NSR Permit No. 0063-M6R1 Page 2 of 33

Rev. 12/15/05 This permit authorizes the modification and/or operation of the San Juan Generating Station. The function of the facility is to generate electricity by combusting coal. This facility is located in Township 30 north, Range 15 west, Sections 16 – 21, 29, and 30, approximately 3 miles north northeast of Waterflow, New Mexico in San Juan County.

Modification History:

0063-M6R1 Adding two bag houses, one each for Units 1 and 2 fly ash silos and disconnecting (not removed) the Electrostatic Precipitators (ESP) from each unit.

0063-M6 Adding four activated carbon silos and associated control equipment.

0063-M5 Permit Application No. 0063-M5 was withdrawn.

0063-M4 Modification No. 0063-M4 consists of adding fabric filters to each boiler, replacing the existing boiler burners with low-NOx burne rs, and increasing the control efficiency of the wet limestone scrubber.

This permit supersedes and replaces all portions of Air Quality Permit No. 0063-M6, issued April 22, 2008, except the portion requiring compliance tests. Compliance test conditions from previous permits are still in effect, in addition to compliance test requirements contained in this permit.

The Department has reviewed the permit application for the proposed modification and has determined that the provisions of the Act and ambi ent air quality standards will be met. Conditions have been imposed in this permit to assure continued compliance. 20.2.72.210.D NMAC, states that any term or condition imposed by the Department on a permit is enforceable to the same extent as a regulation of the Environmental Improvement Board.

Pursuant to 20.2.75.11 NMAC, the Department will assess an annual fee for this facility. This regulation set the fee amount at $1,500 through 2004 and requires it to be adjusted annually for the Consumer Price Index on January 1. The curre nt fee amount is available by contacting the Department or can be found on the Department’s website. The AQB will invoice the permittee for the annual fee amount at the begi nning of each calendar year. This fee does not apply to sources which are assessed an annual fee in accordance with 20.2.71 NMAC. For sources that satisfy the definition of “small business” in 20.2.75.7.F NMAC, this annual fee will be divided by two.

All fees shall be remitted in the form of a corporate check
, certified check , or money ordermade payable to the “NM Environment Department, AQB” mailed to the address shown on the invoice and shall be accompanied by the remittance slip attached to the invoice.NSR Permit No. 0063-M6R1 Page 3 of 33

Rev. 12/15/05 TOTAL EMISSIONS
The total potential emissions from this facility, excluding exempted activities, are shown in the following table. The emissions limitations for i ndividual units are shown in Specific Condition 2.

Total Potential Criteria Pollutant Emissions from Entire Facility (for information only, not an enforceable condition):

Pollutant Emissions (tons per year) Nitrogen Oxides (NOx) 24,710.00 Carbon Monoxide (CO) 39,427.00 Total Suspended Particulate (TSP) 1,816.00 Particulate Matter Less Than 10 Microns (PM10) 1,549.00 Volatile Organic Compounds (VOC) 249.00 Sulfur Dioxide (SO 2 ) 16,043.00

Total Potential HAPS that exceed one ton per ye ar (for information only, not an enforceable condition):

Pollutant Emissions (tons per year) Hydrogen Chloride 15.8 Hydrogen Fluoride 48.1

SECTION I: SPECIFIC CONDITIONS
Pursuant to 20.2.72 NMAC, and the specific regulator y citations in parenthesis, the Facility is subject to the following Specific Conditions.

Fee Requirement: This permit is not effec tive until the Department receives the permit fee specified in the attached invoice. Pursuant to 20.2.75.12 NMAC , the Permittee shall pay this invoice no later than thirty (30) days after the date of the invoice, unless the Department has granted an extension. The permit fee must be paid by this date regardless of the Permittee’s intended use or non-use of the permit or of the Department’s cancellation of the permit. The Permittee’s failure to pay this fee when due will automatically void the permit and the Department may initiate enforcement action to collect the fee and assess a civil penalty for non- payment. The Permittee shall not construct the equipment or implement the operation specified in Specific Conditions 1.j until the Department acknowledges receipt of the fee by letter or electronic mail. The Department may initiate enforcement action for injunctive relief and civil penalties for any construction or operation specified in Specific Conditions 1.j prior to the date of the Department’s written acknowledgment of receipt of the fee.NSR Permit No. 0063-M6R1 Page 4 of 33

Rev. 12/15/05 1. Construction / Modification / Revision and Operation (20.2.72 NMAC; NSPS 40 CFR 6060, Subparts A, D, and OOO)

a. The facility shall consist of the equipment identified in Table 1.1.

Table 1.1: Regulated Equipment List

Unit No. 1 Description Manufacture Manufacture Date Model No. Serial No. Capacity Control Equipment

S301/E301 Unit 1 Coal Boiler Begin Commercial

Operation

12/1976 Foster Wheeler -- 08-1266 -- 3707 MM Btu/hr 4 Fabric Filter ESP SO 2 Scrubber

S302/E302 Unit 2 Coal Boiler Begin Commercial

Operation

11/1973 Foster Wheeler -- 08-1266 -- 3688 MM Btu/hr 4 Fabric Filter ESP SO 2 Scrubber

S303/E303 Unit 3 Coal Boiler Begin Commercial

Operation

12/1979 Babcock & Wilcox -- RB-544 -- 5758 MM Btu/hr 4 Fabric Filter ESP SO 2 Scrubber

S304/E304 Unit 4 Coal Boiler Begin Commercial

Operation

4/1982 Babcock & Wilcox -- RB-545 -- 5649 MM Btu/hr 4 Fabric Filter ESP SO 2 Scrubber

S508/E501 Unit 1 Duct Leaks -- -- -- -- -- good air pollution control practices

S509/E502 Unit 2 Duct Leaks -- -- -- -- --

S510/E503 Unit 3 Duct Leaks -- -- -- -- --

S511/E504 Unit 4 Duct Leaks -- -- -- -- --

S111/E101 Coal Pile A Maintenance -- -- -- -- -- TBD

S112/E102 Coal Pile A Maintenance -- -- -- -- -- TBD

S113/E103 Coal Pile A Maintenance -- -- -- -- -- TBD

S114/E104 Coal Pile A Maintenance -- -- -- -- -- TBDNSR Permit No. 0063-M6R1 Page 5 of 33

Rev. 12/15/05 Unit No. 1 Description Manufacture Manufacture Date Model No. Serial No. Capacity Control Equipment

S201/E202 Coal Silo Transfer Point -- -- -- -- -- Enclosure

S203/E203 Coal Belt to Pulverizers transfer Point -- -- -- -- -- Enclosure

S204/E201 Coal Pulverizers Multiple Multiple Multiple Multiple 8,200,000 tpy 3 Building Enclosure

S425/E406 Unit 1 Cooling Tower Marley Note 2 D52 6615-5- 11 170,000 gpm Drift Eliminators/Design

S426E407 Unit 2 Cooling Tower Marley Note 2 D52 6615-5- 11 165, 000 gpm
S427/E408 Unit 3 Cooling Tower Marley Note 2 Model 2 644-12- 333-75 220, 000 gpm
S428/E409 Unit 4 Cooling Tower Marley Note 2 Model 2 6616-12- 113-80 227,500 gpm
S429/E410 Aux #1 Cooling Tower Marley 1978 600 series TBD 5,000 gpm

S430/E411 Aux # 2 Cooling Tower Marley 1978 TBD TBD 30,000 gpm
S518/E518 Unit 1 Fly Ash Silo Vent W.W. Sly TBD JM3586 TBD TBD Fabric Filter Baghouse

S519/E519 Unit 2 Fly Ash Silo Vent W.W. Sly TBD JM3586 TBD TBD Fabric Filter Baghouse

S512/E505 Unit 3 Fly Ash Silo Vent W.W. Sly TBD JM3586 TBD TBD Fabric Filter Baghouse

S513/E506 Unit 4 Fly Ash Silo Vent W.W. Sly TBD JM3586 TBD TBD Fabric Filter Baghouse

S514/E507 Unit 1 Fly Ash Silo Unloading -- -- -- -- TBD Moisture Control (Bulk Unloading)

S515/E508 Unit 2 Fly Ash Silo Unloading -- -- -- -- TBD

S516/E509 Unit 3 Fly Ash Silo Unloading -- -- -- -- TBD

S517/E510 Unit 4 Fly Ash Silo Unloading -- -- -- -- TBD

S738/E704 Front End Loader (Around Coal Piles) -- -- -- -- -- Watering

S753/E707 Front End Loader (Around

Gypsum Piles) -- -- -- -- -- Watering

E702, E703, E704-B, and E706 Un-Paved Haul Roads -- -- -- -- -- Watering

E701, E705, and

E708 Paved Road Emissions -- -- -- -- -- Water Truck Street SweeperNSR Permit No. 0063-M6R1 Page 6 of 33

