MEMORANDUM TO FILE 

TO: Docket No. EPA-R09-OAR-2013-0009; Approval of Air Quality 

Implementation Plans; Navajo Nation; Regional Haze Requirements for Navajo 

Generating Station; Proposed Rule 

FROM: Anita Lee 

Date: April 11, 2013 

Subject: Submission of Materials from March 11, 2013 Meeting with Maricopa Stanfield 

Irrigation District 

On April 4, 2013, Paul Orme, General Counsel for MSIDD, provided the following materials, by email, to

EPA.  

The meeting materials consist of 7 pages in a PDF File (not including this cover memo).  

Pages 1 and 2 are a summary of EPA’s BART proposal for NGS and SRP’s initial response, dated

February 7, 2013. This summary was not generated by EPA.  

Page 3 is titled “CAP Perspectives on Proposed NGS Rule”, dated January 2013.  

Pages 4‐7 include text and cost estimates and are titled “Impacts of Navajo Generating Station

Proposed Rule on Non‐Indian CAP Agricultural Water Users”, dated March 6, 2013.
EPA’s BART Proposal for NGS -1- February 7, 2013

Summary of EPA's Bart Proposal for the Navajo Generating Station

EPA's Proposal

 On January 18th, the United States Environmental Protection Agency (EPA) issued a proposed 

Best Available Retrofit Technology (BART) rule for the Navajo Generating Station (NGS). The 

EPA's proposal is complex and has an accompanying Technical Support Document. SRP and 

the other NGS owners are reviewing and analyzing the details of the proposal. 

 EPA's proposal would require Selective Catalytic Reduction (SCR) to be installed and 

operational on all three units by 2018. However, in recognition of the importance of NGS and 

the unique circumstances facing the plant, EPA also proposed a BART alternative. 

 The BART alternative provides credit for early action taken by the NGS owners to voluntarily 

install Low-NOX Burners and Separated Overfire Air (LNB/SOFA), and provides a more flexible 

timeframe for installing SCR.

 The BART alternative would require SCR to be installed and operational on one unit per year 

between 2021 and 2023. EPA's calculations indicate that this alternative achieves greater 

emission reductions than EPA's proposal between 2009 and 2044. EPA refers to this option as 

"Alternative #1."

 EPA also solicited comments on two additional BART alternatives that would further extend the 

timeframe for SCR to be installed and operational: 

 Compliance on one unit per year between 2023 and 2025 ("Alternative #2")

 Compliance on one unit per year between 2024 and 2026 ("Alternative #3")

 Alternatives #2 and #3 would require the NGS owners to implement additional emission 

reductions to ensure that total emissions from 2009-2044 are less than EPA's BART proposal. 

EPA would issue a supplemental proposal for public comment. 

 SRP has estimated that the cost of SCR would be $589 million. If baghouses are required to 

mitigate potential increases in particulate matter that could occur as a result of installing SCR, 

the total cost of the additional emission controls could top $1.1 billion. 

 The determination of whether baghouses are required would be made by EPA during the 

permitting process for the SCR which would not occur until two years prior to start of 

construction.

SRP's Initial Response

 SRP appreciates that EPA provided flexibility on the timing for SCR in recognition of the 

complex timing issues that this decision creates for the owners. However, SRP is concerned 

that the proposal may not allow enough time to resolve the uncertainties facing NGS before 

the owners will have to make a significant financial commitment. 

 SRP also has initial concerns about whether compliance can be achieved with the stringent 

emission limit in EPA's proposal, particularly in a retrofit application. A preliminary review 

suggests that this limit is one of the most stringent in the nation.
EPA’s BART Proposal for NGS -2- February 7, 2013

 SRP also has a number of technical concerns with EPA's proposal. SRP is still reviewing and 

analyzing the details of the proposal and will be addressing those concerns in comments on 

the proposed rule. 

Timing Constraints

 The initial term of the plant site lease (and other critical agreements) begins to expire in 2019. 

The NGS owners are renegotiating the terms of the lease amendment with the Navajo Nation. 

However, even if consensus is reached on future lease terms, an amendment cannot be issued 

until comprehensive Federal environmental reviews are completed.

 Those reviews will cover 20 Federal actions and require the complex coordination of 10 Federal 

agencies and 15 Native American Tribes. Once the review is completed, the Federal agencies 

will issue a Record of Decision (ROD) and the Secretary of Interior must decide whether to 

approve or disapprove the lease extension.

 Partial Federal ownership of NGS complicates the process because the U.S. Bureau of 

Reclamation (USBR) acts as both a project participant and permitting agency. USBR may not 

authorize, fund or implement agreements to extend the operations of NGS prior to completing 

the Federal environmental review processes. 

