July 

### 13,2010



## Memo to:

From: Gerardo Rios, Chief Permits Office EPA Region 9



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## sierra research

1801 J Street Sacramento, CA 95811 Tel: (916) 444-6666 Fax: (916) 444-8373
Ann Arbor, MI Tel: (734) 761-6666 Fax: (734) 761-6755



## Subject: Compliance of Avenal Power Center, LLC I-Hour N02 NAAQS Supplemental Analysis with EPA's June 

### 28 and 

### 29,2010 Memoranda on Applicability of Appendix W Modeling Guidance and PSD Implementation Guidance

The Avenal Energy Project's February 

### 2008 application for a Prevention of Significant Deterioration (PSD) permit! was deemed complete 2 on March 

### 19,2008, and Region 

### 9 issued a draft PSD permie on June 

### 16, 2009 but has not yet issued the final PSD permit. Meanwhile, during the 27 months since the application was deemed complete and more than 

### 12 months since the draft permit was issued, EPA announced 4 the new National Ambient Air Quality Standard (NAAQS or standard) for I-hour average nitrogen dioxide (N02) on January 

### 22,2010, issued the final rule for the standardS on February 

### 9,2010, and established April 

### 12, 2010 as the effective date for the standard. Concerning guidance on the air dispersion modeling required to demonstrate compliance with the

new standard, EPA's Air Quality Modeling Group issued an updated notice 6 containing limited modeling guidance on February 

### 25,2010. Avenal Power Center, LLC (APC) submitted an analysis7 to EPA on May 

### 13,2010 that demonstrated compliance of the proposed Avenal Energy Project with the new I-hour N02 NAAQS. On June 

### 15,2010, EPA responded with comments and questions on the May 13 analysis, 8 and referred to

J Sierra Research. Application to the 

## us. EPA for a Prevention of Significant Deterioration Permit, Avenal Energy Project, Kings County, California, February 2008.

2 EPA. Prevention of Significant Deterioration Application No. 08-SJ-0 I, Avenal Power Center, LLC, Avenal Energy Project, Avenal, California, letter from Gerardo Rios, Chief, Permits Office, Region 9, to Stuart Zisman, Avenal Power Center, LLC, March 19,2008.

3 EPA. Statement of Basis and Ambient Air Quality Impact Report For a Clean Air Act Prevention of Significant Deterioration Permit, June 16,2009.

4 EPA, http://www.epa.gov/air/nitrogenoxides/actions.html#janl0.

5 Federal Register, Volume 75, Number 26, Part III, Environmental Protection Agency, 40 CFR Parts 50 and 58, Primary National Ambient Air Quality Standardsfor Nitrogen Dioxide; Final Rule, Appendix S,
pages 6532-6533, February 9,2010.

6 EPA. Notice Regarding Modelingfor New Hourly N0 2 NAAQS, http://www.epa.gov/ttniscramln02_hourly_NAAQS_aermod_02-25-10.pdf.

7 Sierra Research. Supplemental N0 2 Air Quality Impact AnalYSis, May 13, 2010.

8 EPA. EPA Comments on the 0511312010 Supplemental N0 2 Air Quality Impact A nalysis for the Avenal Energy Project, letter from Gerardo Rios, Chief, Permits Office, Region 9, to Jim Rexroad of A venal Power Center, LLC, June 15,2010.Gerardo Rios

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- July 1 3 , 2010

new guidance the agency h ad not yet issue d on how to demonstrate compliance. APC responded to EPA’s June 15 comment in a submission dated June 28, 2010. 9

EPA i ssued two new guidance memorand a in quick succession on June 28, 2010 10 and on J une 29, 2010

. 11 The June 29 memorandum in cludes the prior June 28 memorandum along with a second June 28 memorandum 12 containing general guidance for implementa tion of the new standard and an interim 1

- hour NO 2 significant impact level (SIL).

This purpose of this memorandum is to describe how the Project’s May 13, 2010

s ubmittal complies with the Agency’s June 28 and 29 , 2010 guidance memoranda

.

Compliance with EPA’s June 28, 2010 Memorandum (Applicability of Appendix W Modeling Guidance for the 1

- hour NO 2 National Ambient Air Quality Standard)

The o verall observation of the June 28, 2010 guidance memorandum is that it recommends justification of every aspect of analysis if a Tier 3 detailed screening method is used to demonstrate compliance of a proposed project’s NOx emissions with the new 1

- h our NO 2 standard

. The memorandum observes that Appendix W was written to provide modeling guidance related to the existing annual average NO 2 NAAQS

, 13 which has be en in effect since October 8, 1996 , and that increased caution is required when applying any of the same assumptions to modeling for compliance with the new 1

- hour NO 2 standard

.