Rev. 12/15/05 Unit No. 1 Description Manufacture Manufacture Date Model No. Serial No. Capacity Control Equipment

S804/E802 Lime Stone Pile Maintenance -- -- -- -- -- TBD

E801 Limestone Truck Unloading __ __ __ __ __ None

S806/E803 Limestone Silo loading __ __ __ __ __ Baghouse

S901 Activated Carbon Silo -- TBD -- -- 45,000 lb Dedicated Baghouse (E901)

S902 Activated Carbon Silo -- TBD -- -- 45,000 lb Dedicated Baghouse (E902)

S903 Activated Carbon Silo -- TBD -- -- 72,000 lb Dedicated Baghouse (E903)

S904 Activated Carbon Silo -- TBD -- -- 72,000 lb Dedicated Baghouse (E904)

1 Unit number designations starting with an “S” indicate Source and “E” Designations indicate emissions points 2 The manufacture date for the boilers (Units E301 – E304) , the boiler specific cooling towers (Units 406 – 409), and the coal pulverizes (Unit E201) is assumed to be the “b egin commercial operations” date for the respective boilers. 3 The coal pulverizers have a capacity of 1,600,000 tons per year of coal for each emissions units E301 and E302. The coal pulverizers have a capacity of 2,500,000 tons per year of coal for each emissions units E303 and E304. These capacity values are rounded to the nearest 100,000 tons per year. These values are based on historical coal use, scaled up to 100 percent unit utilization (i.e 100 percent load at 8760 hours per year).” 4 The Btu/hr value listed in Table 1.1 Includes a 6% safety factor added to nominal rated capacity of the boilers existing at the time of permit issuance.

b. This facility is authorized to operate on a continuous basis.

c. This facility is subject to all applicable requirements including, but not limited to, the following regulations:

Table 1.2: applicable requirements

Citation Title 40 CFR Part 60, Subpart A General Provisions 40 CFR Part 60 Subpart D Standards of Performance for Fossil Fuel Fired Steam Generators for Which Construction is Commenced After August 17, 1971 40 CFR Part 60 Subpart OOO Standards of Performance for Nonmetallic Mineral Processing Plants 20.2.3 NMAC Ambient Air Quality Standards
20.2.5 NMAC Source Surveillance
20.2.7 NMAC Excess Emissions
20.2.14 NMAC Particulate Emissions From Coal Burning Equipment
20.2.31 NMAC Coal Burning Equipment - Sulfur Dioxide
20.2.32 NMAC Coal Burning Equipment - Nitrogen DioxideNSR Permit No. 0063-M6R1 Page 7 of 33

Rev. 12/15/05 Citation Title
20.2.61 NMAC Smoke and Visible Emissions
20.2.70 NMAC Operating Permits
20.2.71 NMAC Operating Permit Fees
20.2.72 NMAC Construction Permits
20.2.73 NMAC NOI & Emissions Inventory Requirements
20.2.75 NMAC Construction Permit Fees
20.2.77 NMAC New Source Performance
20.2.84 NMAC Acid Rain Permit

d. Units E301, E303, and E304 are subject to fe deral new source perf ormance standards (NSPS) found in CFR Title 40, Part 60, Subpart A - General Provis ions, and Subpart D and shall comply with both the notificati on requirements in Subpart A and with the specific requirements of Subpart D.

e. New Source Performance Standards (N SPS) found in 40 CFR 60, Subpart A - General Provisions, and Subpart OOO applies to certain pieces of equipment in the limestone handling system. Affected units shall comply with both the notification requirements in Subpart A and with the specific requirements of Subpart OOO.
f. Units E301, E302, E303, and E304 are subject to the applicable requirements of 20.2.14, 20.2.31, 20.2.32 NMAC. Table 1.3 identifie s whether the boiler unit is a new or existing unit including its vintage designation. Table 1.3: Boiler Designation (NMAC) Information Vintage Unit Number 20.2.31 20.2.32 20.2.14, 20.2.31, and 20.2.32 NMAC

E301 1 -- New Coal Burning Equipment

E302 -- D Existing Coal Burning Equipment

E303 2 -- New Coal Burning Equipment

E304 3 -- New Coal Burning Equipment

g. PNM shall comply with the Opacity, PM, SO 2 , and NOx emission limitations in Table 2.3 in accordance with the schedule listed below: (i) For Unit E304, no later than ninety (90) days after completion of construction of PM, NO x , and SO 2 controls, or by December 31, 2007, whichever date is earlier. (ii) For Unit E303, no later than nine ty (90) days after completion of construction of PM, NO x , and SO 2 controls, or by June 30, 2008, whichever date is earlier. (iii) For Unit E301, no later than ninety (90) days after completion of construction of PM, NO x , and SO 2 controls, or by December 31, 2008,NSR Permit No. 0063-M6R1 Page 8 of 33

Rev. 12/15/05 whichever date is earlier. (iv) For Unit E302, no later than ninety (90) days after completion of construction of PM, NO x , and SO 2 controls, or by May 31, 2009, whichever date is earlier.

h. For each unit, until the baghouses become ope rational, the permittee shall operate the ESPs to control particulate emissions in accordance with ESP applicable conditions of the Title V operating permit P062R 1 that specify operating, monitoring, recordkeeping, and reporting requirements for the ESPs.

i. Emission Units E701, E702, E703, E704, E705, E706, E707, and E708 (road areas) shall comply with the operational requirements specified in Table 1.4.

Table 1.4, Operational Requirements for Road Areas

Emission Unit No. Operational Requirements

E701, E705, and E708 Unit shall be paved, and swept and watered as necessary, to minimize emissions of TSP and PM-10
E702, E703, E704, E706, and E707 Unit shall be watered as necessary to minimize emissions of TSP and PM-10

j. The fly ash silo loading (E505, E506, E518, and E519) and limestone silo loading (E803) shall be equipped and operated with fabr ic filters. The fabric filters shall be equipped and operated with devices to mon itor the differential pressure drop across the filters. The control devices shall be operated and maintained in accordance with manufacturer’s specifications, including specifications for pressure drop, in order to achieve a minimum 99.5% control of TSP, PM-10, and PM emissions.

k. The coal pulverizers (E201) shall be entir ely enclosed in a structure that is maintained and operated in accordance with good air pollution control practices in order to minimize particulate emissions.

l. The emergency generators shall burn only No. 2 Diesel Fuel Oil.

m. Except for maintenance and testing activities, the emergency generators shall only be operated during the unavoidable loss of co mmercial utility power. Each emergency generators shall not operate more than 500 hours per year.

n. The facility shall not process more than the quantities of raw materials specified in Table 1.5 below. Table 1.5, Facility-Wide Operational Limits on Raw Materials

Material Annual LimitNSR Permit No. 0063-M6R1 Page 9 of 33

Rev. 12/15/05 Material Annual Limit Coal 8,200,000 tons No. 2 Diesel Fuel Oil 2,912,500 gallons Limestone 227,000 tons

o. Coal pile maintenance (E101, E102, E103, and E104), fly ash silo unloading to trucks (E507, E508, E509, E510), limestone delivery system(E705), and limestone pile maintenance (E802) shall be operated in accordance with good air pollution control practices to minimize emissions.

p. Each boiler (Units E301, E302, E303, and E304) shall be equipped and operated with a baghouse in accordance with the schedule in condition 1. g , to meet the emission limits specified in Table 2.3, except as otherwise allowed under the applicable provisions of 20.2.7 NMAC and 40 CF R 60 Subpart A (E301, E303, and E304 only). In addition, Control Devices associated with Emission Units E301, E303, and E304 are subject to the requirements of 40 CFR 60.11(d).
Each baghouse associated with the boilers shall be maintained and operated in accordance with good air pollution control practices for minimizing emissions. Individual boilers shall only be operated wh en its associated baghouse is achieving a control efficiency sufficient to ensure co mpliance with all applicable particulate emission limits listed in this permit.

q. Prior to the proposed baghouses becoming fully operational, each of the boilers (E301, E302, E303, and E304) shall be equipped and operated with an ESP, except as otherwise allowed under the applicab le provisions of 20.2.7 NMAC and 40 CFR 60 Subpart A (E301, E302, and E304 only). In addition, Control Devices associated with Emission Units E301, E303, and E304 ar e subject to the requirements of 40 CFR 60.11.

