Document ID: EPA-R09-OAR-2012-0021-0244
Agency: epa
Document Type: Rule
Title: Approvals, Disapprovals and Promulgations of Air Quality Implementation Plans: Arizona; Regional Haze State and Federal Implementation Plans
Posted Date: 2012-12-05T05:00Z

[Federal Register Volume 77, Number 234 (Wednesday, December 5, 2012)]
[Rules and Regulations]
[Pages 72511-72580]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28565]

[[Page 72511]]

Vol. 77

Wednesday,

No. 234

December 5, 2012

Part III

Environmental Protection Agency

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40 CFR Part 52

Approval, Disapproval and Promulgation of Air Quality Implementation 
Plans; Arizona; Regional Haze State and Federal Implementation Plans; 
Final Rule

  Federal Register / Vol. 77 , No. 234 / Wednesday, December 5, 2012 / 
Rules and Regulations  

[[Page 72512]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2012-0021, FRL-9754-3]

Approval, Disapproval and Promulgation of Air Quality 
Implementation Plans; Arizona; Regional Haze State and Federal 
Implementation Plans

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is taking final action to approve in part and disapprove 
in part a portion of Arizona's State Implementation Plan (SIP) 
submittal for its regional haze program and to promulgate a Federal 
Implementation Plan (FIP) for the disapproved elements of the SIP. The 
State and Federal plans are to implement the regional haze program in 
Arizona for the first planning period through 2018. This final rule 
addresses only the portion of the SIP related to Arizona's 
determination of Best Available Retrofit Technology (BART) to control 
emissions from eight units at three electric generating stations: 
Apache Generating Station, Cholla Power Plant and Coronado Generating 
Station. Consistent with our proposal, EPA approves in this final rule 
the State's determination that the three sources are subject to BART, 
and approves the State's emissions limits for sulfur dioxide 
(SO2) and particulate matter less than or equal to 10 
micrometers (PM10) at all the units, but disapproves 
Arizona's BART emissions limits for nitrogen oxides (NOX) at 
the coal-fired units of the three power plants. We also are 
promulgating a FIP that contains new emissions limits for 
NOX at these coal-fired units and compliance schedules for 
implementation of BART as well as requirements for equipment 
maintenance, monitoring, recordkeeping and reporting for all units and 
all pollutants at the three sources. In today's action, we are revising 
some elements of the proposed FIP in response to comments and 
additional information that we received.

DATES: Effective date: This rule is effective January 4, 2013.
    Compliance dates: The owners/operators of each unit subject to this 
final rule shall comply by the dates specified in the regulatory text.

ADDRESSES: EPA has established docket number EPA-R09-OAR-2012-0021 for 
this action. Generally, documents in the docket are available 
electronically at http://www.regulations.gov or in hard copy at EPA 
Region 9, 75 Hawthorne Street, San Francisco, California. Please note 
that while many of the documents in the docket are listed at http://www.regulations.gov, some information may not be specifically listed in 
the index to the docket and may be publicly available only at the hard 
copy location (e.g., copyrighted material, large maps, multi-volume 
reports or otherwise voluminous materials), and some may not be 
available at either locations (e.g., confidential business 
information). To inspect the hard copy materials, please schedule an 
appointment during normal business hours with the contact listed 
directly below.

FOR FURTHER INFORMATION CONTACT: Thomas Webb, U.S. EPA, Region 9, 
Planning Office, Air Division, Air-2, 75 Hawthorne Street, San 
Francisco, CA 94105. Thomas Webb can be reached at telephone number 
(415) 947-4139 and via electronic mail at webb.thomas@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, wherever ``we,'' 
``us,'' or ``our,'' is used, we mean the United States Environmental 
Protection Agency (EPA).

Definitions

    For the purpose of this document, we are giving meaning to certain 
words or initials as follows:
    (1) The words or initials CAA or Act mean or refer to the Clean Air 
Act, unless the context indicates otherwise.
    (2) The initials ACC refer to the Arizona Corporation Commission.
    (3) The initials ACCCE mean or refer to American Coalition for 
Clean Coal Electricity.
    (4) The initials ADEQ mean or refer to the Arizona Department of 
Environmental Quality.
    (5) The initials AEPCO mean or refer to Arizona Electric Power 
Cooperative.
    (6) The initials AFUDC mean or refer to allowance for funds used 
during construction.
    (7) The term Apache refers to Apache Generating Station.
    (8) The initials APS mean or refer to Arizona Public Service 
Company.
    (9) The words Arizona and State mean the State of Arizona.
    (10) The initials BART mean or refer to Best Available Retrofit 
Technology.
    (11) The term BART units refers to Apache Generating Station Units 
1, 2 and 3; Cholla Power Plant Units 2, 3 and 4 and Coronado Generating 
Station Units 1 and 2.
    (12) The initials CBI mean or refer to Confidential Business 
Information.
    (13) The initials CCM mean or refer to EPA's Cost Control Manual.
    (14) The initials CEMS mean or refer to continuous emission 
monitoring system.
    (15) The term Cholla refers to Cholla Power Plant.
    (16) The term Class I area refers to a mandatory Class I Federal 
area.\1\
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    \1\ Although states and tribes may designate as Class I 
additional areas which they consider to have visibility as an 
important value, the requirements of the visibility program set 
forth in section 169A of the CAA apply only to ``mandatory Class I 
Federal areas.''
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    (17) The term coal-fired BART units refers to Apache Generating 
Station Units 2 and 3; Cholla Power Plant Units 2, 3 and 4 and Coronado 
Generating Station Units 1 and 2.
    (18) The initials COFA mean or refer to close-coupled overfire air.
    (19) The term Coronado refers to Coronado Generating Station.
    (20) The initials CY mean or refer to Calendar Year.
    (21) The initials EGU mean or refer to Electric Generating Unit.
    (22) The initials ESPs mean or refer to electrostatic 
precipitators.
    (23) The words EPA, we, us or our mean or refer to the United 
States Environmental Protection Agency.
    (24) The initials FGD mean or refer to flue gas desulfurization.
    (25) The initials FGR mean or refer to flue gas recirculation.
    (26) The initials FIP mean or refer to Federal Implementation Plan.
    (27) The initials FLMs mean or refer to Federal Land Managers.
    (28) The initials FR mean or refer to the Federal Register.
    (29) The initials GEP mean or refer to Good Engineering Practice.
    (30) The initials IMPROVE mean or refer to Interagency Monitoring 
of Protected Visual Environments monitoring network.
    (31) The initials IWAQM mean or refer to Interagency Workgroup on 
Air Quality Modeling.
    (32) The initials IPM mean or refer to Integrated Planning Model.
    (33) The initials LNB mean or refer to low-NOX burners.
    (34) The initials LTS mean or refer to Long-Term Strategy.
    (35) The initials MMBtu mean or refer to Million British thermal 
units.
    (36) The initials MW mean or refer to megawatts.
    (37) The initials MWh mean or refer to megawatt hours.
    (38) The initials NEI mean or refer to National Emission Inventory.
    (39) The initials NH3 mean or refer to ammonia.
    (40) The initials NOX mean or refer to nitrogen oxides.
    (41) The initials NP mean or refer to National Park.

[[Page 72513]]

    (42) The initials NPRM mean or refer to Notice of Proposed 
Rulemaking.
    (43) The initials O&M mean or refer to operation and maintenance.
    (44) The initials OC mean or refer to organic carbon.
    (45) The initials OFA mean or refer to over fire air.
    (46) The initials PM mean or refer to particulate matter.
    (47) The initials PM10 mean or refer to particulate 
matter with an aerodynamic diameter of less than 10 micrometers (coarse 
particulate matter).
    (48) The initials PM2.5 mean or refer to fine 
particulate matter with an aerodynamic diameter of less than 2.5 
micrometers.
    (49) The initials PNG mean or refer to pipeline natural gas.
    (50) The initials ppm mean or refer to parts per million.
    (51) The initials PSD mean or refer to Prevention of Significant 
Deterioration.
    (52) The initials RACT mean or refer to Reasonably Available 
Control Technology.
    (53) The initials RAVI mean or refer to Reasonably Attributable 
Visibility Impairment.
    (54) The initials RATA mean or refer to relative accuracy test 
audit.
    (55) The initials RHR mean or refer to the Regional Haze Rule, 
originally promulgated in 1999 and codified at 40 CFR 51.301-309.
    (56) The initials RMB refer to RMB Consulting & Research, Inc.
    (57) The initials RMC mean or refer to Regional Modeling Center.
    (58) The initials RP mean or refer to Reasonable Progress.
    (59) The initials RPG or RPGs mean or refer to Reasonable Progress 
Goal(s).
    (60) The initials RPOs mean or refer to regional planning 
organizations.
    (61) The initials SCR mean or refer to Selective Catalytic 
Reduction.
    (62) The initials SIP mean or refer to State Implementation Plan.
    (63) The initials SNCR mean or refer to Selective Non-catalytic 
Reduction.
    (64) The initials SO2 mean or refer to sulfur dioxide.
    (65) The initials SOFA mean or refer to separated over fire air.
    (66) The initials SRP mean or refer to Salt River Project 
Agricultural Improvement and Power District.
    (67) The initials TCI mean or refer to total capital investment.
    (68) The initials tpy mean tons per year.
    (69) The initials TSD mean or refer to Technical Support Document.
    (70) The initials VOC mean or refer to volatile organic compounds.
    (71) The initials WA mean or refer to Wilderness Area.
    (72) The initials WEP mean or refer to Weighted Emissions 
Potential.
    (73) The initials WFGD mean or refer to wet flue gas 
desulfurization.
    (74) The initials WRAP mean or refer to the Western Regional Air 
Partnership.

Table of Contents

I. Background
    A. Summary of Our Proposed Action
    B. Legal Basis for Our Final Action
II. Overview of Final Action
III. Final BART Determinations
IV. EPA's Responses to Comments
    A. General Comments on ADEQ's Approach to BART
    B. Comments on ADEQ's Individual BART Analyses and 
Determinations
    C. General Comments on EPA's BART FIP Analyses and 
Determinations
    D. Source-Specific Comments on EPA's BART Analyses and 
Determinations
    E. Comments on Enforceability Requirements in EPA's BART FIP
    F. Comments on Legal Issues
    G. Other Comments
V. Summary of Final Action
VI. Statutory and Executive Order Reviews

I. Background

A. Summary of Our Proposed Action

    Our notice of proposed rulemaking (NPRM) was signed on July 2, 
2012, and was published in the Federal Register on July 20, 2012.\2\ In 
that notice, we proposed to approve in part and disapprove in part a 
portion of Arizona's Regional Haze SIP (submitted on February 28, 2011) 
and proposed a FIP to address the deficiencies in the disapproved 
portions of the SIP. The proposed rule addressed the BART requirements 
for eight units at three electric generating stations: Arizona Electric 
Power Company's (AEPCO) Apache Generating Station (Apache) Units 1, 2 
and 3; Arizona Public Service's (APS) Cholla Power Plant (Cholla) Units 
2, 3 and 4; and Salt River Project's (SRP) Coronado Generating Station 
(Coronado) Units 1 and 2. We did not propose action on any other part 
of Arizona's SIP related to the remaining requirements of the Regional 
Haze Rule (RHR). In summary, we proposed the following:
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    \2\ 77 FR 42834.
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    Proposed Approval: We proposed to approve Arizona's determination 
that the following sources and units are subject to BART: Apache Units 
1, 2 and 3; Cholla Units 2, 3 and 4; and Coronado Units 1 and 2 
(collectively ``BART units''). We proposed to approve Arizona's BART 
emissions limits for SO2 and PM10 at all three 
sources and units and the emissions limit for NOX at Apache 
Unit 1.
    Proposed Disapproval: We proposed to disapprove Arizona's BART 
emissions limits for NOX at all of the coal-fired BART units 
(i.e., all of the BART units except for Apache Unit 1). We also 
proposed to disapprove the compliance schedules and requirements for 
equipment maintenance and operation, including monitoring, 
recordkeeping and reporting requirements for BART at all of the BART 
units, since these were not included in the SIP submittal.
    Proposed FIP: The proposed FIP contained BART emissions limits for 
NOX at all of the coal-fired BART units, as well as 
compliance deadlines and requirements for equipment maintenance and 
operation, including monitoring, recordkeeping and reporting, to ensure 
the enforceability of the BART limits for all of the BART units. 
Because our proposed FIP emission limits would likely result in changes 
in stack conditions from those anticipated in the SIP, we invited 
comment on whether an alternative test method to the one required in 
the SIP is acceptable for PM10. In addition, we specifically 
sought comment on whether we should require lower SO2 
emissions limits or removal efficiency requirements for any of the 
coal-fired BART units. Finally, in the regulatory text in our NPRM, we 
proposed to incorporate by reference into the FIP two provisions of the 
Arizona Administrative Code, R18-2-310 and R18-2-310.01, which we 
characterized as establishing an affirmative defense for excess 
emissions due to malfunctions.\3\
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    \3\ Those provisions also include an affirmative defense for 
excess emissions due to startups and shutdowns, which we did not 
intend to incorporate.
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B. Legal Basis for Our Final Action

    Our action is based on an evaluation of Arizona's Regional Haze SIP 
submitted on February 28, 2011, to meet the requirements of Section 308 
of the RHR. We evaluated the SIP against the requirements of the RHR 
and Clean Air Act (CAA) sections 169A and 169B. We also applied the 
general SIP requirements in CAA section 110. Our authority for action 
on Arizona's Regional Haze SIP is based on CAA section 110(k). Our 
authority to promulgate a FIP is based on CAA section 110(c).

II. Overview of Final Action

    EPA is taking final action to approve in part and disapprove in 
part a portion of Arizona's SIP for Regional Haze, and to promulgate a 
FIP for the disapproved elements of the SIP. This final rule only 
addresses the BART requirements for the eight BART units identified 
above.

[[Page 72514]]

Most notably, and with the exception of Apache Unit 1, the FIP includes 
NOX emission limits for all the units that are achievable 
with SCR. At this time, EPA is not taking action on the State's other 
BART determinations or any other parts of the SIP regarding the 
remaining requirements of the RHR.
    EPA takes very seriously a decision to disapprove any state plan. 
To approve a state plan, EPA must be able to find that the state plan 
is consistent with the requirements of the CAA and EPA's regulations. 
Further, EPA's oversight role requires us to ensure fair implementation 
of CAA requirements by states across the country, even while 
acknowledging that individual decisions from source to source or state 
to state may not have identical outcomes. In this instance, for the 
reasons described in our proposal and in this document, we find that 
the State's NOX BART determinations for the coal-fired units 
are not consistent with the applicable statutory and regulatory 
requirements. Furthermore, the Arizona Regional Haze SIP does not 
include the necessary compliance schedules and requirements for 
equipment maintenance and operation, including monitoring, 
recordkeeping and reporting requirements for BART. As a result, EPA 
believes this final disapproval is the only path that is consistent 
with the Act at this time.
    We encourage the State to submit a revised SIP to replace all 
portions of our FIP, and are ready to work with the State to develop a 
revised plan. The CAA requires states to prevent any future and remedy 
any existing man-made impairment of visibility in 156 national parks 
and wilderness areas designated as Class I areas. Arizona has a wealth 
of such areas. The three power plants affect visibility at 18 national 
parks and wilderness areas, including the Grand Canyon, Mesa Verde and 
the Petrified Forest. The State and EPA must work together to ensure 
that plans are in place to make progress toward natural visibility 
conditions at these national treasures.

III. Final BART Determinations

    This section is a summary of EPA's final action on the BART 
determinations for the BART units at Apache, Cholla and Coronado 
electric generating stations. Please refer to Table 1 that compares 
this final rule to the proposal that was published on July 20, 2012. 
Where EPA has modified our proposal to respond to comments or 
additional information, we explain our analysis in the next section 
titled ``EPA's Responses to Comments.'' We have fully considered all 
comments on our proposal, and have concluded that some changes are 
warranted based on public comments and additional information we 
received in response to questions raised in the proposal.
    Final Approval: EPA is approving Arizona's determination that the 
following sources and units are subject to BART: Apache Units 1, 2 and 
3; Cholla Units 2, 3 and 4; and Coronado Units 1 and 2 (collectively 
``BART units''). We are approving the emissions limits for 
NOX, PM10 and SO2 at Apache Unit 1 as 
proposed. We are approving the State's emissions limits for 
PM10 and SO2 for all the units.
    Final Disapproval: Based on our evaluation described in the 
proposal and in this document, we are disapproving the State's BART 
emissions limits for NOX at all the BART units except for 
Apache Unit 1, for which the SIP's BART determination consists of fuel 
switching to pipeline natural gas (PNG). We also are disapproving the 
compliance schedules and requirements for equipment maintenance and 
operation, including monitoring, recordkeeping and reporting 
requirements for BART at all the BART units since these were not 
included in the Arizona Regional Haze SIP.\4\
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    \4\ For each BART source, the SIP must include a requirement to 
install and operate control equipment as expeditiously as 
practicable (40 CFR 51.308(e)(1)(iv)); a requirement to maintain 
control equipment (40 CFR 51.308(e)(1)(v)); and procedures to ensure 
control equipment is properly operated and maintained, including 
requirements for monitoring, recordkeeping and reporting (40 CFR 
51.308(e)(1)(v)).
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    Final Federal Implementation Plan: We are promulgating a FIP that 
includes emissions limitations representing BART for NOX at 
all the coal-fired BART units. The FIP also includes compliance 
schedules and requirements for equipment maintenance, monitoring, 
testing, recordkeeping and reporting for all the BART units. For 
PM10 at all units, we allow the use of Method 5 as an 
alternative to Method 201A/202. In addition, the FIP includes a removal 
efficiency requirement for SO2 on Cholla Units 2, 3 and 4, 
which will ensure that the scrubbers on these units are properly 
operated and maintained. Finally, we are incorporating into the FIP an 
affirmative defense provision for excess emissions due to 
malfunctions.\5\
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    \5\ In the regulatory text in our NPRM, we proposed to 
incorporate by reference into the FIP two provisions of the Arizona 
Administrative Code, R18-2-310 and R18-2-310.01, which we 
characterized as establishing an affirmative defense for excess 
emissions due to malfunctions. However, those provisions also 
include an affirmative defense for excess emissions due to startups 
and shutdowns, which we did not intend to incorporate. As explained 
below, the emission limits that we are promulgating today include an 
adequate margin of compliance to account for periods of startup and 
shutdown. Accordingly, as indicated by the title of this provision 
in our proposed regulatory text (``Affirmative Defense for 
Malfunctions''), we are only incorporating into the FIP the 
malfunction-related provisions of these rules and not the startup 
and shutdown provisions. Our final regulatory text clarifies this 
distinction and also incorporates the definition of malfunction.
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    We have revised certain elements of our proposed FIP based on 
public comments and additional information as follows:
     Apache Units 2 and 3: The final emissions limit for 
NOX is 0.070 pounds per million British thermal units (lb/
MMBtu) determined as an average of the two units, based on a rolling 
30-boiler-operating-day average. Compared to the proposed emissions 
limit of 0.050 lb/MMBtu on each unit, this higher limit and the 
addition of a two-unit average provides an extra margin of compliance 
to account for periods of startup and shutdown as well as additional 
operational flexibility for Apache given AEPCO's status as a small 
entity. When either one of the two units is not operating, its 
emissions from its own preceding thirty boiler-operating-days will 
continue to be included in the two-unit average. The final compliance 
date for this NOX limit remains five years from the date of 
publication of this final rule. For SO2 and PM10 
we are extending the compliance deadline to four years from publication 
of this final rule in order to provide AEPCO with sufficient time to 
implement upgrades to the existing scrubbers and electrostatic 
precipitators (ESPs) at these units.
     Cholla Units 2, 3 and 4: The final emissions limit for 
NOX is 0.055 lb/MMBtu determined as an average of the three 
units, based on a rolling 30-boiler-operating-day average. Compared to 
the proposed emissions limit of 0.050 lb/MMBtu on each unit, the higher 
limit and three-unit average provide an extra margin of compliance to 
account for periods of startup and shutdown. When any of the three 
units is not operating, its emissions from its own preceding thirty 
boiler-operating-days will continue to be included in the three-unit 
average. As proposed, the final compliance date to install and operate 
controls is five years from the date of publication of this final rule. 
For SO2, we are adding a removal efficiency requirement of 
95 percent for the scrubbers on Cholla Units 2, 3 and 4, in order to 
ensure that these scrubbers are properly operated and maintained, 
consistent with 40 CFR 51.308(e)(1)(v). We are retaining the other 
compliance deadlines as proposed, except for Cholla Unit 2, where we 
are extending the

[[Page 72515]]

compliance deadline to April 1, 2016, for both SO2 and 
PM10 in order to provide APS with sufficient time to install 
a new wet flue gas desulfurization (FGD) system and fabric filter on 
this unit.
     Coronado Units 1 and 2: The final emissions limit for 
NOX is 0.065 lb/MMBtu determined as an average of the two 
units, based on a rolling 30-boiler-operating-day average. Compared to 
the proposed emissions limits of 0.050 on Unit 1 and 0.080 on Unit 2, 
this new limit based on a two-unit average provides an extra margin of 
compliance to account for startup and shutdown. When either one of the 
two units is not operating, its emissions from its own preceding thirty 
boiler-operating-days will continue to be included in the two-unit 
average. The final compliance date for the two units is five years from 
the date of publication of this final rule.

                Table 1--Summary of Changes From Proposal to Final Rule: Emissions Limits (Lb/MMBtu) and Compliance Dates in SIP and FIP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   NOX                                        PM10                                    SO2
            Source             -------------------------------------------------------------------------------------------------------------------------
                                     Proposal               Final               Proposal               Final              Proposal            Final
--------------------------------------------------------------------------------------------------------------------------------------------------------
Apache Unit 1.................  0.056, Five years  0.056, Five years       0.0075, 180 days.  0.0075, 180 days        0.00064, 180      0.00064, 180
                                                                                                                       days.             days.
Apache Unit 2.................  0.050, Five years  0.070 (across two       0.03, 180 days...  0.03, Four years        0.15, 180 days..  0.15, Four
                                                    units)                                                                               years.
Apache Unit 3.................  0.050, Five years  Five years              0.03, 180 days...  0.03, Four years        0.15, 180 days..  0.15, Four
                                                                                                                                         years.
Cholla Unit 2.................  0.050, Five years  0.055 (across three     0.015, Jan 1,      0.015, Apr 1, 2016      0.15, 180 days..  Add 95 percent
                                                    units)                  2015.                                                        efficiency Apr
                                                                                                                                         1, 2016.
Cholla Unit 3.................  0.050, Five years  Five years              0.015, 180 days..  0.015, 180 days         0.15, 180 days..  Add 95 percent
                                                                                                                                         efficiency 1
                                                                                                                                         year.
Cholla Unit 4.................  0.050, Five years                          0.015, 180 days..  0.015, 180 days         0.15, 180 days..  Add 95 percent
                                                                                                                                         efficiency 1
                                                                                                                                         year.
Coronado Unit 1...............  0.050, Five years  0.065 (across two       0.03, 180 days...  0.03, 180 days          0.08, 180 days..  0.08, 180 days.
                                                    units)
Coronado Unit 2...............  0.080, June 1,     Five years              0.03, 180 days...  0.03, 180 days          0.08, 180 days..  0.08, 180 days.
                                 2014.
--------------------------------------------------------------------------------------------------------------------------------------------------------

IV. EPA's Responses to Comments

    We are responding to comments on our proposed rule published on 
July 20, 2012.\6\ We held an initial public hearing in Phoenix, 
Arizona, on July 31, 2012. In response to concerns that more time was 
needed to analyze the proposal and develop comments, we added two 
additional public hearings in Holbrook and in Benson, Arizona, on 
August 14 and 15, respectively, and extended the public comment 
deadline to September 18, 2012.\7\ The three public hearings were 
attended by hundreds of citizens, local and state government officials, 
workers and officials from the power plants, and representatives from 
environmental organizations. Testimony and comments from the three 
public hearings are organized in the docket by location and available 
for viewing at www.epa.gov/region9/air/actions/arizona.html and http://www.regulations.gov.
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    \6\ 77 FR 42834.
    \7\ 77 FR 45326 (July 31, 2012).
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    We also received a number of written comments, including extensive 
comments from stakeholders and government agencies who offered policy 
and technical analyses addressing the details of our proposed rule. 
These stakeholders included AEPCO, APS, SRP, PacifiCorp, Arizona 
Utilities Group (AUG), National Park Service (NPS), Arizona Department 
of Environmental Quality (ADEQ), and a consortium of conservation 
organizations (National Parks Conservation Association, Sierra Club, 
Physicians for Social Responsibility--Arizona Chapter, Dine' Citizens 
Against Ruining Our Environment, Grand Canyon Trust, and San Juan 
Citizens Alliance) represented by Earthjustice. All of the comments we 
received along with attached technical reports and analyses are 
available for review in the docket.

A. General Comments on ADEQ's Approach to BART

1. ADEQ's Identification of BART Sources
    Comment: One commenter (Earthjustice) stated that EPA must provide 
further factual support for its determination that Cholla Unit 1 is not 
BART-eligible. The commenter indicated that the record lacks the 
requisite support for this conclusion. Recounting the history of ADEQ's 
finding that Unit 1 is not BART-eligible, the commenter noted that APS 
claimed, and ADEQ concurred, that Unit 1 is not BART-eligible based on 
a 50-year-old document entitled ``Operating Notes For May 1962'' which 
allegedly shows that Unit 1 began operations on May 1, 1962, and was 
thus placed into operation just months before the August 7, 1962, BART-
eligibility cut-off. The commenter added that EPA apparently approved, 
without any scrutiny, ADEQ's determination that Cholla Unit 1 is not 
BART-eligible.
    The commenter (Earthjustice) requested that EPA properly analyze 
the BART-eligibility of Cholla Unit 1. Specifically, the commenter 
requested that EPA identify which ``aspects of the process by which 
ADEQ identified its eligible-for-BART and subject-to-BART sources'' it 
disagrees with, the basis of each disagreement, and whether any such 
disagreement implicates Cholla Unit 1. In addition, the commenter 
stated that EPA's independent analysis of this issue must be supported 
by the following information, which is needed to verify the actual date 
that Cholla Unit 1 began operating:
     The document entitled ``Operating Notes for May 1962'' 
referenced in ADEQ's SIP;
     All available 1962 operating records for Cholla Unit 1;
     All initial CAA construction and operating permits issued 
to Cholla Unit 1;
     All emissions data from the year 1962 for Cholla Unit 1;
     Notes of the meeting between ADEQ and APS in August 2007 
or any other time ADEQ and APS discussed the BART-eligibility of Cholla 
Unit 1; and
     Any other documentation that either supports or 
contradicts whether Cholla Unit 1 was placed into

[[Page 72516]]

commercial operation before August 7, 1962.
    Response: We did not specifically propose to take action on ADEQ's 
determination that Cholla Unit 1 is not BART-eligible and our statement 
that ``we do not agree with all aspects of the process by which ADEQ 
identified its eligible-for-BART and subject-to-BART sources'' was not 
intended to apply to this unit. Nonetheless, we agree with the 
commenter that it is appropriate to give some consideration to this 
issue in the context of today's rulemaking action, which covers ADEQ's 
BART determinations for the other three units at Cholla.
    Contrary to the commenter's assertion, the WRAP did not find Cholla 
Unit 1 subject to BART. The WRAP document cited by the commenter merely 
indicates that ADEQ notified APS on July 13, 2007 that Cholla Units 1-4 
were ``Potentially Subject to BART.'' \8\ The WRAP's ``Arizona BART 
Eligibility TSD'' further explains that:
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    \8\ Exhibit 17 to Earthjustice Comments, WRAP BART Clearinghouse 
(Oct. 24, 2008).

    [Cholla] Unit 1 is listed as potentially date eligible as 
information shows that the emissions unit was in service only 2 
months prior to the cut-off date. Recommend requesting additional 
supporting documentation for final determination.\9\
---------------------------------------------------------------------------

    \9\ ``Supporting Documentation on Emissions Unit Bart 
Eligibility Analysis'', section 5.1.2.

ADEQ received this additional documentation from APS in August 2007 in 
the form of a document dated May 23, 1962, and entitled ``Operating 
Notes For May 1962.'' \10\ This document indicates that, ``[o]n 
Tuesday, May 1, 1962, unit [1 was] placed into commercial 
operation.'' \11\ After reviewing this documentation, ADEQ concurred 
that Unit 1 was not BART eligible.\12\
---------------------------------------------------------------------------

    \10\ Arizona Regional Haze SIP at page 155.
    \11\ Id.
    \12\ Id.
---------------------------------------------------------------------------

    Following the close of the public comment period, we requested and 
received from APS a copy of the ``Operating Notes For May 1962'' along 
with additional information concerning the operation of Cholla Unit 
1.\13\ We have placed these materials in the docket and, based on our 
initial review, we believe this documentation is sufficient to confirm 
ADEQ's determination that this unit is not BART-eligible. However, 
because this question was not addressed in our proposed rulemaking, we 
are not taking final action on it at this time. We intend to address 
Cholla Unit 1's BART eligibility when we take action on the remainder 
of the Arizona Regional Haze SIP.
---------------------------------------------------------------------------

    \13\ Email from Sue Kidd, APS, to Colleen McKaughan, EPA 
(October 10, 2012, 9:17 a.m.) and attachments.
---------------------------------------------------------------------------

 2. ADEQ's BART Control Analyses
    Comment: One commenter (PacifiCorp) states that EPA improperly 
focuses on only two factors, costs and visibility improvement, in 
rejecting the ADEQ's entire NOX BART determination. The 
commenter states that EPA inappropriately places more weight on these 
factors.
    Response: EPA disagrees with the comment that we inappropriately 
focused on costs and visibility improvement in our decision to 
disapprove ADEQ's NOX BART determinations. As outlined in 
our proposal, we considered ADEQ's evaluation of the energy and non-air 
quality environmental impacts of compliance of the control 
technologies, any existing pollution control technology in use at each 
of the sources, and the remaining useful life of each source, to be 
generally reasonable and consistent with the RHR and the BART 
Guidelines.\14\ However, we also found that the costs of control were 
not calculated in accordance with the BART Guidelines, and that the 
visibility impacts were not appropriately evaluated and considered. 
These findings formed part of the basis for our disapproval of ADEQ's 
NOX BART determinations.
---------------------------------------------------------------------------

    \14\ See 77 FR 42841.
---------------------------------------------------------------------------

    Comment: Several commenters objected to EPA's use of non-specific 
and undefined parameter levels for both the ``cost-effectiveness'' and 
``sufficient visibility improvement'' parameters in rejecting ADEQ's 
SIP. One commenter (Pacificorp) further noted that states cannot meet 
EPA's specific targets unless and until those targets are clearly 
defined.
    Response: The RHR and the BART Guidelines do not require the 
development of specific thresholds, but rather require evaluation of 
each BART determination on a case-by-case basis for each source.\15\ We 
have not established a specific cost threshold that makes a particular 
control option BART based on just a dollars per ton number, and there 
is not a specific target, either in terms of cost-effectiveness or 
visibility improvement, for ADEQ to meet. All five factors must be 
evaluated and weighed to determine the level of control that is BART on 
a case-by-case basis.
---------------------------------------------------------------------------

    \15\ See, e.g., BART Guidelines, 40 CFR Part 51, Appendix Y, 
section IV.D.5 (``a 0.3 deciview improvement may merit a stronger 
weighting in one case versus another, so one ``bright line'' may not 
be appropriate.'')
---------------------------------------------------------------------------

a. ADEQ's Approach to Costs of Compliance
    Comment: One commenter (NPS) agreed with EPA's conclusions that the 
costs of control were not calculated by ADEQ in accordance with the 
BART Guidelines and that costs were included for items not allowed by 
EPA Control Cost Manual (CCM or the Manual) (e.g., owner's costs, 
surcharge, escalation, and Allowance for Funds Utilized During 
Construction--AFUDC), which inflates the total cost of compliance and 
the cost per ton of pollutant reduced. According to the commenter, a 
review of industry data (detailed in Appendix A of the commenter's 
submission) indicates that the total capital investment (TCI) for SCR 
retrofits is typically about $200/kW, while the TCI estimates for 
Apache and Cholla equaled or exceeded $250/kW.
    The commenter (NPS) noted that the BART Guidelines recommend use of 
the Manual if vendor data are not available. The commenter conducted 
detailed cost analyses of SCR using an approach that the commenter 
believes is similar to that used by EPA in its evaluation of SCR on the 
Colstrip power plant--using the cost methodologies of the Manual and 
relying on EPA's Integrated Planning Model (IPM) to reflect the most 
recent cost levels. The commenter observed that most of the ADEQ SCR 
cost estimates were based on TCI costs that were relatively high ratios 
of the reported direct capital costs (DCC). The commenter indicated 
that according to the Manual, the ratio of TCI to DCC is 141 percent, 
while ADEQ's estimates were as follows:
     At Apache, TCI is 179 percent of DCC for both units and 
included $6 million in costs for each unit not typically allowed by 
EPA.
     At Cholla, TCI is 258 percent of DCC for all three units 
and included $11 million in costs for Units 2 and 3 (each) and $15 
million for Unit 4 that are not typically allowed by EPA.
     At Coronado, data were not sufficient to calculate these 
values.