APC Response: The Avenal Energy Project’s May 13, 2010 Supplemental modeling submittal o bserved all the necessary cautions appropriate to modeling complianc e with the sho rt

- term 1

- hour NO 2 NAAQS, which was further demonstrated in the 605

- page June 2 8 , 2010 response to EPA’s June 15, 2010 comment letter on the May 13, 2010 submittal. Included in the June 24 submittal was the August 2007 submittal to Region 9, the Californi a Energy Commission (CEC), and the San Joaquin Valley Air Pollution Control District (SJVAPCD or District) of the initial air dispersion modeling protocol 14

9 Letter dated J une 28, 2010 from Jeffrey R. Holmstead, Bracewell & Giuliani, to Stephanie Talbert, U.S. Department of Justice and Julie Walters, U.S. Environmental Protection Agency, Region 9. that had described the use of the AERMOD Plume Volume Molar Ratio Method (PVMRM) option. The propos ed choice of model, meteorological data, and background ambient air quality data was accepted by all three regulatory agencies.

10 EPA. Applicability of Appendix W Modeling Guidance for the 1

- hour NO 2 Nation al Ambient Air Quality Standard, memorandum from Tyler Fox, Leader, Air Quality Modeling Group, to Regional Air Division Directors, June 28, 2010.
11 EPA. Guidance Concerning the Implementation of the 1

- hour NO 2 NAAQS for the Prevention of Significant Deter ioration Program, memorandum from Stephen D. Page, Director, Office of Air Quality Planning and Standards, to Regional Air Division Directors, June 29, 2010.
12 EPA. General Guidance for Implementing the 1

- hour NO 2 National Ambient Air Quality Standard in P revention of Significant Deterioration Permits, Including an Interim 1

- hour NO 2 Significant Impact Level, memorandum from Anna Marie Wood, Acting Director, Air Quality Policy Division, to Regional Air Division Directors, June 28, 2010.
13 EPA. 40 CFR Part 5 0, National Ambient Air Quality Standards for Nitrogen Dioxide: Final Rule, Federal Register, Volume 61, Number 196, October 8, 1996.
14 Sierra Research. Air Dispersion Modeling and Health Risk Assessment Protocol, Avenal Energy Project, Kings County, Calif ornia, August 2007.Gerardo Rios

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- July 1 3 , 2010

EPA Memorandum Observation:

The memorandum supports application of the Tier 1 approach because it is the most conservative me thodology of producing the highe st possible resulting 1

- hour NO 2 concentration to be compared to the NAAQS. The Tier 1 approach that may be applied without further justification is to add the overall highest hourly background NO 2 concentration from a repr esentative monitor to the modeled design value, based on the form of the standard, for comparison to the NAAQS. Additional refinements to this Tier 1 approach based on some level of temporal pairing of modeled and monitored values may be considered on a ca se

- by

- case basis, with adequate justification and documentation.

APC Response: APC’s May 13, 2010 Supplemental Analysis utilized the more refined Tier 3 methodology of adding the 1

- hour average NO 2 concentration measured at the District’s monitor in Hanf ord, CA to the same hour average concentration computed by AERMOD

- PVMRM to obtain the total 1

- hour concentration for each hour in the 5

- year modeling period at each receptor

. These total NO 2 concentrations we re then used to find the highest 1

- hour concent ration for each d ay at each receptor, which we re used to calculate the 98 th percentile concentration at each receptor over each rolling 3

- year period in the 5 years of available monitoring data. This method wa s justified because of the existence of good quality and appropriate background monitoring data provided by the District for both NO 2 and ozone, the latter of which is used in the P VMRM algorithm option of AERMOD

. The use of these hourly background air quality data were approved by Region 9, the CEC , and the District in the ir acceptance of the August 2007 modeling protocol for the Project. Therefore, the summations, hour

- by

- hour and receptor by receptor , of the appropriate ambient NO 2 concentration and the AERMOD modeled NO 2 concentration , correct ed by the “same hour” ozone concentration and the conservative NO 2 /NOx ratio (discussed below )

, are appropriate to demonstrate the compliance of this project with the new 1

- hour NO 2 standard

.