Each ESP associated with th e boilers shall be maintained and operated in accordance with good air pollution control practices for minimizing emissions. Individual boilers shall only be operated when their respective ESP is achieving a control efficiency sufficient to ensure compliance with all applicable particulate emission limits in Table 2.1 and 2.2.

r. The boilers (E301, E302, E303, and E304) sh all be equipped and operated with limestone scrubbers. PNM shall not exceed the emission limits in Specific Condition 2. To the extent necessary to meet the SO 2 emission limits and the SO 2 control efficiency requirements of this permit (Tab le 2.3), PNM shall add dibasic acid to the limestone slurry feed of each scrubber. The limestone scrubbers (E301, E302, E303, and E304) shall be maintained and operated in accordance with good air pollution control practices for minimizing emissions, except as otherwise allowed under theNSR Permit No. 0063-M6R1 Page 10 of 33

Rev. 12/15/05 applicable provisions of 20.2.7 NMAC and 40 CFR 60 Subpart A (E301, E302, and E304 only).

s. PNM shall implement a duct leak mana gement program on Units E501, E502, E503, and E504. The Duct leak management program shall conducted in accordance with good air pollution control practices for minimizing emission. All remaining combustion gasses shall be exhausted through the primary stack of each unit.

t. Unit number E301, E302, E303, and E304 sha ll be equipped with a continuous emissions monitoring system (CEMS) for n itrogen dioxide to meet the requirements of the acid rain program and the CEMS shall be maintained in accordance with all applicable provisions of the acid rain program under 40 CFR 75.

u. Heat input to these boilers shall not incr ease as a result of in stallation of the lowNOx burners. Compliance with this cond ition shall be provided upon request of the Department. Boiler heat input used in this calculation shall be the data submitted in accordance with Specific Condition 5. b and 5. c . An increase in heat input solely due to an increase in demand is authorized.

v. Each of the activated carbon silos shall be equipped with a baghouse operated according to manufacturer’s guidelines and specification. The baghouse shall have a design PM emission rate of 0.0092 grains/s cf or less and a design baghouse exhaust flow of rate of 578 scfm or less.

w. The activated carbon shall be introduced in to the exhaust stream prior to the baghouse used to control particulate matter from the respective boilers.

x. Each activated carbon baghouse shall be equipped and operated with a device to continuously monitor the pressure differential across the baghouse to insure continued compliance.

y. The permittee shall install, maintain, and operate mercury CEMS in accordance with the manufacturer’s recommendations.

z. The next significant revision (0063-M7) sh all include condensable emissions and PM2.5 emissions, not included in this pe rmit, unless otherwise allowed by the Department, in writing, prior to the application being submitted for review.

2. Emission Limits (20.2.72.210 NMAC, paragraphs A and B.1.; NSPS 40 CFR 60, Subparts A, D, and OOO)

a. Table 2.1 contain the maximum allowable emission rates for units E301 (1), E302 (2), E303 (3), and E304 (4). The emissi ons from any individual piece of equipment shall not exceed the limits listed in the table.NSR Permit No. 0063-M6R1 Page 11 of 33

Rev. 12/15/05 Table 2.1, Maximum Allowable Emission Rates for Units E301 (1), E302 (2), E303 (3), and E304 (4) Unit No.(s) Pollutant Maximum Allowable Emission Rate Averaging Period Applicable Requirement Compliance Method

1, 2, 3, & 4 CO E301 – 3000 lb/hr E302 – 2000 lb/hr E303 – 2000 lb/hr E304 – 2000 lb/hr Per Compliance Method 20.2.3 NMAC, 40 CFR 50, NSR No. 63-M2 Quarterly Testing

1, 2, 3, & 4 NOx E301 – 1,573.7 lb/hr E302 – 2,435.3 lb/hr E303 – 2,444.4 lb/hr E304 – 2,398.1 lb/hr 24-Hour Average NSR No. 63-M2 20.2.32 NMAC, CEMS

1, 2, 3, & 4 NOx E301 – 6892.6 tons/yr E302 – 10666.6 tons/yr E303 – 10706.5 tons/yr E304 – 10503.5 tons/yr Daily rolling 365-day Total NSR No. 63-M2 20.2.32 NMAC, CEMS

1, 3, & 4 NOx 0.70 lb/MMBtu 3-Hour Average, Rolled Hourly 40 CFR 60.44(a)(3) CEMS
2 NOx 0.70 lb/MMBtu 3-Hour Average, Rolled Hourly 20.2.32.110.C NMAC CEMS 1, 3, & 4 NOx 0.45 lb/MMBtu 3-Hour Average, Rolled Hourly 20.2.32.109 NMAC CEMS 1, 3, & 4 Opacity 20% 6-Minute Average 40 CFR 60.42(a)(2) COMS

1, 2, 3, & 4 TSP 4 (Filterable) E301 – 174.8 lb/hr E302 – 173.9 lb/hr E303 – 271.6 lb/hr E304 – 266.5 lb/hr Per Compliance Method NSR No. 63-M2 Quarterly Testing

1, 2, 3, & 4 TSP 4 (Filterable) E301 – 765.8 tons/yr E302 – 761.9 tons/yr E303 – 1,189.6 tons/yr E304 – 1,167.1 tons/yr Per Compliance Method NSR No. 63-M2 Quarterly Testing

1, 3, & 4 PM 4 (Filterable) 0.1 lb/MMBtu Per Compliance Method 40 CFR 60.42(a)(1) Quarterly Testing

1, 3, & 4 PM 4 (Filterable) 0.05 lb/MMBtu Per Compliance Method 20.2.14.201.A NMAC Quarterly Testing

2 PM 4 (Filterable) 0.05 lb/MMBtu Per Compliance Method 20.2.14.202.A NMAC Quarterly Testing

1, 2, 3, & 4 PM-10 4 (Filterable) E301 – 174.8 lb/hr E302 – 173.9 lb/hr E303 – 271.6 lb/hr E304 – 266.5 lb/hr Per Compliance Method NSR No. 63-M2 Quarterly Testing

1, 2, 3, & 4 PM-10 4 (Filterable) E301 – 765.8 tons/yr E302 – 761.9 tons/yr E303 – 1,189.6 tons/yr E304 – 1,167.1 tons/yr Per Compliance Method NSR No. 63-M2 Quarterly TestingNSR Permit No. 0063-M6R1 Page 12 of 33

Rev. 12/15/05 Unit No.(s) Pollutant Maximum Allowable Emission Rate Averaging Period Applicable Requirement Compliance Method
1, 3, & 4 PM-2 4 (Filterable) 0.02 lb/MMBtu Per Compliance Method 20.2.14.201.B NMAC Note 2

2 PM-2 4 (Filterable) 0.04 lb/MMBtu Per Compliance Method 20.2.14.202.B NMAC Note 2

1, 2, 3, & 4 SO 2 E301 – 7045.8 tpy E302 – 7009.5 tpy E303 – 10944.4 tpy E304 – 10736.9 tpy Per Compliance Method 20.2.3 NMAC, 40 CFR 50 CEMS

1, 3, & 4 SO 2 1.2 lb/MMBtu 3-Hour Average, Rolled Hourly 40 CFR 60.43(a)(2) CEMS
1, 3, & 4 SO 2 1.2 lb/MMBtu 3-Hour Average, Rolled Hourly 20.2.31.109.B NMAC CEMS

2 SO 2 Minimum 72% Control 30-Day Average, Rolled Daily 20.2.31.110.A NMAC CEMS

1, 2, 3, & 4 VOC E301 – 11.1 lb/hr E302 – 11.1 lb/hr E303 – 17.3 lb/hr E304 – 17.0 lb/hr Per Compliance Method NSR No. 63-M2 Note 3

1 Nitrogen dioxide emissions include all oxides of nitrogen expressed as NO 2 2 PNM shall show compliance either the PM or PM2 limits as required in 20.2.14 NMAC. 3 Test results that demonstrate compliance with CO emission limits shall also be considered to demonstrate compliance

with VOC emission limits for the subject emission unit. 4 The particulate emission limits in this permit (0063M6) only include filterable particulate emissions. Future permitting

actions shall change the allowable emission limits to include condensable emissions.

b. Table 2.2 contains the maximum allowable emission rates for Units E301, E302, E303, and E304 combined.