The commenter asserted that this supports EPA's concern that control 
costs submitted by the utilities either included costs not typically 
allowed by EPA or were inadequately documented.
    Response: We appreciate the information provided by the National 
Park Service and are in agreement that ADEQ's cost estimates of SCR are 
overestimated. As indicated in our proposal, our cost estimates for SCR 
generally produced lower values than those in the Arizona Regional Haze 
SIP,

[[Page 72517]]

and at a level that we consider cost-effective. Although we recognize 
that NPS's estimates produce even lower values than those from our 
proposal, we have not updated our own cost estimates to reflect NPS's 
comments since we already consider SCR to be cost-effective. We do note 
that in order to address the comments from the utilities, we have 
performed supplemental cost analyses for each facility based on the 
costs provided by the utilities, and in doing so have accounted for 
those costs not allowed by CCM methodology.
    Comment: Two commenters (ADEQ and AUG) stated that EPA did not and 
cannot show that ADEQ failed to consider relevant cost information in 
making its BART determination, the State fully complied with its CAA 
obligations, and EPA's rationale is insufficient to reject ADEQ's cost 
determinations. AUG asserted that:

    Arizona has expressly stated that it has considered each of the 
BART factors. EPA plainly cannot--and does not--demonstrate that 
Arizona failed to take the costs of compliance with BART emission 
limits into consideration. The state is required to do no more than 
that, and EPA cannot lawfully disapprove the state's determinations 
on the basis that the Agency would prefer a different form of, or 
format for, explanation of those determinations.

The commenters further stated that the other reason EPA rejected ADEQ's 
cost determinations is that EPA believed that ADEQ relied on 
inadequately documented costs. The commenters contended that there is 
nothing in the CAA or BART rules that requires a state to present any 
particular level of cost documentation or that limits a state's 
discretion in its consideration of the cost factor in making a BART 
determination.
    Response: We disagree with this comment. First, while Arizona may 
have ``expressly stated'' that it considered each of the BART factors, 
it must do more than ``state'' that it considered a BART factor, but 
must also provide some type of analysis demonstrating that it 
considered the BART factors.\16\ Although ADEQ has presented 
information relevant to each of the BART factors, it has not provided 
an explanation regarding how this information was used to develop its 
BART determinations. Specifically in the case of cost calculations, the 
Arizona Regional Haze SIP includes relevant information for multiple 
NOX control options, but does not provide evidence that this 
information has been analyzed in any way. In the case of Apache and 
Coronado, the Arizona Regional Haze SIP does not analyze this cost 
information in even a qualitative manner. In the case of Cholla, the 
terms ``least expensive'' and ``most expensive'' are used, but only in 
the context of providing a reference for visibility impacts, and not in 
the context of an evaluation of costs. This does not constitute 
``consideration,'' as it involves little more than ensuring the 
presence of cost values, with no judgment, analysis, or interpretation 
of their meaning.
---------------------------------------------------------------------------

    \16\ See, e.g., BART Guidelines, 40 CFR Part 51, Appendix Y, 
section IV.E.2. (``You should provide a justification for adopting 
the technology that you select as the `best' level of control, 
including an explanation of the CAA factors that led you to choose 
that option over other control levels.'')
---------------------------------------------------------------------------

    Second, we disagree with the commenter's characterization of our 
disapproval as based on a ``preference'' for a different format or form 
of explanation for ADEQ's BART determinations. As discussed in the 
previous paragraph, ADEQ has not discussed its BART determination 
rationale, particularly with regard to costs of compliance, in any 
format. While ADEQ's RH SIP does include cost information, it provides 
no explanation regarding how, or even if, this cost information was 
used in arriving at its NOX BART determinations. Although we 
agree that the RHR does provide states significant discretion in their 
consideration of the BART factors, AUG's comment presupposes that these 
costs were considered. The Arizona Regional Haze SIP does not indicate 
that they were considered.
    Comment: ADEQ noted that the same principles were used for the 
PM10 and SO2 BART evaluations as were used for 
the NOX BART evaluation, yet EPA accepted the approach for 
only PM10 and SO2.
    Response: We disagree that we accepted ADEQ's approach for 
PM10 and SO2. Although we did not disapprove 
ADEQ's PM10 and SO2 BART determinations, the 
absence of a disapproval of these determinations should not be 
construed to represent acceptance of the approach by which they were 
developed. We acknowledge that ADEQ took a similar approach in its 
analyses for PM10 and SO2 as for NOX, 
and that these analyses exhibit the same deficiencies we have noted 
elsewhere for the NOX BART determinations. However, we did 
not disapprove the PM10 and SO2 determinations 
because we find that the shortcomings in these analyses did not result 
in unreasonable BART determinations and therefore were generally 
``harmless errors.''
    With regard to PM10, we note that ADEQ determined the 
most stringent control technology (fabric filters) was BART for each of 
the Cholla units. For Apache and Coronado, ADEQ determined that the 
current control technology (hot-side ESPs) was BART and eliminated the 
most stringent control technology (fabric filters). We note that PM 
emissions from EGUs typically contribute only a small percentage of the 
modeled visibility impact from EGUs, and that controlling their 
emissions results in very small visibility benefit. For example, 
CALPUFF visibility modeling performed by WRAP indicates that for 
Apache, the maximum baseline PM10 visibility impact at the 
most affected Class I area (Chiricahua NM) is 0.04 dv.\17\ Assuming 
that a more stringent control technology could achieve 100 percent PM 
control and eliminate this entire visibility impact, a more stringent 
PM10 BART determination would therefore achieve, at most, a 
visibility benefit of 0.04 dv. Although ADEQ did not document its 
analysis or weighing of the five factors in arriving at the 
PM10 BART determinations for Apache or Coronado, additional 
analysis would not have the potential to result in selection of a more 
stringent control technology in light of the small potential for 
visibility benefit.
---------------------------------------------------------------------------

    \17\ See Docket Item No. B-12, ``Summary of WRAP RMC BART 
Modeling for Arizona.''
---------------------------------------------------------------------------

    With regard to SO2, ADEQ selected the most stringent 
control technology (wet FGD) for all units at Apache, Cholla, and 
Coronado. Although ADEQ did not ``take into account the most stringent 
emission control level that the technology is capable of achieving,'' 
correcting for this flaw would not have the potential to result in the 
selection of a more stringent control technology, since wet FGD, which 
is the most stringent control technology, was already selected as BART. 
Further discussion of our evaluation of ADEQ's BART analyses for 
PM10 and SO2 is provided below.
    Comment: The commenters stated that one of EPA's reasons for 
rejecting ADEQ's cost determinations is because the costs are 
inconsistent with the CCM. The commenters noted that use of the 
outdated Manual is not required by the CAA or the BART rules and 
provide references in which EPA has stated that the Manual is only one 
tool that can be used but that other cost data should also be 
considered.
    Response: We partially agree with this comment. We acknowledge that 
our BART guidelines state, ``In order to maintain and improve 
consistency, cost estimates should be based on the [CCM], where 
possible'' and that ``[w]e believe that the [CCM] provides a good

[[Page 72518]]

reference tool for cost calculations, but if there are elements or 
sources that are not addressed by the Control Cost Manual or there are 
additional cost methods that could be used, we believe that these could 
serve as useful supplemental information.'' \18\ The Manual contains 
two types of information: (1) Study level cost estimates of capital and 
operation and maintenance (O&M) costs for certain specific types of 
pollution control equipment, such as SCR, and (2) a broader costing 
methodology, known as the overnight method. We agree that the language 
of the BART Guidelines does not require strict adherence to the study 
level equations and cost methods used to estimate capital and O&M 
costs.
---------------------------------------------------------------------------

    \18\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.4.a.
---------------------------------------------------------------------------

    We consider the use of the broader costing methodology used by the 
CCM, the overnight method, as crucial to our ability to assess the 
reasonableness of the costs of compliance. Evaluation of the cost of 
compliance factor requires an evaluation of the cost-effectiveness 
associated with the various control options considered for the 
facility. A proper evaluation of cost-effectiveness allows for a 
reasoned comparison not only of different control options for a given 
facility, but also of the relative costs of controls for similar 
facilities. If the cost-effectiveness of a control technology for a 
particular facility is outside the range for other similar facilities, 
the control technology may be rejected as not cost-effective.\19\ In 
order for this type of comparison to be meaningful, the cost estimates 
for these facilities must be performed in a consistent manner. Without 
an `apples-to-apples' comparison of costs, it is impossible to draw 
rational conclusions about the reasonableness of the costs of 
compliance for particular control options. Use of the CCM methodology 
is intended to allow a fair comparison of pollution control costs 
between similar applications for regulatory purposes. This is why the 
BART guidelines specify the use of the CCM where possible \20\ and why 
it is reasonable for us to insist that the CCM methodology be observed 
in the cost estimate process. However, we note that the overnight 
method has been used for decades for regulatory control technology cost 
analyses, and that its use ensures equitable BART determinations across 
states and across sources.
---------------------------------------------------------------------------

    \19\ See Id. section IV.D.4.f (``A reasonable range [of cost-
effectiveness values] would be a range that is consistent with the 
range of cost-effectiveness values used in other similar permit 
decisions over a period of time.'')
    \20\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.4.
---------------------------------------------------------------------------

    Comment: One commenter (SRP) stated that ADEQ appropriately 
considered the ``dollars-per-deciview'' cost-effectiveness of different 
control options, which is reasonable and entirely within the broad 
discretion afforded to the states under the CAA. SRP stated that 
because BART is a component of the CAA's visibility program, it is more 
crucial to evaluate control costs in relation to the visibility 
improvements that may be expected using a dollars per deciview ($/dv) 
metric.
    Response: The BART Guidelines require that cost-effectiveness be 
calculated in terms of annualized dollars per ton of pollutant removed, 
or $/ton, but also list the $/deciview ratio as an additional cost-
effectiveness measure that can be employed along with $/ton for use in 
a BART evaluation.\21\ However, the $/dv metric is only useful to the 
extent that it reflects appropriately calculated costs and visibility 
benefits. As explained elsewhere in this document, we have determined 
that ADEQ did not evaluate costs and visibility benefits in a manner 
consistent with the RHR and the BART Guidelines. Therefore, while ADEQ 
certainly had the discretion to take $/dv into consideration as part of 
its BART analyses, the values that it relied upon in doing so were not 
reasonable.
---------------------------------------------------------------------------

    \21\ BART Guidelines sections IV.D.4.c and IV.E.
---------------------------------------------------------------------------

b. ADEQ's Approach to Energy and Non-Air Quality Environmental Impacts
    Comment: One commenter (SRP) stated that EPA inappropriately 
downplayed the energy and non-air quality factor in its review of 
ADEQ's BART analysis. Another commenter (ADEQ) noted that because fly 
ash ammonia residues have the potential to contaminate ground and 
surface waters, ADEQ included potential environmental impacts and the 
economics of disposing the fly ash in its BART analysis.
    Response: We do not agree that we inappropriately downplayed the 
energy and non-air quality environmental impacts factor in our review 
of ADEQ's BART analyses. ADEQ provided only brief consideration of this 
factor in its BART analyses and did not explain how it weighed this 
factor against the other statutory factors. Because ADEQ's analysis of 
this factor was limited in scope, our evaluation of this factor in 
reviewing the SIP was similarly limited. We discuss our analysis of 
this factor in our FIP action below.
c. ADEQ's Approach to Degree of Visibility Improvement
    Comment: Several commenters (American Coalition for Clean Coal 
Electricity (ACCCE), AEPCO, APS, AUG, Navajo Nation, PacifiCorp, SRP) 
asserted that EPA improperly dismissed ADEQ's visibility impacts 
analyses. The commenters cited the BART Guidelines (70 FR 39170, July 
6, 2005) to assert that there is no prescribed method for states to 
consider and weigh visibility impacts and, thus, EPA has no legal 
grounds for disapproving a SIP based on the method the State has chosen 
to consider visibility impacts or improvements. The commenters added 
that whatever EPA's preference, it has no discretion to substitute its 
method or its conclusion for those of the State. According to the 
commenters, it is clear that the BART rules envision--or, at a minimum, 
allow--a visibility improvement analysis that is focused on visibility 
impacts in the most impacted area.
    Regarding ADEQ's BART determination at Coronado in particular, one 
commenter (SRP) noted that ADEQ evaluated a visibility index derived 
from an average of modeled visibility improvements at the nine Class I 
areas closest to Coronado. The commenter asserted that this approach 
was well within the State's discretion to assess visibility under the 
BART rules. Another commenter (AUG) argued this consideration of an 
average visibility impacts index is an even more thorough type of 
evaluation than that required by the BART rules.
    One commenter (AEPCO) added that EPA's proposal to disapprove 
ADEQ's NOX BART determinations was largely based on its 
concern with ADEQ's reliance on the Western Regional Air Partnership 
(WRAP) modeling.
    By contrast, another commenter asserted that since the facilities' 
modeling results indicated that controls would contribute to visibility 
improvements in multiple Class I areas, ADEQ should consider these 
benefits rather than looking at the benefits in only a single Class I 
area. The commenter believes that overlooking significant visibility 
benefits in this way considerably understates the overall benefit of 
controls to improved visibility. The commenter contended that the 
procedure followed by ADEQ is not a sufficient basis for making BART 
determinations for sources with substantial benefits across many Class 
I areas.
    Response: EPA's proposed disapproval of ADEQ's NOx BART 
determinations was not based on any concern with the WRAP modeling

[[Page 72519]]

protocol, upon which ADEQ relied for its BART analyses. On the 
contrary, we found that the modeling procedures relied upon by ADEQ 
were ``in accord with EPA guidance.'' \22\ However, we noted that 
ADEQ's use of the results of modeling in making BART decisions was 
``problematic in several respects.'' \23\ In other words, our concern 
with the visibility analysis was not with the technical adequacy of the 
modeling itself, but rather with how ADEQ interpreted the results of 
this modeling.
---------------------------------------------------------------------------

    \22\ 77 FR 42841.
    \23\ Id.
---------------------------------------------------------------------------

    In its BART analyses for Apache and Cholla, ADEQ considered 
visibility improvements only at the single Class I area with the 
greatest modeled impact from a facility. This neglects improvements 
that would occur at other nearby Class I areas, and in general is not 
adequate for assessing the overall visibility benefit from candidate 
BART controls. As noted by commenters, the BART Guidelines provide 
that, ``[i]f the highest modeled impacts are observed at the nearest 
Class I area, [a State] may choose not to analyze the other Class I 
areas any further and additional analyses might be unwarranted.'' \24\ 
Commenters argued that this language shows that Arizona's exclusive 
focus on improvements at a single Class I area is allowed under the 
BART Guidelines. However, this language is not intended as an 
invitation for states to ignore significant visibility improvements at 
multiple Class I areas. Rather, it is intended to provide a way of 
streamlining a complex and difficult modeling exercise where ``an 
analysis may add a significant resource burden to a State.'' \25\ For 
example, when the visibility benefits at the most impacted Class I area 
alone are sufficient to justify the selection of the most stringent 
control technology as BART, then analysis of additional areas would be 
unnecessary and the state could conserve resources by not modeling the 
impacts on those additional areas. Here, by contrast, ADEQ did not 
perform its own modeling at all, but instead relied on modeling 
performed by contractors for the facilities. This modeling indicated 
that the installation of more stringent controls (i.e., SNCR or SCR) 
would result in visibility benefits at multiple Class I areas, yet ADEQ 
chose to consider the benefits only at the most impacted area. Where, 
as here, the benefits of controls have been modeled for a number of 
surrounding areas and consideration of these benefits is useful in 
determining the appropriate level of controls, EPA does not agree that 
these benefits may be ignored.\26\
---------------------------------------------------------------------------

    \24\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.5.
    \25\ See 70 FR 39126.
    \26\ See, e.g., 76 FR 52388, 52430 (San Juan Generating 
Station); 77 FR 51620, 51631-51632 (Four Corners Power Plant); and 
77 FR 51915, 51922-51923 (Roseton and Danskammer Generating 
Stations).
---------------------------------------------------------------------------

    While there may be no single prescribed method to consider and 
weigh visibility impacts, the BART Guidelines do require that certain 
visibility impacts be included in the considering and weighing. EPA 
disagrees that state flexibility extends to categorically excluding 
consideration of visibility improvements occurring at multiple Class I 
areas. Considering benefits at multiple areas does not necessarily 
require use of the ``cumulative'' improvement approach (i.e., the 
direct sum of improvements at all the areas), but does require that 
improvements at those areas be taken into account in some way. For 
example, one could simply list visibility improvements at the various 
areas, and qualitatively weigh the number of areas and the magnitudes 
of the improvements. However, ADEQ did not do this for any of the 
sources covered by this action.
    With respect to ADEQ's consideration of visibility improvements for 
Coronado, EPA agrees that average visibility index used by ADEQ could 
be acceptable in itself as part of assessing multiple area impacts and 
improvements; indeed it is a variant of the cumulative improvement 
approach. However, without any consideration of particular area 
improvements, the averaging process causes especially large benefits at 
some individual areas to be diluted or lost, effectively discounting 
some of the more important effects of the controls. In addition, the 
approach is counter to ADEQ's emphasis elsewhere in the SIP on the 
importance of considering the visibility improvement at the single area 
having the largest impact from a given facility. Finally, ADEQ provided 
no discussion of how the results of the visibility index were weighed 
against the other BART factors.
    In addition, ADEQ considered visibility improvements from controls 
on only a single emitting unit at a time, despite the fact that each of 
the three sources has multiple BART-eligible units. This neglects the 
full improvement that would result from controls on the facility, with 
the potential for dismissing emitting unit benefits that are 
individually small, but that collectively could have a significant 
visibility benefit. The RHR requires RH SIPs to include a 
``determination of BART for each BART-eligible source in the State that 
emits any air pollutant which may reasonably be anticipated to cause or 
contribute to any impairment of visibility in any mandatory Class I 
Federal area.'' \27\ The BART Guidelines explain that, ``[i]f the 
emissions from the list of emissions units at a stationary source 
exceed a potential to emit of 250 tons per year for any visibility-
impairing pollutant, then that collection of emissions units is a BART-
eligible source.'' \28\ Therefore, it is that collection of units for 
which one must make a BART determination. The Guidelines state ``you 
must conduct a visibility improvement determination for the source(s) 
as part of the BART determination. * * *'' \29\ This requires 
consideration of the visibility improvement from BART applied to the 
facility as a whole.
---------------------------------------------------------------------------

    \27\ 40 CFR 51.308(e)(1)(ii).
    \28\ 40 CFR Part 51, Appendix Y, section II.A.4.
    \29\ Id. section IV.D.5.
---------------------------------------------------------------------------

    The RHR and the Guidelines do not preclude consideration of 
visibility improvement from controls on individual units, but that 
would be in addition to considering the improvement from the whole 
facility. The BART Guidelines clearly allow for the consideration of 
technical feasibility and cost-effectiveness on a unit-by-unit basis 
where appropriate, but those considerations fall under different 
factors than the assessment of the degree of visibility improvement, 
and do not remove the obligation to consider visibility improvement 
from BART applied to the facility as a whole. In sum, while the State 
has some flexibility in choosing a specific procedure to consider these 
cumulative area and multiple unit benefits, when such benefits are 
significant, it is not reasonable to ignore them altogether as ADEQ 
did.
    Comment: One commenter (NPS) agrees with EPA that the ammonia 
background concentration assumed by ADEQ for Cholla and Coronado may be 
too low, ranging from 1 part per billion (ppb) down to 0.2 ppb. 
According to the commenter, EPA guidance recommends the use of a 1 ppb 
ammonia background for areas in the west, absent compelling evidence to 
the contrary.
    Other commenters (APS and AUG) state that the Interagency Workgroup 
on Air Quality Modeling (IWAQM) recommended value of 1ppb is outdated 
and should not be used now that better data have been gathered and 
since the CALPUFF model was updated to allow for monthly, rather than 
yearly, average ammonia concentrations. APS also noted that EPA Region 
9 has explicitly

[[Page 72520]]

approved the use of the same monthly-varying background ammonia 
concentrations, which were based on actual field measurements, in 
running the CALPUFF model for two other sites located close to Cholla 
and that were used by ADEQ in its analysis. These values range from 1 
ppb during the summertime to 0.2 ppb during cold winter months. EPA has 
also stated in response to comments on the Montana regional haze FIP 
(77 FR 57864, September 18, 2012) that ``it is preferable to use 
ambient ammonia measurements when such data are available rather than 
using default background ammonia concentrations.'' Another commenter 
(Navajo Nation) agrees that EPA should use actual, recorded data 
wherever possible, especially ammonia background values. AUG concludes 
that EPA has no basis for rejecting the use of refined background 
ammonia concentration values in disapproving the SIP.
    Response: The IWAQM Guidance \30\ is the only guidance available 
for choosing ammonia background concentrations. Because of the paucity 
of monitoring data and the uncertainty in other ammonia estimation 
methods, EPA concludes that it is appropriate to use the default 1 ppb 
from the IWAQM Guidance.
---------------------------------------------------------------------------

    \30\ Interagency Workgroup On Air Quality Modeling (IWAQM) Phase 
2 Summary Report And Recommendations For Modeling Long Range 
Transport Impacts (EPA-454/R-98-019), EPA OAQPS, December 1998, 
http://www.epa.gov/scram001/7thconf/calpuff/phase2.pdf.
---------------------------------------------------------------------------

    As stated by the commenter, EPA did originally accept monthly 
varying ammonia values of 0.2 to 1.0 ppb for BART analyses performed by 
AECOM for APS for the Four Corners Power Plant (FCPP), and by SRP for 
the Navajo Generating Station (NGS). However, shortly after that, the 
USDA Forest Service brought to EPA's attention ammonia monitored in the 
Four Corners area showing concentrations up to 3 ppb, described in a 
journal paper \31\ by Mark Sather and others. EPA and the Forest 
Service also estimated ammonia concentrations by ``back calculating'' 
the amount of ammonia needed to form the ammonium nitrate and ammonium 
sulfate collected at Arizona and New Mexico sites in the IMPROVE 
monitoring network. This yielded concentrations ranging from 0.4 to 1.3 
ppb, with winter values considerably higher than the AECOM 0.2 ppb 
recommended by the commenter.\32\ Since this method accounts only for 
ammonium, and not remaining free gaseous ammonia, the total ammonia 
originally available to form visibility-impairing compounds may 
actually be higher. Because of uncertainty in the ``back-calculation'' 
method, and criticism of it, EPA relied on it in the FCPP FIP only as 
corroboration for the IWAQM default of 1 ppb.\33\ Nevertheless, it 
supports the idea that winter ammonia levels in the Class I areas 
affected by emissions from sources in Arizona are likely substantially 
higher than 0.2 ppb.
---------------------------------------------------------------------------

    \31\ Mark E. Sather et al., ``Baseline ambient gaseous ammonia 
concentrations in the Four Corners area and eastern Oklahoma, USA''. 
Journal of Environmental Monitoring, 2008, 10, 1319-1325, DOI: 
10.1039/b807984f.
    \32\ See, e.g., Proposed Rule: Source Specific Federal 
Implementation Plan for Implementing Best Available Retrofit 
Technology for Four Corners Power Plant: Navajo Nation Technical 
Support Document, pages 59-61, 65-66, 68-73.
    \33\ Id. at page 68.
---------------------------------------------------------------------------

    EPA agrees with commenters that it would be preferable to use 
actual monitoring data to determine background ammonia concentrations. 
However, much of the existing data cited by the commenters is from 
other states, and so is unlikely to be representative for evaluating 
visibility impacts at Arizona's Class I areas. Further, the data 
comprises only ammonia itself, and not ammonium; or if it does include 
ammonium, that is not cited by the commenters. Visibility-impairing 
ammonium sulfate and ammonium nitrate are formed from ammonia, 
SO2, and NOX. Therefore the ammonium represents 
part of the pool of ammonia that could be available to interact with 
the SO2 and NOX from a facility and contribute to 
visibility impacts, and should be accounted for in estimating ammonia 
background concentrations. In several of the research papers \34\ cited 
by commenter APS, the amount of measured ammonium is comparable to and 
at times much greater than the amount of ammonia.
---------------------------------------------------------------------------

    \34\ RoMANS--Rocky Mountain Atmospheric Nitrogen & Sulfur Study, 
William C. Malm and Jeffrey L. Collett. National Park Service, CSU-
CIRA, Fort Collins, CO. ISSN 0737-5352-84. October 2009. http://www.nature.nps.gov/air/Studies/romans.cfm. Table 3.9 on p.3-38 shows 
ammonium comparable to or about half of ammonia, depending on 
measurement method. It also shows that the spring time mean and 
maximum ammonium are about 0.22 and 0.57 [micro]g/m\3\, 
respectively, or 0.38 and 0.78 ppb; and the mean and maximum ammonia 
are about 0.38 and 1.0 [micro]g/m\3\ or 0.51 and 1.4 ppb. The sum of 
these means and maxima is 0.81 and 2.2 ppb, respectively. Figure 
4.26 on p.4-26 shows daily sums of ammonium and ammonia, with values 
of 2.5-5 [micro]g/m\3\ or 3.6-7.2 ppb occurring frequently. These 
are substantially higher than values cited by the commenters. 
``NH3 Monitoring in the Upper Green River Basin, 
Wyoming'', by John V. Molenar, H. James Newell, Jeffrey Collett, et 
al. Extended Abstract 70, A&WMA Specialty Conference 
``Aerosol & Atmospheric Optics: Visual Air Quality and Radiation'', 
Moab, Utah, 28 April--2 May 2008, p.3 Figure 1 and p.4 Figure 3 show 
ammonium comparable to ammonia in summer and far greater in winter. 
``Aerosol Ion Characteristics During the Big Bend Regional Aerosol 
and Visibility Observational Study,'' Taehyoung Lee, Sonia M. 
Kreidenweis & Jeffrey L. Collett Jr. Journal of the Air & Waste 
Management Assoc. vol.54, issue 5, 2004, pages 585-592. DOI:10.1080/
10473289.2004.10470927, Table 1 p. 587 shows ammonium about four 
times as high as ammonia.
---------------------------------------------------------------------------

    New ammonia monitoring data were collected by SRP at several sites 
between NGS and the two nearest Class I areas, Capitol Reef National 
Park and Grand Canyon National Park, from December 2009 through April 
2010. The monitoring report,\35\ cited by commenter APS, describes a 
surprisingly high spatial variability in ammonia concentrations. The 
two monitors in the Cameron area south of NGS (and east-southeast of 
the Grand Canyon) showed consistent concentration differences despite 
being less than five miles from each other; this may be due to 
relatively localized ammonia sources. These sites also showed 
consistently lower measurements than the Halls Crossing site, north of 
NGS (and southwest of Capitol Reef). The range in concentrations was 
comparable to the range seen between the AECOM values at the low end, 
and EPA's back-calculated values at the high end. Unfortunately, 
because of the variability and its unknown causes, the data collected 
did not lead to a clear picture of appropriate and representative 
ammonia background concentrations to use with CALPUFF.
---------------------------------------------------------------------------

    \35\ ``Measurements of Ambient Background Ammonia on the 
Colorado Plateau and Visibility Modeling Implications'', Salt River 
Project, Dr. Ivar Tombach, Consultant, and Robert Paine, AECOM 
Environment, September 2010.
---------------------------------------------------------------------------

    In any case, as mentioned above, some nearby monitored data 
reported in Sather's paper show considerably higher ammonia than 
recommended by some commenters, so it is not clear that values lower 
than 1 ppb should be used. EPA concludes that there is not a compelling 
case for using ammonia background concentrations other than the 1 ppb 
found in the only authoritative guidance document available on this 
topic and supported by the FLMs.
    Comment: Two commenters (APS and AUG) noted that the RHR and BART 
Guidelines are silent regarding whether visibility improvements should 
be modeled on a unit-by-unit basis or a plant-wide basis, and there is 
no legal requirement that units be modeled aggregately. Given that 
visibility benefits are approximately additive, the commenters contend 
that it is unreasonable for EPA to conclude that

[[Page 72521]]

ADEQ's BART analyses failed to consider any significant visibility 
effect merely because ADEQ modeled the units separately. In addition, 
AUG notes that it is necessary to determine the effects of emissions 
from units individually so that projected visibility impacts can be 
considered in light of costs and other impacts associated with BART-
candidate controls for that particular unit, and modeling units 
together could obscure these comparisons.
    Response: Considering the visibility benefits of multiple units 
together does not preclude a state from also considering individual 
unit benefits, as well as individual unit costs. EPA does not agree 
that modeling the units together obscures these other comparisons. 
Rather, the benefit of controls for an entire BART-eligible source is a 
factor that should be considered along with those other comparisons. In 
any case, whether considered unit by unit or all units together, 
visibility improvement has no effect on the assessment of cost-
effectiveness as measured by dollars per ton of reductions.