EPA Memorandum Observation:

As noted in the March 23, 2010 memo randum regarding “Modeling Procedures for Demonstrating Compliance with PM 2.5 NAAQS” (EPA, 2010b)

, 15 combining the 98 th percentile monitored value with the 98 th percentile modeled concentrations for a cumulative impact assessment could result in a value tha t is below the 98 th percentile of the combined cumulative distribution and would, therefore, not be protective of the NAAQS.

APC Response: APC concurs, which is why the May 13, 2010 analysis used the more meaningful methodology of adding the monitored background NO2 concentration at each hour to the modeled concentration for that hour at each receptor.

15 EPA

. Modeling Procedures for Demonstrating Compliance with PM 2.5 NAAQS

. Stephen D. Page Memorandum, March 23, 2010.Gerardo Rios

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- July 1 3 , 2010

EPA Memorandum Observation:

One of t he modeling assumptions for which the guidance indicates greate r care should be taken is the in

- stack NO 2 /NOx rat io , discussed on page 9 of the memorandum as follows :

“ Assumptions regarding in

- stack NO 2 /NOx ratios that may have been deemed appropriate in the context of the annual standard may not be appropriate to use for the new 1

- hour standard. In particular, it i s worth reiterating that the 0.1 in

- stack ratio often cited as the ’ default ’ ratio for OLM should not be treated as a default value for hourly NO 2 compliance demonstrations. ”

APC Response: Emissions from the combined

- cycle F

- Class combustion gas turbines were assigned conservative NO 2 /NOx ratios of 0.25 for normal operation and 0.40 for startup an d commissioning based on source test results from the same F

- Class turbine (i.e., GE 7FA) proposed for use by APC; this turbine is operating at the Palomar Energ y Center in Escondido, California, and the data were furnished by the San Diego Air Pollution Control District

. These two operating modes (startup and commissioning) represent the highest NOx emitting modes for the project.

EPA Memorandum Observation:

The new guidance does not specify or recommend a method to be used for data substitution in the event of missing data (ozone, NO 2 , and met eorological data). The guidance states:

“ In the case of hourly background ozone concentrations, methods used to subs titute for periods of missing data may play a more significant role in determining the 1

- hour NO 2 modeled design value, and should therefore be given greater scrutiny, especially for data periods that are likely to be associated with peak hourly concentrat ions based on meteo rological conditions and source characteristics. In other words, ozone data substitution methods that may have been deemed appropriate in prior applications for the annual standard may not be appropriate to use for the new 1

- hour standar d. ”

APC Response: The method used, described as “Missing hourly ambient O 3 concentrations from the Hanford monitoring station were given substituted concentrations with hour

- appropriate values (e.g., from the previous day, or the next day, for the same hour) as stated in the August 14, 2007 modeling protocol,” sought to make the substituted concentrations as close to reality as possible. Artificially reducing the substituted concentrations to artificially increase the resulting 1

- hour NO 2 concentration does not enhance the analysis, but, instead, purposefully injects even more conservative bias than already exists. Moreover, the substitution procedure was submitted to EPA Region 9 in the August 14, 2007 modeling protocol, accepted without comment, used as described in the original 1

- hour NO 2 modeling included in the February 2008 application to Region 9, and referred to without comment in Section 8.2 (Modeling Methodology) on page 24 of EPA’s June 2009 Statement of Basis and Ambient Air Quality Impact Re port For a Clean Air Act Prevention of Significant Deterioration P ermit

. The May 13, 2010 Supplemental Analysis also described the data substitution used for missing data, and theGerardo Rios

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- July 1 3 , 2010

June 24, 2010 response to EPA’s June 15, 2010 comments includes thorough ju stification for the selected method ology

. With respect to missing NO 2 data, and as described in both the May 13, 2010 Supplemental Analysis and the June 28, 2010 response to EPA comments, the method used to address missing data follows EPA guidance issued in conjunction with the 1

- hour NO 2 NAAQS Final Rule regarding assessments of attainment with the new standard

– the only such guidance available at the time the May Supplemental Analysis was prepared, and the only such guidance available at the present da te.

EPA Memorandum Observation:

Becaus e the OLM and PVMRM methods in AERMOD are currently considered

non

- regulatory

- default options, application of these options requires justification and approval by the Regional Office on a case

- by

- case basis as alt ernative modeling techniques, in accordance with Section 3.2.2, paragraph (e), of Appendix W.