Table 2.2, Maximum Allowable Emission Rates for Units E301-E304 Combined

Pollutant Maximum Allowable Emission Rate Averaging Period Applicable Requirement Compliance Method

NOx 9,000 lb/hr 24-Hour Average, Rolled Hourly NSR No. 63-M2, 40 CFR Part 50 CEMS

SO 2 13,000 lb/hr 3-Hour Average, Rolled Hourly 20.2.31.109.C NMAC CEMS

SO 2 0.55 lb/MMBtu 30-Day Average, Rolled Daily 20.2.31.109.C NMAC CEMS & Process Records

SO 2 0.46 lb/MMBtu Annual Average NSR No. 63-M2 CEMS & Process Records

1 Nitrogen dioxide emissions include all oxides of nitrogen expressed as NO2

c. Table 2.3 contain additional individual maxi mum allowable emission rates for Units E301, E302, E303, E304 Each After Eff ective Dates of Condition 1.g. The emissions from any individual piece of equipment shall not exceed the limits listed in the tables.NSR Permit No. 0063-M6R1 Page 13 of 33

Rev. 12/15/05 Table 2.3: Additional Individual Maximum Allowa ble Emission Rates for Each Boiler (Units E301, E302, E303, E304) After Effective Dates of Condition 1.g.

Pollutant Maximum Allowable Emission Rate Averaging Period Applicable Requirement Compliance Method

NOx 1, 2 0.30 lb/MMBtu 30 day rolling average 1 0063-M4 CEMS & Process Records SO 2 90% removal Annual Average 0063-M4 CEMS

SO 2 3 0.250 lb/MMBtu 7-day block average 0063-M4 CEMS & Process Records PM 6 (Filterable) 0.015 lb/MMBtu Per Compliance Method 0063-M4 Quarterly Testing

Opacity 5 20% Six-minute average 2 0063-M4 COMS PM-2.5 6 (Filterable) E301 – 55.6 lb/hr E302 – 55.3 lb/hr E303 – 86.4 lb/hr E304 – 84.7 lb/hr Per Compliance Method 0063-M6 Quarterly Testing

PM-2.5 6 (Filterable) E301 – 243.5 tons/yr E302 – 242.2tons/yr E303 – 378.4 tons/yr E304 – 371.0 tons/yr Per Compliance Method 0063-M6 Quarterly Testing

1 Nitrogen dioxide emissions include all oxides of nitrogen expressed as NO 2 2 For purposes of calculating the thirty (30) day rolling average, NO x emissions for the first three (3) hours of a cold startup after coal is fed to the boiler shall be capped at 0. 30 lb/MMBtu. Cold startup is defined as a startup when the boiler is at ambient indoor temperature measured at the time fuel is first fed to the boiler.
3 The seven (7) day average emission rate of SO 2 at San Juan Units E301, E302, E303, and E304 shall not exceed 0.250 lb-SO 2 /MMBtu for each unit, calculated as a block average as measured by SO 2 CEMS located downstream of the scrubber outlet and any scrubber by-pass return. For purposes of calculating the block average, SO 2 emissions for the first three (3) hours of a cold startup after coal is fed to the boiler shall be capped at 0.250 lb./MMBtu. Cold startup is defined as a startup when the boiler is at ambien t indoor temperature measured at the time fuel is first fed to the boiler.
4 The PM average emission rate for each of Units E301, E302, E303, and E304 shall not exceed 0.015 lb-PM/MMBtu, as measured by EPA Reference Method 5 stack tests, c onducted at least once each calendar quarter at times and conditions specified by the Department, and according to test protocols approved by the Department, but in all cases under conditions and in a manner no less stringent than described in EPA’s 2004 Clean Air Act National Stack Testing Guidance.
5 The opacity limit for San Juan Units E301, E303, and E 304 as required by 40 CFR 60.D and E301, E302, E304, and E304 as required by this permit shall be twenty (20) per cent, averaged over any six (6) minute period except for one six (6) minute average per hour of up to twenty-seven (27) percent opacity. This limit shall apply at all times when air pollutants are being discharged into the atmosphere, unless PNM demonstrates that any excess opacity reading: (a) was caused by a startup, shutdown, malfunction, or emer gency, or (b) occurred when both the boiler and all fans that move flue gas in the unit were off. Load changes, poor coal quality, air heater cleaning, sootblowing, and high ash hoppers shall not excuse any excess opacity reading. Op acity shall be measured in the stack or, if approved by EPA, after the outlet of the baghouse and corrected to stack exit.
6 The particulate emission limits in this permit (0063M6) only include filterable particulate emissions. Future permitting actions shall change the allowable emission limits to include condensable emissions.NSR Permit No. 0063-M6R1 Page 14 of 33

Rev. 12/15/05 d. Table 2.4 list the allowable emissions from duct leaks. Compliance with Condition Specific Condition 2. d shall be determined by implementation of a duct leak management program.

Table 2.4, Maximum Allowable Emission Rates fo r Duct Leaks After the Effective Dates of Condition 1.g Maximum Allowable Emission Rates in Pounds per Hour (pph) and Tons per Year (tpy) TSP PM-10 NOx CO SO 2 Emission Unit No. pph tpy Pph tpy pph tpy pph tpy pph tpy E501 11.3 45.0 4.5 18.1 0.3 0.8 0.5 2.0 1.1 4.5 E502 12.4 50.0 4.9 20.0 0.4 0.8 0.4 1.5 1.2 4.9 E503 12.6 50.4 5.0 20.1 -- 0.8 0.2 1.0 1.3 5.0 E504 14.5 58.3 5.8 23.3 0.3 1.0 0.3 1.1 1.5 5.8

e. Table 2.5 lists the allowable emission limits for non-boiler emission units. The emissions from any individual piece of equipment shall not exceed the limits listed in the table.

Table 2.5, Maximum Allowable Emission Rates for Non-Boiler Emission Units Maximum Allowable Emission Rates in Pounds per Hour (pph) and Tons per Year (tpy) TSP PM-10 Emission Unit No. pph tpy pph tpy E101 1.6 7.0 -- 1.6 E102 1.6 7.0 -- 1.6 E103 1.6 7.0 -- 1.6 E104 1.6 7.0 -- 1.6 E201 7.3 32.0 2.8 12.3 E202 -- 0.6 -- -- E203 -- 0.6 -- -- E406 9.4 41.0 9.4 41.0 E407 9.1 39.8 9.1 39.8 E408 9.1 39.8 9.1 39.8 E409 12.5 54.9 12.5 54.9 E410 -- 1.0 -- 1.0 E411 1.3 5.8 1.3 5.8 E505 -- 0.5 -- -- E506 -- 0.5 -- -- E507 0.6 2.4 -- 1.1 E508 0.6 2.4 -- 1.1 E509 0.9 3.7 -- 1.8 E510 0.8 3.7 -- 1.7NSR Permit No. 0063-M6R1 Page 15 of 33

Rev. 12/15/05 Maximum Allowable Emission Rates in Pounds per Hour (pph) and Tons per Year (tpy) TSP PM-10 Emission Unit No. pph tpy pph tpy E518 -- -- -- -- E519 -- -- -- -- E704A 0.9 3.9 -- 1.2

E707 2.3 10.3 0.8 3.3 Paved Roads (E701, E705, E708) 12.2 53.5 2.4 10.4

Unpaved Roads

(E702, E703, E704B, ,E706) 9.0 39.5 2.7 6.8 E801 0.7 3.1 -- 1.5 E802 2.4 10.4 -- 1.6 E803 -- -- -- -- S901 -- -- -- -- S902 -- -- -- -- S903 -- -- -- -- S904 -- -- -- -- Note: E704A is the front end loader emissions from travel around the coal p iles. E704Bis front end loader emissions on unpaved roads. “--“ indicates that the emissions ar e less than 0.5 pph or 0.5 tpy and emission limits are not required for this permit.

f. Unless otherwise required by this permit or another applicable regulation, compliance with the NOx emission limits sha ll be determined on a unit-specific basis using data from NOx CEMS that have b een installed, calibrated, and operated in accordance with 40 CFR. 75 and any other applicable requirement.

g. Unless otherwise required by this permit or another applicable regulation, compliance with the SO 2 emission limits shall be determined on a unit-specific basis using data from SO 2 CEMS that have been installed, calibrated, and operated in accordance with 40 CFR 75 and any other applicable requirement.

h. Each affected facility as defined in 40 CFR 60 Subpart OOO of the limestone handling system, including the limestone silo, shall meet the standards for particulate matter specified in 40 CFR 60.672.

i. In accordance with 20.2.61.109. NMAC, the owner or operator of stationary combustion equipment shall not permit, cause, suffer or allow visible emissions from the stationary combustion equipment to equal or exceed an opacity of 20 percent; provided, however, stationary combustion equipment which is regulated by PartsNSR Permit No. 0063-M6R1 Page 16 of 33

Rev. 12/15/05 20.2.10 NMAC through 20.2.18 NMAC, 20.2.37 NMAC, and 20.2.42 NMAC, and any other Part of Chapter 2 which speci fically limits particulate emissions is exempted from this Part. The emer gency generators are subject to 20.2.61.109 NMAC.
j. Emission Units E406, E407, E408, E409, E410, and E411 (cooling towers) shall be maintained and operated according to manufacturer’s recommendations and good engineering practices. The pump’s circulati ng water rate, the water’s total dissolved solids (TDS) content, and the cooling tower’s drift rate shall not exceed the values specified in Table 2.6 below.

