19020 33 rd Avenue W, Suite 310, Lynnwood, WA 98036-4748 Tel: +1 425.412.1800 Fax: +1 425.412.1840 www.environcorp.com July 1, 2010 Project No. 29-23586A

Mr. Gerardo Rios U.S. Environmental Protection Agency, Region 9 75 Hawthorne Street San Francisco, California 94105
Subject: Response to Incompleteness De termination and Information Request Sierra Pacific Industries Biom ass-Fired Cogeneration Project Anderson, California

Dear Mr. Rios:
The U.S. Environmental Protection Agency, Region 9 (USEPA) offi ce issued a letter on May 11, 2010 indicating that the Prevention of Significant Deterioration (PSD) permit application submitted on March 26, 2010 in s upport of the biomass-fired cogeneration project proposed by Sierra Paci fic Industries, Inc. (SPI) for their Anderson facility is incomplete, and that additional information is needed to determine that the application is complete. This letter is intended to address th e issues raised in the letter, and to provide the information that will render the application complete. Re sponses are organized in the same order as that of the enclosure to your letter, and the information requests are summarized as an italicized introduction to the response.

Emissions Data:
Provide particulate matter (PM) emission rate data.
PM not captured by the electrostatic precipitato r (ESP) that will be used to control PM emissions from the cogeneration unit is expected to be comprised entirely of particulate matter less than 10 microns (PM 10 ). Thus, the PM and PM 10 emission rates are expected to be equivalent for the c ogeneration unit. Similarly, because PM emissions from the cooling tower are expected to be exclusivel y condensed aerosols, it was assumed that all PM from the cooling tower will be PM 2.5 . Thus, PM, PM 10 , and PM 2.5 emission rates for the cooling tower are exp ected to be equivalent.
The expected PM/PM 10 emission increase for the proposed project is 37.3 tpy, which is greater than the PM significan t emission rate (SER) of 25 tpy. Therefore, the project is subject to PSD review for both PM and PM 10 emissions. Because, as discussed above, PM and PM 10 emissions are equivalent, the PM 10 BACT analysis provided in the submitted PSD permit application is also th e BACT analysis for PM emissions.
Provide greenhouse gas (GHG) emission rate data.
USEPA’s GHG Tailoring Rule was finali zed on May 13, 2010, and becomes effective on January 2, 2011. If USEPA has not issued a PSD permit before the tailoring rulebecomes effective, SPI understands that a GHG emissions inventory of the proposed emission units may be required on or after January 2, 2011. Following determination of the actual requirement date, SPI will provide a GHG emissions inventory prior to January 2, 2011. However, because a GHG emissions in ventory is not currently required, we believe that the permit application should be considered complete without a submitted GHG emission inventory.