 Given the number of stakeholders involved, USBR's role in the process, the complexity of the 

project and the extensive public input that is expected, Federal reviews will likely take 5 years 

or longer and will most likely be subject to litigation. 

 The NGS owners are concerned that EPA's proposal will not allow sufficient time to get through 

the Federal environmental review processes and anticipated litigation, secure the necessary air 

permits, and complete the design and construction of additional controls. The owners cannot 

justify procurement and construction of controls until the risks of litigation begin to diminish and 

they are reasonably certain the plant can continue to operate. 

How to Engage

 There is a 90-day comment period associated with the proposed rule that ends on May 6th. 

EPA will hold multiple public hearings on the proposed rule. Details on the dates and locations 

of the hearings will be published 30 days prior to the date of the hearings. 

 Attend public hearings and submit comments on the proposed rule. Express support for 

alternatives that provide as much time flexibility as possible for installing additional controls, in 

recognition of the importance of NGS.

Additional Information

 Additional information can be found at SRP's website: www.NGSPower.com
-;p PERSPECTIVES 

ON PROPOSED NGS RULE 

January 2013 

• EPA has released its proposed rule that takes some account of the vital role 

of the Navajo Generating Station (NGS) in CAP's ability to deliver Colorado River 

water. 

The proposed rule will require new emissions controls to reduce haze-forming nitrogen 

oxides (NOx) at NGS. 

• CAP is disappointed that the EPA did not recognize that NOx reduction technology 

installed between 2009 and 2011 meets EPA's current regional haze requirements. 

• The new EPA rule sets a standard for NOx emissions of 0.055Ibs/miliion BTUs, but provides 

the owners with an extended time-line (10 years) in recognition of the voluntary 

installation of Low-NOx burners and tribal issues. 

• The only technology currently available that can meet this standard is Selective Catalytic 

Reduction (SCR) at a cost of at least $500 million. 

• The cost would more than double, to $1.1 billion, if new bag house filters are required to 

remove the particulates formed by the SCR process. 

• The National Renewable Energy Laboratory (Department of Energy) agreed that the 

evidence was inconclusive that these more expensive NOx controls would yield any 

perceptible improvement in visibility at the Grand Canyon and other areas of concern. 

• CAP customers will experience increased costs but how much the costs will increase has 

yet to be determined. 

• The decision shows the EPA has not ignored the concerns expressed by CAP and its 

customers, Arizona's Congressional delegation, and others impacted by the rule. 

• A 90-day comment period on the proposed emissions rule will begin when the proposed 

rule is published in the Federal Register. 

• CAP will work with the regulatory community, our state and Congressional leadership and 

our other partners to find effective and cost-efficient solutions to the complex challenges 

presented by the proposed rule. 

• CAP will also work with the EPA. the Departments of Interior and Energy under the terms of 

their January 4,2013 Joint Federal Agency Statement Regarding NGS. 

• NGS provides more than 90 percent of the power CAP uses to deliver Colorado River 

water to central and southem Arizona. 

• NGS also provides power to APS, SRP, Los Angeles Department of Water and 

Power, Nevada Energy and Tucson Electric Power. 

www.CenlraIArizonaProject.com 
March 6, 2013 1

IMPACTS OF NAVAJO GENERATING STATION PROPOSED RULE ON

NON-INDIAN CAP AGRICULTURAL WATER USERS

Thus far our review includes the 108 page Proposed Rule, the 142 page Technical Support 

Document ("TSD") and the 82 page Report from Energy Strategies, LLC, whom EPA 

contracted with for an "Affordability Analysis of BART Options for NGS”. There is very little 

mention of Central Arizona Project (CAP) Non-Indian Agriculture (NIA) water users in the 

Proposed Rule and the Technical Support Document.

We feel that almost all of our input has been ignored including that from the Stakeholder 

process, from our original official comments, from meetings with and submissions to NREL, 

from Congressional Oversight Committee testimony, including a letter from the Family Farm 

Alliance, and from in-person meetings with high EPA officials last year in Washington, DC. 

There is one highly troubling paragraph in the TSD on page 81. It provides in part: 

"EPA understands NIA users of CAP water are concerned about potential 

impacts of increasing costs of CAP water. Over the short term, EPA also 

understands that irrespective of a BART determination on NGS, variable 

OM&R water rates for CAP water have generally increased annually and are 

projected to continue to increase in the future. IT IS UNCLEAR TO EPA HOW 

LONG NIA USERS EXPECT TO CONTINUE USING CAP WATER, AND 

WHETHER THE EXISTING NIA USERS INTEND AND ARE ALLOWED TO 

RETURN TO GROUNDWATER WHEN THE TRANSITION FROM NIA USE 

OF CAP WATER TO INDIAN AGRICULTURE USE OF CAP WATER 

OCCURS, OR IF CAWCD AND THE FARMERS EXPECT NIA USERS TO 

CEASE OPERATIONS WHEN CAP WATER IS NO LONGER AVAILABLE 

FOR NIA USE." (Emphasis added). 