Table 2.6, Circulating Rate, TDS, and Drift Rate Operational Limits for Cooling Towers

Emission Unit No. Circulating Water Rate ( gallons/minute) TDS Content ( lb/gallon) Drift Rate (%) E406 170,000 0.0459 0.002 E407 165,000 0.0459 0.002 E408 220,000 0.0459 0.0015 E409 227,500 0.0459 0.002 E410 5,000 0.03756 0.002 E411 30,000 0.0292 0.002

k. The Activated carbon baghouse silos shall be designed and operated so there are no visible emissions.

3. Monitoring (20.2.72.210.C NMAC, NSPS 40 CFR 60, Subparts A, D, and, OOO)

a. Table 3.1 identifies the affected units and applicable monitoring requirements.

Table 3.1 -

Effected Units Applicable Monitoring Requirements E301, E303 and E304 40 CFR 60.45 , Subpart D E301, E302, E303 and E304 20.2.31.112 NMAC The limestone handling system Applicable monitoring requirements in 40 CFR 60.676. Subpart OOO E301, E302, E303, and E304 40 CFR Part 75(NOx, SO 2 , and CO 2 CEMS) E301, E303, and E304 40 CFR 60 Subpart A (COMS)

b. Units E301, E303, and E304 are subject to 40 CFR 60 Subpart D and PNM shall operate the COMS for units E301, E303, a nd E304 as required in 40 CFR 60 Subpart D. Although Unit 302 is not an affected unit for purposes of NSPS 40 CFR 60, Subpart D, PNM shall install, calibrate , maintain, and operate COMs on Unit E302NSR Permit No. 0063-M6R1 Page 17 of 33

Rev. 12/15/05 per the procedures specified in 40 CFR 60 Subpart D. For units E301, E302, E303, and E304 the permittee shall determine comp liance with the opac ity limits of the permit on a continuous basis, using date fr om the current COMS or an EPA approved COMs and an alternative location. All COMs shall be certified or recertified per the procedures in 40 CFR Part 60.

c. The COMS for Unit E302 shall be installed in a location comparable to the COMS location of Units E301, E303, and E 304, unless otherwise approved by the Department.

d. PNM shall monitor the pressure drop acr oss each fly ash silo baghouse (Units 505 and 506).

e. For baghouse associated with the Un its E301, E302, E303, and E304, PNM shall monitor the pressure drop across each baghouse with a continuous monitoring device. The continuous monitoring device shall be designed with an alarm that records and signal to the operator any ex cursion outside the normal operating range of the baghouse. The normal operating range of the baghouse shall be determined by the manufacture or another Department approved method.

f. PNM shall monitor the pressure drop across each activated carbon silo baghouse (Units E901, E902, E903, and E904) whenever the silos are loaded. The data capture rate shall be no less than once every six minutes. At a minimum the record shall include the silo designation, date , time, pressure differential, and in the event that the pressure differential is not continually mon itored, the silo loading status (fan on or off).

g. No less than once per calendar year, PNM sha ll inspect the coal pulverizers to insure they meet the requirements of Specific Condition 1. k

h. No less than once each calendar year, PNM sh all inspect the coal pile maintenance, fly ash silo unloading to trucks, limestone delivery, and limestone pile maintenance to ensure that the meet the requirements of Specific Condition 1. o of this permit.

i. PNM shall monitor the operating hours of the emergency generators.
j. PNM shall monitor the quantities of coal, diesel fuel, and limestone processed.

k. No less than once each calendar quarter, PN M shall measure the TDS concentration of each cooling tower.

l. For each 24-hour period, the permittee shall monitor the coal flows in each boiler.NSR Permit No. 0063-M6R1 Page 18 of 33

Rev. 12/15/05 m. The permittee shall continually monitor the mercury emissions using CEMS that are installed and maintained in accord ance with the CEMS manufacturer’s recommendations.

n. For baghouse associated with the Un its E505, E506, E518, E519 and E803, PNM shall monitor the differential pressure drop across the fabric filters daily.

4. Recordkeeping (20.2.72.210.E NMAC, NSPS 40 CFR 60, Subparts A, D, and OOO)

a. All records required by this permit shall be maintained on-site for a minimum of five (5) years from the time of recording and shall be made available to Department personnel upon request,

b. Table 4.1 identifies the affected units and applicable recordkeeping requirements.

Table 4.1 – Applicable Record Keeping Requirements

Affected Units Applicable Recordkeeping Requirements E301, E303, and E304 CFR Title 40, Part 60.45. E301, E303 and E304 20.2.31.113.B NMAC E302 20.2.31.113.A NMAC E301, E303, and E304 20.2.32.115 NMAC limestone handling system 40 CFR 60.676 E301, E302, E303 and E304 40 CFR 75

c. The Permittee shall keep the following haul road (Units E701, E702, E704, E705, E706, and E707) records 1) the times and location of water application, 2) the times and location of sweeping, 3) amount of water applied to the haul road 4) occurrences of visual inspections.

d. PNM shall keep records of the pressure drop across each fly ash silo baghouse (Units 505 and 506).

e. For baghouse associated with the Un its E301, E302, E303, and E304, PNM shall record the pressure drop across each baghouse with a continuous monitoring device. The continuous monitoring device shall be de signed with an alarm that records and signals to the operator any excursion out side the normal operating range of the baghouse. The normal operating range of the baghouse shall be determined by the manufacture or another Department approved method.NSR Permit No. 0063-M6R1 Page 19 of 33

Rev. 12/15/05 f. PNM shall keep records of the pressu re drop across each activated carbon silo baghouse (Units E901, E902, E903, and E904).

g. PNM shall keep the manufacturer’s documen tation onsite that indicates the proper range that the pressure drop should be dur ing normal operations of each activated carbon silo baghouse (Units E901, E902, E903, and E904).

h. PNM shall keep manufacturer’s documentati on onsite indicting that each activated carbon silo baghouse (Units E901, E902, E903, and E904) was designed to control PM emissions 0.0092 grains/scf or less and design baghouse exhaust flow rate is 578 scfm or less.

i. PNM shall record the results of the insp ections required in Specific Condition 3.g for the coal pulverizes.
j. PNM shall record the results of the inspection required by Specific Condition 3. h for the coal pile maintenance, fly ash silo unloading to trucks, limestone delivery, and limestone pile maintenance.

k. PNM shall record the monthly and 12 mont h total operating hours of each emergency generator.

l. PNM shall maintain quarterly records of the quantities of coal, diesel fuel, and limestone processed.

m. No less than once each calendar quarter , the permittee shall record the TDS concentration of each cooling tower. The permittee shall then calculate the individual cooling tower emissions, ba sed on the maximum capacity of the circulating water pump(s) for each unit, the actual TDS content, and the units specific drift rate. The circulating water rate and drift rate for each unit is included in Table 2.6.

n. The duct leak management practices shall be reviewed to insure that PNM is meeting good air pollution control practices requirements.

o. For each boiler, the 24-hour heat input va lue shall be calculated by multiplying the 24-hour coal flow rate with the 7-day rolli ng average Btu content of the coal. The 7- day rolling average Btu content of the coal shall be derived from as delivered coal sample analysis. In the event no coal is de livered for 7 or more days, the last 7-day rolling average will be used.

p. PNM shall keep records of the “as-delivered” heat content of the coal. The heat content of the coal shall be analyzed using an appropriate ASTM method, in accordance with the requirements of the coal contract.NSR Permit No. 0063-M6R1 Page 20 of 33

Rev. 12/15/05 q. For each boiler, the 365-day rolling total heat input shall be calculated as a summation of the 24-hour heat input value calculated in condition 4. o

.

r. For the first twelve (12) months of opera tion after the low-NOx burners are installed, for each Unit, PNM shall maintain reco rds detailing the operational parameters implemented to achieve the NOx emission limits.

s. The permittee shall keep records of the mercury CEMS outputs, calculations, and any CEMS maintenance activity necessary to show accurate and continual mercury emission rates were recorded.

t. For baghouse associated with the Un its E505, E506, E518, E519 and E803, PNM shall keep records of the differential pressure drop across the fabric filters.