APC Response: The Project’s air dispersion modeling protocol 16 was submitted to EPA Region 9 in August 2007, as well as to the District and the CEC . The protoc ol described in detail the proposed use of the PVMRM option in AERMOD, and the protocol was approved by all three agencies.

The five requirements in Appendix W Section 3.2.2, paragraph (e) are satisfied as follows:

“i. The model has received a scientific peer review;”

The June 28 guidance memorandum addresses this requirement as follows: “...items i and iv of the alternative model demonstration for these options can be fulfilled in part based on existing documentation (Cole and Summerhays, 1979; Hanrahan, 1999a; Hanrahan, 1999b; MACTEC, 2005)...”

“ ii. The model can be demonstrated to be applicable to the problem on a theoretical basis; ”

The fundamental principle in the PVMRM option is to limit atmospheric reac tion of nitric oxide (NO) to NO 2 by the amount o f ozone available in the dispersing plume. Because the San Joaquin Valley has relatively high ozone concentrations, as indicated by its severe ozone non

- attainment classification and the background ozone data used in the modeling, application of the atmos pheric chemistry within PVMRM will tend to drive
more, no t less, of the emitted NO to NO 2 , thereby not u nderestimating the resulting NO 2 that , along with background NO 2 concentrations, hav e been used to demonstrate compliance with the new 1

- hour NO 2 standa rd.

16 Id

.Gerardo Rios

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- July 1 3 , 2010

“ iii. The data bases which are necessary to perform the analysis are available and adequate; ”

The availability and adequacy of the necessary data bases, including background ozone, NO 2 , and meteorological data, has been demonstrated in the August 200 7 modeling protocol, the May 13, 2010 Supplemental analysis, the June 2 8 , 2010 response to EPA’s June 15, 2010 comments, and in other responses herein.

“ iv. Appropriate performance evaluations of the model have shown that the model is not biased toward un derestimates; ” and

The June 28 guidance memorandum addresses this requirement as follows: “...items i and iv of the alternative model demonstration for these options can be fulfilled in part based on existing documentation (Cole and Summerhays, 1979; Hanrah an, 1999a; Hanrahan, 1999b; MACTEC, 2005)...”

“ v. A protocol on methods and procedures to be followed has been established.”

The August 2007 modeling protocol established the methods and procedures followed in the modeling contained in both the original Fe bruary 2008 application and in the May 13, 2010 Supplemental analysis with respect to the application of PVMRM

.

EPA Memorandum Observation (page 4)

“ The 5

- year average based on use of NWS data, or an average across one or more years of available site sp ecific data, serves as an unbiased estimate of the 3

- year average for purposes of modeling demonstrations of compliance with the NAAQS. Modeling of ‘ rolling 3

- year averages, ’ using years 1 through 3, years 2 through 4, and years 3 through 5, is not require d. ”

APC Response: Because the Supplemental Analysis submitted to EPA on May 13, 2010 preceded the memorandum issuance on June 28, 2010, the methodology used in the analysis was more conservative than EPA now indicates is required

. In the May 13, 2010 Sup plemental Analysis, t he 1

- hour NO 2 concentration computed from three rolling 3

- year averages is nec essarily higher than the allow ed computation of a 5

- year average, even though the NAAQS is defined in terms of a 3

- year average. This is one more example of how the Project ’ s analysis methodology is more conservative than required by federal guidance

.

Compliance with EPA’s June 2 8 , 2010 Memorandum ( General Gu idance for Implementing the 1

- hour NO 2 National Ambient Air Quality Standard in Prevention of Sign ificant Deterioration Permits, Including an Interim 1

- hour NO 2 Significant Impact Level )

This memorandum is designed to help permit applicants in at least three sets of circumstances :Gerardo Rios

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- July 1 3 , 2010

1. F acilities whose modeling for compliance indicates a potential for vio lations of the new 1

- hour NO 2 NAAQS; 2. R educe the burden of modeling for the new 1

- hour NO 2 NAAQS; and 3. I dentify approaches for proposed new sources to mitigate modeled potential violations of the new 1

- hour NO 2 NAAQS.

Because it was demonstrated in the Aven al Energy Project’s May 13, 2010 Supplemental Analysis that the Project would not result in a violation of the new 1

- hour NO 2 NAAQS, the “help” offered by this guidance memorandum is not needed in this case.