This statement is problematic for several reasons. The Proposed Rule and TSD 

acknowledge that the CAP energy cost will increase by $8.40 (CAP estimates closer to 

$10) per acre foot for the SCRs alone (and twice that if baghouses are required). EPA 

acknowledges this is at least a 14-15% increase for agricultural water uses (both Indian 

and Non-Indian), the highest proportionate increase on any CAP water user. Annual 

increases to date for NIA water users have been in the $1-$3 per acre foot range, so an 

increase along the lines projected by EPA is unprecedented. 

Secondly, and most troubling, the Proposal seeks to minimize the financial impacts on NIA 

users by suggesting that NIA water use is for the short term, and therefore, of no real 

consequence in their analysis. To really “drill down” on this statement you need to see the 

Energy Strategies Report on Rates which focuses on NIA water users at the very end of the 

Report (pp.73-82). This study appears to have used incredibly faulty assumptions and 

EPA’s consultants never spoke directly with any of the large NIA CAP water users. 

These assumptions included the following: 

1. Generally NIA's water supply is only 25% from the CAP; 

2. NIA's CAP rights are the most "junior" in the CAP; 

3. While under the 2004 Settlement Act, NIA has a right to a 400k Pool through 2017, a 

300,000 Pool through 2024, and a 225,000 Pool through 2030, the actual available 

water supply due to Colorado River build-out and projected shortages is only 75,000

acre feet in 2018, and rapidly drops to 0 by 2024 before coming back up slightly in 

2025-2029. 
March 6, 2013 2

In order to justify point #3, we believe the hired consultant used the worst-case Colorado 

Water Supply projections of the 14 considered by the Water Resources Development 

Commission (WRDC) in 2011. Most of the other scenarios showed the full CAP Ag Pool 

being fully available and, in fact, that is the belief of CAP staff members who administer the 

NIA excess water contracts and water orders. The reason we believe this is so 

disingenuous is that it allows marginalization of the impact of the resulting high water cost 

on NIA due to the NGS Rule, by saying there is very little water to apply these costs to for 

NIA in the 2018-2030 time frame so the resulting economic burden is insignificant. 

Point #1 was also taken from the WRDC study and seems to be an analysis of all the 

farming in the three-county area, including those farms which do not have access to CAP 

water. For the districts we represent (which currently use 1/3 of all CAP annual deliveries), 

CAP use is between 66-90% of their annual supply if you count in-lieu deliveries, and 

between 35-50% if you only count the Ag Pool. Again, this point was used to minimize the 

impact of much higher water costs due to the NGS Proposed Rule and the statement is 

even made that this is a "hedge" against much higher CAP water costs. 

As to point #2, while the original NIA priority for long term CAP contracts was the junior 

priority for such contracts, the NIA excess Settlement Pool is the highest priority of all 

excess uses (one step down from long term uses) and is expected to be fully available 

unless there are EXTREME shortage conditions on the River. The last point of contention 

on the above statement from the TSD is the allegation that NIA users may not be able to 

return to groundwater once they can no longer receive CAP water. We believe this is a 

political statement made to undercut the powerful argument that the Proposed Order will 

force NIA back onto groundwater pumping in direct contradiction of the public policy behind 

the enactment of the CAP Enabling Legislation which was to ensure the reduction of 

groundwater pumping in Arizona, proportionate to the availability of CAP water. As you 

know, groundwater pumping in the Active Management Areas (AMAs) is a matter of state 

law. We have been representing Central Arizona Irrigation & Drainage District (CAIDD) and 

Maricopa-Stanfield Irrigation & Drainage District (MSIDD) for over 30 years and are not 

aware of any state law prohibiting the farmers in those districts from pumping (through the 

irrigation districts) their full entitlements of groundwater once CAP water is no longer 

available to them. These districts do have certain contractual agreements with the Federal 

government to restrict pumping near Indian reservations, but those agreements allow the 

districts to pump between 240,000-250,000 acre feet each (twice as much as they are 

doing now) if no comparably priced CAP water is available to them. Again, this statement 

is unsupported and self-serving and we are seeking to find its genesis. 

The three districts we represent use cumulatively about 450,000–500,000 acre feet of CAP 

water each year. An additional $10 an acre foot would cost them $4.5 million a year; or $9 

million, if baghouses are required and if all those costs are passed on to them. We 

anticipate that many CAP farmers will not be able to get crop financing with these types of 

increases in future water prices. The Proposed Rule imposes seriously harmful economic 

consequences on the CAP agricultural sector, in return for highly disputed and uncertain 

air visibility benefits.