5. Reporting (20.2.72 NMAC, Sections 210 and 212; NSPS 40 CFR 60, Subparts A, D, and OOO)

a. Table 5.1 identifies the affected units and applicable reporting requirements.

Table 5.1:

Affected Units Applicable Reporting Requirements E301, E303 and E304 CFR Title 40, Part 60 , Subpart D E301, E303 and E304 20.2.31 NMAC , Section 113.B E302 20.2.31 NMAC, Section 113.A E301, E303, and E304 20.2.32.115 NMAC The limestone handling system (E801, E802, E803) Applicable reporting requirements in 40 CFR 60.676. E301, E302, E303 and E304 40 CFR 75

b. Within 90 days of permit issuance the pe rmittee shall calculate and report to the Department the historical 12-month rolling to tal heat input rate for each boiler for the time period of July 1, 2001 through Septem ber 30, 2006. The historical 12-month rolling total heat input rate for each boile r shall be calculated in accordance with Specific Condition 4.p and 4. q

.

c. Upon written request by the Department, PNM shall summarize and report the 365- day rolling total heat input values calculated in Specific Condition 4. q

.NSR Permit No. 0063-M6R1 Page 21 of 33

Rev. 12/15/05 6. Compliance Test (20.2.72 NMAC Sections 210.C and 213; NSPS 40 CFR 60, Subparts A, D, and OOO)

a. No additional initial compliance testing is required for Permit No. 0063-M6. The quarterly testing already required by Speci fic Condition 6.b is sufficient to insure compliance with the applicable standards.

b. PNM shall conduct quarterly testing on the boilers (E301, E302, E303, and E304) for each pollutant listed in Table 6.1 in accordance with their respective testing methods.

Table 6.1: Quarterly testing Requirements

Pollutant Reference Method CO 1 Methods 1-4 and 10 PM TSP PM10 2
PM2.5 2 Method 1-5

1 T est results that demonstrate compliance with CO emission limits shall also be considered to demonstrate compliance with VOC emission limits for the subject emission unit. 2 PNM may use Method 5 testing to demonstrate compliance with the PM10 and PM 2.5 standards.

c

. PM10 and PM2.5 particulate emissions include condensable particulates. Particulate testing shall include testing for condensable emissions when appropriate. Condensable testing is waived until an appropriate method is established by the USEPA.

d. Once every 5 th calendar quarter, PNM shall conduct compliance testing to determine actual emissions for PM10 and PM2.5 (if a te st method has been established) from each unit. The initial test shall be conducted prior to January 1, 2010, and different units may be tested during different calenda r quarters. Testing for actual emissions is waived if an appropriate test method has not been established by USEPA.
If testing is waived beyond January 1, 2010, th e test shall be performed with in 6- months of being notified by the Department of an available EPA method test or within 1-year of the EPA method test becoming available, whichever is sooner.

e. PM10 testing is waived until an appropriate test method is established by the USEPA.

f. PM2.5 testing is waived until an appropriate test method is established by the USEPA.

g. PNM shall maintain, calibrate, and operate CEMS at San Juan Units E301, E303, and E304 to measure accurately and continuously opacity and the emissions of SO 2 ,NSR Permit No. 0063-M6R1 Page 22 of 33

Rev. 12/15/05 NOx, and the exhaust flow rate from each unit in full compliance with the requirements of 40 CFR Parts 60 and 75, incl uding requirements for heat input rate measurements. Although Unit 302 is not an affected unit for purposes of NSPS 40 CFR 60, Subpart D, PNM shall maintain, ca librate, and operate CEMS at San Juan Unit E302 to measure continuously opacity and the emissions of SO 2 , NOx, and the exhaust flow rate from each unit in acco rdance with the requirements of 40 CFR Parts 60 and 75, including requirements for heat input rate measurements.

h. Compliance test requirements from previous permits (if any) are still in effect, unless the tests have been satisfactorily completed.

i. Additional compliance tests may be impos ed if it is deemed necessary by the Department to determine whether the s ource is in compliance with applicable regulations or permit conditions.
j. These tests shall be conducted within sixty (60) days after the unit(s) achieve the maximum normal production. If the ma ximum normal production rate does not occur within one hundred twenty (120) days of source startup, then the tests must be conducted no later than one hundred eighty ( 180) days after initial startup of the

source.

k. For all periodic monitoring events, except when a federal or state regulation is more stringent , three test runs shall be conducted at 90% or greater of the full normal load as stated in this permit, or in the perm it application if not in the permit, and at additional loads when requested by the Department. If 90% load cannot be achieved, the monitoring will be conducted at the maximum achievable load under prevailing operating conditions.

l. The compliance tests required shall be pe rformed in accordance with EPA Reference Methods 1 through 4, Method 5 (for demons trating compliance with PM, TSP, and PM10), Method 10 for CO and contained in CFR Title 40, Part 60, Appendix A, and with the requirements of Subpart A, Ge neral Provisions, 60.8(f). If allowed under U.S.EPA policy and approved by the Departme nt in advance, PNM may demonstrate compliance with PM10 using an alternative method.

m. Within 10 days of a request by the Depart ment, PNM shall provide temporary Teflon lines adjacent to the sampling ports in the stacks at the time of any required compliance tests. PNM shall provide adequa te access to all required locations to the Department personnel during the time of compliance tests and inspections. The sampling line shall be made clear of a ll blockages during compliance tests and inspections.

If you have questions about this permit please call Joe Kimbrell of the AQB New Source Review (NSR) Unit in Santa Fe at (505) 476-4347.NSR Permit No. 0063-M6R1 Page 23 of 33

Rev. 12/15/05 cc: Ralph Williams, Class One Services, Inc., 3500 Comanche Rd. NE, Albuquerque, NM 87107

Enclosure: Industry/Consultant Feedback Questionnaire with envelopeNSR Permit No. 0063-M6R1 Page 24 of 33

Rev. 12/15/05 SECTION II: GENERAL CONDITIONS

1. Reporting (20.2.72 NMAC Sections 210 and 212)
The Permittee shall notify the Department in writing of, or provide the Department with:

a. the anticipated date of initial start up of each new or modified source not less than thirty (30) days prior to the date;

b. the equipment serial number and the ac tual date of initial startup of each new or modified source within fifteen (15) days after the startup date;

c. the date when each new or modified emission source reaches the maximum production rate at which it will operate w ithin fifteen (15) days after that date;

d. any change of operators within fifteen (15) days of such change;

e. any necessary update or correction no more than sixty (60) days after the operator knows or should have known of the condition necessitating the update or correction of the permit.

2. Records Retention

Except as provided in the Specific Conditions, records shall be maintained on-site for a minimum of two (2) years from the time of recording and shall be made available to Department personnel upon request. Sources subject to 20.2.70 NMAC “Operating Permits” shall maintain records on-site for a minimum of five (5) years from the time of recording.

3. Posting/Retention of the Permit

The Permittee shall post a copy of this permit in plain view at the Facility at all times. If it is not possible to post a copy of the permit becau se the Facility is unmanned, a copy of this permit shall be kept at the nearest business office and the Permittee shall post a notice in a conspicuous place at the Facilit y. The notice must state the Facility name and ownership, the air quality permit number, address and phone number of the office where the permit is located, and the Air Quality Bureau address a nd phone number in Santa Fe. A copy of this permit shall be made available to Department personnel for inspection upon request.NSR Permit No. 0063-M6R1 Page 25 of 33

Rev. 12/15/05 4. Right to Access Property and Review Records (NMSA 1978, Section 74-2-13)

The Department shall be given the right to enter the Facility at all reasonable times to verify the terms and conditions of this permit. The company, upon either a verbal or written request from an authorized representative of the Department, shall produce any records or information necessary to establish that the term s and conditions of this permit are being met.

5. Contents of Permit Application (20.2.72.210.A NMAC)

Pursuant to 20.2.72.210 A NMAC, the contents of a permit application specifically identified by the Department shall become the terms and conditions of the permit or permit revision. Unless modified by conditions of this permit, the Permittee shall construct or modify and operate the Facility in accordance with all representations of the application and supplemental submittals that the Department relied upon to determine compliance with applicable regulations and ambient air quality standards. If the Department relied on air quality modeling to issue this permit, any change in the parameters used for this modeling shall be submitted to the Department for re view. Upon the Department’s request, the Permittee shall submit additional modeling for re view by the Department. Results of that review may require a permit modification.