B. Comments on ADEQ's Individual BART Analyses and Determinations

1. ADEQ's BART Analyses and Determinations for Apache Unit 1
    Comment: One commenter (NPS) concurred with ADEQ's and EPA's 
proposals for BART at Apache Unit 1.
    Response: We acknowledge NPS's concurrence.
2. ADEQ's BART Analyses and Determinations for Apache Units 2 and 3
a. ADEQ's BART Analysis and Determination for NOX
    Comment: One commenter (Earthjustice) commended EPA's decision to 
disapprove ADEQ's NOX BART determination for Apache Units 2 
and 3. The commenter stated that EPA correctly concluded that ADEQ's 
BART determination for NOX inflated the costs of more-
stringent NOX controls by including costs not allowed by EPA 
Cost Control Manual, provided little reasoning about the visibility 
benefits of additional NOX controls, and did not weigh the 
visibility impacts at all nearby Class I areas. The commenter asserted 
that because ADEQ's BART analysis does not comply with the RHR's 
requirements, EPA must disapprove ADEQ's BART determinations for Apache 
Units 2 and 3.
    Response: We agree that ADEQ's BART analysis for Apache Units 2 and 
3 does not comply with the RHR's requirements. As discussed further 
below, we performed a supplemental analysis using the version of 
AEPCO's cost estimate that adheres to our assumptions regarding costs 
that are allowed by the CCM (i.e., capital costs for the installation 
of SCR with LNB and OFA of $164.9 million), and we also considered the 
fact that AEPCO is a small entity under the Regulatory Flexibility 
Act.\36\
---------------------------------------------------------------------------

    \36\ As explained in our proposal, a firm primarily engaged in 
the generation, transmission, and/or distribution of electric energy 
for sale is small if, including affiliates, the total electric 
output for the preceding fiscal year did not exceed 4 million 
megawatt hours. 77 FR 42867. AEPCO sold under 3 million megawatt 
hours in 2011 and is therefore a small entity.
---------------------------------------------------------------------------

b. ADEQ's BART Analysis and Determination for PM10
    Comment: One commenter (NPS) agreed with ADEQ and EPA that BART for 
PM10 at Apache Units 2 and 3 is upgrades to the existing 
electrostatic precipitators (ESPs) and a PM10 emissions 
limit of 0.03 lb/MMBtu. The commenter noted that ADEQ stated that 
PM10 emissions would be measured by conducting EPA Method 
201/202 tests.
    In contrast, a second commenter (Earthjustice) disagreed with EPA's 
proposal to approve ADEQ's PM10 BART determination for 
Apache Units 2 and 3. The commenter contended that EPA proposed to 
approve the BART determination despite acknowledging that ADEQ did not 
conduct a full BART analysis for PM10 because it 
overestimated costs and failed to consider upgrades to the existing 
ESPs. However, the commenter believes that lower emission rates are 
achievable and, as a result, that EPA should disapprove ADEQ's BART 
determination, conduct a full five-factor BART analysis and set a lower 
emission limit as BART for PM10. According to the commenter, 
the Sahu report demonstrates that nearly 150 EGUs across the nation 
with a variety of PM controls achieve emission rates lower than 0.03 
lb/MMBtu. The commenter asserted that neither ADEQ nor EPA provided any 
explanation why Apache Units 2 and 3 could not similarly meet a lower 
emission limit.
    Response: As we noted in our proposal, ADEQ's BART analysis did not 
demonstrate that all potential upgrades to the existing ESPs at Apache 
Units 2 and 3 were fully evaluated or that the costs were calculated in 
compliance with the Control Cost Manual. However, we concluded that 
this was a harmless error because of the relatively small visibility 
improvement associated with PM10 reductions from these 
units.\37\ Therefore, we proposed to approve ADEQ's determination that 
BART for PM10 at Apache Units 2 and 3 is upgrades to the 
existing ESPs and a PM10 emissions limit of 0.03 lb/MMBtu.
---------------------------------------------------------------------------

    \37\ 77 FR 42847.
---------------------------------------------------------------------------

    One commenter asserted that this limit is too lenient, since other 
coal-fired units are achieving lower limits, based on test data 
submitted by various utilities to EPA as part of an Information 
Collection Request (ICR) for the Mercury and Air Toxics (MATS) 
Rule.\38\ EPA disagrees with this comment. The MATS Rule establishes an 
emission standard of 0.030 lb/MMBtu filterable PM (as a surrogate for 
toxic non-mercury metals) as representing Maximum Achievable Control 
Technology (MACT) for coal-fired EGUs.\39\ This standard derives from 
the average emission limitation achieved by the best performing 12 
percent of existing coal-fired EGUs (taking into account the 
variability in the testing results for these facilities), based upon to 
the same test data referred to by the commenter.\40\ The BART 
Guidelines provide that, ``unless there are new technologies subsequent 
to the MACT standards which would lead to cost-effective increases in 
the level of control, you may rely on the MACT standards for purposes 
of BART.'' \41\ Therefore, we are approving ADEQ's determination that a 
PM10 limit of 0.03 lb/MMBtu represents BART for these units.
---------------------------------------------------------------------------

    \38\ Information Collection Request For National Emission 
Standards For Hazardous Air Pollutants (NESHAP) for Coal- And Oil-
Fired Electric Utility Steam Generating Units (OMB Control No. 
2060[hyphen]0631). See http://www.epa.gov/ttn/atw/utility/utilitypg.html for detailed information obtained through this ICR.
    \39\ 77 FR 9304, 9450, 9458 (February 16, 2012) (codified at 40 
CFR 60.42Da(a), 60.50Da(b)(1)).
    \40\ See Memorandum from Jeffrey Cole (RTI International) to 
Bill Maxwell (EPA) regarding ``National Emission Standards for 
Hazardous Air Pollutants (NESHAP) Maximum Achievable Control 
Technology (MACT) Floor Analysis for Coal- and Oil-fired Electric 
Utility Steam Generating Units for Final Rule'' (Dec. 16, 2011).
    \41\ 40 CFR Part 51, Appendix Y, Section IV.C.
---------------------------------------------------------------------------

c. ADEQ's BART Analysis and Determination for SO2
    Comment: One commenter (Earthjustice) disagreed with EPA's proposal 
to approve ADEQ's SO2 BART determination at Apache Units 2 
and 3. The commenter states the approval is contrary to the RHR because 
ADEQ's BART determination is not supported by a valid five-factor 
analysis. The commenter states that EPA cannot speculate that it would 
reach the same conclusion as ADEQ, and it must undertake an independent 
full five-

[[Page 72522]]

factor BART analysis. The commenter argues that an SO2 limit 
of 0.04 lb/MMBtu is achievable and cost-effective for Apache Units 2 
and 3 according to the Sahu report. The commenter further asserts that, 
based on this report, scrubber upgrades can achieve SO2 
removal efficiencies of 98 percent and should have been investigated.
    Another commenter (NPS) noted that that AEPCO's BART reports 
indicate that uncontrolled SO2 emissions are 0.69 lb/MMBtu, 
and that the ADEQ BART proposal would reduce SO2 emissions 
by 78 percent down to 0.15 lb/MMBtu. Based on the SO2 
control data submitted by the commenter, the commenter asserted that 
other BART upgrades are achieving higher removal efficiencies and/or 
lower SO2 limits. The commenter believes that the existing 
scrubbers can be upgraded to achieve better removal efficiency and 
lower emission rates than the 78 percent and 0.15 lb/MMBtu proposed by 
EPA. The commenter cited various examples of upgraded scrubbers 
achieving limits of less than 0.15 lb/MMBtu or removal rates of greater 
than 90 percent.
    By contrast, ADEQ and AEPCO expressed opposition to both a lower 
limit and a removal efficiency requirement. ADEQ asserted that ``the 
limits included in the state SIP submittal are acceptable as BART'' and 
``imposing dual-limitations will be unnecessary and burdensome for the 
facility.'' AEPCO commented that ADEQ permit conditions, which require 
SO2 absorption systems to be operated and maintained at all 
times in a manner consistent with good air pollution control practices 
for minimizing emissions, is sufficient, and an additional control 
efficiency limit is not necessary. An efficiency limit would also 
require modification to the monitors to include the capability to 
measure scrubber inlet SO2 in addition to stack emissions, 
which would require additional capital and O&M expenditures.
    Response: We proposed to approve ADEQ's determination that BART for 
SO2 at Apache Units 2 and 3 is upgrades to the existing 
scrubbers with an associated emission limit of 0.15 lb/MMBtu (30-day 
rolling average). However, we also solicited comment on whether an 
efficiency requirement should be part of the BART requirement, since 
Apache has the ability to use coal from various sources that have 
varying sulfur content. After reviewing the comments received on our 
proposal, we have concluded that the emission limit set by ADEQ 
appropriately reflects BART for SO2 at these units and that 
a removal efficiency requirement would not be appropriate for these 
units.
    While new wet scrubbers are capable of achieving 95 percent or 
better removal of SO2,\42\ the Apache scrubbers were 
manufactured in the 1970s and designed to meet a limit of 0.8 lb/MMBtu 
(i.e., a control efficiency of up to 70 percent).\43\ For such existing 
scrubbers achieving greater than 50 percent control, the BART 
Guidelines (which are not mandatory for these units) do not provide a 
presumptive limit or removal efficiency, but recommend consideration of 
cost-effective scrubber upgrades designed to improve the system's 
overall SO2 removal efficiency.\44\ In August 2009, AEPCO 
provided information to ADEQ concerning potential scrubber upgrades at 
Apache Units 2 and 3.\45\ AEPCO noted that it was in the process of 
upgrading its limestone grinding system and described other potential 
upgrades, such as improving operation of the scrubber bypass damper 
system, upgrading the mist eliminator wash system, adding another sieve 
tray, and modifying the flue gas inlet. The enclosed ``Wet FGD 
Implementation Plan'' indicated that AEPCO intended to proceed with 
upgrading the limestone grinding system, improving operation of the 
scrubber bypass damper system, and upgrading the mist eliminator wash 
system, but that ``[t]he remaining wet FGD options were not selected on 
the basis of low probability of successfully making a significant 
difference in scrubber performance and/or high cost.'' \46\
---------------------------------------------------------------------------

    \42\ See BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.E.4.
    \43\ See Apache Title V Permit Technical Support Document 
(2007), Table 9; Title V Permit (2007), Attachment B, section 
II.E.1.a.
    \44\ See BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.E.4.
    \45\ Letter from Michelle Freeark, AEPCO, to Trevor Baggiore, 
ADEQ (July 8, 2009).
    \46\ Id.
---------------------------------------------------------------------------

    Based on this information, we conclude that no further cost-
effective scrubber upgrades are likely to be feasible for this facility 
and we are therefore deferring to ADEQ's determination that 0.15 lb/
MMBtu represents BART for these units. Given the age of these 
scrubbers, we find that an additional removal efficiency requirement 
would be unnecessarily burdensome. This approach is consistent with our 
consideration of AEPCO's status as a small entity in our FIP 
determination. We note that our final FIP includes a requirement to 
maintain and operate air pollution control equipment at all units in 
``a manner consistent with good air pollution control practices for 
minimizing emissions'' at all times. We expect that this requirement 
will help to ensure that the scrubbers on Apache Units 2 and 3 are 
properly maintained and operated under all conditions.
3. ADEQ's BART Analyses and Determinations for Cholla Units 2, 3 and 4
    Comment: One commenter (APS) remarked that EPA stated that APS's 
contractor did not provide supporting information for its capital cost 
estimate, such as detailed equipment lists. The commenter argues that 
detailed equipment lists are typically not necessary for the level of 
accuracy needed for the process selection phase of a project and noted 
that its contractor used vendor quotes for the major pieces of 
equipment and factors for construction, balance of plant, electrical, 
owner's costs, surcharges, AFUDC and contingency.
    Response: We do not agree with this comment. The BART Guidelines 
provide that:

    You should include documentation for any additional information 
you used for the cost calculations, including any information 
supplied by vendors that affects your assumptions regarding 
purchased equipment costs, equipment life, replacement of major 
components, and any other element of the calculation that differs 
from the [CCM].\47\

    \47\ 40 CFR Part 51, Appendix Y, section IV.4.a., note 15.

Thus, detailed cost documentation is necessary to the extent that cost 
assumptions differ from the CCM. In this case, several of ADEQ's and 
APS's cost assumptions for control costs at Cholla differed from the 
CCM, but no such documentation was provided as part of the Arizona 
Regional Haze SIP.
a. BART Analysis and Determination for NOX
    Comment: One commenter (Earthjustice) commended EPA's decision to 
disapprove ADEQ's NOX BART determination for Cholla Units 2, 
3 and 4. The commenter stated that EPA correctly concluded that ADEQ's 
BART determination for NOX inflated the costs of more-
stringent NOX controls by including costs not allowed by the 
Manual, and substantially underestimated the visibility benefits of 
additional NOX controls. The commenter asserted that because 
ADEQ's BART analysis does not comply with the RHR's requirements, EPA 
must disapprove ADEQ's BART determinations for Cholla Units 2, 3 and 4.

[[Page 72523]]

    Response: As explained in our proposal and elsewhere in this 
document, we agree that ADEQ's BART analyses and determinations for 
NOX at Cholla Units 2, 3 and 4 do not comply with the 
requirements of the CAA and RHR. We are therefore disapproving these 
determinations.
b. BART Analysis and Determination for PM10
    Comment: One commenter (NPS) agreed with EPA's proposal to approve 
ADEQ's BART determination for Cholla Units 2, 3 and 4 of an emission 
limit of 0.015 lb/MMBtu for PM10 based on the use of fabric 
filters, the most stringent control technology available. In contrast, 
a second commenter (Earthjustice) disagreed with EPA's proposal to 
approve ADEQ's PM BART determination for Cholla Units 2, 3 and 4. The 
commenter contended that EPA proposed to approve the BART determination 
despite acknowledging that ADEQ did not conduct a full BART analysis 
for PM because fabric filters are the most stringent PM control 
technology available and ADEQ's 0.015 lb/MMBtu emission limit is 
``consistent'' with other EGUs employing fabric filters (citing 77 FR 
42849). However, the commenter believes that lower emission rates are 
achievable with fabric filters and, as a result, that EPA should 
disapprove ADEQ's BART determination, conduct a full five-factor BART 
analysis and set a lower emission limit as BART for PM10. 
According to the commenter, the BART Guidelines' exemption from a full 
five-factor analysis for the most stringent control technology is not 
applicable in this case because improvements to the fabric filters are 
possible and a lower emission rate is thus achievable.
    The latter commenter (Earthjustice) stated that had EPA conducted 
the PM10 BART analysis required by the RHR, it would show 
that an emission rate lower than 0.015 lb/MMBtu is BART for Cholla. 
According to the commenter, an expert report accompanying the 
commenter's submission (the ``Sahu report'') demonstrates that upgrades 
to the fabric filters can achieve a lower emission limit and, moreover, 
that nearly 100 EGUs across the nation with a variety of PM controls 
achieve emission rates lower than 0.015 lb/MMBtu. The commenter 
asserted that neither ADEQ nor EPA provided any explanation why Cholla 
Units 2, 3 and 4 could not similarly meet a lower emission limit.
    Response: We are finalizing our approval of ADEQ's PM10 
BART determination at Cholla Units 2, 3 and 4. We find that an emission 
limit of 0.015 lb/MMBtu represents what can be continuously achieved 
with a properly operated baghouse on these units. The fabric filters 
(i.e., baghouses) at Cholla will all be new since they are scheduled to 
be installed between 2008 and 2016. Recent PSD BACT limits for coal-
fired EGUs with new baghouses have typically ranged from 0.01 to 0.015 
lb/MMBtu using Method 5.
    As to the commenter's position that bag material selection would 
influence the level of PM that could be achieved, EPA notes that there 
are a number of factors that influence a utility's selection of proper 
bag material such as bag life, compatibility with exhaust gas stream 
and control of other pollutants such as mercury (Hg) or sulfuric acid 
mist (H2SO4). In addition, it should be noted 
that the latest revision to the EGU NSPS requires modified units to 
meet a PM limit of 0.015 lb/MMBtu.\48\ Also, as noted above, the recent 
EGU MATS rule sets a PM emissions standard of 0.03 lb/MMBtu, and the 
BART Guidelines provide that, ``unless there are new technologies 
subsequent to the MACT standards which would lead to cost-effective 
increases in the level of control, you may rely on the MACT standards 
for purposes of BART.'' \49\ Therefore, we are finalizing our proposed 
approval of ADEQ's BART determination for PM10 at Cholla 
Units 2, 3 and 4.
---------------------------------------------------------------------------

    \48\ 77 FR 9450 (February 16, 2012) (codified at 40 CFR 
60.42Da).
    \49\ 40 CFR Part 51, Appendix Y, Section IV.C.
---------------------------------------------------------------------------

c. ADEQ's BART Analysis and Determination for SO2
    Comment: Citing various examples of lower SO2 limits at 
other coal-fired units, one commenter argued that the existing 
scrubbers at Cholla can be upgraded to achieve lower emission rates 
than the 0.15 lb/MMBtu proposed by EPA. Based on the SO2 
control data submitted by the commenter, the commenter asserted that 
other BART upgrades are achieving higher removal efficiencies and/or 
lower SO2 limits.
    Another commenter (Earthjustice) disagreed with EPA's proposal to 
approve ADEQ's SO2 BART determination for Cholla Units 2, 3 
and 4. The commenter states the approval is contrary to the RHR because 
ADEQ's BART determination is not supported by a valid five-factor 
analysis, which the commenter believes had flaws in its cost and 
visibility improvement analyses. The commenter alleged that EPA 
proposed to approve the SO2 BART determinations based on 
unsupported speculation that the outcome would be the same if EPA 
performed the BART analysis required by the RHR, although EPA 
identified nothing in the docket to support its claim that a full BART 
analysis would have yielded the same result. The commenter states that 
EPA cannot speculate that it would reach the same conclusion as ADEQ, 
and it must undertake an independent full five-factor BART analysis.
    The commenter further stated that ADEQ's SO2 BART 
analysis for Cholla Units 2, 3 and 4 is also flawed because ADEQ failed 
to analyze controls and upgrades that would result in emission rates 
lower than the BART Guidelines' presumptive BART limits. According to 
the commenter, EPA has recognized multiple times that the presumptive 
BART limits are merely the starting point for the BART determination, 
not the ending point. Moreover, the commenter asserted that the 
presumptive limits are often outdated with the result that appropriate 
consideration of the five statutory BART factors can result in far 
lower emission rates than presumptive BART. The commenter cited 
statements by EPA Region 6 (76 FR 64186, 64203, October 17, 2011, 
regarding proposed actions on Arkansas' RH SIP) and EPA Region 9 (77 FR 
51633 regarding the final RH FIP for the Four Corners Power Plant).
    Earthjustice also presented documentation that the commenter 
believes to show that lower SO2 emission limits are 
achievable and cost-effective at Cholla Units 2, 3 and 4. According to 
the commenter, a report submitted with the comments (the ``Stamper 
report'') \50\ shows that a proper BART determination for Cholla would 
have found that 98 percent SO2 control efficiency achieving 
a 0.04 lb/MMBtu emission limit is BART for the units, and that even 
with the less-stringent 95 percent SO2 control efficiency 
that is the basis of ADEQ's BART determinations, ADEQ should have 
required an SO2 emission limit of 0.10 lb/MMBtu because 0.15 
lb/MMBtu limit does not reflect 95 percent SO2 removal.
---------------------------------------------------------------------------

    \50\ Attachment 1 to Earthjustice Comments, Technical Support 
Document to Comments of Conservation Organizations, Proposed Arizona 
Regional Haze Partial SIP Approval and Partial FIP SO2 
and NOX BART Determinations for Cholla Units 2, 3 and 4 
(September 17, 2012), prepared by Victoria Stamper.
---------------------------------------------------------------------------

    Another commenter (APS) noted that the SO2 content of 
the coal source for the Cholla plant is up to 3.0 lbs/MMBtu, and the 
maximum rate of removal that will be continuously achievable after the 
plant upgrades its scrubbers is 95 percent. Therefore, the commenter 
asserts that 0.15 lb/MMBtu is the

[[Page 72524]]

maximum achievable SO2 emissions limit.
    Response: A number of commenters indicated that lower emission 
levels are being achieved at other sources with wet FGDs and western 
coal. However, none of these examples are based on coal with as high a 
potential SO2 level as the coal that is currently burned at 
Cholla. APS historically burned coal from the McKinley mine located on 
the Navajo Reservation at the Cholla units. Following the closure of 
this mine, APS obtained coal from various sources until the company 
signed a long-term contract for coal from the El Segundo and Lee Ranch 
mines in New Mexico.\51\ The sulfur content of coal from these two 
mines is substantially higher than Powder River Basin (PRB) coal and 
also much higher than coal from the former source, the McKinley 
mine.\52\ The current coal contract for these units indicates that the 
typical sulfur content of this coal is equivalent to 2.4 lb/MMBtu 
SO2 and can be as high as 3.0 lb/MMBtu.\53\ Given that the 
transition to this coal has already occurred and that company has 
entered into a contract to continue purchasing this coal until 2024, we 
consider emissions based on this coal supply to ``represent a realistic 
depiction of anticipated annual emissions for the source.'' \54\ The 
RHR and the BART Guidelines do not require states to restrict or alter 
a facility's selection of the coal supply in order to meet a specific 
limit.
---------------------------------------------------------------------------

    \51\ See ``Additional APS Cholla BART response'', Appendix B.
    \52\ See, e.g., ``APS Cholla Unit 2 BART report'', Table 2-2.
    \53\ See ``Additional APS Cholla BART response'', Appendix B, 
Section 6.2.
    \54\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.4.d.
---------------------------------------------------------------------------

    APS's comments on the proposal indicate that the company intends to 
upgrade the existing SO2 controls at Unit 2 to a new wet 
flue gas desulfurization (FGD) system, identical to those already 
installed on Units 3 and 4.\55\ APS further explained that:
---------------------------------------------------------------------------

    \55\ ``Comments of Arizona Public Service Company'', page 27.

    The coal source for [Cholla] is El Segundo and Lee Ranch coal 
with an SO2 content of up to 3.0 lbs/mmBtu.The maximum 
rate of removal that will be continuously achievable after the 
scrubber upgrades * * * are performed is 95 percent. If compliance 
is determined on a 30-day rolling average basis, the maximum 
SO2 emission limit achievable at Cholla on a continuous 
basis is, therefore, 0.15 lb/mmBtu. \56\
---------------------------------------------------------------------------

    \56\ Id. page 63.

Given this information, EPA finds that the ADEQ BART limit of 0.15 lb/
MMBtu represents BART for SO2 at these units. As noted by 
APS, this limit would require a removal efficiency of 95 percent when 
these units are burning this ``worst-case'' (highest-sulfur) coal 
(i.e., 3.0 lb/MMBtu). Therefore, we are finalizing our approval of 
ADEQ's BART limit of 0.15 lb/MMBtu of SO2 for these units.
    However, we remain concerned that this worst case coal is not 
representative of the typical coal that APS will receive from the El 
Segundo and Lee Ranch mines. APS's current contract for this coal 
indicates that the minimum sulfur content is equivalent to 1.88 lb/
MMBtu of SO2 for the El Segundo coal and 1.64 lb/MMBtu of 
SO2 for the Lee Ranch Coal.\57\ When burning this lower-
sulfur coal, the units would only need to achieve 90 to 92 percent 
control in order to meet the BART limit of 0.15 lb/MMBtu of 
SO2. While APS has stated that the scrubbers on Cholla Units 
2, 3 and 4 will be able to continuously achieve a removal efficiency of 
95 percent, the Arizona Regional Haze SIP does not include a 
requirement or procedures to ensure that the scrubbers are operated and 
maintained to achieve this level of control. Therefore, in order to 
ensure that these scrubbers are properly operated and maintained, 
consistent with 40 CFR 51.308(e)(1)(v), we are finalizing a removal 
efficiency requirement for SO2 of 95 percent on a 30-day 
rolling basis for Cholla Units 2, 3 and 4. This requirement is 
explained further under ``Comments on Enforceability Requirements in 
EPA's BART FIP.''
---------------------------------------------------------------------------

    \57\ See ``Additional APS Cholla BART response'', Appendix B, 
Section 6.2.
---------------------------------------------------------------------------

4. ADEQ's BART Analyses and Determinations for Coronado Units 1 and 2
a. ADEQ's BART Analysis and Determination for NOX
    Comment: One commenter (NPS) agreed with EPA that ADEQ's BART 
selection of LNB with OFA for Coronado is not adequately supported for 
the following reasons:
     ADEQ did not consider the typical visibility metrics of 
benefit at the area with maximum impact, nor benefits summed over the 
areas.
     Using the default 1 ppb ammonia background concentration 
would have increased estimated impacts and control benefits.
     There is no weighing of the visibility benefits and 
visibility cost-effectiveness for the various candidate controls and 
the various Class I areas.
     ADEQ does not indicate whether it considered any cost 
thresholds to be reasonable or expensive in analyzing the costs of 
compliance for the various control options.
    Similarly, another commenter (Earthjustice) supported EPA's 
disapproval of ADEQ's NOX BART determination for Coronado 
Units 1 and 2. For the reasons discussed by the commenter above for 
Cholla Units 2, 3 and 4, the commenter agreed with what the commenter 
said was EPA's conclusion that all of ADEQ's BART determinations are 
fatally flawed in numerous respects (e.g., inflated costs and 
underestimated visibility benefits). Specific to Coronado, the 
commenter agreed that ADEQ failed to provide detailed and verifiable 
cost information and to properly consider the costs of compliance for 
each control option in its BART analysis (citing 77 FR 42851). In 
addition, the commenter indicated that ADEQ failed to properly evaluate 
the visibility benefits of more-stringent NOX controls at 
Coronado, used a novel and unapproved metric to measure visibility 
benefits, failed to consider cumulative visibility benefits across all 
affected Class I areas, and used incorrect background ammonia 
concentrations in its modeling. The commenter added that ADEQ also 
failed to explain how it evaluated the five statutory BART factors and 
selected BART based on the factors. The commenter asserted that because 
ADEQ's BART analysis does not comply with the RHR's requirements, EPA 
properly disapproved ADEQ's NOX BART determinations for 
Coronado.
    Response: We agree that ADEQ's BART analysis for NOX at 
Coronado Units 1 and 2 did not comply with the requirements of the CAA 
and RHR.
    Comment: One commenter (SRP) stated that EPA must accept ADEQ's 
BART determination for NOX because it was a complete and 
thorough five[hyphen]factor analysis conducted in accordance with the 
BART Guidelines and resulted in a reasonable and appropriate 
determination of NOX BART for Coronado.
    Response: We do not agree with this comment. As explained in the 
NPRM and elsewhere in this document, ADEQ's BART determinations for 
NOX did not comply with the requirements of the RHR or the 
BART Guidelines. Therefore, we are finalizing our disapproval of these 
NOX BART determinations, including the determinations at 
Coronado Units 1 and 2.
b. ADEQ's BART Analysis and Determination for PM10
    Comment: One commenter (NPS) agreed with EPA's proposal to approve 
ADEQ's PM10 BART determination for

[[Page 72525]]

Coronado Units 1 and 2, noting that that emissions of PM10 
from Coronado Units 1 and 2 are currently controlled by hot-side ESPs 
and that, in terms of the consent decree, SRP is required to optimize 
its ESPs to achieve a PM10 emission rate of 0.030 lb/MMBtu.
    Another commenter (SRP) stated that EPA's approval of the Arizona 
BART determination for PM10 is reasonable and appropriate, 
believing it to be consistent with the CAA and supported by the 
technical record in this rulemaking. The commenter does not believe any 
upgrades to the ESPs are warranted as part of the BART determination, 
as SRP has in place a plan to optimize performance of the existing 
equipment. The commenter noted that as part of the consent decree 
between SRP and EPA for Coronado, SRP is required to operate the ESPs 
``at all times when the Unit it serves is in operation to maximize PM 
emission reductions, provided that such operation of the ESP is 
consistent with the technological limitations, manufacturers' 
specifications, and good engineering and maintenance practices for the 
ESP,'' and this requirement also is reflected in Coronado's current 
Title V operating permit.
    The commenter also noted that the PM10 limit in the 
recently promulgated MATS Rule will be more stringent than the 
PM10 limit proposed as BART. The commenter indicated that it 
makes sense for BACT to be more stringent than BART, and it likewise is 
appropriate for the MATS requirements to impose more stringent 
compliance obligations on utilities than a BART determination since 
MATS is intended to protect the public health from hazardous air 
pollutants, while BART is aimed at aesthetic concerns that Congress 
intended the states to address very gradually.
    In contrast, a third commenter (Earthjustice) disagreed with EPA's 
proposal to approve ADEQ's PM10 BART determination for 
Coronado Units 1 and 2. The commenter contended that EPA proposed to 
approve the BART determination despite acknowledging that ADEQ did not 
conduct a full BART analysis for PM10 because EGUs with ESPs 
elsewhere have BART limits of 0.03 lb/MMBtu. However, the commenter 
believes that lower emission rates are achievable and, as a result, 
that EPA should disapprove ADEQ's BART determination, conduct a full 
five-factor BART analysis and set a lower emission limit as BART for 
PM10. According to the commenter, the Sahu report 
demonstrates that nearly 150 EGUs across the nation with a variety of 
PM controls achieve emission rates lower than 0.03 lb/MMBtu. The 
commenter asserted that neither ADEQ nor EPA provided any explanation 
why Coronado Units 1 and 2 could not similarly meet a lower emission 
limit.
    Response: EPA acknowledges that ADEQ did not perform a rigorous 
five-factor BART analysis for PM10 at Coronado. However, a 
full five-factor analysis would be very unlikely to result in a change 
of control technology for PM10. Modeling of visibility 
impacts from direct PM10 emissions has shown very small 
impairment for EGU PM10 emissions in comparison to 
visibility impairment resulting from SO2 and NOX 
emissions. The existing hotside ESPs at Coronado Units 1 and 2 control 
PM10 by greater than 98 percent. In addition, SRP is 
required under a Consent Decree to optimize the performance of these 
ESPs and to meet a PM limit of 0.030 lb/MMBtu as measured by Method 
5.\58\ The consent decree also requires Coronado to install and conduct 
performance specification testing of a particulate matter CEMS 
(PMCEMS).
---------------------------------------------------------------------------

    \58\ Consent Decree in United States v. Salt River Project, CV 
08-1479-PHX-JAT (entered Dec. 19, 2008).
---------------------------------------------------------------------------

    Installing the best control, a baghouse, would result in a cost 
exceeding $100,000/ton of additional PM removed. From a cost and 
visibility improvement standpoint, it is not justifiable to require 
replacement of controls that can achieve a reasonably low emission 
level on a continuous basis. As noted previously, 0.030 lb/MMBtu is the 
limit for filterable PM in the recently issued EGU MATS rule. 
Therefore, we are finalizing our approval of ADEQ's BART determination 
for PM10 at these units.
c. ADEQ's BART Analysis and Determination for SO2
    Comment: One commenter (NPS) noted that the consent decree between 
EPA and SRP requires installation of wet flue gas desulfurization 
(WFGD) systems on both Coronado units to achieve a 30-day rolling 
average SO2 removal efficiency of at least 95 percent or a 
30-day rolling average SO2 emissions rate of no greater than 
0.080 lb/MMBtu. The commenter added that EPA proposed to approve ADEQ's 
BART SO2 emission limit of 0.08 lb/MMBtu (30-day rolling 
average) for Coronado Units 1 and 2, which the commenter indicated 
would be consistent with the more stringent limits on WFGD upgrades 
that the commenter has seen.
    One commenter (SRP) stated that EPA's approval of ADEQ's BART 
determination for SO2 is reasonable and appropriate, 
believing it to be supported by the technical record. In response to 
EPA's request for comment on whether a lower emission limit may be 
achievable when the units are burning a lower-sulfur coal, the 
commenter responded that it is inappropriate for EPA to establish a 
BART limit that would be premised on any restriction of SRP's fuel 
supply. According to the commenter, this type of restriction would 
increase unit operating costs and reduce operational flexibility, and 
EPA provides no technical record to support consideration of this 
emissions reduction option.
    Another commenter (Earthjustice) disagreed with EPA's proposal to 
approve ADEQ's SO2 BART determination. The commenter states 
the approval is contrary to the RHR because ADEQ's BART analyses are 
not supported by a valid five-factor analysis. The commenter states 
that EPA cannot speculate that it would reach the same conclusion as 
ADEQ, and it must undertake an independent full five-factor BART 
analysis, which the commenter believes would result in a SO2 
BART limit of 0.04 lb/MMBtu based on a 30-day rolling average. 
Earthjustice further asserted that, according to the Sahu report, WFGD 
can achieve SO2 removal efficiencies of 98 percent and the 
use of low-sulfur coals, which can further reduce SO2 
emissions, also should have been investigated.
    Response: EPA does not agree that we should disapprove the ADEQ 
BART determination and set an emission limit as low as 0.04 lb/MMBtu 
for SO2. EPA does acknowledge that while burning some coals, 
such as from PRB, these limits can be achieved at new units (though 
only achieved continuously over longer than 30-day averages), but EPA 
does not find that this limit would be consistently achievable at 
Coronado. Coronado receives its coal supply by rail line and has access 
to various sources of coal including PRB, Colorado and New Mexico 
coals. As mentioned previously, the RHR and the BART Guidelines do not 
require emission limits to be set at a level that would restrict the 
flexibility of EGUs to use available coals with varying sulfur content.
    The consent decree between EPA and SRP described in our proposal 
requires installation of wet flue gas desulfurization (WFGD) systems 
(i.e., new scrubbers) at both units at Coronado by January 1, 2013. 
These scrubbers are required to achieve either 0.080 lb/MMBtu of 
SO2 or 95 percent reduction of SO2 across the 
FGD, both

[[Page 72526]]

over a rolling 30-day basis.\59\ ADEQ has selected 0.08 lb/MMBtu as the 
BART emission limit for these units. We find that this is an 
appropriate limit for these units and are finalizing our approval of 
this determination.
---------------------------------------------------------------------------

    \59\ Consent Decree in United States v. Salt River Project, CV 
08-1479-PHX-JAT (entered Dec. 19, 2008).
---------------------------------------------------------------------------

    We also note that the recently promulgated EGU MATS rule, which 
uses an SO2 limit as an acceptable surrogate for limiting 
the emissions of hazardous acid gases, has set the limit at 0.20 lb/
MMBtu of SO2 for existing EGUs like Coronado Units 1 and 
2.\60\
---------------------------------------------------------------------------

    \60\ 77 FR 9490 (February 16, 2012), codified in Table 2 to 
Subpart UUUUU of 40 CFR Part 63.
---------------------------------------------------------------------------

C. General Comments on EPA's BART FIP Analyses and Determinations
1. Selection of Baseline Period
    Comment: Several commenters expressed disagreement with our general 
approach to the selection of baseline periods. One commenter (NPS) 
stated a general preference for the use of a baseline period that 
represents pre-control emissions, as advised in the BART Guidelines, to 
estimate baseline emissions for the purpose of calculating the average 
cost-effectiveness of the complete control system (e.g., combustion 
controls plus SCR). The commenter believes that this avoids any biasing 
of the calculations by sources that install combustion controls during 
the BART evaluation process. NPCA asserted that the ``proper'' baseline 
for BART determinations is 2001-2004. ADEQ asserted EPA violated the 
RHR provision in 51.308(d)(2)(i), which specifies the period for 
establishing baseline visibility conditions as 2000-2004, by using the 
period between 2008 and 2011 as a baseline period for EPA's BART 
analyses.
    Response: We disagree that our use of updated baseline periods for 
BART determinations is inappropriate or inconsistent with the CAA or 
the RHR. While the RHR specifies 2000-2004 as the baseline for purposes 
of measuring reasonable progress at Class I areas during the first 
implementation period,\61\ neither the RHR nor the BART Guidelines 
require that this particular timeframe be used as the baseline for BART 
determinations at individual sources. Rather, the Guidelines provide 
that, for purposes of calculating the costs of compliance:
---------------------------------------------------------------------------

    \61\ See 40 CFR 51.308(d)(2)(i).

