:

a. The total monthly hours of operation; b. 3-hour averages of CO and NO x emissions in units of lbs/MMBtu and lbs/hour dry basis. All time periods when the boile r is not in operation shall be excluded from the averages. The monthly average of CO and NO x emissions expressed in lbs/hour shall also be included;

c. 3-hour average calculations of PM 10 emissions in units of lbs/MMBtu and lbs/hour dry basis using the most recent annual PM 10 source test; d. Notification of all periods the continuous monitors were not functioning and the reasons for the same;

e. Steam production rate averaged over a daily (24-hour) period.

6. The Permittee shall maintain CEMS and COMS records that include the following:

a. The occurrence and duration of any startup, shutdown, or malfunction, performance testing, evaluations, calibrati ons, checks, adjustments maintenance, duration of any periods during which a CEMS or COMS is inoperative, and corresponding emission measurements. b. Date, place, and time of measurement or monitoring equipment maintenance activity;

c. Operating conditions at the time of measurement or monitoring equipment maintenance activity; d. Date, place, name of company or entity that performed the measurement or monitoring equipment maintenance activ ity and the methods used; and

e. Results of the measurement or monitoring equipment maintenance.

7. The Permittee shall maintain records a nd submit a written report of all excess emissions and opacity measurements to EP A and the District semi-annually, except when more frequent reporting is specifically required by an applicab le subpart; or thePage 18 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 Administrator, on a case-by-case basis, determ ines that more frequent reporting is necessary to accurately assess the compliance status of the source. The report is due on the 30 th day following the end of each se mi-annual period and shall include the following:

a. Time intervals, data and magnitude of the excess emissions, the nature and cause (if known), corrective actions taken and preventive measures adopted; b. Applicable time and date of each period during which the CEMS or COMS was inoperative (monitor down-time) , except for zero and span checks, and the nature of CEMS or COMS repairs or adjustments;

c. A statement in the report of a negative d eclaration; that is, a statement when no excess emissions occurred or when the CEMS or COMS has not been inoperative, repaired, or adjusted; d. Any failure to conduct any required s ource testing, monitoring, or other compliance activities; and

e. Any violation of limitations on operation, including but not limited to restrictions on hours of operation.

8. A period of monitor down-time shall be any unit operating cl ock hour in which sufficient data are not obtained by the CEMS to validate the hour for NO x , CO, or CO 2

.
9. Excess emissions shall be defined as a ny period in which emissions exceed the emission limits and standards set forth in Conditions X.C.1, X.C.2, X.C.3 and X.D.5

.
10. Excess emissions indicated by the CEMS , COMS, source testing, or compliance monitoring shall be considered violations of the applicable emission limit or standard for the purpose of this permit.

11. For U1, daily records of fuel received ot her than natural gas shall be maintained. These records shall include a detailed descrip tion of the fuel supplier, fuel type and tons received.

12. For U3, the Pp ermittee shall maintain records of the following: hours of operation, purpose of operation, fuel usage on h ourly basis and calculated PM/PM 10 emissions based on manufacturer emissions speci fications and fuel usage data.

13. Unless otherwise specified herein, all records required by this PSD Permit shall be retained for not less than five years fo llowing the date of such measurements, maintenance, reports, and/or records.Page 19 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 XI. ACROYNMS AND ABBREVIATIONS ASTM American Society for Testing and Materials BACT Best Available Control Technology BTU British Thermal Unit CAA Clean Air Act CEMS Continuous Emissions Monitoring System CFR Code of Federal Regulations CH 4 Methane CHP Combined Heat and Power CO Carbon Monoxide CO 2 Carbon Dioxide CO 2 e Carbon Dioxide Equivalents CTG Combustion Turbine Generator CTM Conditional Test Method COMS Continuous Opacity Monitoring System CU Cogeneration Unit District Shasta County Air Quality Management District DLN Dry Low NO X (d)scf (dry) Standard Cubic Feet EPA Environmental Protection Agency ESP Electrostatic Precipitator Facility Sierra Pacific Industries – Anderson Division FR Federal Register GHG Greenhouse Gases gpm Gallons Per Minute gr Grains HHV Higher Heating Value hr Hour lbs Pounds lb CO 2 e/lb steam Pounds of CO 2 Equivalents per Pound of Steam Produced MMBtu Million British Thermal Units MW Megawatt NAAQS National Ambient Air Quality Standards NO 2 Nitrogen Dioxide N 2 O Nitrous Oxide NO X Oxides of Nitrogen NSPS New Source Performance Standards Owner or Operator Sierra Pacific Industries Permittee Sierra Pacific Industries PM Total Particulate Matter PM 2.5 Particulate Matter with aerodynamic diameter less than 2.5 micrometers PM 10 Particulate Matter with aerodynamic diameter less than 10 micrometers ppm Parts Per Million ppmvd Parts Per Million by Volume, Dry basis ppmv Parts Per Million by VolumePage 20 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 PSD Prevention of Significant Deterioration RATA Relative Accuracy Test Audit SCAQMD Shasta County Air Quality Management District SCR Selective Catalytic Reduction SNCR Selective Non-Catalytic Reduction SO 2 Sulfur Dioxide SO X Oxides of Sulfur TDS Total Dissolved Solids tpy Tons Per Year yr Year

XII. AGENCY NOTIFICATIONS

A. Unless otherwise directed by the EPA or th is permit, the owner or operator shall submit all information required to be reporte d by this permit other than notification of change of ownership, including, but not limited to, test plan s, reports, certifications, notifications and requests to approve alte rnative monitoring or reporting, to the following address:

Director, Enforcement Di vision (Attn: ENF-2-1) U.S. Environmental Protection Agency, Region IX 75 Hawthorne Street San Francisco, CA 94105-3901

EMAIL: aeo_r9@epa.gov

B. Unless otherwise directed by the EPA or th is permit, the owne r or operator shall submit all other information pertaining to this permit or facility, including but not limited to, applications to add, replace or modify an emission unit or control equipment, notification of change of ownership, and information concerning any other changes that may contravene existing permit terms, to:

Director, Air Divi sion (Attn: AIR-3) U. S. Environmental Protection Agency Region IX 75 Hawthorne Street San Francisco, CA 94105-3901Page 21 of 21

Sierra Pacific Industries- Anderson (SAC 12-01) Proposed Final PSD Permit – April 2014November 2013 C. The owner or operator shall submit a copy of all documents required to be submitted pursuant to this permit, including but not limited to Sections X.A and X.B, to:

Air Pollution Control Officer Shasta County Air Quality Management District 1855 Placer Street, Suite 101 Redding, CA 96001-1759