Best Available Control Technology (BACT) Analysis
Provide BACT analyses for PM and partic ulate matter less than 2.5 microns (PM 2.5 )
The permit application assumes that all PM emissions from the c ogeneration unit and the cooling tower are PM 2.5 ; therefore, the PM, PM 10 , and PM 2.5 emission rates are equivalent. The PM 10 section of the BACT analysis provided with the PSD permit application was intended to cover all particulate matte r emissions, including PM, PM 10 , and PM 2.5 . The technologies described in the pr ovided BACT analysis apply to PM and PM 2.5 , as well as to PM 10 , and BACT proposal for PM 10 (0.02 lb/MMBtu, achieved using an electrostatic precipitato r) applies to both PM and PM 2.5 . Provide a GHG BACT analysis
SPI understands that, because the project is al ready subject to PSD review, and will have the potential to emit more than 75,000 metric tons per year of GHG on a CO 2 e basis, a GHG BACT analysis will be re quired if a PSD permit has not been issued by January 2, 2011. Currently, there is no guidance availabl e for preparing a BACT analysis for GHG emissions. When it becomes clear that a permit will not be issued before January 2, 2011, SPI will provide USEPA with the appropr iate GHG BACT analysis prior to that date. However, because a GHG BACT analysis is not currently required, we believe that the lack of such an analysis should not prev ent the permit application from being deemed complete. Furthermore, should it become necessary to develop a GHG BACT analysis, we are confident that the state-of-the-art boiler design proposed by SPI will reflect BACT for GHG emissions from a biomass-fired, stoker-type boiler.
Air Quality Impact Analysis
Provide a full impact analysis to demonstrate complian ce with the Federal 1-hour average ambient standard fo r nitrogen dioxide (NO 2 ).
The maximum model-predicted ambient 1-hour NO 2 concentration calculated using the AERMOD dispersion model was 14. 0 micrograms per meter cubed ( μ g/m 3 ). Because the maximum model-predicted value is likely in excess of a potential future promulgated SIL, USEPA has requested a cumulative analys is to assess compliance with the Federal 1-hour NO 2 ambient air quality standard. A PSD increment for 1-hour NO 2 has been neither proposed nor promulgated.
ENVIRON contacted John Waldrop of the Shasta County Air Quality Management District (SCAQMD), Joe Sunday of the Teha ma County Air Pollution Control District(TCAPCD), and Brian Wilson of the North Coast Unified Air Quality Management District (which includes Trin ity County) to request emission rates and release parameters for industrial sources of NO X within 50 kilometers (km) of SPI’s Anderson facility. SCAQMD and TCAPCD provided this information, which is summarized in the attached Table 1, and it was determined that none of the NO X -emitting industrial sources located in Trinity County were within 50 km of SPI’s Anderson facility.
An air dispersion modeling simulation, using the methodology described in Section 4 of the PSD permit application submitted on Ma rch 26, 2010, was conducted to screen the industrial sources of NO X within 50 km of SPI’s Anders on facility. Because USEPA has not promulgated a significant impact level (SIL) for the Federal 1-hour NO 2 standard, we proposed to use a value that is approxim ately 4 percent of the standard (i.e., 8 μ g/m 3 ) as an informal SIL. Sources determined to have model-calculated facility-wide NO X concentrations equal or exceed the informal SIL at a receptor where NO X emissions attributable to the proposed project also ex ceed the informal SIL were included in the cumulative analysis to assess comp liance with the Federal 1-hour NO 2 standard. The maximum facility-wide, model-predicted NO 2 concentrations (making the conservative assumption that 100 percent of NO X is converted to NO 2) for each source are presented in the attached Table 2.
The cumulative impact air dispersion mode ling simulation, again using the methodology described in Section 4 of the submitted PSD permit application, was developed to include the proposed cogeneration unit and industrial sources of NO X within 50 km that have a significant impact at receptors where the propos ed project is also predicted to have a significant impact. It should be noted that the cumulative impact modeling analysis was conducted in a conservative manner in which all significant receptors were included together in the modeling simulations over th e entire 5-year simulation period. A more resource-intensive, less-conservative an alysis would have individual modeling simulations for each hour-and-receptor combin ation that the project was predicted to exceed the informal SIL. The less-conservati ve approach would ensure that only the meteorological conditions that caused the model to predict that the proposed project would exceed the informal SIL at that rece ptor were influencing competing industrial sources of NO X . The maximum model-predicted 1-hour NO 2 concentration from the cumulative analysis was 59.9 μ g/m 3 , and the five-year average of the 98 th percentile of the annual distribution of the daily maximum 1-hour average NO 2 concentrations is 24.1 μ g/m 3 . Combining the 98 th percentile concentration with the repres entative background c oncentration used in the submitted PSD permit application (80.9 μ g/m 3 ) results in a total concentration of 105 μ g/m 3 , which is less than the ambient standard (188 μ g/m 3 ), indicating that the proposed project would neither cause nor cont ribute to an exceedance of the Federal 1- hour average NO 2 ambient standard.
Provide an explanation of why USEPA shoul d not require a revised Class I PSD increment analysis.
The PSD permit application submitted in May 2007 for SPI’s previously proposed new biomass-fired cogeneration unit at the Anderson, California facility in cluded analyses of criteria pollutant concentrati ons and air quality-related valu es (AQRVs) in nearby Class Iareas using the FLAG modeling guidance and mode l versions that were current at that time. As indicated in the current PSD pe rmit application, which includes an emission unit with approximately 25 pe rcent more capacity than th at previously proposed, the Federal land managers (FLMs) ha ve indicated their l ack of interest in reviewing a revised AQRV analysis based on the results of the “Q /D” analysis provided in the current permit application and the AQRV analysis provide d in the previous permit application.
We understand that EPA does not typically use th e results of a Q/D analysis to guide the necessity to predict criteria pollutant con centrations in Class I areas for assessing compliance with the applicable PSD incr ements; however, we propose the relatively small increase in NO X , SO 2 , and PM 10 emissions compared to the 2007 application submittal will not result in a significant change from previous Class I modeling results for the following reasons:

• The maximum CALPUFF-predicted concentrations in the 2007 application were less than 20 pe rcent of EPA’s proposed Class I significant impact levels; and

• SPI would need to increase emissions by 500 percent from the 2007 application emission rates for CALP UFF-predicted concentrations to come near the applicable Class I significant impact levels.
SPI is proposing to increase emissions by onl y 25 percent from the previous Class I modeling analysis, which will result in CA LPUFF-predicted concentrations much less than the Class I SILs.
Additional Impacts Analysis
Provide a site-specific discussi on of nearby soils and vegetation.