    The baseline emissions rate should represent a realistic 
depiction of anticipated annual emissions for the source. In 
general, for the existing sources subject to BART, you will estimate 
the anticipated annual emissions based upon actual emissions from a 
baseline period.\62\
---------------------------------------------------------------------------

    \62\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.4.d.1

This provision is consistent with the statutory requirement that each 
BART determination take into consideration ``any existing pollution 
control technology in use at the source.'' \63\ While the Guidelines do 
not specify particular dates for this ``baseline period'' for BART 
analyses, in order to ``represent a realistic depiction of anticipated 
annual emissions for the source'' the baseline can account for controls 
already installed on the source, or, where appropriate, controls which 
are required to be installed in the near future.
---------------------------------------------------------------------------

    \63\ CAA 169A(g)(2), 42 U.S.C. 7491(g)(2); see also 40 CFR 
52.308(e)(ii)(A).
---------------------------------------------------------------------------

    In many instances, the 2000-2004 time frame was used as a baseline 
period for BART determinations because this time frame reflected 
existing controls in use at BART sources at the time BART analyses were 
performed, following the issuance of the final BART Guidelines in 2005. 
In Arizona's case, the initial BART analyses were performed in 2007, 
using baseline periods that varied by source: 2002-2007 for Apache; 
2001-2003 for Cholla; and 2001-2003 for Coronado.\64\ These periods 
appear to reflect controls in existence at the time that these BART 
analyses were performed. Our proposed disapproval of certain aspects of 
Arizona's BART determinations was not based on any flaw in the choice 
of baseline period.
---------------------------------------------------------------------------

    \64\ See, e.g., SIP Appendix D at 4; Apache Unit 2 BART analysis 
at 2-2; Cholla.
---------------------------------------------------------------------------

    However, having proposed to disapprove Arizona's BART 
determinations for NOX on other grounds, we were obligated 
to conduct our own five-factor BART analyses for NOX for 
these sources. At the time we conducted our analysis in 2011 and 2012, 
several of these units had been retrofitted with additional 
NOX controls that were not in place between 2000 and 2004. 
In particular, Cholla had installed LNB on Units 2, 3 and 4 in 2008 to 
2009, and Coronado had installed LNB at Unit 1 in 2009.\65\ In 
addition, during this time period, Cholla completed its transition to a 
different coal with much higher potential NOX emissions.\66\ 
Thus, in order to take into account existing controls and to ensure 
that the baseline period accurately represented anticipated future 
emissions, we updated the baseline period for each unit to ensure that 
it reflected these changes.\67\
---------------------------------------------------------------------------

    \65\ 77 FR 42859, 42861. Although no new NOX controls 
were installed at Apache during this timeframe, we determined that 
more recent emissions data (2008-2011 rather than 2005-2007) were 
more likely to represent future emissions. 77 FR 42856.
    \66\ 77 FR 42856, 42859, 42861.
    \67\ 77 FR 42861.
---------------------------------------------------------------------------

    With respect to Coronado Unit 2, we also took into account the 
federally-enforceable emissions limits set by a Consent Decree between 
the United States and SRP, which was entered in 2008.\68\ Again, this 
is consistent with the BART Guidelines, which provide that:
---------------------------------------------------------------------------

    \68\ Consent Decree in United States v. Salt River Project, CV 
08-1479-PHX-JAT (entered December 19, 2008).

    When you project that future operating parameters (e.g., limited 
hours of operation or capacity utilization, type of fuel, raw 
materials or product mix or type) will differ from past practice, 
and if this projection has a deciding effect in the BART 
determination, then you must make these parameters or assumptions 
into enforceable limitations. In the absence of enforceable 
limitations, you calculate baseline emissions based upon 
continuation of past practice.\69\
---------------------------------------------------------------------------

    \69\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.4.d.2.

Consistent with this provision, for Coronado we used the consent 
decree-mandated NOX emission limit of 0.08 lb/MMBtu in order 
to ensure that the baseline emissions rate would represent a realistic 
depiction of anticipated annual emissions for Unit 2.
    We note that such an ``updated baseline'' might not be appropriate 
in all instances. For instance, if it appeared that controls had been 
installed early in order to avoid a more stringent BART determination, 
it would presumably not be appropriate to use a baseline representing 
these new controls. We find no evidence of such intent here. Rather, 
with respect to Coronado, the installation of new NOX and 
SO2 controls was required by a consent decree. With respect 
to Cholla, the installation of newly installed NOX and 
SO2 controls coincided with increases in potential emissions 
of these pollutants resulting from a change in coal supply.\70\ 
Therefore, the more recent baseline is likely to be more representative 
of future operating conditions at these units.
---------------------------------------------------------------------------

    \70\ See Docket Item B-09, ``Additional APS Cholla BART 
response'', Appendix B, Section 6.2.
---------------------------------------------------------------------------

    Contrary to the assertions of some commenters, use of updated 
baselines did not unfairly penalize those sources that reduced their 
NOX emissions in advance of a final BART determination. 
Rather, the updated baseline effectively lowered the baseline 
visibility impacts from these sources by reducing the baseline 
emissions. As a result, the projected benefits of additional controls

[[Page 72527]]

were less than if we had used the original baseline. This approach is 
consistent with the RHR and the BART Guidelines because it accurately 
reflects controls in place at the time we performed our BART analysis. 
Nonetheless, in order to address commenters' concerns about the effect 
of the updated baselines on our proposed determinations, we have also 
taken into account the original baseline periods considered by ADEQ, as 
part of the supplemental cost analyses described below.
    Finally, we note that the use of a more recent baseline for 
purposes of our BART analyses does not alter the baseline used for 
purposes of measuring reasonable progress. As noted by several 
commenters, the RHR specifies that, for purposes of setting RPGs and 
measuring progress:

    The period for establishing baseline visibility conditions is 
2000 to 2004. Baseline visibility conditions must be calculated, 
using available monitoring data, by establishing the average degree 
of visibility impairment for the most and least impaired days for 
each calendar year from 2000 to 2004. The baseline visibility 
conditions are the average of these annual values.\71\
---------------------------------------------------------------------------

    \71\ 40 CFR 51.308(d)(2)(i).

In its Regional Haze SIP, Arizona used IMPROVE monitoring data from 
2000-2004 to calculate baseline visibility for the best and worst 
visibility days for each Class I Area.\72\ Since these baseline 
visibility conditions are calculated based on monitored conditions at 
Class I areas, they reflect actual emissions that occurred during the 
2000-2004 time frame, rather than any subsequently implemented 
controls.
---------------------------------------------------------------------------

    \72\ AZ Regional Haze SIP at page 39.
---------------------------------------------------------------------------

    In developing its long-term strategy, a state must consider inter 
alia ``[e]missions limitations and schedules for compliance to achieve 
the reasonable progress goal'' and the ``anticipated net effect on 
visibility due to projected changes in point, area, and mobile source 
emissions over the next 10 years.'' \73\ This would include any 
reductions in emissions from BART sources that are implemented prior to 
a final BART determination, as well as any reductions resulting from 
such a determination. Thus, in setting its RPGs for 2018, a state may 
receive ``credit'' for any reductions achieved during the first 
implementation period, regardless of whether or not those reductions 
are reflected in the ``baseline'' emissions for a particular BART 
source.
---------------------------------------------------------------------------

    \73\ 40 CFR 51.308(d)(3)(v)(G).
---------------------------------------------------------------------------

    EPA has not yet proposed action on Arizona's RPGs or long-term 
strategy. Our ultimate action on these elements of the plan will take 
into consideration all emissions reductions achieved during the first 
implementation period, consistent with the requirements of the CAA and 
the RHR.
2. Control Efficiencies and Emission Reductions for Alternative 
Controls
    Comment: One commenter (NPS) concurred with EPA's reliance on an 
SCR level of performance of 0.05 lb/MMBtu. The commenter noted that 
this level is consistent with EPA's determination for the San Juan 
Generating Station in New Mexico and EPA's assumptions for the Colstrip 
and Corette power plants in Montana.
    Response: We acknowledge the commenter's concurrence. As described 
further below, information received in comments on our proposal 
continues to support the use of an SCR level of performance of 0.05 lb/
MMBtu on an annual average basis. Accordingly, we have retained the use 
of 0.05 lb/MMBtu in our cost calculations (which are based on annual 
emissions). However, in setting emission limits on a 30-day rolling 
average basis, it is necessary to account for startup and shutdown 
events, which raise the average emission rates over this shorter period 
of time. Therefore, we have revised our proposed emission limits for 
SCR at each of the sources. As explained below, we have also taken into 
account other site-specific factors in revising the emissions limits. 
In the case of Apache Units 2 and 3, we have performed a supplemental 
analysis using AEPCO's cost estimates that are allowed by the CCM 
(capital costs for the installation of SCR with LNB and OFA of $164.9 
million). We also considered comments, the size of the Apache facility, 
AEPCO's classification as a small entity, the economic effects of 
requiring the use of SCR on Apache Units 2 and 3, and AEPCO's arguments 
regarding an SCR emissions limit of 0.07 lb/MMBtu. As discussed below 
in this preamble, we have concluded that in this case it is appropriate 
to revise the 30-day rolling average SCR limit to 0.070 lb/MMBtu, with 
a ``bubble'' across Apache Units 2 and 3. In the case of Cholla, we 
have taken into account the need to accommodate startup and shutdown 
events in the 30-day rolling average and have revised the limit to 
0.055 lb/MMBtu, with a bubble across Units 2, 3 and 4. Finally, in the 
case of Coronado, we have taken into account both the need to 
accommodate startup and shutdown events, as well as the existing 
consent decree, which sets an emission limit of 0.080 lb/MMBtu for Unit 
2. Based on these considerations, we have set a two-unit 30-day rolling 
average limit of 0.065 lb/MMbtu. For each of the three sources, we have 
established the compliance determination method such that when one unit 
is not operating, the emissions from its own preceding thirty boiler-
operating-days will continue to be included in the 30-day rolling 
average. In the case of Coronado, for example, during periods when only 
one unit operates, this method allows the one operating unit to average 
out short-term emission spikes by using the most recent thirty boiler-
operating-day value from the non-operating unit. Otherwise, averaging 
across units would not be possible during such periods, since the 
emissions value from the non-operating unit would be zero since it is 
not operating.
    Comment: One commenter (Earthjustice), based on a report submitted 
with the comments (the ``Sahu report''), stated that SCR can achieve 
greater NOX reductions and visibility benefits at less cost 
than EPA's calculations. According to the commenter, while SCR systems 
are capable of achieving 90 percent or greater removal, EPA's proposed 
NOX emission limit of 0.05 lb/MMBtu represents control 
levels of less than 90 percent at each of the Apache, Cholla and 
Coronado units. Accordingly, the commenter believes that EPA should 
have analyzed SCR with an emission limit of 0.04 lb/MMBtu because this 
level is achievable at 90 percent removal.
    The commenter (Earthjustice), based on a separate report submitted 
with the comments (the ``Stamper report''), stated that SCR systems are 
capable of achieving 90 percent or greater removal and EGUs elsewhere 
are subject to NOX emission limits as low as 0.03 lb/MMBtu. 
The commenter cited several Prevention of Significant Deterioration 
(PSD) permit limits based on BACT determinations, including a 0.03 lb/
MMbtu limit at Plant Washington, issued by Georgia Environmental 
Protection Division, and 0.035 lb/MMBtu for Desert Rock, issued by EPA 
Region 9. Accordingly, the commenter believes that EPA should have 
analyzed SCR with an emission limit of 0.04 lb/MMBtu because this level 
is achievable at 90 percent control for each of the units.
    Response: We agree with the information provided by the commenters 
that SCR technology has the potential to achieve 90 percent and greater 
rates of removal, as well as achieve emission rates of less than 0.05 
lb/MMBtu. However, we disagree with the commenter's assertion that 
emission limits associated with BART must meet the lowest emission rate 
achieved with

[[Page 72528]]

that technology at any coal-fired power plant. The RHR provides that:

    The determination of BART must be based on an analysis of the 
best system of continuous emission control technology available and 
associated emission reductions achievable for each BART-eligible 
source that is subject to BART * * * \74\
---------------------------------------------------------------------------

    \74\ 40 CFR 51.308(e)(1)(ii)(A).

Additionally, the BART Guidelines state that: ``[i]n assessing the 
capability of the control alternative, latitude exists to consider 
special circumstances pertinent to the specific source under review, or 
regarding the prior application of the control alternative'' \75\ and 
that ``[t]o complete the BART process, you must establish enforceable 
emission limits that reflect the BART requirements * * *''.\76\ The 
five-factor BART analysis described in the Guidelines is a case-by-case 
analysis that considers site-specific factors in assessing the best 
technology for continuous emission controls. After a technology is 
determined as BART, the BART Guidelines require establishment of an 
emission limit that reflects the BART requirements, but does not 
specify that the emission limit must represent the maximum level of 
control achieved by the technology selected as BART. While the BART 
Guidelines and the RHR do not preclude selection of the maximum level 
of control achieved by a given technology as BART, the emission limit 
set to reflect BART must be determined based on a consideration and 
weighting of the five statutory BART factors. Therefore, limits set as 
BACT during PSD review (e.g., Desert Rock), or emission rates achieved 
from the operation of individual facilities under an emissions trading 
program (e.g., Clean Air Act Interstate Rule (CAIR)) may provide 
important information, but should not be construed to automatically 
represent the most appropriate BART limit for a given technology.
---------------------------------------------------------------------------

    \75\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.3.
    \76\ Id. section V.
---------------------------------------------------------------------------

    Comment: Several commenters (APS, AEPCO, SRP, AUG, Pacificorp) note 
that the proposed NOX emission rate, as based on SCR 
technology, is more stringent than many other EPA actions. In its 
comments, SRP provided a contractor's report that found that the 
proposed limit is inconsistent with BACT determinations that EPA has 
approved for new coal-fired units in the following ways:
     Although there have been several units permitted with 
similar emissions limits, none of these limits are directly equivalent 
(same numeric limit and averaging time, including startup and shutdown 
periods).
     These units are based on new construction, which can be 
designed to optimize NOX reduction in other aspects of 
combustion (i.e., pulverizer design, boiler height, etc.).
     There is inadequate data available to confirm the long-
term achievability of the limits because the units have not begun 
operation or only recently became operational.
    Other commenters note that, as part of the Cross State Air 
Pollution Rule (CSAPR), EPA concluded that a NOX limit below 
0.06 lb/MMBtu is not achievable through retrofit of SCR on coal-fired 
electric generating units.\77\ AEPCO and APS also note that based on 
data from the RACT/BACT/LAER Clearinghouse, new coal-fired EGUs with 
SCR are only required to achieve 0.05 lb/MMBtu averaged over 12 months, 
and it is not appropriate to assume that a retrofit coal-fired unit can 
achieve this limit averaged over 30 days. SRP notes that the proposed 
limit for Coronado Unit 1 is more stringent than the recently 
promulgated NSPS for electric utility steam generating units 
constructed after May 3, 2011 (40 CFR part 60, subpart Da), which 
establishes a limit of 0.70 lb/MWh (0.077 lb/MMBtu) for new units, and 
1.1 lb/MWh (0.11 lb/MMbtu) for modified units. APS also provided a 
report, originally prepared by RMB Consulting & Research, Inc. (RMB) 
for comment on the Regional Haze FIP for San Juan Generating Station, 
suggesting that the Subpart Da limits represent the most stringent 
level of available control. The RMB report states that EPA's Guidelines 
indicate that state regulatory agencies should consider NSPS limits in 
the BART evaluation except in cases where the NSPS might be considered 
outdated (e.g., ``technology determinations from the 1970s or early 
1980s''), which is not the case for the recently promulgated NSPS 
Subpart Da.
---------------------------------------------------------------------------

    \77\ Citing 76 FR 1109, 1115, January 7, 2011; EPA, Transport 
Rule Engineering Feasibility Response to Comments, Docket ID No. 
EPA-HQ-OAR-2009-0491-4529, at 13, July 6, 2011.
---------------------------------------------------------------------------

    Response: We do not agree that our consideration of a 
NOX emission limit of 0.050 lb/MMBtu was inappropriate. We 
note that, in its submitted comments, Earthjustice identified several 
recently issued permits that establish emission limits for SCR that are 
more stringent than our proposal. While limits set as BACT during PSD 
review may provide important information about the capabilities of 
various control technologies, they should not be construed to 
automatically represent (or in this context, constrain) the 
determination of what the most appropriate BART limit representative of 
a given technology is for a given facility. The emission limit set to 
reflect BART must be determined based on a consideration and weighing 
of the statutory BART factors. Although there are some similarities 
between the top-down BACT determination process and the five-step BART 
determination process, we note that a BACT determination is based 
almost exclusively on cost-effectiveness, and does not, for example, 
take visibility improvement at Class I areas into account.\78\
---------------------------------------------------------------------------

    \78\ We note that a Class I area impact analysis must be 
performed by certain PSD projects as part of the permit application 
process. However, the visibility results are not used in the BACT 
determination, which is typically determined prior to performing the 
visibility modeling, and are not used to determine the appropriate 
level of control except in those cases where the visibility impact 
is sufficiently high to warrant mitigation measures that end up 
involving additional emission reductions.
---------------------------------------------------------------------------

    One of the commenters noted that in IPM modeling performed in 
support of the CSAPR rulemaking, we used an SCR emission rate of 0.06 
lb/MMBtu for certain retrofit coal-fired EGUs, stating that this was 
the most stringent emission rate assumed achievable for retrofit units. 
It is important to note that IPM is a tool that operates using a large 
number of variables with values determined based upon a wide variety of 
assumptions. These assumptions, and the values upon which they are 
based, will necessarily change based upon the needs and context of the 
project or rulemaking for which IPM is used. It is therefore not 
appropriate to automatically consider a particular assumption or 
variable value (in this case, SCR emission rate) used in one 
application of IPM to represent a uniform standard or constraint 
against which all other uses of IPM should be compared.
    In the case of the CSAPR rulemaking cited by the commenter, IPM was 
used to set state-wide budgets for NOX based on assumptions 
that would be minimally achievable to a broad array of covered sources. 
The emission data and constraints fed into IPM therefore represented 
sector-wide modeling assumptions, which is a much different use and 
context than a BART determination, which must ``take into account the 
most stringent emission control level'' in order to establish a source-
specific emission limit. As a result, we disagree that the 0.06 lb/
MMBtu assumption used in the CSAPR rulemaking should be construed to

[[Page 72529]]

represent the most stringent emission control level for SCR.
    Similarly, we also disagree that the recently promulgated NSPS 
Subpart Da represents the most stringent emission control level for 
SCR. First, we acknowledge that while the BART Guidelines state that 
``EPA no longer concludes that the NSPS level of controls automatically 
represents `the best these sources can install' '' \79\ this was 
written in the context of older NSPS subparts with technology 
evaluations that could potentially be outdated and not representative 
of current pollution control technology performance. We also 
acknowledge that, while the BART Guidelines provide for ``situations 
where NSPS standards do not require the most stringent level of 
available control for all sources within a category'' and cite NSPS 
Subpart GG (stationary gas turbines) as a subpart that does not 
consider post-combustion controls,\80\ the recently promulgated NSPS 
Subpart Da does consider post-combustion controls such as SCR.\81\
---------------------------------------------------------------------------

    \79\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.1, n. 13.
    \80\ Id. section IV.D.1.
    \81\ 40 CFR Part 60, Subpart Da.
---------------------------------------------------------------------------

    Despite this language, however, we disagree with the commenter's 
assertion that NSPS Subpart Da represents the most stringent emission 
control level for SCR, or that an NSPS Subpart, even a recently 
promulgated one, should be treated as a ``floor'' for establishing BART 
emission limits. While the BART Guidelines provide that, ``you may rely 
on MACT standards for purposes of BART,'' \82\ they do not indicate 
that the same is true for the NSPS standards. An NSPS standard must 
establish an emission rate that is appropriate for all the units within 
its category,\83\ which in the case of Subpart Da includes a variety of 
boiler types, coal types, and baseline emission rates that may not be 
representative of the Apache, Cholla, and Coronado units. Specifically 
in the case of the RMB report, which was prepared for the San Juan 
Generating Station, the assertion that the Subpart Da standards 
represent the most stringent level of available control is undermined 
by the report's findings that emission modeling indicates that the San 
Juan units could achieve NOX emission rates in the range of 
0.047 to 0.068 lb/MMBtu, which are emission rates lower than the 
Subpart Da standards.
---------------------------------------------------------------------------

    \82\ Id. section IV.C.
    \83\ Or subcategories, which Subpart Da does not establish 
except for ``new'' and ``modified'' units.
---------------------------------------------------------------------------

    Comment: Multiple commenters (AUG, APS, SRP) stated that EPA must 
consider presumptive BART limits. The commenters asserted that EPA 
cannot ignore presumptive BART limits because, as part of the BART 
Guidelines, they are binding regulatory presumptions that should only 
be deviated from based on a careful consideration of the BART factors 
(70 FR 39171).
    EPA's Proposed Rule, however, does not reflect any such 
consideration. Indeed, EPA's Proposed Rule never even mentions the 
presumptive limits except to note that Arizona considered them. (77 FR 
42847). The nature of and basis for EPA-established presumptive 
NOX BART limits for the relevant units at Apache, Cholla, 
and Coronado show that EPA's determination in its proposed FIP that 
SCR--a much more costly, post-combustion technology--represents BART at 
these facilities is, at least, presumptively incorrect. Because EPA 
failed to consider the presumptive limits in developing its proposed 
FIP's BART limits for NOX, the Proposed Rule is flawed and 
must be withdrawn.
    The commenters also note that the RHR also established presumptive 
BART emission limits for NOX emissions from fossil fuel-
fired units through notice-and-comment rulemaking. The presumptive 
NOX emissions limits for coal-fired EGUs vary according to 
individual source characteristics, including fuel firing configuration 
(tangential/wall-fired, opposed wall-fired, cyclone) and type of fuel 
burned (bituminous, sub-bituminous, lignite, etc.). Commenters also 
argued that, because EPA shifted the baseline for BART, it did not 
include combustion controls, such as LNB, in its analysis, and only 
considered higher cost post-combustion controls (SNCR and SCR).
    Response: We disagree with the commenters' assertions that we 
ignored the presumptive BART NOX limits. Because Apache, 
Cholla and Coronado all have access to and have historically burned 
both bituminous and sub-bituminous coal,\84\ there is no single 
presumptive NOX limit that applies to any of these 
units.\85\ Therefore, rather than rely upon the numerical values of the 
presumptive NOX limits listed in the BART Guidelines, we 
have considered the technological basis for presumptive NOX 
BART limits, such as the use of combustion control technology, boiler 
type, and coal type, as part of the five-factor analysis we performed 
for each facility. For each source, we considered combustion controls 
as a potential option for BART.\86\
---------------------------------------------------------------------------

    \84\ See, e.g., Final Report, Apache Unit 2 BART Analysis, Table 
3-1 (December 2007); Cholla Unit 2 BART Report, page ES-2; SRP 
Comments on Proposed Rule (September 2012), RMB Technical 
Memorandum, page 3.
    \85\ See BART Guidelines, 40 CFR Part 51, Appendix Y, Table 1.
    \86\ At Apache Units 2 and 3, we considered combustion controls 
(LNB plus OFA) as one of the control scenarios. At Cholla and 
Coronado, combustion controls were considered as part of the 
baseline emission rate and were a potential BART option in the event 
that the five-factor analysis indicated that no additional controls 
beyond the baseline were justified.
---------------------------------------------------------------------------

    We also disagree with commenters' assertions that our selection of 
non-presumptive BART technology as BART is flawed or presumptively 
incorrect. In the BART Guidelines EPA explained that:

    For coal-fired EGUs greater than 200 MW located at greater than 
750 MW power plants and operating without post-combustion controls 
(i.e. SCR or SNCR), we have provided presumptive NOX 
limits, differentiated by boiler design and type of coal burned. You 
may determine that an alternative control level is appropriate based 
on a careful consideration of the statutory factors. For coal-fired 
EGUs greater than 200 MW located at power plants 750 MW or less in 
size and operating without post-combustion controls, you should 
likewise presume that these same levels are cost-effective. You 
should require such utility boilers to meet the following 
NOX emission limits, unless you determine that an 
alternative control level is justified based on consideration of the 
statutory factors.\87\
---------------------------------------------------------------------------

    \87\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.E.5.

Therefore, the presumptive emission limits in the BART Guidelines are 
rebuttable, and the five statutory factors enumerated in the BART 
Guidelines provide the mechanism for establishing different 
requirements. Specifically, as explained in the preamble to the BART 
---------------------------------------------------------------------------
Guidelines:

    If, upon examination of an individual EGU, a State determines 
that a different emission limit is appropriate based upon its 
analysis of the five factors, then the State may apply a more or 
less stringent limit.\88\
---------------------------------------------------------------------------

    \88\ 70 FR 39132.

Thus, the establishment of presumptive BART limits, and the 
corresponding technology upon which those limits are based, does not 
preclude states or EPA from setting limits that differ from those 
presumptions. The five-factor analysis we performed for these 
facilities demonstrates that, taking into consideration the expected 
remaining useful life and the existing controls present at the 
facilities, SCR is cost-effective, results in the most visibility 
improvement of all feasible control technologies, and that these 
factors are not outweighed by SCR's potential energy and non-air 
quality environmental impacts. As a result, regardless of the 
appropriateness of SCR

[[Page 72530]]

as a control technology for most units on a national scale, our five-
factor analyses establish that NOX BART limits more 
stringent than the presumptive limits are appropriate for these units.
 3. Costs of Compliance
    Comment: Several commenters stated that EPA inappropriately 
conducted its cost analysis using generalized data and a regional 
model, whereas the CAA requires a BART determination to be based, in 
part, on a site-specific cost evaluation. One commenter (Navajo Nation) 
stated that EPA should justify its use of the IPM and explain why it 
did not use or request line item costs from the facilities to make its 
analysis more site-specific. This commenter also stated that EPA's 
reliance on the IPM is misplaced because the model integrates health-
based regulations and not the RHR.
    Another commenter (SRP) added that the proposed rule and the TSD 
say almost nothing about how IPM was used to calculate costs, instead 
directing the public to an EPA contractor report for more information. 
The commenter asserted that no contractor report in the docket for the 
rulemaking supplies additional detail on precisely how IPM was used. 
The commenter believes that this failing renders EPA's proposed rule 
inconsistent with the CAA's public notice requirements.
    Response: As described in our proposal, the IPM is a multi-regional 
linear programming model of the U.S. electric power sector. IPM relies 
upon a very large number of data inputs and provides forecasts of 
least-cost capacity expansion, electricity dispatch, and emission 
control strategies for meeting energy demand and environmental, 
transmission, dispatch, and reliability constraints. EPA has used IPM 
to evaluate the cost and emissions impacts of proposed policies, such 
as the recent Mercury and Air Toxics Standard (MATS) to limit pollutant 
emissions from the electric power sector.
    We wish to clarify that, for our proposed action on Arizona's 
Regional Haze SIP, we did not actually run IPM. Rather, we used one 
component of IPM, specifically, the component that develops the costs 
of air pollution control technologies. Broadly speaking, IPM relies 
upon numerous components and sub-components to specify constraints and 
variable values that feed into the model algorithms used during an 
actual IPM model run. The air pollution control cost development 
component is just one of these numerous components. We relied upon the 
cost information and equations contained in this component by manually 
placing them into a spreadsheet that calculated the capital and O&M 
costs associated with pollution control options. While we relied upon 
the results of these spreadsheet calculations, we did not then use 
those results to run IPM, as the type of information generated by an 
actual IPM model run (e.g., generation dispatch decisions, capacity 
decisions) is not relevant to our action. We documented our use of the 
equations from IPM's air pollution control technology cost component by 
placing the raw cost calculation spreadsheet in the docket for our 
proposal.\89\ This spreadsheet contained the IPM equations, 
corresponding variable values, selected notes regarding assumptions and 
variable ranges as well as selected tables from IPM Base Case v4.10 
documentation. Since we did not perform an actual IPM model run, the 
spreadsheet and contractor's report in the docket for our proposal 
sufficiently document our use of the cost methodologies from the IPM 
air pollution control cost component.
---------------------------------------------------------------------------

    \89\ Document ID: EPA-R09-OAR-2012-0021-0008, File name: G-15--
MODELING--FILES--EGU--BART--Costs--Apache--Cholla--Coronado--FINAL2.
---------------------------------------------------------------------------

    We disagree with commenters' characterization of the cost 
development methodology contained in IPM as generalized or outdated. As 
noted in the documentation for IPM's cost development methodology for 
SCR, the cost estimate methodology is based upon two databases of 
actual SCR projects.\90\ These databases include 2004 and 2006 industry 
cost estimates prepared for the Midwestern Ozone Group (MOG), and a 
proprietary in-house database maintained by engineering firm Sargent & 
Lundy (S&L). The MOG information was cross-referenced with actual 2009 
projects, and escalated accordingly. S&L then used the information in 
these databases to develop the equations described in the cost 
component taking into account the pre-control NOX emission 
level, degree of reduction, coal type, facility size, and numerous 
other unit-specific factors. While a costly engineering evaluation that 
included site visits would potentially produce a more refined cost 
estimate that could be considered more site-specific than our own, we 
disagree that our approach has produced cost estimates that are either 
``generic'' or ``generalized.''
---------------------------------------------------------------------------

    \90\ http://www.epa.gov/airmarkets/progsregs/epa-ipm/docs/v410/Appendix52A.pdf.
---------------------------------------------------------------------------

    Comment: Several commenters contended that where specific knowledge 
is available, the CCM is oriented to allow and provide for the use of 
such information. The commenters also note that the RHR explicitly 
provides that the cost analysis should take into account any site-
specific information that affect the costs of a particular BART 
technology option, and the Corn Growers court explained that BART 
determinations must be made on a source-specific basis.
    Response: While we agree that BART determinations must be made on a 
source-specific basis, we do not agree that site-specific information 
is required for all aspects of a BART analysis. Nonetheless, in order 
to address commenters' concerns that our proposal was based on cost 
information that was insufficiently site-specific and that the costs of 
the SCR with LNB and OFA control option, in particular, are not 
representative of actual installation costs at these facilities, we 
have performed a supplemental cost analysis. The supplemental cost 
analyses for each facility are described in Section IV.D of this 
document, and incorporate much of the cost information provided by the 
facilities in their comments. In performing this supplemental cost 
analysis, we have adopted a ``hybrid'' approach that relies on cost 
estimates provided by the facilities for certain line items, but still 
retains the use of the CCM methodology as described in the following 
response.
    Comment: Several commenters stated that EPA's cost estimating 
techniques are flawed and its reliance on the outdated EPA CCM led to 
underestimates of costs. Several of these commenters noted that EPA 
claimed that owner's costs, surcharges and Allowance for Funds Used 
During Construction (AFUDC) are not allowed by EPA's CCM and refute 
that these costs are not allowed by the Manual. The commenters state 
that while the Manual does not have specific line items for owner's 
costs and surcharges, it discusses some of the items that roll up into 
these categories. APS, for example, states that:

    Owner's costs are home office and plant support costs that are 
charged directly to specific projects. These would include costs 
related to project management, engineering, construction support, 
start-up, training, etc. Surcharges are home office costs associated 
with a project that may not be charged directly to that project. 
These costs would be related to overhead loads, procurement, 
accounting, finance, etc.\91\
---------------------------------------------------------------------------

    \91\ APS comments, page 12.