6. Asbestos Demolition

Before any asbestos demolition or renovation work, the Permittee shall determine whether 40 CFR 61 Subpart M, National Emissions Standard s for Asbestos applies. If required, the Permittee shall notify the Department using forms furnished by the Department.

7. Revisions and Modifications (20.2.72 NMAC Sections 200.A.2 and E, and 210.B.4)

a. Any future physical changes or changes in the method of operation may constitute a modification as defined by 20.2.72 NMAC, Construction Permits. Unless the source or activity is exempt under 20.2.72.202 NMAC, no modification shall begin prior to issuance of a permit.

b. Changes in plans, specifications, and other representations stated in the application documents shall not be made if they cause a change in the method of control of emissions or in the character of emissions, or will increase the discharge of emissions. Any such proposed changes shall be submitted as a revision or modification.NSR Permit No. 0063-M6R1 Page 26 of 33

Rev. 12/15/05 c. Modifications or revisions to this permit shall be processed in accordance with 20.2.72 NMAC.

8. Notification to Subsequent Owners (20.2.72 NMAC Sections 7.P.1 and 212.C)

a. The permit and conditions apply in the event of any change in control or ownership of the Facility. No permit modification is required in such case. However, in the event of any such change in control or ownership, the Permittee shall notify the succeeding owner of the permit and conditions and shall notify the Department of the change in ownership within fifteen (15) days of that change.

b. Any new owner or operator shall notify the De partment, within thirty (30) days of assuming ownership, of the new owner’s or operator’s name and address.

9. Permit Cancellations (20.2.72 NMAC)

a. The Department shall automatically cancel any permit for any source which ceases operation for five (5) years or more, or permanently. Reactivation of any source after the five (5) year period shall require a new permit.

b. The Department may cancel a permit if th e construction or modification is not commenced within two (2) years from th e date of issuance or if, during the construction or modification, work is suspended for a total of one (1) year.

10

. Emissions Limit Averaging Times and Energy Input Limits

Emissions limits associated with the energy input of a Unit, i.e. lb/MMB tu, shall apply at all times unless stated otherwise in a Specific Condition of this permit. The averaging time for each emissions limit, including those based on en ergy input of a Unit (i .e. lb/MMBtu) is one (1) hour unless stated otherwise in a Specific C ondition of this permit or in the applicable requirement that establishes the limit.

11. Testing and Records for Engines and Turbines Equipped with Emissions Controls

For engines or turbines equipped with catal ytic converters and/or air-fuel ratio (AFR) controllers, or similar device which performs the same function of maintaining appropriate air and fuel ratios, records shall be made and maintained of the following requirements. The Permittee shall retain these records for a period of at least two (2) years from the date of generation and the records shall be made av ailable to Department personnel upon request.NSR Permit No. 0063-M6R1 Page 27 of 33

Rev. 12/15/05 a. F or each AFR controlling type device, de monstrate that the manufacturer's or supplier's recommended maintenance is performed, including replacement of oxygen sensor as necessary for oxygen-based contro llers. Verification of proper operation of the controller shall be demonstrated at least quarterly by measuring and recording exhaust oxygen or NO x concentrations with a properly calibrated portable analyzer as specified in the most current version of the SOP for "Use of Po rtable Analyzers in Performance Tests".

b. For any engine equipped with a non-selec tive catalytic converter, demonstrate the maintenance of the NOx and CO reduction e fficiency across the catalyst bed. This test shall be performed within ninety (90) days following initial startup and on a quarterly basis thereafter, unless an alternative testing schedule is specified by the Department. Properly calibrated portable analyzers are acceptable for this demonstration. The test shall be conducted at ninety percent (90 %) or greater of full load and shall include the exhaust volume flow rate (dscf) and the NOx and CO emission rate (lb/hr). (20.2.72 NMAC, Section 210.B(4)).

c. For any engine equipped with a selectiv e catalytic converter, demonstrate the maintenance of the CO reduction efficiency across the catalyst bed. This test shall be performed within ninety (90) days follo wing initial startup and on a quarterly basis thereafter, unless an alternative testing schedule is specified by the Department. Properly calibrated portable analyzers are accep table for this demons tration. The test shall be conducted at ninety percent (90%) or greater of full load and shall include the exhaust volume flow rate (dscf) and th e NOx and the CO emission rate (lb/hr). (20.2.72 NMAC, Section 210.B(4)).

12

. Operation of Engines Equipped with Catalytic Converters

a. F or engines equipped with catalytic convert ers, the engine shall not be operated without the catalytic converter, specifically including catalyst maintenance periods. During periods of catalyst maintenance, th e Permittee shall either (1) shut down the engine(s); or (2) replace the catalyst with a functionally equivalent spare to allow the engine to remain in operation.

b. Any engine equipped with a catalytic conve rter shall also have an AFR controlling device, or similar device that performs the same function of maintaining an appropriate air-fuel ratio. Engines equippe d with oxidation catalysts are not required to operate with an AFR.

13

. Flares

a. F lares used as control devices to comp ly with any NSPS (40 CFR Part 60) or NESHAP (40 CFR Part 61) requirement sh all be tested in accordance with theNSR Permit No. 0063-M6R1 Page 28 of 33

Rev. 12/15/05 requirements contained in 40 CFR 60, Subpa rt A, General Provisions, paragraph 60.8 (performance tests) and 60.18 (general contro l device requirements). Flares used as control devices to comply with any MACT requirement (40 CFR Part 63) shall be tested in accordance with the requireme nts contained in 40 CFR 63, Subpart A, General Provisions, Section 63.7 (performan ce tests) and 63.11 (general control device requirements).

b. Any flares that are operated at this Facility are authorized to have emissions resulting only from the pilot flame, unless otherwis e approved by Specific Conditions of this permit.

14

. Compliance Testing Procedures

If this permit requires any compliance testing, the Permittee shall notify the Department at least thirty (30) days before the test date a nd allow a representative of the Department to be present at the test. The Permittee shall submit a testing protocol to the Department at least thirty (30) days before the test date and shall observe the following testing procedures:

a. T he test protocol and compliance test repor t shall conform to the standard format specified by the Department. The most current version of the format may be obtained from the Enforcement and Compliance Section of the Air Quality Bureau.

b. All compliance tests required by this perm it, unless otherwise specified by Specific Conditions of this permit, shall be conduc ted in accordance with the requirements of CFR Title 40, Part 60, Subpart A, General Provisions, and the following EPA Reference Methods as specified by CFR Title 40, Part 60, Appendix A:

i. Methods 1 through 4 for stack gas flowrate ii

. Method 5 for TSP iii

. Method 7E for NOX (test results shall be expressed as nitrogen dioxide (NO2) using a molecular weight of 46 lb/lb-mol in all calculations (each ppm of NO/NO2 is equivalent to 1.194 x 10-7 lb/SCF) iv. M ethod 9 for opacity

v. M ethod 10 for CO vi

. Method 6C for SO 2 vii

. Method 29 for metals viii

. Method 201 for filterable PM10

ix. Me thod 202 for condensable PM10

x. M ethod 320 for organic Hazardous Air Pollutants (HAPs) xi

. Method 25A for VOC reduction efficiency.

Alternative test method(s) may be used if the Department approves the change.NSR Permit No. 0063-M6R1 Page 29 of 33

Rev. 12/15/05 Emission limit test results for each pollutant (except opacity) shall be reported in pounds per hour (unless otherwise specified) and tons per year. Opacity shall be reported in percent. Test result numerical values shall not be truncated or rounded, and shall be recorded and reported to the number of significant figures corresponding to the full accuracy inherent in the testing instrument or Method test used to obtain the data.

c. M ethod 19 may be used in lieu of Methods 1-4 for stack gas flowrate upon approval of the Department. A justification for th is proposal must be provided along with a contemporaneous fuel gas analysis (preferably on the day of the test) and a recent fuel flow meter calibration certificate (within the most recent quarter).

d. Unless otherwise indicated by Specific Cond itions or regulatory requirements, the default time period for each test run shall be 60 minutes and each performance test shall consist of three separate runs using the applicable test method. For the purpose of determining compliance with an applicab le emission limit, the arithmetic mean of results of the three runs shall apply. In the ev ent that a sample is accidentally lost or conditions occur in which one of the thr ee runs must be discontinued because of forced shutdown, failure of an irreplaceab le portion of the sample train, extreme meteorological conditions, or other circumstances, beyond the owner or operator's control, compliance may, upon the Department approval, be determined using the arithmetic mean of the results of the two other runs.