As indicated in Section 4.8.3 of the PSD permit application submitted on March 26, 2010, based on the potential to only slightly increase the nitrogen and sulfur deposition to soil and vegetation, the proposed project in not expected to impact nearby agriculture or forestry operations. Additionally, there are no refuges or preserves in the area containing sensitive soils or vegetation that could potenti ally be impacted by air emissions from the proposed project.
The biological review conducted by ENPLAN in 2007, and updated in 2010, identifies one federally listed plants species (slender Orcu tt grass) in the area. This species has been designated as “threatened,” and critical habitat for the species exists in the area. According to the US Department of Interior ’s Bureau of Land Management, the habitat for this species is vernal pools, grassla nds, blue-oak and oak-juniper woodlands, and Jeffery pine forests, at el evations from 300 to 3,600 feet. Some of the area surrounding the facility could be consid ered forest land, rangeland, or wetlands where the species could be present, the majority of the surroundi ng area is developed for either residential, commercial, or agricultural use, where the presence of this species is highly unlikely.
The primary potential impact on soils from air pollutants is through acidification from deposition of nitrogen- or sulfur-conta ining compounds. According to the USDepartment of Agriculture Natural Resour ces Conservation Service’s Web Soil Survey (http://websoilsurvey.nrcs.usda.gov/), soils in the area are various types of loam with pH ratings between 5.3 and 6.5. As indicated in Section 4.8.3 of the pe rmit application, the potential nitrogen and sulfur deposition fluxes attributable to the proposed project are quite small (approximately 10 pounds per acre per year), and are unl ikely to alter or influence the pH of soils in the area.
General Requirements
Provide a PSD permit application submittal statement signed by an appropriate representative.
Please find attached a letter, signed by the ma nager of SPI’s Anders on facility, certifying the PSD permit application submitted on March 26, 2010.
Provide further location, design, and layout descriptions as well as a detailed construction schedule for the proposed project.
Please find attached a site plan showing the lo cations of the structur es associated with proposed project, and elevation drawings of a boiler similar to that proposed. Final location and design drawings are not yet available.
Please also find attached a preliminary c onstruction schedule. Because the permit issuance date is unknown at this point, the events and task durations occur relative to that date rather than on specific dates in the future.
We believe that the information provided in this letter addresses the issues raised by USEPA, and should be considered to ame nd the submitted PSD permit application. As requested in your letter, a list of Federal, State, and local enti ties that may require EPA to provide notice is also attached. If you or your staff has any additional questions or need additional information, please do not hesitate to contact me at 425.412.1804.
Sincerely yours, ENVIRON INTERNATIONAL, INC.

Eric Albright Senior Manager

Enclosures
cc: Omer Shalev, USEPA, Region 9 Shane Young, Sierra Pacific Industries Dave Brown, Sierra Pacific Industries Cedric Twight, Sierra Pacific Industries

## TablesTable 1. NO X -Emitting Industrial Sourc es Within 50 km of SP I’s Anderson Facility

Source Unit UTMx (m) UTMy (m) NO X Emission Rate (lb/hr) Stack Height

(ft) Stack Temp.

(F) Flow Rate (acfm) Stack Dia. (in) Kiara Co Gen Project (proposed) 1 556901 4480286 19.2 77 374 81,542 84 1 561184 4475287 50.7 170 260 154,808 90 2 561184 4475287 50.7 170 260 154,808 90 Wheelabrator Shasta Co-Gen 3 561184 4475287 50.7 170 260 154,808 90 Wheelabrator Lassen Gas Turbine 1 561987 4476151 92.0 70 350 386,648 108"x118" 1 548845 4484294 10.0 45 400 304,310 102 2 548845 4484294 12.1 45 400 304,310 102 3 548845 4484294 12.1 45 400 304,310 102 4a 548841 4484222 8.9 110 331 377,575 90 4b 548841 4484222 8.9 110 331 377,575 90 City of Redding Power Plant

5 548731 4484141 4.2 100 575 447,038 112 Ag Products Asphalt 1 549536 4484029 8.0 40 140 89,436 120 North State Asphalt 1 548075 4483242 9.17 50 140 89,436 120 JF Shea Smith Road Asphalt 1 554477 4484456 25.0 80 120 86,453 120 Aramark Industries 1 552296 4492776 0.7 60 200 6,000 12