APS also notes that there is a line item for AFUDC in the Manual but 
provides that it is assumed to be zero percent, but that in its 
experience AFUDC is a real cost and is never zero percent. In

[[Page 72531]]

addition, the commenters state neither the CAA nor the BART Guidelines 
---------------------------------------------------------------------------
require the Manual to be used to determine the costs of compliance.

    Response: With regard to owner's costs and surcharges, we agree 
with commenters' assertions that the CCM does discuss some of the items 
that roll up into these line items as they have described in comments. 
For the control option of SCR with LNB and OFA, for example, the CCM 
does provide for ``Engineering and Home Office Fees'' \92\ that could 
potentially include some of the home office and plant support costs 
described in comments. These types of costs are often included in 
estimates under some type of engineering/procurement/project services 
line item. In the case of the cost estimates provided by the utilities 
(both those submitted to ADEQ as part of the original BART analysis, 
and those submitted to us in comments on our proposal), we note that 
their cost estimates are not organized to list line item(s) that 
clearly correspond to ``Engineering and Home Office Fees,'' and do not 
provide information indicating where these costs may be included. As a 
result, while owner's costs and surcharge are not line items included 
in the CCM, in this instance, as a conservative assumption, we have 
included the portion of owner's costs/surcharge in the total cost, up 
to the value specified for ``Engineering and Home Office Fees'' 
indicated by the CCM.
---------------------------------------------------------------------------

    \92\ As described in Table 2-5 of the CCM, Engineering and Home 
Office Fees represent 10 percent of purchased equipment costs.
---------------------------------------------------------------------------

    We disagree with commenters' assertions that AFUDC is a cost that 
should be incorporated into our cost analysis, as it is inconsistent 
with CCM methodology. The utility industry uses a method known as 
``levelized costing'' to conduct its internal comparisons, which is 
different from the methods specified by the CCM. Utilities use 
``levelized costing'' to allow them to recover project costs over a 
period of several years and, as a result, realize a reasonable return 
on their investment. The CCM uses an approach sometimes referred to as 
overnight costing, which treats the costs of a project as if the 
project were completed ``overnight'', with no construction period and 
no interest accrual. Since assets under construction do not provide 
service to current customers, utilities cannot charge the interest and 
allowed return on equity associated with these assets to customers 
while under construction. Under the ``levelized costing'' methodology, 
AFUDC capitalizes the interest and return on equity that would accrue 
over the construction period and adds them to the rate base when 
construction is completed and the assets are used. Although it is 
included in capital costs, AFUDC primarily represents a tool for 
utilities to capture their cost of borrowing and return on equity 
during construction periods. AFUDC is not allowed as a capitalized cost 
associated with a pollution control device under CCM's overnight 
costing methodology, and is specifically disallowed for SCRs (i.e., set 
to zero) in the CCM.\93\ Therefore, in reviewing other BART 
determinations, EPA has consistently excluded AFUDC.\94\
---------------------------------------------------------------------------

    \93\ CCM (Tables 1.4 and 2.5 show AFUDC value as zero).
    \94\ See, e.g., 77 FR 20894, 20916-17 (Apr. 6, 2012) (explaining 
in support of the North Dakota Regional Haze FIP, ``we maintain that 
following the overnight method ensures equitable BART determinations 
* * *.''); 76 FR 52388, 52399-400 (August 22, 2011) (explaining in 
the New Mexico Regional Haze FIP that the Manual does not allow 
AFUDC).
---------------------------------------------------------------------------

    Comment: The ACCCE notes that the Manual specifically states that 
it does not directly address the controls needed to control air 
pollution at EGUs, citing the following quote from the Control Cost 
Manual:

    * * * this Manual does not directly address the controls needed 
to control air pollution at electrical generating units (EGUs) 
because of the differences in accounting for utility sources. 
Electrical utilities generally employ the EPRI Technical Assistance 
Guidance (TAG) as the basis for their cost estimation processes.

    Response: We disagree with the commenter's assertion that the CCM 
does not address control costs needed to control air pollution at EGUs. 
The quote cited by the commenter contains a footnote that reads as 
follows:

    This does not mean that this Manual is an inappropriate resource 
for utilities. In fact, many power plant permit applications use the 
Manual to develop their costs. However, comparisons between 
utilities and across the industry generally employ a process called 
``levelized costing'' that is different from the methodology used 
here.\95\
---------------------------------------------------------------------------

    \95\ EPA Air Pollution Cost Control Manual, Sixth Edition page 
1-3.

The quote is merely a factual observation that electric utilities, in 
their planning and cost estimating for their own purposes, use a 
different accounting method than required by the CCM. The footnote 
clarifies that the CCM is appropriate for utilities for regulatory 
purposes.
4. Energy and Non-Air Environmental Impacts
    Comment: One commenter (ADEQ) stated that EPA should consider the 
costs associated with fly ash ammonia removal in selecting BART. 
Further, additional problems during disposal of fly ash may cause 
environmental damage and should not be discounted.
    Response: EPA disagrees with this comment. First, we note that 
ammonia adsorption in the fly ash is expected to be minimal from SCR 
because excess ammonia would likely react with sulfuric acid to form 
particulate ammonium sulfate or ammonium bisulfate, which would not 
pose the same odor problem in fly ash reuse as adsorbed ammonia. 
Second, the facilities' own BART analyses did not include costs of fly 
ash disposal or ammonia removal in the cost estimates for SCR, which 
indicates that they do not consider these potential costs to be 
significant. Finally, we note that the Arizona Department of 
Transportation has designated fly ash from each of the three sources as 
approved material.\96\ As explained in our proposed rulemaking and the 
accompanying TSD, the presence of ammonia does not impact the integrity 
of the use of fly ash in concrete.\97\ Therefore, we have no 
information that suggests that installation of SCR would result in a 
change to the facilities' current fly ash disposal and re-use 
practices.
---------------------------------------------------------------------------

    \96\ Approved Materials Source List, Fly Ash, Natural Pozzolan, 
and Lime, Revised July 10, 2012, available at http://www.azdot.gov/Highways/Materials/.
    \97\ See 77 FR 42853-4284, TSD at 38.
---------------------------------------------------------------------------

    Comment: One commenter (SRP) stated that EPA downplayed the energy 
and non-air quality factor its revised BART determination in the 
proposed FIP, presenting the narrow conclusion that potential energy 
and non[hyphen]air quality impacts do not warrant elimination of any of 
the otherwise feasible control options for NOX at any of the 
sources. The commenter asserted that this narrow consideration of this 
factor is not tenable because this factor must be weighed and 
considered in conjunction with the other BART factors in the overall 
assessment of what control option constitutes BART for a particular 
source. The commenter believes that EPA's approach minimizes the role 
of this factor in a BART analysis, which is beyond EPA's authority.\98\
---------------------------------------------------------------------------

    \98\ Citing Corn Growers, 291 F.3d at 6-7 (finding that EPA's 
original 1999 regional haze rules had improperly divorced 
consideration of the BART visibility benefits factor from the other 
BART factors).
---------------------------------------------------------------------------

    Response: EPA does not agree with this comment. The RHR and the 
BART Guidelines allow the reviewing authority (State, Tribe, or EPA) 
the discretion to determine how to weigh and in what order to evaluate 
the

[[Page 72532]]

statutory factors (cost of compliance, the energy and non-air quality 
environmental impacts of compliance, any existing pollution control 
technology in use at the source, the remaining useful life of the 
source, and the degree of improvement in visibility which may 
reasonably be anticipated to result from the use of such technology), 
as long as the reviewing authority justifies its selection of the 
``best'' level of control and explains the CAA factors that led the 
reviewing authority to choose that option over other control 
levels.\99\ In this case, having disapproved the state's BART 
determinations for NOX at several units, ``all of the rights 
and duties that would otherwise fall to the State accrue instead to 
EPA.'' \100\ This includes a significant degree of discretion in 
deciding how to weigh the five factors, so long as that weighing is 
accompanied by reasoned explanation for adopting the technology 
selected as BART, based on the five factors, and in accordance with the 
BART Guidelines. EPA has provided a detailed explanation of our BART 
evaluation process and five-factor analyses in our proposal, TSD and 
elsewhere in this document. We have weighed the potential energy and 
non[hyphen]air environmental quality impacts of the various control 
options along with the other statutory factors in our BART analyses and 
have concluded that impacts do not warrant elimination of any of the 
otherwise feasible control options for NOX at any of the 
sources.\101\
---------------------------------------------------------------------------

    \99\ See BART Guidelines, 40 CFR Part 51, appendix Y, section 
IV.E.2.
    \100\ Central Arizona Water Conservation Dist. v. EPA, 990 F.2d 
1531, 1541 (9th Cir. 1993).
    \101\ See 77 FR 42853-4284, TSD at 38.
---------------------------------------------------------------------------

5. Remaining Useful Life of the Source
    Comment: One commenter (APS) did not dispute EPA's assumption of a 
twenty-year useful life of the emission control equipment in its 
annualized cost calculations.
    Response: EPA agrees with the commenter that this is an appropriate 
assumption for these sources.
6. Degree of Improvement in Visibility
    Comment: One commenter (NPS) agreed with EPA that a more complete 
assessment of visibility improvement for candidate BART controls would 
include consideration of the number of areas affected and the degree of 
improvement expected at all Class I areas rather than focusing on a 
single area. The commenter commended EPA for its reliance on deciview 
improvement and the number of areas showing improvement, plus its 
consideration of cumulative improvement, which provides a supplemental 
measure that combines information on the number of areas and on 
individual area improvement.
    In contrast, several commenters (ADEQ, AEPCO, APS and AUG) 
disagreed that EPA's new visibility metric, ``cumulative visibility 
improvement,'' is an appropriate metric, asserting that this metric 
incorrectly inflates the estimated visibility improvements of various 
control options and should not be used. The commenters further stated 
that this metric does not appear anywhere in the CAA, RHR or BART 
Guidelines, and that these rules and guidelines specifically give 
discretion to states to determine how to take into account visibility 
impacts in a BART evaluation. In addition, the RHR (at 70 CFR 39170) 
supports identifying the single Class I area that would have the 
greatest visibility effects from emission controls and does not support 
adding improvements from multiple Class I areas in determining 
visibility effects. The commenters affirmed that EPA should use a 
change in deciview at the Class I area with the highest impact as its 
visibility metric, consistent with EPA's RHR and the method used by 
other EPA regions and states.
    The commenters further stated that to be relevant to the 
environmental effect that the regional haze program addresses, the 
metric by which visibility improvement is determined for purposes of 
assessing BART for a particular facility must reflect actual human 
perception of visibility. The commenters added that the cumulative 
impact approach used by EPA has no tie to human perception and can only 
distort a BART analysis. The commenters believe that this approach 
arbitrarily magnifies the benefit that might be associated with 
emission limitations at a single source.
    Response: EPA agrees with NPS on the need to consider visibility 
improvements at all the nearby Class I areas as part of a comprehensive 
assessment of the degree of visibility improvement due to BART 
controls. EPA disagrees with some other commenters that cumulative 
improvement over multiple areas is an inappropriate metric, or that 
examining a single Class I area is sufficient. The cumulative 
improvement metric (i.e., the simple sum of impacts or improvements 
over all the Class I areas) is not intended to correspond to a single 
human's perception at a given time and place. The approach is simply 
one way of assessing improvements at multiple areas, for consideration 
along with other visibility metrics. Another approach would be to 
simply list visibility improvements at the various areas, and 
qualitatively weigh the number of areas and the magnitudes of the 
improvements. The cumulative sum is simply an easily understood and 
objective way of weighing cumulative visibility improvement, as part of 
the overall BART decision.
    Comment: One commenter performed NO2 modeling by scaling 
tropospheric column NO2 derived from satellite measurements, 
as portrayed in imagery from the Institute of Environmental Physics, 
University of Bremen, Germany. The commenter states that SCR would 
reduce NO2 closer to background levels.
    Response: While the facilities considered for BART control are not 
the only NOX sources in the area, the commenter's scaling of 
the concentrations in the satellite images according to the reductions 
expected from SCR can give a rough idea of its NO2 benefit. 
However, to assess visibility impacts, the model used must account for 
the formation of visibility-impairing ammonium nitrate particles. Under 
the BART Guidelines, CALPUFF is the recommended model that incorporates 
this nitrate chemistry. Alternative models could potentially be used if 
they had the ability to handle this and other chemical transformations 
and had undergone a rigorous performance evaluation.
    Comment: One commenter (NPS) commended EPA for the thoroughness of 
its visibility modeling analyses and the methodologies used. The 
commenter noted that EPA used CALPUFF methods 6 and 8 and modeled 
against annual average and 20 percent best natural background 
conditions. The commenter also pointed out that EPA modeled all 
pollutants while varying NOX emissions to evaluate the 
effects of changing this one pollutant.
    Response: EPA acknowledges the comment. It was our intention to 
estimate visibility impacts accurately and transparently so that one 
could more easily compare results to earlier applications of CALPUFF 
and clearly understand the effect of old versus revised IMROVE 
equations (methods 6 and 8) as well as alternative natural background 
conditions. We modeled all pollutants together in order to account for 
chemical interactions among the various pollutants and also the 
nonlinear dependence of deciviews upon extinction.
    Comment: One commenter (APS) stated that EPA's proposal noted that 
it is appropriate to use Method 6a, 6b, 8a or 8b in CALPOST within the 
CALPUFF model, yet EPA inappropriately rejected

[[Page 72533]]

ADEQ's use of Method 6a in its own analysis and instead used Method 8b, 
which yielded higher predicted visibility improvements in Class I 
areas.
    Response: EPA did not reject ADEQ's use of visibility method 6a, 
which remains a viable method for past visibility modeling work under 
an agreed upon protocol. Method 6a comprises CALPOST Method 6, the old 
IMPROVE equation for translating pollutant concentration into 
visibility impacts, and annual average (the ``a'') natural background 
concentrations. However, for new visibility modeling, such as EPA 
performed for the FIP, method 8b is preferable. Method 8b comprises 
CALPOST Method 8, the revised IMPROVE equation, and best 20 percent of 
days (the ``b'') natural backgrounds. The revised IMPROVE equation has 
superior performance for assessing visibility, and is recommended by 
the Federal Land Managers for regional haze assessments performed for 
New Source Review permitting.\102\ EPA believes that using the best 20 
percent of days as a basis for background concentrations is desirable 
since visibility impacts due to emissions from facilities are most 
noticeable on the best days, that is, most visible to visitors of Class 
I areas. EPA assessed the results of both methods (and also the ``6b'' 
and ``8a'' combinations), but primarily relied on 8b as the most 
appropriate method in the BART context.
---------------------------------------------------------------------------

    \102\ Federal Land Managers' Air Quality Related Values Work 
Group (FLAG) Phase I Report--Revised (2010), U.S. Forest Service, 
National Park Service, U.S. Fish and Wildlife Service, October 2010. 
http://www.nature.nps.gov/air/Pubs/pdf/flag/FLAG_2010.pdf.
---------------------------------------------------------------------------

    Comment: One commenter (APS) objected to EPA shifting the CAA's 
mandate to compare costs and benefits under the BART program to an 
assessment of ``cost-effectiveness'' ($/ton) without specifying the 
threshold level of what is cost-effective. APS also noted that in the 
absence of a specific threshold for cost-effectiveness, the FLMs have 
referred to a benchmark of $20 million per deciview as the upper limit. 
The commenter also presented data showing the incremental costs of 
going from LNB/OFA to SNCR or SCR to be over $20 million per deciview 
for Cholla.
    Response: The commenter is correct that the BART Guidelines list 
the $/deciview ratio as an additional cost-effectiveness metric that 
can be employed along with $/ton for use in a BART evaluation, and we 
have included this information in our proposal. While the FLMs have 
indicated that they consider $20 million/dv to be a benchmark for 
average cost-effectiveness, we note that the BART Guidelines do not 
require the development of a specific threshold. The BART Guidelines, 
however, require that cost-effectiveness be calculated in terms of 
annualized dollars per ton of pollutant removed, or $/ton.\103\ We 
considered cost of controls by discussing the total capital costs, 
annual costs, $/ton, and incremental $/ton, and considered the degree 
of visibility improvement by discussing the individual and cumulative 
deciview improvement resulting from the various control technology 
options, as well as the percent change in improvement. Our 
consideration of other metrics in addition to $/dv in no way relegates 
visibility improvement to a secondary role. Finally, we note that the 
FLMs' recommended ``benchmarks'' for dollars per deciview are for 
average dollars per deciview not incremental dollars per deciview.\104\ 
Neither the BART Guidelines nor the FLMs recommend consideration of 
incremental dollars per deciview.
---------------------------------------------------------------------------

    \103\ BART Guidelines section IV.D.4.c.
    \104\ See, e.g. National Park Service Comments on Best Available 
Retrofit Technology for Apache, Cholla, and Coronado Power Plants in 
Arizona (September 17, 2012) at 6.
---------------------------------------------------------------------------

    Comment: One commenter (NPS) cautioned against any implication in 
EPA's analyses that visibility improvement must exceed 0.5 dv to be 
significant. The commenter believes that such an approach would be 
contrary to the BART Guidelines.
    Response: EPA agrees that the 0.5 dv threshold for ``contribute to 
visibility impairment'' is only for the initial Subject-to-BART 
screening test and it is a maximum even for that purpose, according to 
the BART Guidelines.\105\ Smaller improvements from controls should be 
considered in BART determinations, since they can be beneficial in 
considering effects from controls on multiple sources.\106\ We have 
used the 0.5 dv level simply as one point of comparison, a 
``benchmark'' or ``yardstick,'' to gauge the magnitude of impacts under 
various control scenarios.
---------------------------------------------------------------------------

    \105\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
III.A.1 (``As a general matter, any threshold that you use for 
determining whether a source ``contributes'' to visibility 
impairment should not be higher than 0.5 deciviews.'')
    \106\ See, e.g. 70 FR 39129 (``Even though the visibility 
improvement from an individual source may not be perceptible, it 
should still be considered in setting BART because the contribution 
to haze may be significant relative to other source contributions in 
the Class I area.'')
---------------------------------------------------------------------------

    Comment: Several commenters (APS, AUG, Navajo Nation, PacifiCorp 
and SRP) asserted that EPA's proposed NOX BART determination 
rests on a flawed assessment of visibility impacts. The commenters made 
the following arguments to support their contention that EPA's modeling 
overestimates the visibility benefits associated with BART control 
options. First, EPA used an outdated version of the CALPUFF model 
(version 5.8) that over-predicts visibility benefits. Based on 
citations provided by the commenters, CALPUFF version 6.42 has been 
shown to provide better agreement with observed levels of nitrates. The 
commenters provided modeling results using CALPUFF version 6.42 for 
EPA's consideration. Second, EPA's outdated use of constant ammonia 
background concentration of 1.0 ppb over-predicts visibility benefits 
and fails to account for known monthly or seasonal variations. EPA 
inappropriately rejected ADEQ's use of variable background 
concentrations, which was well within the state's discretion. Several 
of these commenters also noted that a case study \107\ by Terhorst and 
Berkman based on the 2005 closure of the Mohave Generating Station 
found virtually no evidence that closure resulted in improved 
visibility at the Grand Canyon. In addition, SRP stated that EPA must 
consider visibility benefits from NOX controls within the 
context of nitrate contributions to regional haze. Studies of 
visibility impairment on the Colorado plateau show that nitrate 
aerosols contribute only two to five percent to haze.
---------------------------------------------------------------------------

    \107\ Terhorst, Jonathan and Berkman, Mark, ``Effect of Coal-
fired Power Generation on Visibility in a Nearby National Park'', 
Atmospheric Environment 44, 2524, 2530 (Apr. 2010).
---------------------------------------------------------------------------

    Response: EPA disagrees with the commenters that any new CALPUFF 
version should be used for the BART determination. EPA relied on 
version 5.8 of CALPUFF because it is EPA-approved version in accordance 
with the Guideline on Air Quality Models (``GAQM'', 40 CFR 51, Appendix 
W, section 6.2.1.e). EPA updated the specific version to be used for 
regulatory purposes on June 29, 2007, including minor revisions as of 
that date. The approved CALPUFF modeling system includes CALPUFF 
version 5.8, level 070623, and CALMET version 5.8 level 070623. CALPUFF 
version 5.8 has been thoroughly tested and evaluated, and has been 
shown to perform consistently with the initial 2003 version in the 
analytical situations for which CALPUFF has been approved. Any other 
version, and especially one with such fundamental differences in its 
handling of chemistry, would be considered an ``alternative model'', 
subject to the provisions of GAQM section 3.2.2(b), requiring full 
model

[[Page 72534]]

documentation, peer-review, and performance evaluation. No such 
information for the later CALPUFF versions that meet the requirements 
of section 3.2.2(b) has been submitted to or approved by EPA. 
Experience has shown that when the full evaluation procedure is not 
followed, errors that are not immediately apparent can be introduced 
along with new model features. For example, changes introduced to 
CALMET to improve simulation of over-water convective mixing heights 
caused their periodic collapse to zero, even over land, so that CALPUFF 
concentration estimates were no longer reliable.\108\
---------------------------------------------------------------------------

    \108\ ``CALPUFF Regulatory Update'', Roger W. Brode, 
Presentation at Regional/State/Local Modelers Workshop, June 10-12, 
2008; http://www.cleanairinfo.com/regionalstatelocalmodelingworkshop/archive/2008/agenda.htm.
---------------------------------------------------------------------------

    The change from CALPUFF version 5.8 to CALPUFF 6.4 is not a simple 
model update to address minor issues, but a significant change in the 
model science that requires its own rulemaking with public notice and 
comment before it can be relied on for regulatory purposes.
    Furthermore, it should be noted that the US Forest Service and EPA 
review of CALPUFF version 6.4 results for a limited set of BART 
applications showed that differences in its results from those of 
version 5.8 are driven by two input assumptions not associated with the 
chemistry changes in 6.4. Use of the so-called ``full'' ammonia 
limiting method and finer horizontal grid resolution are the primary 
drivers in the predicted differences in modeled visibility impacts 
between the model versions. These input assumptions have been 
previously reviewed by EPA and the FLMs and have been rejected based on 
lack of documentation, inadequate peer review, and lack of technical 
justification and validation.
    Introducing a new regulatory model is a long process. EPA intends 
to conduct a comprehensive evaluation of the latest CALPUFF version 
along with other ``chemistry'' air quality models, including a full 
statistical performance evaluation, verification of its scientific 
basis, and determination of whether the underlying science has been 
incorporated into the modeling system correctly. To accommodate such a 
model, there would have to be an evaluation of the effect on the 
regulatory framework for its use, including in New Source Review 
permitting, and also changes to the Guideline on Air Quality Models and 
other modeling guidance, in consultation with the FLMs. CALPUFF version 
5.8 has already gone through this comprehensive evaluation process and 
remains EPA-approved version, and is thus the appropriate version for 
EPA's BART determinations of these facilities.
    The ammonia issue has already been addressed above. EPA believes 
that there is no compelling alternative to the use of the default 1 ppb 
background concentration.
    The Terhorst & Berkman study cited by the commenter is worthy of 
consideration as the Regional Haze program evolves, but one study does 
not invalidate CALPUFF, which has had multiple performance evaluations 
and has gone through public comment and rulemaking. It also does not 
remove the legal requirement to perform BART determinations for 
eligible facilities.
    While nitrate appears to be a smaller contributor to visibility 
impairment than some other compounds, section 169A of the Clean Air Act 
requires BART determinations on BART-eligible EGUs regardless of 
ambient visibility conditions. Application of BART is one means by 
which we can ensure the continuation of downward emission and 
visibility impairment trends. Modeling shows maximum visibility impacts 
of 1.2 to 4.5 deciviews depending on the facility, which are not 
negligible contributions to visibility impairment. Even if an 
individual pollutant or source category appears small to some 
commenters, the many segments of the emissions inventory taken together 
do cause visibility impairment, and each must be addressed in order to 
make progress towards the national goal of remedying visibility 
impairment from man-made pollution. EPA identifies stationary sources 
as an important category to evaluate under the Regional Haze program, 
including a BART analysis.
    Comment: Several commenters argued that the proposed FIP is 
inconsistent with the goal of the RHR, which is to make progress toward 
natural visibility conditions by the year 2064. Another commenter added 
that Arizona's energy providers have already invested time and money 
(hundreds of millions of dollars) in order to reach the long-term goal 
of achieving natural background visibility by 2064, and that the 
accelerated timeline proposed by the rule would result in astronomical 
costs. Another commenter stated that EPA is front-loading as many 
emission reductions as possible in the first five years of this 
program, while ignoring other causes of visibility impairment, such as 
fires, in its FIP. Other commenters suggested that Arizona's haze is 
produced by a number of environmental factors, like pollution from 
wildfires, garbage burning along the Mexico/US border, and dust storms.
    Response: We do not agree that we are front-loading emission 
reductions or that we have lost sight of the ``end goal.'' While the 
goal of the regional haze program is to achieve natural visibility 
conditions in all mandatory Class I Federal areas by 2064, the 
requirement for states to implement BART applies only during the first 
planning period ending in 2018.\109\ Where a State has not met the RHR 
requirements related to BART, EPA is obligated to disapprove that 
portion of the State's submittal. And, as explained elsewhere in this 
document, because the FIP clock has already expired for the Arizona 
Regional Haze plan, we are required to promulgate a FIP for any 
disapproved portion of the SIP. Our action fulfills part of this duty.
---------------------------------------------------------------------------

    \109\ See 40 CFR 51.308(f) (future Regional Haze plans must 
address reasonable progress and long-term strategy, but not BART).
---------------------------------------------------------------------------

    We agree that there are various other factors that contribute to 
haze at Arizona's Class I areas. However, these other factors are not 
relevant to the BART requirements, which govern today's action. Under 
the RHR, causes of haze other than BART sources are addressed under 
separate requirements for reasonable progress and a long-term strategy. 
We will address the remaining requirements of the RHR for the first 
implementation period in Arizona, including requirements for reasonable 
progress toward the 2064 goal, in a separate rulemaking action.

D. Source-Specific Comments on EPA's BART Analyses and Determinations

1. EPA's BART Analysis and Determination for NOX at Apache 
Units 2 and 3
a. Control Efficiencies
    Comment: Various commenters (ADEQ, AEPCO and AUG) asserted that 
EPA's proposed BART determination for Apache Units 2 and 3 was premised 
on the assumption that SCR can achieve an emission limit of 0.050 lb/
MMBtu continuously on a 30[hyphen]day rolling average, including 
periods of startup, shutdown and equipment malfunctions, but that this 
limit has not been shown to be feasible. They argued that EPA had 
failed to support either its proposed BART determination or its 
reliance on this limit in its BART analysis. In addition, AEPCO and AUG 
stated that EPA inappropriately relied on vendor information to support 
an emission rate of 0.050 lb/MMBtu using SCR. AEPCO also noted that it 
considered this support anecdotal and stated that it

[[Page 72535]]

cannot form the basis for a BART determination, as BACT rules expressly 
provide that EPA does ``not consider a vendor guarantee alone to be 
sufficient justification that a control option will work.'' AEPCO 
requested that if EPA retains the SCR limits, that they be set at 0.07 
lb/MMBtu due to the infeasibility of complying with a lower limit at 
the Apache station. Also, due to the load-following and cycling nature 
of the units and the need to accommodate startups and shutdowns, AEPCO 
requested that any lower limits be set as an annual average limit.
    Response: We partially agree with this comment. In our proposal, 
our analysis was based on an SCR annual average design value of 0.050 
lb/MMBtu, which was subsequently proposed as a rolling 30-day average 
emission limit. We disagree that our use of 0.050 lb/MMBtu as an annual 
average design value is merely anecdotally supported or based on vendor 
literature/guarantees alone. As discussed in our proposal, the ability 
of SCR to achieve control efficiencies in the range of 80 to 90 percent 
is well established. Although the information included in our proposal 
did include vendor estimates, it also included summaries of SCR control 
efficiencies that were achieved in practice. We have further 
supplemented the record to include more recent examples illustrating 
that SCR, as a technology, is capable of achieving control efficiencies 
in the range of 80 to 90 percent. For the Apache units, an annual 
average emission rate of 0.050 lb/MMBtu represents 87 to 89 percent 
control. While these values represent the upper range of SCR control 
and are more stringent than the control efficiencies used in the BART 
analyses prepared by AEPCO,\110\ we reaffirm that these values are 
appropriate, given that they are still within the range of what is 
achievable with SCR and that the Apache units are among the highest 
baseline NOX emission rate units considered in our proposal. 
We agree with the commenter that, when establishing a 30-day rolling 
average BART emission limit that would apply at all times, it is 
appropriate to accommodate emissions associated with startup and 
shutdown events in developing the emission limit. SRP raised similar 
concerns in comments on Coronado 1 and 2. As discussed in more detail 
in our responses on Coronado, SRP submitted information suggesting that 
the Coronado units cannot achieve an SCR emission rate of 0.050 lb/
MMBtu on a rolling 30-day average and could only achieve in the range 
of 0.053 to 0.072 lb/MMBtu.\111\ We have reviewed the analyses provided 
by SRP and note that while the results of SRP's analysis indicate that 
Coronado could meet a 0.050 lb/MMBtu limit on an annual average 
basis,\112\ we agree that the Coronado units cannot achieve an SCR 
emission rate of 0.050 lb/MMBtu on rolling 30-day average. As a result, 
we conclude that 0.050 lb/MMBtu is appropriate as annual average design 
value, but not as 30-day rolling average emission limit at the Coronado 
units. While we acknowledge that Apache 2 and 3 are not identical to 
the Coronado units, we do note the following similarities:
---------------------------------------------------------------------------

    \110\ See Docket Items B-03 and B-04, Appendix A. AEPCO's 
calculations are based on 83-85 percent SCR control efficiency, and 
24-hour average emission rates of 0.07 lb/MMBtu.
    \111\ As discussed in further detail in the responses on 
Coronado, this range of values corresponds to an SCR unit designed 
to operate during all periods of normal operation and loading 
conditions.
    \112\ As discussed in further detail in the responses on 
Coronado, this is specifically in regards to Coronado Unit 1.
---------------------------------------------------------------------------

     Both the Apache and Coronado units are of the same boiler 
type (Riley turbo).
     Both the Apache and Coronado units were constructed and 
placed into operation at approximately the same time. Construction 
commenced on the Apache units in 1976, and they were placed into 
operation in 1979. The Coronado units were placed into operation in 
1979 and 1980.
     Both the Apache and Coronado units have access to, and 
could potentially use, a bituminous and sub-bituminous coal blend.\113\
---------------------------------------------------------------------------

    \113\ The Apache units have access to a number of bituminous and 
sub-bituminous coal blends. See, e.g., Final Report, Apache Unit 2 
BART Analysis, Table 3-1 (December 2007). While the Coronado units 
currently burn 100 percent sub-bituminous Powder River Basin coal, 
they have historically burned a mixture of PRB with bituminous coal. 
See SRP Comments on Proposed Rule (September 2012), RMB Technical 
Memorandum, page 3.
---------------------------------------------------------------------------

     Although the historical operating profiles of the Apache 
and Coronado units are not identical, both the Apache and Coronado 
units are cycling units that exhibit a greater number of startup and 
shutdown events than baseload units.
    Based on these similarities, we similarly conclude that the Apache 
units cannot achieve an SCR emission rate of 0.050 lb/MMBtu on a 
rolling 30-day average, but that use of 0.050 lb/MMBtu as an annual 
average design value is appropriate. We agree that when establishing a 
rolling 30-day BART emission limit that is based upon an annual average 
design value, it is appropriate to provide a compliance margin for 
periods of startup and shutdown. In addition to considering the boiler 
type, age of the units, and coal type to which Apache has access, we 
also note that AEPCO meets the definition of ``small entity'' as 
established for electric utility companies by the U.S. Small Business 
Administration.\114\ We considered AEPCO's small entity status \115\ 
and how to provide AEPCO with operational flexibility consistent with 
application of the five-factor BART analysis. Based on these 
considerations, we have decided to raise the rolling 30-day average 
emission limit from the proposed level of 0.050 lb/MMBtu to 0.070 lb/
MMBtu. A rolling 30-day average of 0.070 lb/MMBtu represents an upward 
revision of 40 percent from an annual average design value of 0.050 lb/
MMBtu and corresponds to the upper end of the range of lb/MMBtu values 
considered achievable by SRP's analysis. We consider this magnitude of 
upward revision appropriate to accommodate emissions from startup and 
shutdown events, as well to provide AEPCO a sufficient measure of 
operational flexibility as a small entity. In addition, in response to 
comments requesting that emission limits be established across 
units,\116\ consistent with the BART Guidelines,\117\ we have decided 
to set the emission limit as a ``bubble'' limit across Apache Units 2 
and 3. We are therefore finalizing a 30-day rolling average BART 
emission limit of 0.070 lb/MMBtu for Apache Units 2 and 3 as a 
``bubble'' across these two units.
---------------------------------------------------------------------------

    \114\ As noted in our NPRM (77 FR 42867).
    \115\ See EPA's Action Development Process, Final Guidance for 
EPA Rulewriters: Regulatory Flexibility Act as amended by the Small 
Business Regulatory Enforcement Fairness Act, November 2006, at 3. 
This EPA guidance document states that prior to the enactment of the 
Small Business Regulatory Enforcement Fairness Act, EPA exceeded the 
requirements of the Regulatory Flexibility Act (RFA) by preparing a 
regulatory flexibility analysis for every rule that would have any 
impact on any number of small entities. In view of the changes made 
by SBREFA, however, EPA decided to implement the RFA as written--a 
regulatory flexibility analysis as specified by the RFA is not 
required simply because the rule has some impact on some number of 
small entities: ``Instead, such analysis will be required only in 
cases where we will not certify that the rule will not have 
significant economic impact on a substantial number of small 
entities'', but ``It remains EPA policy that program offices should 
assess the direct adverse impact of every rule on small entities and 
minimize any adverse impact to the extent feasible, regardless of 
the magnitude of the impact or the number of small entities 
affected.''
    \116\ Although AEPCO did not specifically request this, this 
comment was made in comments submitted by Arizona Utility Group on 
behalf of all of the utilities. As a result, we are also 
establishing bubble limits for the Apache units.
    \117\ BART Guidelines, 40 CFR Part 51, Appendix Y, section V 
(``You should consider allowing sources to ``average'' emissions 
across any set of BART-eligible emission units within a fenceline * 
* *).
---------------------------------------------------------------------------

    Comment: One commenter (AEPCO) requested that if EPA establishes an

[[Page 72536]]

SNCR limit, that the limits for Apache Units 2 and 3 be set at 0.23 lb/
MMBtu. The commenter notes that while there are some differences in 
past utilization, the units are functionally identical and that, based 
on the best information available, a limit of 0.23 lb/MMBtu is likely 
the best consistently achievable limit given the load-following, unit-
cycling and startup and shutdown issues that must be addressed as part 
of unit operation.
    Response: Although AEPCO stated in comments that ``based on the 
best information available, a limit of 0.23 lb/MMBtu is likely the best 
achievable limit'' and cited unit cycling and startup/shutdown issues, 
AEPCO did not provide any information in its comments documenting how 
or to what extent these issues justify a 0.23 lb/MMBtu emission limit 
(rolling 30-day average). We note that AEPCO's original BART analysis 
also identified an SNCR emission estimate of 0.23 lb/MMBtu, but did not 
discuss the extent to which startup, shutdown, and malfunction events 
are accounted for in this emission rate.
    We note, however, that SRP also provided information in its 
comments regarding SNCR performance at Coronado Unit 1. Again, because 
of the similarities between the Apache units and the Coronado units, we 
consider it useful to examine information provided for the Coronado 
units in evaluating SNCR performance and an appropriate SNCR emission 
limit for the Apache units. As noted in our responses to comments on 
Coronado, SRP submitted a conceptual design estimate for SNCR for 
Coronado 1 that included a vendor estimate of 25 percent control 
efficiency from LNB emission rates. As noted in our responses for 
Coronado, while this is less stringent than the 30 percent SNCR control 
efficiency used by our contractor, we consider it a reasonable 
estimate. Based upon 25 percent control efficiency, annual average 
emission rates for the SNCR with LNB and OFA option are presented in 
Table 2.