e. Testing of emissions shall be conducted w ith the emissions unit operating at 90 to 100 percent of the maximum operating rate allowed by the permit. If it is not possible to test at that rate, the source ma y test at a lower operating rate, subject to the approval of the Department.

i. Testing performed at less than 90 percent of permitted capacity will limit emission unit operation to 110 percent of the tested capacity until a new test is conducted.

ii

. If conditions change such that unit operation above 110 percent of tested capacity is possible, the source must submit a protocol to the Department within 30 days of such change to conduct a new emissions test.

f. P ursuant to 20.2.72.210.C NMAC, for combusti on sources with stacks, the Permittee shall also provide a one-quarter (1/4) inch stainless steel sampling line adjacent to the sampling ports and extending down to with in four (4) feet above ground level to provide access for future audits. The line sha ll extend into the stack a distance of 1/4 the stack diameter, but not less than one in ch from the stack wall. The sampling line shall be maintained clear of blockage at a ll times. This line shall be in place at the time of any required compliance tests. For any source for which compliance tests areNSR Permit No. 0063-M6R1 Page 30 of 33

Rev. 12/15/05 not required or for previously existing sources this line shall be installed no later than one hundred and eighty (180) days from the date of this permit.

g. As an alternative, the Permittee may provide a portable sampling line that is readily available which allows the Department to safely obtain representative stack gas samples at the time of compliance audits or site inspections.

h. A physical configuration of the Facility th at conforms to the emissions testing requirements of 20.2.72.210.C NMAC and of 40 CFR 60.8(e), which is imposed under the authority of 20.2.72.210.C.4 NMAC.

15

. Compliance Test Submittals

Unless otherwise specified by a Specific Condition of this permit, all compliance test reports that are required by Specific Condition 6 Compliance Testing shall be submitted to the Department as follows.

a. I nitial compliance test reports shall be submitted to the Department’s Program Manager, Compliance and Enforcement with in thirty (30) days from the test completion date. Additionally, a copy of each initial compliance test report that is submitted to the Department shall be retained by the Permittee as long as the Permittee owns and operates the tested unit.

b. Periodic compliance test reports shall be reta ined at the Facility, or if the Facility is unmanned, at the nearest business office clos est to the Facility, for no less than two (2) years from the date that the periodi c compliance test was completed. Periodic compliance test reports shall be made available to Department personnel upon request.

16

. General Monitoring/Compliance Testing Requirements These requirements do not supersede or relax requirements of federal regulations.

a. T he following monitoring and/or testing requirements shall be used to determine compliance with applicable requireme nts and emission limits. Any sampling, whether by portable analyzer or EPA refe rence method, that measures an emission rate over the applicable averaging period gr eater than an emission limit in this permit constitutes noncompliance with this permit. The Department may require, at its discretion, additional tests pursuant to EPA Reference Methods at any time, including when sampling by portable analyzer measures an emission rate greater than an emission limit in this permit; but such requirement shall not be construed as a determination that the sampling by portable analyzer does not establish noncompliance with this permit and sh all not stay enforcement of such noncompliance based on the sampling by portable analyzer.NSR Permit No. 0063-M6R1 Page 31 of 33

Rev. 12/15/05 b. If the emission unit is shutdown at the time when periodic monitoring is due to be accomplished, the Permittee is not required to restart the unit for the sole purpose of performing the monitoring. Using electr onic or written mail, the Permittee shall notify the Department’s Enforcement Section of a delay in emission tests prior to the deadline for accomplishing the tests. U pon recommencing operation, the Permittee shall submit any pertinent pre-test notifica tion requirements set forth in the current version of the Department’s Standard Operating Procedures For Use Of Portable Analyzers in Performance Test, and shall accomplish the monitoring.

c. The requirement for monitoring during any monitoring period is based on the percentage of time that the unit has operated as follows:

i. If the emission unit has operated for more than 25% of a monitoring period, then the Permittee shall conduct monitoring during that period.

ii

. If the emission unit has operated for 25% or less of a monitoring period then the monitoring is not required. After two successive periods without monitoring, the Permittee shall conduct monitoring during th e next period regardless of the time operated during that period, except that fo r any monitoring period in which a unit has operated for less than 10% of the monitoring period, the period will not be considered as one of the two successive periods.

iii

. A minimum of one of each type of mon itoring activity shall be conducted during any five-year period for sources not s ubject to 20.2.70 NMAC, Operating Permits.

d. Fo r all periodic monitoring events, except when a federal or state regulation is more stringent, three test runs shall be conducted at 90% or greater of the full normal load as stated in this permit, or in the perm it application if not in the permit, and at additional loads when requested by the Department. If the 90% load cannot be achieved, the monitoring will be conducted at the maximum achievable load under prevailing operating conditions except when a federal or state regulation requires more restrictive test conditions. The load a nd the parameters used to calculate it shall be recorded to document operating cond itions and shall be included with the monitoring report that is required to be furnished to the Department.

e. When requested by the Department, the Perm ittee shall provide schedules of testing and monitoring activities. Compliance tests from previous NSR and Title V permits may be re-imposed if it is deemed necessary by the Department to determine whether the source is in compliance with applicable regulations or permit conditions.

f. Monitoring shall become effective 120 days af ter the date of permit issuance if the monitoring is new or in addition to monitoring imposed by an existing applicable requirement. Any pre-existing monitoring re quirements incorporated in this permit shall continue to be in force from the date of permit issuance.NSR Permit No. 0063-M6R1 Page 32 of 33

Rev. 12/15/05 g. Startup, Shutdown and Malfunction Cond itions: For operations and equipment subject to an NSPS standard pursuant to 40 CFR 60, excess emissions, or operations under startup, shutdown, or malfunction shall be addressed in accordance with the requirements of 40CFR60.7(c) or 40CFR60.8(c) , as appropriate. A Facility subject to a NESHAP standard pursuant to 40 CFR 63 shall comply with the requirement for a Startup, Shutdown and Malfunction Plan (SSM) under 40 CFR 63.6(e)(3). This condition is pursuant to 20.2.72.210 NMAC.

17

. Definitions

a. N atural gas is defined as a naturally o ccurring fluid mixture of hydrocarbons that contains 20.0 grains or less of total sulfur per 100 standard cubic feet (SCF) and is either composed of at least 70% methane by volume or has a gross calorific value of between 950 and 1100 Btu per standard cubic foot.

b. “Daylight” is defined as the time period be tween sunrise and sunset, as defined by the Astronomical Applications Department of the U.S. Naval Observatory. (Data for one day or a table of sunrise/sunset for an entire year can be obtained at http://aa.usno.navy.mil/ . Alternatively, these times can be obtained from a Farmers Almanac or from http://www.almanac.com/rise/ ).

SUBMITTALS TO THE DEPARTMENT
Applications for permit revisions and modifications shall be submitted to:

Program Manager, Permits Section New Mexico Environment Department Air Quality Bureau 1301 Siler Road, Building B Santa Fe, New Mexico 87507-3113

Compliance test protocols, regularly scheduled re ports, a copy of test results, and excess emission reports, shall be submitted to:

Program Manager, Compliance and Enforcement Section New Mexico Environment Department Air Quality Bureau 1301 Siler Road, Building B Santa Fe, New Mexico 87507-3113NSR Permit No. 0063-M6R1 Page 33 of 33

Rev. 12/15/05 REVOCATION
The Department may revoke this permit if the a pplicant or Permittee has knowingly and willfully misrepresented a material fact in the application for the permit. Revocation will be made in writing, and an administrative appeal may be taken to the Secretary of the Department within thirty (30) days. Appeals will be handled in accordance with the Department's Rules Governing Appeals From Compliance Orders.

APPEAL PROCEDURES
20.2.72.207.F. NMAC provides that any person who par ticipated in a permitting action before the Department and who is adversely affected by su ch permitting action, may file a petition for hearing before the Environmental Improvement Board. The petition shall be made in writing to the Environmental Improvement Board within thirty (30) days from the date notice is given of the Department's action and shall specify the portions of the permitting action to which the petitioner objects, certify that a copy of the petition has been mailed or hand-delivered and attach a copy of the permitting action for which review is sought. Unless a timely request for hearing is made, the decision of the Department shall be final. The petition shall be copied simultaneously to the Department upon receipt of the appeal notice. If the petitioner is not the applicant or Permittee, the petitioner shall mail or hand-deliver a copy of the petition to the applicant or Permittee. The Department shall certify the administrative record to the board. Petitions for a hearing shall be sent
to:

Environmental Improvement Board 1190 St. Francis Drive, Runnels Bldg. P.O. Box 26110 Santa Fe, New Mexico 87502