Knauf Insulation 1 551587 4501005 16.5 199 100 411,077 264 1 552344 4502712 10.0 60 475 24,127 42 Sierra Pacific Industries, Shasta Lake 2 552344 4502712 6.54 60 300 22,515 42 Lehigh Cement 1 557225 4509534 248 175 285 180,316 84 JF Shea Fawndale Asphalt 1 558579 4509638 11.0 50 140 89,436 96 Pactiv Corporation 1 5672 78 4444393 0.315 52 1,000 32,876 48 North Valley Crematory 1 564652 4447377 0.0945 15 1,300 2,513 24 1 569475 4442292 1.19 8 1,300 400 6 2 569475 4442292 1.91 8 1,300 500 6 3 569475 4442292 1.57 8 1,300 400 6 Lassen Forest Products

4 569475 4442292 1.19 8 1,300 400 6 PG & E Gerber Compressor Station 1 567119 4434882 7.34 58 943 80,000 108 Cottonwood Creek Sand & Gravel 1 557822 4469048 0.694 8 1,300 600 6 Chuck Wolf Sand And Gravel 1 555714 4460172 1.74 8 1,300 600 6 Bens Truck & Equipment Inc 1 570761 4451508 1.05 8 1,300 4,600 12
1 568731 4441574 0.18 5 120 896 48 Sierra Pacific Industries, Red Bluff 2 568731 4441574 0.18 5 120 896 48Source Unit UTMx (m) UTMy (m) NO X Emission Rate (lb/hr) Stack Height

(ft) Stack Temp.

(F) Flow Rate (acfm) Stack Dia. (in) Louisiana Pacific Corp. 1 568663 4442113 0.033 4 300 3,800 96 1 568012 4442557 2.8 78 185 8,016 24 Siemens Water Technologies 2 568012 4442557 0.151 20 185 1,500 24 1 560013 4469320 2.64 25 150 50,000 72 2 560013 4469320 6.02 15 120 1,413 12 North State Asphalt Inc.
3 560013 4469320 5.78 15 60 634 8 Tehama Asphalt Crushing 1 563975 4450548 7.41 8 1,300 3,000 12 1 564068 4450561 6.69 25 60 30,000 72 2 564068 4450561 6.69 25 120 50,000 72 Tehama Asphalt Processing 3 564068 4450561 8.19 25 1,300 120 4 California Power Holdings, LLC 1 567167 4444519 9.79 40 1,300 10,000 24 Tehama County Landfill 1 560206 4449619 0.376 28 1,600 10,500 60 1 568311 4442156 0.6 30 150 2,000 12 2 568311 4442156 0.0342 30 150 2,000 12 3 568311 4442156 0.05 30 150 7,500 24 4 568311 4442156 0.15 30 150 40,000 48 5 568311 4442156 0.15 30 150 10,000 24 SPI Powder Coatings

6 568311 4442156 0.15 15 150 1,000 12Table 2. Maximum Predicted NO 2 Concentrations for Competing Sources

Source Maximum NO 2 Concentration 1 ( μ g/m 3 ) Include in Cumulative Analysis? Kiara Co Gen Project (proposed) 25.41 Yes

Wheelabrator Shasta Co-Gen 35.71 Yes
Wheelabrator Lassen Gas Turbine 17.30 Yes City of Redding Power Plant 10.30 Yes Ag Products Asphalt 4.52 No North State Asphalt 3.64 No JF Shea Smith Road Asphalt 18.34 Yes
Aramark Industries 0.40 No

Knauf Insulation 1.94 No Sierra Pacific Industries, Shasta Lake 3.09 No Lehigh Cement 9.76 Yes JF Shea Fawndale Asphalt 1.80 No Pactiv Corporation 0.08 No North Valley Crematory 0.06 No
Lassen Forest Products 3.35 No PG & E Gerber Compressor Sta 0.85 No
Cottonwood Creek Sand & Gravel 2.47 No
Chuck Wolf Sand And Gravel 2.56 No Bens Truck & Equipment Inc 0.72 No Sierra Pacific Industries, Red Bluff 0.24 No Louisiana Pacific Corp. 0.02 No Siemens Water Technologies 1.03 No North State Asphalt Inc. 59.87 Yes Tehama Asphalt Crushing 5.12 No Tehama Asphalt Processing 16.72 Yes California Power Holdings Llc 3.50 No Tehama County Landfill 0.14 No

SPI Powder Coatings 0.59 No 1 100 percent of NO X was assumed to be converted to NO 2 .