                                  Table 2--Apache: SNCR Emission Rate Estimate
                                                [Annual average]
----------------------------------------------------------------------------------------------------------------
                                                      Control                                     Average across
               Control technology                   efficiency    Apache 2  (lb/  Apache 3  (lb/    units  (lb/
                                                   (percent) \1\      MMBtu)          MMBtu)          MMBtu)
----------------------------------------------------------------------------------------------------------------
OFA.............................................  ..............            0.37            0.44            0.40
LNB+OFA.........................................              30            0.26            0.31            0.28
SNCR+LNB+OFA....................................              25            0.19            0.23            0.21
----------------------------------------------------------------------------------------------------------------
\1\ This represents the incremental control efficiency from the previous control option, not the overall control
  efficiency from the baseline case of OFA.

    If we were to establish a BART emission limit corresponding to the 
use of SNCR technology, we would use the annual average SNCR emission 
rates presented in Table 2 as our basis, rather than our original 
estimates based on 30 percent SNCR control efficiency. As noted in a 
separate response, when using an annual average design emission rate to 
establish a rolling 30-day limit that will apply during periods of 
startup, shutdown, and malfunction, we consider it appropriate to 
provide some type of measure that provides a compliance margin for such 
events. First, we would set the SNCR emission limit as a ``bubble'' 
limit across Apache 2 and 3. As seen in Table 2, the annual average 
SNCR emission rate, averaged across both units, is 0.21 lb/MMBtu. A 
0.23 lb/MMBtu emission limit, as requested by AEPCO, established on a 
rolling 30-day average represents an approximate 10 percent increase 
from the 0.21 lb/MMBtu annual average emission rate. We would consider 
this magnitude of upward revision appropriate to accommodate startup, 
shutdown, and malfunction events as well as the unit cycling nature of 
the Apache units. As a result, if established, we would consider the 
BART emission limit corresponding to the SNCR with LNB and OFA option 
to be 0.23 lb/MMBtu, established as a bubble across both units.
    For the purposes of our cost calculations or visibility modeling, 
however, we have retained the use of our original SNCR emission rates. 
A less stringent SNCR emission rate would, by itself, primarily serve 
to make the next most stringent control option, SCR, appear to remove a 
greater amount of emissions. This in turn would make the SCR control 
option appear more incrementally cost-effective (i.e., by removing a 
greater amount of emissions, relative to SNCR, for the same cost). As 
discussed in our proposal and in other responses to comments, we 
already consider SCR to be cost-effective, and it is not determinative 
to our decision to find that SCR is ``even more'' incrementally cost-
effective.
b. Costs of Compliance
    Comment: Two commenters (NPS and Earthjustice) conducted their own 
analyses of the cost and cost-effectiveness of SCR with LNB and OFA for 
reducing emissions of NOX at Apache Units 2 and 3. NPS used 
the cost methodologies of the CCM, relied on the IPM to reflect the 
most recent SCR cost levels, and submitted the detailed calculations as 
Appendix B to its comments. The commenter's analysis yielded cost-
effectiveness values of $2,392/ton to $3,144/ton. The commenter noted 
that EPA's analysis yielded cost-effectiveness values of $2,275/ton to 
$2,908/ton, which EPA considers cost-effective. According to 
Earthjustice, when the cost-effectiveness of SCR is calculated using 
more accurate costs and proper baselines, the result is a cost-
effective SCR investment that reduces NOX at a cost of 
$2,640/ton at Unit 2 and $2,275/ton at Unit 3.
    Response: Based upon a review of the commenters' calculations, we 
recognize that there are certain aspects of cost calculations that 
would result in lower $/ton values under different assumptions. As 
noted in our proposal, we already consider the SCR with LNB and OFA 
control option to be cost-effective at $/ton values that are somewhat 
higher than those calculated by the commenters. As a result, we decline 
to modify our estimates of cost-effectiveness to reflect these 
comments, as it is not in any way determinative to our decision to find 
that SCR is ``even more'' cost-effective or that the incremental cost-
effectiveness value between SCR and SNCR is ``even more'' incrementally 
cost-effective.
    Comment: One commenter (AEPCO) stated EPA underestimated the site-
specific costs for installing SCR at Apache, due principally to EPA's 
substitution of general data used in the IPM model for the site-
specific data used by ADEQ. The commenter stated that EPA needs to 
reevaluate its numbers in light of AEPCO's site-

[[Page 72537]]

specific analysis. For operation and maintenance costs, AEPCO estimates 
total costs of $1,760,000, which is slightly lower than EPA's estimate 
of $1,822,463, with the main difference due to EPA's higher allowance 
for maintenance. For the base unit costs, EPA used a 25 percent 
reduction factor for ``low dust'' for Unit 3. AEPCO's vendors do not 
believe there will be any substantial reduction in cost based on ``low 
dust,'' and estimates that installed costs will be approximately 
$39,094,000 compared to EPA's estimate of $33,279,000 for this unit. 
AEPCO estimates that the bare module cost will be near $48,119,000, 
rather than the $25,599,000 that EPA estimates, because EPA only 
included costs for induced draft (ID) fan upgrades and did not account 
for the additional costs of upgrading existing or running new 
electrical service to support the additional electrical loads required 
by SCR. The commenter also stated that EPA did not include contractor 
indirect costs and contingency with the capital, engineering and 
construction costs, nor did EPA include any owner's costs or allowance 
for funds during construction, including interest during construction. 
AEPCO does not believe EPA should disallow these costs. AEPCO's 
estimates with these costs are $85,666,000, compared with EPA's 
estimate of $33,279,000.
    The commenter stated that based on AEPCO's estimated installed 
costs of SCR, the cost burden is disproportional to the benefits. 
Adding the costs of SCR to EPA's estimate for LNB and OFA, the 
annualized cost is $3,508 per ton and $13.9 million per deciview.
    Another commenter (ACCCE) stated that EPA's proposal to require SCR 
at Apache Units 2 and 3 must be abandoned due to the high costs of SCR. 
The commenter notes that according to EPA's estimates, costs of SCR 
with LNB and OFA would be about $6 million for each unit, while the 
annualized costs of LNB and OFA estimated by ADEQ are only about 
$533,000 per unit. In addition, the commenter notes that the marginal 
improvement in visibility with SCR over LNB and OFA would be less than 
1 deciview.
    Response: We disagree with commenters' assertions that we 
underestimated the costs of SCR, or that the cost of SCR is 
disproportional to its benefits. In developing our proposed action for 
Apache Units 2 and 3, we examined the cost estimates for the SCR with 
LNB and OFA control option contained in AEPCO's original BART 
analysis.\118\ By comparison, the SCR with LNB and OFA cost estimates 
we developed for our proposed action \119\ do not differ significantly. 
A comparison of capital cost, total annual cost, and cost-effectiveness 
for these two estimates are summarized in Tables 3 and 4.

                         Table 3--Apache Unit 2: Cost Comparison of SCR With LNB and OFA
----------------------------------------------------------------------------------------------------------------
                                                                                                   Average cost-
                                                   Capital cost    Total annual      Emissions     effectiveness
                                                        ($)        cost  ($/yr)   removed  (tpy)      ($/ton)
----------------------------------------------------------------------------------------------------------------
EPA estimate....................................     $44,779,657      $5,869,299           2,019          $2,908
AEPCO original estimate.........................      48,740,300       6,102,740           3,250           1,878
----------------------------------------------------------------------------------------------------------------

                         Table 4--Apache Unit 3: Cost Comparison of SCR With LNB and OFA
----------------------------------------------------------------------------------------------------------------
                                                                                                   Average cost-
                                                   Capital cost    Total annual      Emissions     effectiveness
                                                        ($)        cost  ($/yr)   removed  (tpy)      ($/ton)
----------------------------------------------------------------------------------------------------------------
EPA estimate....................................     $43,812,028      $6,103,078           2,683          $2,275
AEPCO original estimate.........................      48,740,300       6,062,302           2,778           2,182
----------------------------------------------------------------------------------------------------------------

We note that while we used a different cost estimation methodology than 
AEPCO, our estimates of capital cost and total annual cost are very 
similar to the company's original estimates and differ, for example, by 
only 8 percent and 4 percent (respectively) at Apache Unit 2. More 
importantly, we note that AEPCO's original estimates for Apache Units 2 
and 3 actually show lower $/ton values than our own, meaning that 
AEPCO's original estimate indicates that SCR with LNB and OFA is cost-
effective.
    In submitted comments, AEPCO provided multiple analyses comparing 
our SCR (stand alone) cost estimate with revised estimates prepared by 
engineering firm Burns and McDonnell.\120\ AEPCO provided two sets of 
revisions: one in which it retained our assumptions regarding costs not 
included in the CCM, such as AFUDC and owner's costs, and another set 
in which it included those costs. In both cases, these analyses also 
contained revisions in order to reflect capital costs and O&M costs 
that AEPCO considered more representative and appropriate for the 
Apache units. These revisions included the following:
---------------------------------------------------------------------------

    \118\ Docket Item No. B-01, Arizona Regional Haze SIP, Appendix 
D, page 49.
    \119\ See 77 FR 42856, Table 16.
    \120\ The analysis was included in Attachment 1 to AEPCO's 
Comments on the page titled ``SCR Capital Cost Comparison.''
---------------------------------------------------------------------------

     Higher bare module SCR costs, involving the inclusion and 
upward revision of specific constituent cost items (e.g., concrete and 
piling, ductwork);
     Use of lower cost reduction for the low-dust SCR design as 
reflected in bare module cost (10 percent cost reduction, compared to a 
25 percent cost reduction used in our estimate);
     Use of higher capacity factor (0.85 for both units, 
compared to 0.62 and 0.71);
     Lower SCR NOX removal efficiency (based on an 
SCR emission rate of 0.07 lb/MMBtu, compared to 0.05 lb/MMBtu);
     Inclusion of an additional 15 percent engineering, 
procurement, contracting fee (not included in our cost estimate); and
     And certain other different assumptions regarding O&M 
costs that result in similar total O&M costs.

AEPCO then included our estimate of LNB and OFA costs with its SCR 
(standalone) costs to arrive at its overall cost estimate for the SCR 
with LNB and OFA control option. As discussed elsewhere in this 
preamble, we have decided to finalize a 30-day rolling average BART 
emission limit of 0.070

[[Page 72538]]

lb/MMBtu for Apache Units 2 and 3, and a ``bubble'' across these two 
units to provide AEPCO an adequate margin for compliance. Although this 
30-day limit accommodates the possibility of multiple startups in a 
given 30-day period, we expect such spikes to be smoothed out over the 
course of a year, so that the annual average remains closer to 0.05 lb/
MMBtu. For the other items noted above, such as bare module SCR costs, 
we are willing to defer to AEPCO's judgment on these issues in order to 
address AEPCO's concerns that our cost estimate was insufficiently 
site-specific. As a supplemental cost estimate, we have used the 
version of AEPCO's cost estimate that adheres to our assumptions 
regarding costs that are allowed by the CCM. As shown in Table 5, this 
results in revised SCR with LNB and OFA cost-effectiveness values of 
$3,450/ton and $2,973/ton for Apache 2 and 3, respectively, that are 
still within a range that we consider cost-effective when considered in 
conjunction with the visibility improvement associated with SCR.

                   Table 5--Apache 2 and 3: Cost Estimate of Supplemental SCR With LNB and OFA
----------------------------------------------------------------------------------------------------------------
                            Parameter                                Apache 2        Apache 3          Notes
----------------------------------------------------------------------------------------------------------------
SCR Capital Cost ($)............................................      71,938,250      71,938,250               1
LNB+OFA Capital Cost ($)........................................      10,543,189      10,543,189               2
SCR+LNB+OFA Capital Cost ($)....................................      82,481,439      82,481,439  ..............
Interest Rate (percent).........................................             7.0             7.0  ..............
Equipment Lifetime (years)......................................              20              20  ..............
Capital Recovery Factor.........................................           0.094           0.094               2
Annualized Capital Cost ($/yr)..................................       7,785,664       7,785,664  ..............
Fixed O&M ($/yr)................................................         466,000         466,000               1
Variable O&M ($/yr).............................................       1,294,600       1,294,600               1
Total Annual O&M ($/yr).........................................       1,760,600       1,760,600  ..............
                                                                 -----------------------------------------------
    Total Annual Cost ($/yr)....................................       9,546,264       9,546,264  ..............
Heat Rate (MMBtu/hr)............................................           2,316           2,223               2
Baseline Emission Rate (annual average lb/MMBtu)................           0.371           0.438  ..............
SCR Emission Rate (annual average lb/MMBtu))....................           0.050           0.050               2
SCR Control Efficiency (percent)................................              87              89  ..............
Annual Capacity Factor..........................................            0.85            0.85               1
Baseline Emissions (tpy)........................................           3,198           3,625  ..............
SCR Emissions (tpy).............................................             431             414  ..............
    Emissions Removed (tpy).....................................           2,767           3,211  ..............
Annual Cost ($/yr)..............................................       9,546,264       9,546,264  ..............
Emissions Removed (tpy).........................................           2,767           3,211  ..............
                                                                 -----------------------------------------------
    Average Cost-Effectiveness ($/ton)..........................           3,450           2,973  ..............
----------------------------------------------------------------------------------------------------------------

    Comment: One commenter (AEPCO) stated that according to EPA's 
estimates of SNCR costs, the incremental costs of SNCR with LNB and OFA 
compared to LNB and OFA are $3.3 million with a maximum incremental 
improvement of 0.47 dv at Chiricahua Wilderness Area. The commenter 
stated that this improvement in deciviews is insignificant compared 
with cost.
    Response: As described above, EPA is not limited to considering 
incremental costs and benefits in comparing BART alternatives. The 
visibility benefits of SNCR at Chiricahua are a full 1 deciview with an 
annual cost of $6.6 million and a cost-effectiveness of $2,056 $/ton 
averaged over the two emitting units. In this case, even the 
incremental cost-effectiveness of $2,837 $/ton is well within the range 
that we consider cost-effective. The incremental visibility benefit of 
0.47 dv is also substantial, and additional benefits would occur at 
multiple Class I areas. Considered as a contribution to visibility 
impairment, EPA disagrees that this improvement from SNCR is 
insignificant.
    Comment: One commenter (AEPCO) stated that the Appendix Y BART 
Guidelines (40 CFR 51, App. Y, section IV.E.3.2) provide that the State 
and EPA must consider the economic effects of BART determinations. 
AEPCO estimates that to install and operate SCR with LNB and OFA, rates 
would need to rise by more than 17.5 percent. Further, the units could 
have to shut down if the cost of power from those units is out of line 
with the cost of power in the open market. Moreover, due to contract 
expirations, AEPCO has no certainty that even its existing 147,643 
meters will be available to defray costs. AEPCO asserted that these 
factors are exactly the types of circumstances that were designed to be 
acknowledged in the BART Guidelines.
    One commenter (AEPCO) stated that EPA failed to follow the 
requirements of CAA section 51.308 and Appendix Y in its cost analysis 
by failing to review the affordability of the final cost on AEPCO as a 
single facility cooperative, but rather examined only the cost per ton 
and the cost per deciview. EPA should also consider the implications of 
AEPCO's cooperative status and its limitations in obtaining funding for 
capital improvements. As a single generating station, with multiple 
units subject to BART requirements, the cooperative is unable to spread 
costs over unaffected units, other facilities or a large system of 
units and ratepayers. Also, as a cooperative, AEPCO is owned by its 
members and cannot sell stock or other equities to raise funding, and 
must seek long-term financing from the Rural Utilities Service, which 
has a limited budget and is being asked to fund efforts for other 
cooperatives and rural utilities to meet CAIR, CSAPR, other SIP 
initiatives, and the upcoming EGU MACT. In addition, the terms of 
AEPCO's mortgage agreement would necessitate a rate increase of more 
than 16 percent to accommodate SCR, and it is not certain whether the 
Arizona Corporation Commission (ACC) would grant such a rate increase 
or what the long term impact would be on AEPCO's working and patronage 
capital.
    AEPCO also stated that the operating and financing costs are 
unreasonable for the Apache plant. EPA estimates the SCR system alone 
will have operating and maintenance costs of $3.3 million,

[[Page 72539]]

which is 35 percent of AEPCO's total net revenue of $9.5 million for 
2010 and more than the net revenue of $1.9 million for 2011. AEPCO 
estimates that it will need to increase rates by $22.5 million a year 
over the O&M costs just to finance SCR with LNB and OFA on Units 2 and 
3. This combined cost is 14 times AEPCO's net revenues in 2011 and 2.8 
times 2010 net revenues. This cost does not include other expenditures 
that will be required for Units 1, 2 and 3 for BART. With only 147,643 
metered customers and with many of these customers in low income areas, 
rate increases for these customers are not trivial. The commenter also 
stated that SNCR also is not affordable due to the operating costs. 
AEPCO estimates SNCR with LNB and OFA operating costs to be $6.8 
million, which is three times AEPCO's net revenue 2011 and over two-
thirds of net revenues in 2010.
    Another commenter (Earthjustice) stated that SCR costs will not 
threaten AEPCO's continued viability or have a severe impact on its 
operations, which are the only two affordability conditions allowed to 
be considered under the BART Guidelines (Appendix Y, Section IV.E.3.). 
The commenter noted that guidance and case law on Reasonably Available 
Control Technology (RACT) and BACT determinations, which make clear 
that affordability issues are given relatively little weight, are 
instructive for BART determinations due to the similar analysis. For 
RACT and BACT, the commenter explained that Congress intended that all 
sources in a source category bear similar costs for pollution reduction 
and that sources should not be able to avoid cost-effective controls 
due to poor financial position, as this would reward inefficient or 
poorly-managed sources. The commenter cited two cases regarding RACT 
and BACT economic feasibility (Michigan v. Thomas, 805 F.2d 176, 180 
(6th Cir. 1986), Nat'l Steel Corp., Great Lakes Steel Div. v. Gorsuch, 
700 F.2d 314, 324 (6th Cir. 1983)). The commenter also noted that 
detailed economic data is required for sources to raise affordability 
issues under RACT and BACT, and the detailed economic analysis called 
for in the BART Guidelines should be similarly robust where EPA 
considers affordability issues for ``unusual circumstances.'' The 
commenter also stated that Apache's continued viability is not 
threatened, based on a report by Paul Chernick at Resource Insight 
Inc., which shows that AEPCO's average operating margin over the last 
four years would cover 185 percent of the annual debt repayment for the 
SCR system, and the current equity capital of $94 million in 2011 would 
cover the entire cost of installation. The report also shows that AEPCO 
will receive refunds from a settlement with two railroads totaling $63 
million. The commenter further refuted that AEPCO may not be able to 
borrow sufficient funds for SCR. The commenter stated that RUS loan 
funds are not raised or subsidized by taxpayers, and the RUS does not 
anticipate any shortage in funding. In addition, the commenter claimed 
that the National Rural Utility Cooperative Finance Corporation 
(NRUCFC) is financed by private investors, and AEPCO should not have 
any difficulty borrowing from the NRUCFC, if necessary.
    Another commenter (ACCCE) stated that the large costs of SCR may 
adversely impact AEPCO and its customers due to AEPCO's small size, the 
low income profiles of AEPCO's service area, and AEPCO's ability to 
obtain financing. The commenter urges EPA to give full consideration to 
AEPCO's comments submitted June 29, 2012, on these issues.
    Commenters from AEPCO's member cooperatives stressed the unique 
economic and engineering challenges they face--low population density, 
the demands of servicing vast remote areas with rugged topography, and 
transmission grid capacity limitations that make it difficult to import 
power. They noted that the majority of their power comes from the 
Apache Generating Station, so the cost impact of SCR installation would 
be especially acute, resulting in rate increases ranging from an 
estimated 15 percent to 30 percent. The commenters pointed out that 
their customer base has average incomes well below the national and 
Arizona averages, and would be especially hard hit by large rate 
increases; many customers struggle to pay their power bills as it is. 
The commenters stated that AEPCO and the associated cooperatives cannot 
finance or absorb the costs of SCR at the Apache Generating Station. 
The commenters indicated that closure of the large, load-following 
coal-fired units would threaten the reliability of the electrical 
system, particularly with the limited capacity of the local grid to 
import power from other areas.
    Another commenter (Earthjustice) cited a report by Paul Chernick at 
Resource Insight Inc., which estimates that any rate increases at 
Apache would be limited to a 2 percent to 5 percent increase at most, 
resulting in an average extra cost of $3.28 per month on customer 
bills. The commenter stated that this is reasonable, as average annual 
increases have been up to 3 times as high as this increase, and this 
rate will likely be offset by a settlement award of $63 million. The 
commenter also noted that while the incomes of its customer base are 
relatively low, the cost of living in the area is also lower than the 
national average. The commenter further noted that utilities in 
similarly economically disadvantaged areas have successfully installed 
modern pollution controls costing significantly more than the cost of 
SCR at Apache.
    Response: It is not EPA's intention to endanger the economic 
viability of Apache Generating Station or to place an undue burden on 
AEPCO's customers. EPA has considered the comments on these issues very 
carefully. Regarding the legal basis for our decision, neither the CAA 
nor the RHR requires states or EPA to consider the affordability of 
controls or ratepayer impacts as part of a BART analysis. Rather, the 
CAA and RHR require consideration of ``the costs of compliance, the 
energy and non-air quality environmental impacts of compliance, any 
existing pollution control technology in use at the source, the 
remaining useful life of the source, and the degree of improvement in 
visibility which may reasonably be anticipated to result from the use 
of such technology.'' \121\
---------------------------------------------------------------------------

    \121\ CAA section 169A(g)(2), 42 U.S.C. 7491(g)(2); 40 CFR 
51.308(e)(1)(ii)(A).
---------------------------------------------------------------------------

    The BART Guidelines do allow for (but do not require) the 
consideration of ``affordability'' as part of the ``costs of 
compliance'' under certain circumstances, noting that:

    1. Even if the control technology is cost effective, there may 
be cases where the installation of controls would affect the 
viability of continued plant operations.
    2. There may be unusual circumstances that justify taking into 
consideration the conditions of the plant and the economic effects 
of requiring the use of a given control technology. These effects 
would include effects on product prices, the market share, and 
profitability of the source. Where there are such unusual 
circumstances that are judged to affect plant operations, you may 
take into consideration the conditions of the plant and the economic 
effects of requiring the use of a control technology. Where these 
effects are judged to have a severe impact on plant operations you 
may consider them in the selection process, but you may wish to 
provide an economic analysis that demonstrates, in sufficient detail 
for public review, the specific economic effects, parameters, and 
reasoning * * * Any analysis may also consider whether other 
competing plants in the same industry have

[[Page 72540]]

been required to install BART controls if this information is 
available.\122\
---------------------------------------------------------------------------

    \122\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.E.3.

    We interpret the question of affordability as a specific question 
of whether the viability of continued plant operations will be affected 
by the pollution control technology in question. Although one commenter 
asserted that the costs of SCR with LNB and OFA could cause a shutdown 
of Apache Units 2 and 3 if it causes power costs from those units to be 
out of line with the cost of power on the open market, the commenter 
did not provide evidence or analysis that supports this assertion. We 
agree that the terms of AEPCO's mortgage require AEPCO to have 
sufficient revenue to meet the financial metrics of Times Interest 
Earned Ratio and Debt Service Coverage ratio. But AEPCO is eligible to 
finance additional debt related to air pollution controls, and it has 
not shown that such financing is unavailable to it. Securing a rate 
increase from ACC may be time consuming, and thus supports our decision 
to grant AEPCO five years for installation of such controls. However, 
the information provided to us does not show that installation of SCR 
would affect the viability of continued plant operations. AEPCO is not 
being treated differently from other competing plants in its industry: 
many other electric utilities, including other rural electric 
cooperatives, are also being required to install BART controls.
    Nonetheless, we performed additional analysis to understand better 
the impacts of the proposed pollution controls on AEPCO as a small 
entity. As we explained in our proposal, the U.S. Small Business 
Administration (SBA) defines an electric utility company as small if, 
including its affiliates, it is primarily engaged in the generation, 
transmission and/or distribution of electric energy for sale and its 
total electric output for the preceding fiscal year did not exceed 4 
million megawatt hours (MWh).\123\ In 2011, AEPCO member cooperatives 
sold 2,453,272 MWh of electricity.\124\ As explained in the proposal, 
we conducted an initial assessment of the potential adverse impacts on 
AEPCO of requiring SCR with LNB and OFA. Using publicly available 
information, EPA estimated that the annualized cost of requiring SCR in 
Units 1 and 2 would likely be in the range of 3 percent of AEPCO's 
assets and between 6 and 7 percent of AEPCO's annual sales. We noted in 
the NPRM that the projected costs of SCR with LNB and OFA are 
approximately $12 million per year, and that this exceeds AEPCO's net 
margins of $9.5 million in 2010 and $1.9 million in 2011,\125\ although 
the report by Paul Chernick at Resource Insight Inc., submitted by 
Earthjustice, notes that AEPCO's margin in 2008 was $17.4 million.
---------------------------------------------------------------------------

    \123\ 77 FR 42866-42867; see also 13 CFR 121.201, footnote 1.
    \124\ Annual Report for year ending December 31, 2011, from 
AEPCO to Arizona Corporation Commission.
    \125\ See Docket Item H-1 Arizona Electric Power Cooperative, 
Inc. Annual Report Electric for Year Ending December 31, 2011 
submitted to Arizona Corporation Commission Utilities Division, 
available at http://www.azcc.gov/Divisions/Utilities/Annualpercent20Reports/2011/Electric/Arizona_Electric_Power_Cooperative_Inc.pdf.
---------------------------------------------------------------------------

    In addition to conducting this initial economic impact assessment, 
we requested information from AEPCO on the economics of operating 
Apache Generating Station and what impact the installation of SCR may 
have on the economics of operating Apache Generating Station. We 
received a description of plant conditions and potential economic 
effects before the NPRM was published,\126\ and received additional 
information during the comment period. We noted in the NPRM that if our 
analysis of this information indicated that installation of SCR would 
have a severe impact on the economics of operating Apache Generating 
Station, we would incorporate such considerations in our selection of 
BART.
---------------------------------------------------------------------------

    \126\ Docket Item C-16, Letter from Michelle Freeark (AEPCO) to 
Deborah Jordan (EPA), AEPCO's Comments on BART for Apache Generating 
Station, June 29, 2012.
---------------------------------------------------------------------------

    The BART cost figures provided in this final action do not include 
other expenditures that will be required for Apache Units 1, 2 and 3 to 
meet the BART emission limits included in Arizona's Regional Haze SIP. 
Under the CAA, EPA is not permitted to consider economic feasibility 
when taking action on a SIP.\127\ To the extent these costs are 
relevant to our FIP action, we note that AEPCO did not provide any cost 
estimates for the required upgrades to the existing ESPs and scrubbers 
at Apache Units 2 and 3 and estimated that the total first year 
annualized cost of the required controls at Apache Unit 1 (LNB and FGR) 
would be $0.552 million.\128\ These costs are two orders of magnitude 
lower than the SCR costs described elsewhere in this document. 
Therefore, even if we were to take them into account, they would not 
substantially affect our analyses.
---------------------------------------------------------------------------

    \127\ Union Electric Co., v. EPA, 427 U.S. 246, 255-66 (1976); 
42 U.S.C. 7410(a) (2).
    \128\ Arizona Regional Haze SIP, Appendix D, Table 10.3; see 
also Comments of Arizona Electric Power Cooperative, Inc., Proposed 
Disapproval of AZ RH SIP and EPA's Proposed RH BART FIP (September 
18, 2012) page 9. In our proposal, we noted that these control cost 
calculations include costs that are disallowed by EPA's Control Cost 
Manual, such as owner's costs and AFUDC. Both of these elements have 
the effect of inflating cost calculations and thus the cost-
effectiveness of the various control options considered. See 77 FR 
4284.
---------------------------------------------------------------------------

    Regarding the comment that the cost of SCR with LNB and OFA at 
Apache could be covered with funds from AEPCO's operating margins or 
legal settlements, while Apache Generating Station does have annual 
operating margins that vary according to various conditions, it is not 
necessarily true that AEPCO can cover the costs of pollution control 
equipment exclusively from these funds, or from the settlement 
agreement mentioned in the comment. Because AEPCO is a member-owned 
utility, operating margins and other surplus funds may be earmarked to 
be returned to its member cooperatives on a rotating basis. While some 
of these funds may be available for capital expenditures such as 
pollution controls, we have assumed for the purpose of our analysis 
that financing will be necessary to achieve the pollution reductions 
required by our action.
    For electric utilities, EPA has not customarily analyzed or 
considered ratepayer impacts in BART determinations.\129\ Nevertheless, 
we also analyzed ratepayer impacts in an effort to assess the potential 
effects of our action on AEPCO as a small entity. EPA requested an 
electricity rate analysis through our contractor, EC/R Inc., to assist 
us in evaluating the possible electricity rate increases discussed in 
the comments above. Our contractor noted that AEPCO's analysis appears 
to place the entire burden of the incremental capital and O&M costs on 
its Member Co-ops and their retail customers. However, the analysis 
should account for a share of the SCR cost going to off-system sales 
volumes and not only allocated to member rates. The contractor's 
Incremental Cost Model calculated an increment in revenue requirements 
for AEPCO's member cooperatives of 12.7 percent under the scenario that 
spreads the incremental SCR cost across all kWh produced at Apache, 
both Member Co-ops and off-system or non-Member sales. Under the 
alternative scenario that the incremental cost for SCR is covered 
exclusively by member cooperatives, the incremental revenue

[[Page 72541]]

requirement was 15.4 percent.\130\ As explained in the preceding 
responses, this analysis is based on a capital cost for the 
installation of SCR with LNB and OFA of $164.9 million, which matches 
the costs claimed by AEPCO in their comment letter minus certain 
charges excluded by EPA CCM. This difference in the estimated capital 
cost for SCR also accounts for much of the discrepancy between AEPCO's 
and Earthjustice's estimates of electricity rate increases, since 
Earthjustice's estimate was based on the capital cost estimates 
originally published in our NPRM.
---------------------------------------------------------------------------

    \129\ Exceptions include EPA's Regional Haze FIP for Hawaii, 
where we analyzed potential rate impacts due to the unique energy 
situation in Hawaii, 77 FR 61478, 61488, and EPA's BART FIP for Four 
Corners Power Plant, where we examined potential rate impacts as 
part of tribal consultation, 77 FR 51620, 51625-51626.
    \130\ Apache Plant: Report on SCR Incremental Cost Assessment. 
Prepared by Energy Strategies, LLC for EC/R, Inc. (November 2012).
---------------------------------------------------------------------------

    AEPCO sells electricity through its member cooperatives, and not 
directly to residential and business customers, but EC/R also analyzed 
the impact of an increase in the cost of electricity generation on the 
monthly bills of electricity users serviced by AEPCO's Member Co-ops. 
Table 6 indicates the incremental retail costs of electricity to end 
users under the two scenarios mentioned above. The potential rate 
increases for residential users in 2019, the first full year of 
incremental capital expenditures for pollution controls installed in 
2017 (and the year with the largest incremental cost impact), range 
from 4.5 percent, or $5.75 per month over 2011 rates, to 10.6 percent, 
or $10.75 per month over 2011 rates.\131\ EC/R noted that the 
assumptions it made in constructing its model may cause the impact to 
rates to be conservatively overstated.
---------------------------------------------------------------------------

    \131\ Id.

                                                      Table 6--Incremental Retail Costs Due to SCR
                                                     [As 2019 costs would impact 2011 retail rates]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Residential class only               Combined residential, commercial & industrial
                                                         -----------------------------------------------------------------------------------------------
             Scenario                Range of  outcomes       Percent      Average $ per   Average $ per      Percent      Average $ per   Average $ per
                                                             Increase        year per        month per       Increase        year per        month per
                                                             (percent)       customer        customer        (percent)       customer        customer
--------------------------------------------------------------------------------------------------------------------------------------------------------
A: Members Pay all SCR Costs.....  Low..................             5.4             $83           $6.92             5.8            $125          $10.42
                                   High.................            10.6             129           10.75            12.0             220           18.33
B: Members Pay Portion of SCR      Low..................             4.5              69            5.75             4.8             103            8.58
 Costs.
                                   High.................             8.8             107            8.92             9.9             182           15.17
--------------------------------------------------------------------------------------------------------------------------------------------------------

    While these projected rate increases are not trivial, they are 
comparable to average historical rate increases for AEPCO, Arizona, and 
U.S. ratepayers.\132\ They are also projected to occur seven years in 
the future. Again, in discussing the limitations of this retail rate 
analysis, EC/R noted that the results of the retail rate assessment 
should be considered conservative by design.
---------------------------------------------------------------------------

    \132\ Energy Information Administration (EIA) State Historical 
Tables for 2011, Released: October 1, 2012. Average Price by State 
by Provider, 1990-2011. http://www.eia.gov/electricity/data/state/avgprice_annual.xls, last accessed November 5, 2012.
---------------------------------------------------------------------------

    Regarding the comment that utilities in similarly economically 
disadvantaged areas have successfully installed modern pollution 
controls costing significantly more than the cost of SCR at Apache, we 
note that none of the installed controls listed in Earthjustice's 
comment letter were installed under the RHR. Accordingly, EPA cannot 
rely on them as precedents for the Apache Generating Station BART 
analysis.
    Regarding the comment on the economic vulnerability of AEPCO's 
ratepayer population, EPA reviewed the supplemental information on per 
capita and median household incomes. Because electric utility bills are 
likely paid at the household and not individual, or per capita, level, 
we believe that median household income is an appropriate metric for 
assessment. We used census data to compare household income levels in 
the areas served by AEPCO's Class A member cooperatives to average 
household incomes in the United States. In 2011 the median income for 
U.S. households was $50,502. Using the supplemental information 
provided by AEPCO, we calculated that the median income for AEPCO's 
Member Co-ops' ratepayers was $49,303. In addition, we aggregated the 
data on median household income by zip code into four incomes ranges. 
Seventy-one percent of the median household incomes by zip code were in 
the $40,000 and above income ranges and twenty-nine percent were in the 
median household income range of $20,000 to $39,999. We found that the 
household incomes in AEPCO's Member Co-ops' service area are in the 
same range as average U.S. household income, so an increase in AEPCO's 
electricity rates should not cause greater hardship than a similar 
increase elsewhere in the country.\133\ EPA's responsibility under the 
CAA and the RHR is to implement BART at Apache Generating Station. As 
discussed elsewhere in this document, the five-factor analysis 
indicates SCR with LNB and OFA represents BART for NOX at 
Apache Units 2 and 3. While the analyses conducted by EPA and the 
commenters attempted to project the revenue requirements and possible 
rate increases that would be required if SCR with LNB and OFA are 
required at Apache, BART and other environmental regulatory 
requirements form only one part of the complex business conditions 
under which utility rate decisions take place, especially over extended 
time periods. It is the responsibility of utility companies to work 
with the appropriate regulatory agencies to implement any necessary 
rate changes in a manageable fashion.
---------------------------------------------------------------------------

    \133\ Arizona Regional Haze SIP, BART Determination for Apache 
Generating Station, Supplemental Economic Analysis. Memorandum from 
Larry Sorrels and Robin Langdon, EPA Office of Air Quality Planning 
and Standards (November 5, 2012).
---------------------------------------------------------------------------

    Accordingly, because neither these projected rate increases nor any 
submitted information or analysis indicate that a requirement to 
install SCR with LNB and OFA will affect the viability of Apache 
Generating Station, EPA is finalizing its determination that this level 
of control represents BART. However, we are also taking into account 
AEPCO's status as a small entity as part of our determination. In 
particular, in its comments on our proposal, AEPCO requested that ``EPA 
set the final BART limits in terms of lb/MMBtu only and not as a 
specified technology'' to provide AEPCO with

[[Page 72542]]

``maximum flexibility.'' \134\ AEPCO also requested that if EPA decided 
to finalize emission limits consistent with SCR that the limits be set 
at 0.07 lb/MMBtu.\135\ Given the unusual status of AEPCO as a small 
entity and a rural electric cooperative, we believe that it is 
consistent with EPA policy to minimize adverse impact to this small 
entity to the extent that such action is feasible and consistent with 
our BART analysis. To allow this small entity the maximum flexibility 
that is consistent with our analysis of the five factors, we have 
determined that it is appropriate to set the BART limit as a 30-day 
rolling average 0.070 lb/MMBtu limit, with a five year compliance 
deadline. As AEPCO noted, this approach may allow minor changes in 
configuration of the optimal system to allow AEPCO's compliance at 
somewhat lower cost. This 30-day rolling average 0.070 lb/MMBtu limit 
is also applied as a ``bubble'' across Units 2 and 3. This approach 
allows for short term emission spikes from startups and provides this 
small entity with additional operational flexibility within the 
constraints of the BART emissions limit.
---------------------------------------------------------------------------

    \134\ AEPCO Comments page 18.
    \135\ Id.
---------------------------------------------------------------------------

    Comment: One commenter (AEPCO) stated that EPA should not consider 
fuel switching from the current mix to all natural gas at Apache Unit 1 
to be costless. AEPCO states that if it loses the ability to use 
multiple fuels, its negotiating leverage with natural gas suppliers 
will be greatly reduced, and it will not be able to obtain gas at 
reasonably competitive rates. AEPCO argued that this cost at Apache 
Unit 1 should be considered by EPA in its overall evaluation of the 
affordability of controls at Apache.
    Response: EPA is approving ADEQ's emissions limit for Apache Unit 
1. As noted by the commenter, Tables 6 and 7 of our proposed action (77 
FR 42844) listed ``fuel switch to PNG'' as a control option in the 
context of the PM10 and SO2 BART analyses, in 
addition to ``fuel switch to low-sulfur fuel oil.'' The annualized 
costs for both options were listed as zero in both analyses. The 
information contained in Tables 6 and 7 does not represent our analysis 
for Apache Unit 1, but reflects the information contained in ADEQ's 
PM10 and SO2 BART analyses. ADEQ's BART analyses 
for Apache 1 eliminated more stringent control technologies such as 
fabric filters and wet FGD, and determined that a fuel switch to 
natural gas was BART. Natural gas is a commodity, and its price 
fluctuates due to factors beyond the constraints on AEPCO's ability to 
use multiple fuels. However, the BART emissions limit we are 
establishing for Apache Units 2 and 3 will still allow AEPCO a choice 
of using multiple fuels across the units at the Apache facility.
b. Visibility Improvement
    Comment: One commenter (NPS) agreed with EPA's analysis of the 
visibility impacts of the alternative NOX control options 
for Apache Units 2 and 3 at the various impacted Class I areas, as 
presented in EPA's TSD, including EPA's conclusions that ``the 
improvements from SCR are substantially greater than for the other 
candidate controls'' and that ``the modeled degree of visibility 
improvement supports SCR as BART for Apache.'' The commenter also 
indicated that it compiled BART analyses data from across the United 
States, which revealed that the average cost per deciview proposed by 
either a state or a BART source is $14 to $18 million. The commenter 
pointed out that for all of the NOX control options at the 
Apache plant, including SCR, both the $/max deciview and the $/
cumulative deciview are well below this range.
    Response: We acknowledge the commenter's agreement with our 
analysis. Our supplemental analysis, discussed in more detail above, 
was conducted using a capital cost for the installation of SCR with LNB 
and OFA of $164.9 million. For the 0.070 limit on Apache Units 2 and 3 
that we are finalizing in this action, this supplemental analysis found 
an average cost per deciview ($/max deciview) of $12.7 million and a 
cumulative average cost per deciview ($/cumulative deciview) of $3.1 
million.
c. Other Comments
    Comment: One commenter noted that EPA is required by the Executive 
Order on Environmental Justice to consider all potential economic and 
environmental impacts on minorities and low-income populations that its 
decisions on BART, in this case, will have on AEPCO and its customers. 
The commenter stated that over four in ten of AEPCO's customers are 
minorities. In similar remarks, another commenter cautioned EPA that 
such increases would impact at-risk populations.
    Response: In establishing BART requirements for the facilities in 
this final rulemaking, EPA is increasing the level of environmental 
protection for all affected populations by requiring substantial 
NOX emission reductions. Thus, EPA does not expect any 
disproportionately high and adverse human health or environmental 
effects on any population, including any minority or low-income 
population from our final action. Disadvantaged populations also will 
be able to enjoy the visibility improvements in Class I areas 
anticipated from the emissions reductions required by this final 
rulemaking.
    EPA took several steps to ensure transparency and meaningful 
participation in the rule development process for this BART FIP. In 
response to numerous requests, we extended the public comment period on 
our proposal and increased the number of public hearings in Arizona 
from one to three. In addition, all three hearings had Spanish language 
interpretation services and the hearing on August 14 in Holbrook, 
Arizona, also offered interpretation in Din[eacute].
    We disagree that Executive Order 12898 requires EPA to consider the 
economic effects of our proposed action on disadvantaged populations. 
As EPA's Environmental Appeals Board (EAB) has explained:

    Executive Order 12898 instructs federal agencies to address, as 
appropriate, ``disproportionately high and adverse human health or 
environmental effects of [their] programs, policies, and activities 
on minority and low-income populations * * *.'' The Executive Order, 
thus, speaks to human health and environmental effects; it does not 
require federal agencies to consider issues regarding cost or rate 
changes.\136\
---------------------------------------------------------------------------

    \136\ In re: Upper Blackstone Water Pollution Abatement 
District, Order Denying Review In Part and Remanding In Part, NPDES 
Appeal Nos. 08-11 to 08-18 & 09-06. (May 28, 2010) slip op at 105. 
(internal citation omitted).

Therefore, Executive Order 12898 does not require us to consider 
potential economic effects. Nonetheless, as explained elsewhere in this 
document, in consideration of AEPCO's status as a small entity and 
consistent with EPA policy encouraging consideration of the potential 
social and economic impacts of EPA actions,\137\ we have conducted an 
analysis of the affordability of installing SCR at Apache Units 2 and 
3. This analysis indicates that installation of SCR would not affect 
the viability of continued plant operations at Apache and would result 
in an average rate increase for residential member utility customers of 
(at most) $11 per month in 2019 compared to 2011 rates.
---------------------------------------------------------------------------

    \137\ See, e.g., Interim Guidance on Considering Environmental 
Justice During the Development of an Action page 4, footnote 4.
---------------------------------------------------------------------------

    Comment: One commenter indicated that because AEPCO is a small 
electric cooperative, EPA is required by the Regulatory Flexibility Act 
to prepare a regulatory flexibility analysis for this rulemaking.

[[Page 72543]]

    Response: We agree that AEPCO is considered small entity for 
purposes of the Regulatory Flexibility Act (RFA). However, the RFA does 
not require a regulatory flexibility analysis when a rule has an impact 
on only one small entity (as opposed to a significant impact on a 
substantial number of small entities). Nonetheless, EPA policy is to 
assess the direct adverse impact of every rule on small entities and 
minimize any adverse impact to the extent feasible, regardless of the 
magnitude of the impact or number of small entities affected. 
Therefore, we gave AEPCO additional opportunities to participate in the 
rulemaking process. Specifically, prior to issuing our proposed rule, 
we informed AEPCO that our proposed action would address BART 
requirements for units at AEPCO's Apache facility. We also requested 
information from AEPCO on the economics of operating Apache Generating 
Station and what impact the installation of SCR may have on the 
economics of operating Apache Generating Station. We have considered 
the comments we received concerning AEPCO's status as a small entity 
and the potential economic impact of our proposed action on AEPCO. Our 
discussion of affordability above includes our response to these 
comments and delineates the changes we made from our initial proposal 
in order to give AEPCO flexibility as a small entity. We have also 
taken into consideration the potential impact of the reporting, 
recordkeeping, and other compliance requirements of this rule, as set 
forth in the regulatory text. Because AEPCO is an electric utility that 
is already subject to reporting, recordkeeping and other compliance 
requirements under the CAA, AEPCO already has access to the 
professional skills necessary for the preparation of the reports and 
records necessary for compliance with the FIP.
2. Cholla Units 2, 3 and 4
a. Selection of Baseline Period
    Comment: Several commenters asserted that EPA incorrectly and 
inappropriately changed the control baseline period in its 
NOX BART analysis for Cholla. APS and PacifiCorp contend 
that the 2011 NOX emissions were already controlled by LNB 
and OFA at Cholla Units 2, 3 and 4, which penalized APS and PacifiCorp 
for their voluntary use of these controls. In addition, since LNB and 
OFA were already in use, EPA inappropriately only considered higher 
cost post-combustion controls (SCR and SNCR) in its BART analysis. If 
the baseline remained 2001-2006, LNB and OFA would also have been 
considered in the analysis. APS noted that EPA concurred with ADEQ's 
BART determination for SO2 and PM10 emissions for 
these same units using a baseline of 2001-2006. In addition, one 
commenter (Earthjustice) asserted the baseline period (2008-2011) 
understates NOX emissions reductions compared to the 
baseline period of 2001-2004.
    In contrast, one commenter (NPS) concurred with EPA's use of 2011 
as the baseline period for Cholla units 2, 3 and 4 since it represents 
the first complete calendar year at which it is certain that the Cholla 
plant operated using the full quantity of a higher NOX-
emitting coal that the plant is committed to purchase under its current 
coal contract. The commenter submitted a graph of annual NOX 
emission rates for the units at the Cholla plant, which the commenter 
believes to show the impact of recently added combustion controls and 
higher-NOX coal.
    Response: As explained in a previous response, we do not agree that 
use of the updated baseline for Cholla was incorrect or inappropriate. 
Moreover, updating the baseline did not eliminate LNB and OFA from 
consideration as BART, since existing controls can constitute BART if 
additional controls are not warranted based on the five-factor 
analysis. For example, EPA recently approved a determination by 
Colorado that existing LNB at Comanche Units 1 and 2 constituted BART 
where ``the State determined that the added expense of achieving lower 
limits through different controls was not reasonable based on the high 
cost-effectiveness [$9,900/ton] coupled with the low visibility 
improvement (under 0.2 dv) afforded.'' \138\ In this case, by contrast, 
the cost-effectiveness of post combustion controls is reasonable and 
the expected visibility improvements are substantial, as explained 
below. Nonetheless, in order to address the commenter's concerns that 
we did not properly consider LNB and OFA as a potential control option 
and therefore precluded a BART determination of LNB and OFA, we have 
used a baseline period of 2001-2003, which corresponds to the period 
used in APS's original BART analysis. Our supplemental cost analysis 
for Cholla is summarized in Table 10.\139\
---------------------------------------------------------------------------

    \138\ 77 FR 18052, 18066 (March 15, 2012) (Proposed Rule); pre-
publication version of Final Rule, signed September 10, 2012, 
available at: http://www.epa.gov/region8/air/FinalActionOnColoradoRegionalHazePlanSep2012.pdf.
    \139\ A spreadsheet titled ``Supplemental Cost Analysis 2012-11-
15.xls'' is in the docket.
---------------------------------------------------------------------------

b. Control Efficiencies
    Comment: In arguing against the achievability of EPA's proposed 
limit, one commenter (APS) noted that according to the study that EPA 
placed in the docket (IPM Model--Revisions to Cost and Performance for 
APC Technologies, 2010, Sargent & Lundy), the Agency's minimum 
emissions limit of 0.05 lb/MMBtu is specific to Powder River Basin coal 
and the minimum level for bituminous coal is 0.07 lb/MMBtu. The 
commenter also stated that because this is a minimum emissions level, 
it is probably too aggressive even for a BART determination based on 
bituminous coal. The commenter also stated that these rates may be 
appropriate for new units under ideal conditions as BACT are not 
appropriate for BART.
    Another commenter (AUG) stated that EPA's record in support of the 
putative achievability of a 0.050 lb/MMBtu emission limit at Apache, 
Cholla, and Coronado is extremely thin and unpersuasive. AUG states 
that EPA has not, for instance, demonstrated through the development of 
an SCR conceptual design or some other, similar site specific analysis 
that SCR can achieve this emission rate at any of these particular 
facilities, and that EPA must affirmatively establish that its selected 
BART rate is in fact achievable at these facilities.
    In addition, AUG asserted that EPA's proposed limit of 0.050 lb/
MMBtu is inconsistent with the following EPA actions:
     As part of CSAPR, EPA concluded that a NOX 
limit below 0.06 lb/MMBtu is not achievable through retrofit of SCR on 
coal[hyphen]fired electric generating units.\140\
---------------------------------------------------------------------------

    \140\ Citing 76 FR 1109, 1115, January 7, 2011; EPA, Transport 
Rule Engineering Feasibility Response to Comments, Docket ID No. 
EPA[hyphen]HQ[hyphen]OAR[hyphen]2009[hyphen]0491[hyphen]4529, at 13, 
July 6, 2011.
---------------------------------------------------------------------------

     In EPA's proposed rule for North Dakota, EPA based its 
BART analysis on a 0.05 lb/MMBtu emission rate, but then proposed to 
adopt a 0.07 lb/MMBtu limit because EPA concluded the more stringent 
rate would not allow a sufficient margin of compliance (citing 76 FR 
58570, 58610, September 21, 2011).
     In its final rule for South Dakota, EPA set a 
NOX limit of 0.10 lb/MMBtu for an electric generating plant 
to allow for an adequate margin of compliance (citing 77 FR 24845, 
24848, 24849, April 26, 2012).
     In Colorado's recently approved regional haze SIP, the 
NOX BART for Craig Station is an emission rate of 0.27 lb/
MMBtu based on SNCR and SCR for their units and the NOX BART 
for

[[Page 72544]]

Hayden Station is an emission rate of 0.07 lb/MMBtu for one unit and 
0.08 lb/MMBtu at another unit based on SCR.
    Response: We disagree that the SCR emission rate for the Cholla 
units should be established at 0.07 lb/MMBtu per IPM guidance for 
bituminous coal. Based on the coal information provided in the original 
Cholla BART analyses,\141\ the Lee Ranch/El Segundo Mine coal being 
used at Cholla does exhibit some properties that would fall in the 
range of bituminous coal (nitrogen and moisture content), but also 
exhibits properties that fall in the range of sub-bituminous coal 
(fixed carbon, heat value). As a result, we do not agree that the Lee 
Ranch/El Segundo coal can clearly be classified as a bituminous coal.
---------------------------------------------------------------------------

    \141\ ``Additional APS Cholla BART response'', Appendix B.
---------------------------------------------------------------------------

    More broadly, we disagree with commenters' assertion that 0.05 lb/
MMBtu (rolling 30-day average) is an inappropriate SCR emission limit 
for the Cholla units. Although BART determinations are performed on a 
site-specific basis, the process for establishing the technical 
feasibility of a control technology and its associated emission 
performance level are described in the BART Guidelines as follows:

    It is important, however, that in analyzing the technology you 
take into account the most stringent emission control level that the 
technology is capable of achieving. You should consider recent 
regulatory decisions and performance data (e.g., manufacturer's 
data, engineering estimates and the experience of other sources) 
when identifying an emissions performance level or levels to 
evaluate.
    In assessing the capability of the control alternative, latitude 
exists to consider special circumstances pertinent to the specific 
source under review, or regarding the prior application of the 
control alternative. However, you should explain the basis for 
choosing the alternate level (or range) of control in the BART 
analysis. Without a showing of differences between the source and 
other sources that have achieved more stringent emissions limits, 
you should conclude that the level being achieved by those other 
sources is representative of the achievable level for the source 
being analyzed.\142\
---------------------------------------------------------------------------

    \142\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.3.
---------------------------------------------------------------------------

We therefore disagree with commenters' assertion that the BART 
Guidelines require a SCR conceptual design or other site specific 
engineering analysis in order to demonstrate a level of performance. 
The BART Guidelines indicate that one should take into account the most 
stringent emission control level that the technology is capable of 
achieving and then document any special circumstances for selecting an 
alternate level or range of control in the BART analysis.
    In our proposal, we explained that SCR, as a technology, can 
achieve a level of performance between 80 to 90 percent reduction, even 
on a retrofit basis, and especially when combined with LNB and OFA. 
Although the commenters indicate that they do not consider our support 
for this position persuasive, they have not specifically disputed the 
claim that SCR can, as a technology, achieve this level of performance. 
We have included additional documents, including vendor experience 
lists of SCR projects, which indicate that SCR has been capable of 
achieving this level of performance.\143\ In determining whether 
special circumstances exist at the Cholla units that may justify using 
a different range of control, we examined the Clean Air Markets 
Database (CAMD) for tangential coal-fired units operating with SCR, 
either stand alone or in conjunction with LNB and OFA, and on a 
retrofit basis. We identified the 10 best such performing units, and 
have listed them in Table 7. In addition, we have listed their best-
performing annual average emission rate as well as the percent 
reduction associated with that emission rate by comparing it to annual 
average emission rates from its pre-SCR period of operation.\144\
---------------------------------------------------------------------------

    \143\ Kurtides, Ted ``Lessons Learned from SCR Reactor 
Retrofit'', Presented at COAL-GEN (August 6-8, 2003); Hitachi SCR/
NOX catalyst experience (February 2010); Haldor Topsoe 
SCR catalyst reference list (October 2009); Institute of Clean Air 
Companies, ``White Paper--Selective Catalytic Reduction Control of 
NOX emissions from Fossil Fuel-fired Electric Power 
Plants'' (May 2009).
    \144\ ``Tangentially-fired coal unit SCR retrofit emission 
data.''

                                         Table 7--Best Performing Tangential Coal-Fired EGUs With Retrofit SCRs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        SCR Emission rate            Control
        State               Facility name            Unit ID    --------------------------------   efficiency               Control technology
                                                                   (lb/MMBtu)         Year          (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
TX..................  W A Parish...............            WAP7           0.038            2007              73  SCR \1\
TX..................  W A Parish...............            WAP8           0.038            2006              77  SCR \1\
VA..................  Chesterfield Power                      6           0.041            2009              89  SCR+LNB+COFA/SOFA
                       Station.
NC..................  Marshall.................               3           0.045            2011              85  SCR+LNB+SOFA
TN..................  Kingston.................               6           0.051            2009              88  SCR+LNB+SOFA
TN..................  Kingston.................               8           0.052            2009              88  SCR+LNB+SOFA
TN..................  Kingston.................               9           0.052            2009              89  SCR
TN..................  Kingston.................               7           0.054            2009              88  SCR+LNB+SOFA
MN..................  Boswell Energy Center....               3           0.054            2009              86  SCR+LNB+SOFA
TX..................  Sandow...................               4           0.059            2011              83  SCR+LNB+SOFA
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ In the case of the Parish units, we note that their <80 percent control efficiency is the result of low pre-SCR emission rates.

In the case of the Cholla units, which are also tangential coal-fired 
EGUs, our estimate of the level of performance of the SCR with LNB and 
OFA control option corresponds to 80 to 85 percent control efficiency, 
which is in the low- to mid-range of SCR performance. We used these 
control efficiencies in our cost calculations on an annual average 
basis, and in our visibility modeling on a 24-hour average basis.\145\ 
Although the commenters have stated that they disagree with this level 
of control efficiency and the emission rate associated with it, they 
have not submitted information for the Cholla units documenting special 
circumstances that would justify a lower effective range of control 
efficiency for SCR. In fact, we note that certain aspects of APS's own 
BART analyses for the Cholla units are based upon control efficiencies 
in a similar range. The original BART analyses performed by APS and 
submitted to ADEQ included visibility modeling indicating that SCR with 
LNB and OFA can achieve in the range of 83 to 86 percent control 
efficiency for Cholla Units 2, 3 and 4. APS calculated these control

[[Page 72545]]

efficiencies based upon the difference between the highest 24-hour 
average emission rate observed over a 2001-2003 baseline period and a 
24-hour average SCR emission rate of 0.07 lb/MMBtu. This information is 
summarized in Table 8.
---------------------------------------------------------------------------

    \145\ See 77 FR 42859, Table 18.

                            Table 8--SCR With LNB and OFA Control Efficiency Estimate
                                                 [APS estimate]
----------------------------------------------------------------------------------------------------------------
                                    Baseline NOX emissions (24-hour average)         SCR+LNB+OFA Emission rate
                              ----------------------------------------------------------------------------------
             Unit                                                                                     Control
                               (lb/MMBtu) \1\     Control tech        Period        (lb/MMBtu)    efficiency \2\
                                                                                                     (percent)
----------------------------------------------------------------------------------------------------------------
Cholla 2.....................           0.503  CCOFA                     2001-03            0.07              86
Cholla 3.....................           0.410  CCOFA                     2001-03            0.07              83
Cholla 4.....................           0.415  CCOFA                     2001-03            0.07              83
----------------------------------------------------------------------------------------------------------------
\1\ Per Table 2-1 of the original BART analysis for each unit, Docket Items B-06 through B-08.
\2\ Per Appendix A of the original BART analysis for each unit, Docket Items B-06 through B-08.

    APS submitted updated visibility modeling to us as part of comments 
on our proposal, and with the exception of Cholla Unit 2, the baseline 
emissions and associated SCR control efficiencies do not differ from 
the original analysis.\146\ We note that APS did not use SCR emission 
rates consistent with these control efficiencies in other aspects of 
its BART analysis, such as on an annual average basis in cost 
calculations. If the control efficiencies calculated by APS are applied 
to baseline annual average emission rates, the Cholla units can achieve 
the values in Table 9. These values are consistent with our own 
estimates of SCR with LNB and OFA performance, and support the use of a 
0.05 lb/MMBtu emission rate, on an annual average basis, in our cost 
calculations.\147\
---------------------------------------------------------------------------

    \146\ In the visibility modeling submitted a part of their 
comments, APS apparently identified a higher maximum 24-hour average 
value from the 2001-2003 baseline period than the one identified in 
Table 8 for Cholla Unit 2. This results in an estimated SCR with LNB 
and OFA control efficiency of 87 percent.
    \147\ In addition, APS's comments also included an SNCR design 
estimate based upon LNB performance of 0.22 lb/MMBtu. Achieving an 
SCR emission rate of 0.05 lb/MMBtu from this emission rate would 
represent only 77 percent control efficiency. This is well within 
the range of what SCR can achieve, even with a lower inlet 
NOX emission rate.

                                   Table 9--SCR With LNB and OFA Emission Rate
                                      [Per APS Control Efficiency Estimate]
----------------------------------------------------------------------------------------------------------------
                                        Baseline NOX emissions (Annual ave)          SCR+LNB+OFA  emission rate
                                 -------------------------------------------------------------------------------
              Unit                                                                      Control
                                   (lb/MMBtu)      Ctrl tech          Period          efficiency      (lb/MMBtu)
                                                                                       (percent)
----------------------------------------------------------------------------------------------------------------
Cholla 2........................        0.326  CCOFA             2001-03           86                      0.045
Cholla 3........................        0.304  CCOFA             2001-03           83                      0.052
Cholla 4........................        0.296  CCOFA             2001-03           83                      0.050
----------------------------------------------------------------------------------------------------------------

    With regard to establishing the BART emission limit of 0.05 lb/
MMBtu on a rolling 30-day average, the commenters note that in the 
proposed Regional Haze FIP for North Dakota, we stated the following 
for the Milton R Young Station Unit 1, a coal-fired boiler for which we 
also proposed a NOX BART determination based on the use of 
SCR technology:

    In proposing a BART emission limit of 0.07 lb/MMBtu, we adjusted 
the annual design rate of 0.05 lb/MMBtu upwards to allow for a 
sufficient margin of compliance for a 30-day rolling average limit 
that would apply at all times, including startup, shutdown, and 
malfunction.\148\
---------------------------------------------------------------------------

    \148\ 76 FR 58610.