## Attachments

# Sierra Pacific Industries

June 22, 2010

Gerardo C. Rios, Chief, Permits Office United States Environm ental Protection Agency Region IX 75 Hawthorne Street San Francisco, CA 94105

Mr. Rios,
This letter is intended to hereby certif y that the information contained in the PSD permit application to construct a biomass-fired cogeneration unit submitted to USEPA on March 26, 2010 is, to the best of my knowledge, accurate and complete.
Thank you for your efforts at processing this permit in a timely manner.
Sincerely,

Shane Young Manager Anderson Sawmill Division z P.O. Box 10939 z Anderson, California 96007 Phone (530) 378-8350 z FAX (530) 378-8360Preliminary Cogeneration Unit Construction ScheduleWeek 1Week 2Week 3Week 4Week 5Week 6Week 7Week 8Week 9Week 10Week 11Week 12Week 13Week 14Week 15Week 16Week 17Week 18Week 19Week 20Week 21Week 22Week 23Week 24Week 25Week 26

Wet Ash Conveyors Under Furnace X Ash Screw Conveyors from Multiclone X Grate Support Steel (Beams & Posts) X UG Hoppers (set) X Clinker Chute X Chutes from Hoppers to WAC Under Furnace X UG Air Ducting X UG Dampers X GRATE Frames, Set & Assemble X Primary Furnace Lower Combustion Chamber Assemble X Primary Furnace Lower Combustion Chamber Weld X X Sight Glass Assemblies (Roof & End Wall) X FD Combustion Air Fan X Overfire Wind Boxes and Ducting X X Furance Access Platforms X X Fuel Ram Feeder & Hopper Assy X Fuel Infeed Screw Conveyor X Fuel Feeder Dribble Chutes X ID Fan X Multiple Cone Collector X Air Heater X Economizer X ID Breeching X Boiler Lower Support Steel X Boiler Drum Setting X X Boiler Tubes/Drums Installation XXXXXXXXXXXX Boiler Housing Casing Installation XXXXXXXXXX Boiler Upper Support Steel X Boiler Access Platforms XXXX Boiler Trim XXXXX Miscellaneous Boiler XXXXX Boiler Convection Outlet Duct X Misc Platforms XXX Sootblowers X X Deaerator X Feedwater Pumps X Feedwater Piping XXXXX Refractory Anchors X X Refractory Furnace XXXXXXX Refractory Cure: Install Bulkheads pre Gas Firing & Cure X Refractory Cure: Gas Heaters X Refractory Cure: Remove required Bulkheads & Insulation X Water Piping Wet Ash Conveyor X Water Piping Fuel Feeder Water Jacket X Water Piping Deluge System Furnace Fuel System X Hydraulic Power Unit WFB X Hydraulic Piping WFB X X Hydraulic Power Unit Furnace X Hydraulic Pipling Furnace X X Hydraulic Piping Flush X Paint X X Miscellaneous XXXXXXXXXXXX

### Federal, State, and Local Entity Contact Information

State & Local air pollution control agency:
Shasta County Air Quality Management District 1855 Placer Street, Suite101 Redding, California 96001 Phone: (530) 225-5674 Fax: (530) 225-5237 Ross Bell, Manager
Chief executives of the city & county
City of Anderson 1887 Howard St. Anderson, CA 96007 Phone: (530) 378-6626 Dana Shigley, City Manager
Shasta County 1450 Court St., Suite 308B Redding, CA 96001-1680 Phone: (530) 225-5557 Fax: (530) 225-5189 David Kehoe, Chairman, Board of Supervisors
Regional land use planning agency
Shasta County Department of Resource Management Planning Division 1855 Placer Street, Suite 103 Redding, California 96001 Phone: (530) 225-5532 Fax: (530) 245-6468 Richard Simon, Planning Division Manager
Federal land managers

US Forest Service Pacific Southwest Region 1323 Club Drive Vallejo, CA 94592 Phone: (707) 562-8737 Fax: (707) 562-9130 Randy Moore, Regional ForesterNational Park Service Air Resources Division P.O. Box 25287 Denver, CO 80225-0287 Phone: (303) 969-2818 Fax: (303) 969-2822 Chris Shaver, Division Chief
Indian governing body
Redding Rancheria 2000 Redding Rancheria Road Redding, CA 96001 Phone: (530) 225-8979 Fax: (530) 241-1879