The commenter also notes that we approved South Dakota's Regional Haze 
SIP that established a BART emission limit of 0.10 lb/MMBtu (30-day 
rolling) for Big Stone I, based on the use of SCR technology, also 
citing a need for compliance margin for BART limits that must apply at 
all times including startup, shutdown, and malfunction (77 FR 24849). 
We agree with the commenter that it is appropriate to accommodate 
startup and shutdown events when establishing a rolling 30-day BART 
emission limit. Since these events, particularly startup, generate 
elevated levels of emissions, the particular day during which such an 
event occurs will appear as a short-term ``spike.'' On an annual 
average basis, such short-term spikes can be averaged with 365 other 
values that allow them to be ``smoothed out.'' \149\ Since the limit 
was established on a shorter averaging period than the design basis 
(from 365 days to 30 days), there are fewer days (i.e., data values) 
with which such short-term spikes can be ``smoothed out.'' In the 
instances noted by the commenter, a less stringent value (from 0.05 to 
0.07 for MR Young 1) was established for the shorter averaging period.
---------------------------------------------------------------------------

    \149\ The precise method by which such short term spikes will be 
`smoothed out' over the period of a year will vary based upon the 
precise compliance determination methodology. The suggestion that it 
would be averaged with the other 364 days' values is just a generic 
description of one type of averaging process.
---------------------------------------------------------------------------

    In order to accommodate emissions from startup and shutdown events, 
we are finalizing two revisions to our proposed emission limit of 0.050 
lb/MMBtu (rolling 30-day average). First, we are finalizing the limit 
as a ``bubble'' limit across Cholla Units 2, 3 and 4. By establishing 
the rolling 30-day limit

[[Page 72546]]

across all three units, this allows the spike in emissions associated 
with a startup/shutdown event at one unit to be smoothed with the 
emission values from the other operating units. Second, we are also 
finalizing a less stringent value in order to establish an emission 
limit that accommodates the startup and shutdown events associated with 
the operating profile of the Cholla units. In determining what 
magnitude of revision is appropriate, we examined the emissions of the 
Cholla units, as reported to CAMD, over a 2001-2003 baseline 
period.\150\ We calculated annual average emission rates and 30-day 
rolling average emission rates using a calculation methodology 
corresponding to a bubble limit across all three units.\151\ Based on 
this methodology, we determined that the maximum annual average 
emission rate for these units was approximately 0.32 lb/MMBtu, while 
the maximum 30-day rolling average emission rate was approximately 0.35 
lb/MMBtu. This represents an 8 percent difference between the highest 
rates observed on an annual and 30-day rolling average. We recognize 
that this variability between annual average and 24-hour average 
emission rates is based on operation of the Cholla units with LNB and 
OFA, and may not be directly representative of the variability 
associated with operation of SCR. We are therefore finalizing an 
emission rate of 0.055 lb/MMBtu as a bubble limit across Cholla Units 
2, 3 and 4, which represents a 10 percent upward revision from the 
annual average design value. When combined with the 3-unit bubble, this 
represents an emission limit that we consider appropriate to ensure 
design and operation of the emission control system to provide the best 
available retrofit control.
---------------------------------------------------------------------------

    \150\ ``Cholla CAMD emission data (daily) 2001-03''
    \151\ Please consult the regulatory language in our final action 
for the NOX compliance determination methodology 
associated with the bubble limit.
---------------------------------------------------------------------------

    Comment: EPA based LNB/SOFA emission rates on 2011 NOX 
emissions rates, which is not an accurate assessment of the capability 
of the installed LNB and SOFA. Arizona set the BART limit for Cholla 
Units 2, 3 and 4 at 0.22 lb/MMBtu. All three units were able to meet 
this limit in their acceptance test after LNB and SOFA were 
retrofitted, and APS believes they can meet it long term. In addition, 
an SNCR design study performed by Black and Veatch indicated that an 
SNCR system could obtain a control efficiency of approximately 25 
percent, which would correspond to an emission rate of 0.17 lb/MMBtu. 
EPA's cost and visibility estimates must be updated to reflect these 
levels.
    Response: We partially agree with this comment. In submitted 
comments, APS provided a conceptual design estimate for SNCR which was 
based upon 25 percent control efficiency (incremental from LNB) and a 
resulting emission rate of 0.17 lb/MMBtu. While this control efficiency 
is less than the 30 percent control efficiency used by our contractor, 
we consider it to be a reasonable estimate based upon the vendor quotes 
provided by APS.\152\
---------------------------------------------------------------------------

    \152\ Black and Veatch's report cites lower inlet NOX 
concentrations to the SNCR system. A lower inlet NOX 
emission rate makes it more difficult to reduce NOX 
emissions, which makes a lower removal efficiency reasonable.
---------------------------------------------------------------------------

    We disagree with the use of an LNB emission rate of 0.22 lb/MMBtu, 
as the Cholla units have not demonstrated a consistent ability to 
operate at this emission rate under the current coal contract for Lee 
Ranch/El Segundo coal. Based upon a review of CAMD emission data since 
the installation of LNB, we acknowledge that the Cholla units have, to 
varying degrees, operated with LNB at emission rates consistent with 
APS's assertion of 0.22 lb/MMBtu during this period. However, as noted 
in our proposal, calendar year 2011 represented the first year at which 
the Cholla plant operated at the ``full'' minimum purchase quantity 
under its new contract for Lee Ranch/El Segundo coal, which is a higher 
NOX-emitting coal than what was previously used. Since the 
beginning of 2011 to September 2012, Cholla Units 3 and 4 have operated 
at or below an emission rate of 0.22 lb/MMBtu for only five to six 
months of this 21 month period, and Cholla Unit 2 has not operated at 
or below this emission rate in any month during this period.\153\ 
Therefore, an LNB emission rate of 0.22 lb/MMBtu is not supported by 
the actual recent operation of the Cholla units, so it is unlikely to 
be an appropriate representation of anticipated future emissions.
---------------------------------------------------------------------------

    \153\ ``Cholla CAMD emission data (monthly) 2010-12.''
---------------------------------------------------------------------------

c. Costs of Compliance
    Comment: One commenter (APS) stated that, for EPA's capital costs 
estimate, no back-up material was provided, even when directly 
requested by APS. This lack of information makes it impossible for APS 
to comment on the validity of EPA's cost estimates. The commenter also 
stated that EPA has not established its contractor or subcontractor 
responsible for the costs estimates as experienced in the engineering, 
procurement and construction of utility-scale air quality control 
systems.
    Response: We disagree with the commenter's assertion that we have 
not provided sufficient information regarding our cost calculations. In 
the docket for our proposal, we included the raw cost calculation 
spreadsheets that contain the cost calculation equations, corresponding 
variable values, selected notes regarding assumptions and variable 
ranges, as well as selected tables from the IPM Base Case v4.10.\154\ 
In addition, web links were also provided (both in the raw cost 
calculation spreadsheet and in our proposal) to the location on the 
publicly available EPA Web site that contains full IPM documentation. 
We note that both SRP and AEPCO were able to locate this spreadsheet, 
as both utilities submitted control cost estimates as part of their 
comments that revised certain variable values and assumptions in our 
contractor's raw calculation spreadsheet. This information was 
initially developed by EPA contractors \155\ and was reviewed by EPA 
staff. Following the close of the public comment period on our proposed 
rulemaking, APS provided additional information concerning its own cost 
estimates. We have placed this information to the docket and taken it 
into account as part of this final rulemaking, as explained below.
---------------------------------------------------------------------------

    \154\ Document ID: EPA-R09-OAR-2012-0021-0008, File name: G-15--
MODELING--FILES--EGU--BART--Costs--Apache--Cholla--Coronado--FINAL2
    \155\ Specifically, the initial cost estimates were developed by 
Jim Staudt of Andover Technology Partners. While there is no 
requirement for EPA to establish that its contractors are 
``experienced in the engineering, procurement, and construction of 
utility-scale air quality control systems,'' Dr. Staudt has 
extensive expertise and experience in the field of air pollution 
control at power plants. See: www.andovertechnology.com/staudt.html.
---------------------------------------------------------------------------

    Comment: One commenter (APS) stated that EPA's cost-effectiveness 
numbers in the proposed FIP are incorrect. The commenter stated that 
EPA used a capital recovery factor of 9.4 percent, assuming an interest 
rate of 7 percent, but APS states that a capital recovery factor of 
13.4 percent should be used to account for income and property taxes 
and the cost of capital authorized by ACC in the last rate case. The 
commenter also stated that EPA analysis uses emissions factors for SCR 
that are not appropriate for the type of coal used, the units, or the 
averaging period. In addition, APS noted the cost values used in the 
IPM model and EPA's CCM may be outdated, which may also lead to 
underestimation of the true costs. APS estimates cost-effectiveness 
ranging from $7,719/ton to $8,894/ton, with incremental costs ranging 
from

[[Page 72547]]

$8,759/ton to $10,329/ton compared to EPA's estimates of $3,115/ton to 
$3,473/ton, with incremental costs ranging from $3,257/ton to $3,813/
ton. APS included costs for surcharges, current AFUDC and fixed charge 
rates, and emissions factors based on the capability of the existing 
LNB and OFA at the plant, typical SNCR removal rates, and minimum SCR 
emissions for bituminous coal.
    In contrast, one commenter (Earthjustice) stated that SCR at Cholla 
is more cost-effective than EPA's calculations suggest, in that EPA 
overestimated the costs by (1) using an unjustifiably high 7 percent 
interest rate; (2) amortizing costs over a 20-year life of the SCR 
system, rather than a more realistic life of 30 years or more; and (3) 
overestimating the costs of the SCR catalyst, reagent, auxiliary power 
and property taxes and insurance. In addition, the commenter asserted 
that EPA baseline period understates NOX emissions 
reductions compared to the baseline period of 2001-2004. According to 
the commenter, when the cost-effectiveness of SCR is calculated using 
more accurate costs, proper baselines and appropriate emission rates, 
the result is an even more cost-effective SCR investment that reduces 
NOX at a cost of $1,901/ton at Unit 2, $1,940/ton at Unit 3 
and $2,076/ton at Unit 4.
    Response: Although we do not agree that our cost-effectiveness 
estimates were incorrect, we have performed a supplemental analysis 
using portions of the updated cost estimates provided by APS in its 
comments. In this supplemental analysis, we have generally relied upon 
APS's estimates of capital costs and operating costs. While we do not 
find that these estimates were sufficiently supported with detailed 
site-specific information in all instances, we are using them as a 
conservative assumption (i.e., an assumption that would tend to 
overestimate rather underestimate the annualized cost of controls). As 
discussed in a previous response, we consider it appropriate to observe 
the broader cost methodology used in EPA's CCM, and have adjusted or 
eliminated certain cost items not allowed by the CCM. A line-by-line 
comparison of APS's cost estimate and our revisions can be found in the 
docket for this rulemaking action.\156\ A summary of cost estimates 
based on this supplemental analysis is in Table 10, and includes the 
following:
---------------------------------------------------------------------------

    \156\ Docket ID No. EPA-R09-OAR-2012-0021.
---------------------------------------------------------------------------

     Inclusion of APS's updated cost estimates: We have adopted 
a `hybrid' approach in which we have used APS's capital cost and O&M 
cost estimates, while excluding those cost items not allowed by CCM 
methodology. As discussed in a previous comment, we have included 
owner's costs up to the amount provided for ``Engineering and Home 
Office Fees'' as described by the CCM. We have excluded surcharge as 
well as AFUDC, which is inconsistent with CCM methodology.
     Use of a 7 percent interest rate: We have retained the use 
of a 7 percent interest rate in calculating the capital recovery 
factor, and disagree with APS's assertion that a 13.4 percent interest 
rate is appropriate. For cost analyses related to government 
regulations, an appropriate ``social'' interest (discount) rate should 
be used. EPA calculated capital recoveries using 3 percent and 7 
percent interest rates in determining cost-effectiveness for the 
Regulatory Impact Analysis (RIA) for the BART 
Guidelines.157 158 We consider our use of an interest rate 
of 7 percent to calculate capital recovery to be a conservative 
approach.
---------------------------------------------------------------------------

    \157\ Regulatory Impact Analysis for the Final Clean Air 
Visibility Rule or the Guidelines for Best Available Retrofit 
Technology (BART) Determinations Under the Regional Haze 
Regulations, EPA-0452/R-05-004 (June 2005).
    \158\ A 7 percent interest rate is recommended by Office of 
Management and Budget, Circular A-4, Regulatory Analysis, http://www.whitehouse.gov/omb/circulars-a004-a-4/.
---------------------------------------------------------------------------

     Use of original baseline period: As discussed elsewhere in 
our responses, we consider our use of a more recent baseline as 
consistent with BART Guidelines. However, in order to address 
commenter's concerns that we did not properly consider LNB and OFA as a 
potential control option and therefore precluded a BART determination 
of LNB and OFA, we have used a baseline period of 2001-2003, which 
corresponds to the period used in APS's original BART analysis. This 
represents a time period prior to the installation of LNB, during which 
the control technology in place on the Cholla units was only OFA.

                 Table 10--Cholla Control Cost Estimates (per APS Comments, With EPA Revisions)
----------------------------------------------------------------------------------------------------------------
                                                                    Annualized
                 Control options                   Capital cost    capital cost     Annual  O&M    Total annual
                                                        ($)           ($/yr)       cost  ($/yr)    cost  ($/yr)
----------------------------------------------------------------------------------------------------------------
Cholla 2:
    LNB+OFA.....................................      $4,482,254        $423,093        $120,000        $543,093
    SNCR w/LNB+OFA..............................      16,617,408       1,568,566       1,254,500       2,823,066
    SCR w/LNB+OFA...............................      87,713,386       8,279,523       1,626,683       9,906,206
Cholla 3:
    LNB+OFA.....................................       3,848,807         363,300         120,000         483,300
    SNCR w/LNB+OFA..............................      19,238,125       1,815,943       1,254,500       3,070,443
    SCR w/LNB+OFA...............................      83,461,195       7,878,146       1,570,766       9,448,912
Cholla 4:
    LNB+OFA.....................................       5,334,618         503,550         170,000         673,550
    SNCR w/LNB+OFA..............................      24,885,052       2,348,973       1,737,393       4,086,366
    SCR w/LNB+OFA...............................     119,083,832      11,240,671       2,350,182      13,590,853
----------------------------------------------------------------------------------------------------------------

    A summary of emission rates and emission reductions associated with 
each control option is in Table 11. As noted previously, these emission 
estimates are based on a 2001-2003 baseline period, during which the 
Cholla units operated only with OFA. We note that while APS has 
provided emission estimates for this baseline period, the values 
provided, both in the original BART analysis and in submitted comments, 
appear to represent the highest 24-hour average value for modeling 
purposes. Since control cost estimates are based on an annual average 
($/year), we have calculated annual emission rates for the OFA baseline 
using the annual average emission data reported to CAMD over this 2001-
2003 baseline period. Comparing a baseline value on a 24-

[[Page 72548]]

hour average basis (as provided by APS) to a control option value on an 
annual average basis is not an ``apples-to-apples'' comparison, as some 
portion of the emission reduction in such a comparison would be 
attributable to the differences between moving from a 24-hour average 
to an annual average basis.

                                       Table 11--Cholla Emission Estimates
----------------------------------------------------------------------------------------------------------------
                                              Emission                  Annual      Emission rate     Emissions
              Control options               factor (lb/   Heat rate    capacity --------------------   removed
                                               MMBtu)     (MMBtu/hr)    factor    (lb/hr)    (tpy)      (tpy)
----------------------------------------------------------------------------------------------------------------
Cholla 2:
    OFA (only)............................        0.326        3,022       0.91       985     3,927  ...........
    LNB+OFA...............................        0.295        3,022       0.91       892     3,554          373
    SNCR w/LNB+OFA........................        0.207        3,022       0.91       624     2,488        1,440
    SCR w/LNB+OFA.........................        0.050        3,022       0.91       151       602        3,325
Cholla 3:
    OFA (only)............................        0.304        3,480       0.86      1058     3,985  ...........
    LNB+OFA...............................        0.254        3,480       0.86       885     3,335          650
    SNCR w/LNB+OFA........................        0.178        3,480       0.86       620     2,334        1,651
    SCR w/LNB+OFA.........................        0.050        3,480       0.86       174       655        3,330
Cholla 4:
    OFA (only)............................        0.296        4,399       0.93      1302     5,304  ...........
    LNB+OFA...............................        0.260        4,399       0.93      1144     4,661          643
    SNCR w/LNB+OFA........................        0.182        4,399       0.93       801     3,263        2,042
    SCR w/LNB+OFA.........................        0.050        4,399       0.93       220       896        4,408
----------------------------------------------------------------------------------------------------------------

    Cost-effectiveness values for each control technology are 
summarized in Table 12, based on the total annual costs and annual 
emissions removed listed in the previous tables.

                               Table 12--Cholla Control Option Cost-Effectiveness
----------------------------------------------------------------------------------------------------------------
                                                                                          Cost-effectiveness  ($/
                                                              Total annual    Emissions            ton)
                      Control options                          cost ($/yr)     removed   -----------------------
                                                                                (tpy)       Average    Increment
----------------------------------------------------------------------------------------------------------------
Cholla 2:
    OFA (only).............................................  ..............  ...........  ..........  ..........
    LNB+OFA................................................         543,093          373       1,454  ..........
    SNCR w/LNB+OFA.........................................       2,823,066        1,440       1,961       2,138
    SCR w/LNB+OFA..........................................       9,906,206        3,325       2,979       3,757
Cholla 3:
    OFA (only).............................................  ..............  ...........  ..........  ..........
    LNB+OFA................................................         483,300          650         743  ..........
    SNCR w/LNB+OFA.........................................       3,070,443        1,651       1,860       2,586
    SCR w/LNB+OFA..........................................       9,448,912        3,330       2,838       3,799
Cholla 4:
    OFA (only).............................................  ..............  ...........  ..........  ..........
    LNB+OFA................................................         673,550          643       1,047  ..........
    SNCR w/LNB+OFA.........................................       4,086,366        2,042       2,001       2,441
    SCR w/LNB+OFA..........................................      13,590,853        4,408       3,083       4,016
----------------------------------------------------------------------------------------------------------------

    Even based on cost estimates revised to use APS's capital and O&M 
cost estimates, we still consider the cost-effectiveness values of SCR, 
on an average ($2,838 to $3,083/ton) and incremental ($3,757 to $4,016/
ton) basis, to not be cost-prohibitive. We consider these results 
supportive of our proposed determination that SCR with LNB and OFA is 
cost-effective. We note that while the LNB and OFA option is the least 
expensive (i.e., lowest annual cost) and is the most cost-effective of 
the control technologies (i.e., has the lowest $/ton value), it is also 
the least effective control option. It removes substantially fewer 
emissions than either of the other two control options, the SNCR- and 
SCR-based systems. As discussed in our proposed action, and in other 
responses in this document, we have not identified any energy or non-
air quality impacts that warrant eliminating SCR from consideration for 
the Cholla units. Combined with the modeled visibility improvement 
associated with this control option, these cost estimates continue to 
support the selection of SCR with LNB and OFA as BART for 
NOX at the Cholla units.
d. Visibility Improvement
    Comment: One commenter (NPS) agreed with EPA's analysis of the 
visibility impacts of the alternative NOX control options 
for Cholla Units 2, 3 and 4 at the various impacted Class I areas, as 
presented in EPA's TSD. The commenter also indicated that its estimates 
of the two $/deciview measures of cost-effectiveness were similar to 
those of EPA. Specifically, the commenter's analysis yielded values of 
$19.9 million for the ``$/max deciview'' metric and $3.7 million for 
``$/cumulative deciview.''
    Response: We acknowledge the comment.
    Comment: One commenter (APS) hired a contractor to perform modeling 
with CALPUFF version 5.8 and the

[[Page 72549]]

updated version of 6.42 to measure the sensitivity of various emission 
control scenarios at Cholla Units 2, 3 and 4 including two different 
background ammonia concentrations. The contractor found that regardless 
of which model version or background ammonia value was used, the 
highest predicted visibility improvement of SNCR or SCR, compared to 
LNB and OFA, is lower than the threshold for human perceptibility of 
1.0 deciview. Moreover, retrofitting SNCR or SCR at Cholla will not 
lead to any perceptible improvement in visibility at any of the 13 
Class I areas within 300 km of the Cholla facility.
    Response: EPA disagrees with the ammonia concentration and CALPUFF 
model version used by the commenter for reasons discussed above. 
Further, we do not agree that the consideration of visibility 
improvement must directly reflect human perception. The CAA and the RHR 
require, as part of each BART analysis, consideration of ``the degree 
of improvement in visibility which may reasonably be anticipated to 
result from the use of such technology.'' \159\ The regulations do not 
require that the improvement anticipated to result from a particular 
technology at a particular source be perceptible by a single human 
being in order to be relevant as part of a BART determination. As EPA 
explained in the preamble to the BART Guidelines:
---------------------------------------------------------------------------

    \159\ CAA section 169A(g)(2), 40 CFR 51.308(e)(1)(ii)(A).

    Even though the visibility improvement from an individual source 
may not be perceptible, it should still be considered in setting 
BART because the contribution to haze may be significant relative to 
other source contributions in the Class I area. Thus, we disagree 
that the degree of improvement should be contingent upon 
perceptibility.\160\
---------------------------------------------------------------------------

    \160\ 70 FR 39129.

    Thus, in our visibility improvement analysis, we have not 
considered perceptibility as a threshold criterion for considering 
improvements in visibility. Rather, we have considered visibility 
improvement in a holistic manner, taking into account all reasonably 
anticipated improvements in visibility expected to result at all Class 
I areas within 300 kilometers of each source. Improvements smaller than 
0.5 dv may be warranted considering the number of Class I areas 
involved, and the fact that in the aggregate, small improvements from 
controls on multiple BART and other sources will contribute to 
visibility progress.\161\
    In addition, EPA is not obligated to focus on incremental costs and 
benefits to the exclusion of absolute costs and benefits. The BART 
Guidelines recommend consideration of both average and incremental 
cost-effectiveness,\162\ but do not expressly require or recommend 
consideration of incremental visibility improvement. Rather, they 
provide for consideration of net visibility improvement (i.e., ``the 
visibility improvement based on the modeled change in visibility 
impacts for the pre-control and post-control emission scenarios'' as 
opposed to the change between different control scenarios).\163\
---------------------------------------------------------------------------

    \162\ BART Guidelines, 40 CFR Part 51, Appendix Y, Section 
IV.d.4.b.
    \163\ Id. Section IV.D.5.
---------------------------------------------------------------------------

    Comment: One commenter (APS) noted that Cholla Units 2 and 3 have 
separate flues but share a single stack, which EPA failed to recognize 
in its visibility modeling. The commenter also noted that EPA failed to 
use the appropriate Good Engineering Practice (GEP) stack height 
correction required by EPA's own rules for modeling. Because these 
errors result in visibility impacts in opposite directions, the net 
effect is less than 5 percent, based on modeling that APS has 
conducted.
    Response: If the commenter is correct that there were two errors 
that nearly cancel out, then this would appear to have little effect on 
EPA's decision. The maximum area benefit of SCR was modeled by EPA to 
be 1.34 dv at Petrified Forest National Park, and 1.06 dv at Grand 
Canyon National Park; a 5 percent reduction in these would still result 
in substantial visibility benefits. EPA's modeling was based on stack 
parameters provided by APS in a letter \164\ that did not mention the 
merged stack, although it was mentioned in APS's BART analysis \165\ 
submitted to ADEQ. Stack parameters for Unit 4 provided in the 
commenter's modeling do not match either of those documents (exit 
velocity of 77.1 feet/second versus 52 feet/second in APS's letter). In 
addition, it is unclear how parameters for the merged stack in the 
commenter's modeling were derived (except that the area of the merged 
stack used is equal to the sum of the areas of the individual stacks 
cited in the APS letter). Nevertheless EPA acknowledges that Units 2 
and 3 should have been modeled together as a single stack. EPA 
conducted additional modeling to assess this affect, assuming the same 
total stack exit area and volume flow rate as for the individual 
stacks, and a volume-weighted average of the individual stacks' 
absolute exit temperatures. EPA found that impacts and improvements 
decreased by some 11 percent when merged stacks are used. The 
improvement from SCR at Petrified Forest remains over 1.0 dv, with 
continued substantial benefit at Grand Canyon. A merged stack for Units 
2 and 3 was also assumed in additional modeling EPA performed to 
address H2SO4 emissions for Cholla, as described 
below.
---------------------------------------------------------------------------

    \164\ ``Request for Information Relating to Cholla Power 
Plant'', letter from Sue Kidd, Director, Corporate Environmental 
Policy and Programs, to Francisco Do[ntilde]ez, EPA, (February 3, 
2012).
    \165\ ``BART Analysis for Cholla Unit 2,'' Prepared for APS by 
CH2MHill (January 2008).
---------------------------------------------------------------------------

    EPA's Guideline on Air Quality Models (40 CFR part 51, Appendix W) 
at section 6.2.2 requires that facilities be modeled using a stack 
height consistent with GEP, rather than a higher actual stack height, 
in order to prohibit ``stack height credit'' from being used in 
developing emission limits.\166\ By building very tall stacks instead 
of applying emission controls, facilities could avoid violating the 
NAAQS locally, but would contribute to higher levels of emissions 
regionally, and cause higher total pollutant levels downwind. In short, 
the requirement to use GEP stack height generally results in 
conservative modeling, thereby removing the incentive to build 
artificially tall stacks to evade controls. Choosing a stack height or 
taking credit for a stack height increase is not at issue in a BART 
determination. The visibility impacts and improvements shown in EPA's 
BART modeling are closer to the actual values if actual stack heights 
are used. Insofar as GEP is relevant, using shorter GEP heights would 
tend to increase both pre- and post-control impacts, and to scale up 
the estimated visibility improvements. The overall effect would be to 
strengthen the case for EPA's proposed controls.
---------------------------------------------------------------------------

    \166\ Guideline on Air Quality Models 6.2.2.a. ``The use of 
stack height credit in excess of Good Engineering Practice (GEP) 
stack height or credit resulting from any other dispersion technique 
is prohibited in the development of emission limitations by 40 CFR 
51.118 and 40 CFR 51.164.''
---------------------------------------------------------------------------

    Comment: Based on a report submitted with the comments, one 
commenter (Earthjustice) stated that had EPA's BART analysis included 
lower emission rates and proper baselines, the visibility benefits of 
SCR at Cholla Units 2, 3 and 4 would be even greater than the 7.21 dv 
cumulative visibility benefit discussed in the proposed rule.
    Response: As explained in the general discussion regarding 
selection of baseline periods above, we do not agree that we used an 
improper baseline. However, we agree that higher baselines and lower 
post-control emissions would show greater benefits than our modeling 
showed, and would further support our proposal for SCR.

[[Page 72550]]

    Comment: One commenter (APS) stated that EPA incorrectly applied 
H2SO4 mitigation factors from an Electric Power 
Institute (EPRI) report \167\ in reaching its conclusion that 
H2SO4 production is not a problem with SCR at 
Cholla. The commenter stated that this factor is actually 90 percent 
rather than 99 percent in the report, but that this factor only applies 
to sub-bituminous coal because of the high calcium content in the ash 
of these coals. The commenter stated that testing at the Four Corners 
Power Plant (FCPP), which has similar coal ash calcium content to that 
at Cholla, indicates that 15 percent removal by the fabric filters 
would be likely. The commenter stated that the 
H2SO4 emissions created by the SCR will exceed 
the NSR significance level, will result in costs associated with the 
H2SO4 emissions, and will reduce the improvement 
in visibility anticipated by the retrofitting with SCR.
---------------------------------------------------------------------------

    \167\ Estimating Total Sulfuric Acid Emissions from Stationary 
Power Plants, Version 2010a, 1020636, Technical Update, Electric 
Power Research Institute, April 2010).
---------------------------------------------------------------------------

    Another commenter (ADEQ) also stated that EPA discounts the impact 
of sulfuric acid mist that will be generated by SCR and overestimates 
the acid mist removal rate. The commenter indicated that testing at 
another facility shows H2SO4 removal to be closer 
to 57 percent rather than EPA's assumed 99 percent removal. The 
commenter noted that if H2SO4 emissions increase 
above the PSD significance threshold, a PSD permit and BACT analysis 
would be required. EPA's BART analysis fails to consider the costs 
associated with likely BACT requirements of low oxidation catalyst, 
fuel additives or sorbent injection with a polishing baghouse.
    Response: EPA's decision to discount the increase of 
H2SO4 caused by oxidation from the SCR catalyst 
was actually based on the 90 percent control figure; we erroneously 
wrote 99 percent (which applies to ammonia reduction from a wet 
scrubber). This figure is from the 0.10 percent penetration for 
baghouses, the only one available for baghouses in the EPRI report. It 
is not clear that results from the testing at FCPP referenced by the 
commenter may be applied directly to Cholla given the differences 
between the facilities. In addition, the full test results were not 
provided, so we cannot rely on the commenter's figures.
    In any case, EPA does not believe that BART is the appropriate 
context for addressing this issue. Actual measurements of baseline 
sulfuric acid emissions have not yet been determined at Cholla. 
Moreover, the calculation of projected sulfuric acid emissions after 
installation and operation of SCR using the EPRI methodology is 
dependent on future decisions made by the facility on the type of SCR 
catalyst and number of layers used, as well as numerous assumptions 
about loss to downstream components (i.e., air preheaters and 
baghouses), the true values of which are currently not yet defined or 
known for Cholla. An increase in sulfuric acid emissions from the 
installation of SCR may trigger major modification PSD permit 
requirements at a low threshold of seven tons per year.\168\ 
Preconstruction permitting review may also be triggered from 
significant emissions increases of PM2.5 from SCR 
installation at Cholla. If one of these pollutants triggers PSD, the 
permitting authority must provide an Additional Impact Analysis under 
the PSD program. The PSD program also requires the permitting authority 
to determine BACT for pollutants that triggered PSD. For these reasons, 
Region 9 has determined that for Cholla, emission limits and monitoring 
requirements for sulfuric acid are more appropriately reviewed in the 
preconstruction permitting process.
---------------------------------------------------------------------------

    \168\ See 40 CFR 52.21(b)(23)(i).
---------------------------------------------------------------------------

    Nevertheless, EPA conducted additional CALPUFF modeling to assess 
the visibility effect of increased sulfuric acid due to the SCR 
catalyst. One scenario used the existing modeling for Cholla, but added 
in SCR sulfate calculated by the method in the EPRI document. Since the 
existing modeling used sulfate calculated using PM speciation 
spreadsheets provided by the National Park Service, this scenario mixes 
two calculation methods and may not be reliable. The sulfate in the 
existing modeling is so large that the additional SCR sulfate from the 
EPRI method increases total sulfate by only about 5 percent. Visibility 
benefits only decreased by about three percent at Petrified Forest, and 
by an even smaller fraction at other areas. To assess the SCR sulfate 
effect in a more consistent manner, EPA calculated sulfate using the 
EPRI method throughout the base case for SCNR, and for SCR. All cases 
used a merged stack for Units 2 and 3 and consistent speciation for all 
units (formerly the speciation for Unit 2 differed from the others). 
The sulfate emissions from the EPRI method are much lower than from the 
NPS spreadsheets, but SCR increases that amount by a factor of six 
(even with the increase the total is still far lower than used in the 
original modeling). The visibility impacts for all cases are 
substantially lower than in the former modeling; the maximum area base 
case impact is 3.51 dv at Petrified Forest compared to 4.53 dv 
previously. But for some areas the impacts from controls declined more 
than the impacts from the base case, leading to the somewhat surprising 
result that the improvement due to controls actually increased relative 
to the original modeling. The maximum area benefit of SCR in the new 
modeling is 1.55 dv compared to 1.34 dv in the original. The cumulative 
area benefit decreased very slightly to 7.19 dv compared to 7.21 in the 
original. Based on this improved estimate of sulfate emission based on 
the EPRI method, the case for SCR appears to be strengthened, since the 
maximum visibility improvement is larger than originally estimated.
e. Other Comments
    Comment: One commenter (NPS) agreed with EPA's conclusions on 
Cholla that the visibility improvement associated with the most 
stringent option (SCR with LNB and OFA) is substantial; that SCR with 
LNB and OFA is cost-effective on an average basis as well as on an 
incremental basis when compared to the next most stringent option (SNCR 
with LNB and OFA); and that NOX BART for Cholla Units 2, 3 
and 4 is SCR with LNB and OFA, with an associated emission limit for 
NOX on each of the units of 0.050 lb/MMBtu, based on a 
rolling 30-boiler-operating-day average.
    Response: We acknowledge the comment.
    Comment: One commenter (APS) estimated that EPA's proposed controls 
on Cholla Units 2 and 3 will cost $248 million and $103 million, 
respectively, and increase the costs of electricity from those units by 
over 25 percent. The commenter stated that given the current market 
price for natural gas, the proposed BART requirements, expected coal 
ash regulations, and potential future carbon legislation could 
jeopardize the long-term economic viability of the entire plant. The 
commenter also stated that EPA did not consider the impacts of 
requiring SCR on ratepayers' monthly bills, which would be about 2 
percent to accommodate SCR alone. In addition, the commenter is 
concerned about potential impacts on the transmission grid in Arizona, 
the local economy due to lost jobs, and a reduced diversity in APS's 
fuel mix if Cholla was to close.
    Response: It is not EPA's intention to endanger the economic 
viability of Cholla or to place an undue burden on APS's customers. 
Neither the CAA nor the RHR requires states or EPA to consider the 
affordability of controls,

[[Page 72551]]

ratepayer impacts or potential job losses as part of a BART analysis. 
Rather, they require consideration of ``the costs of compliance, the 
energy and non-air quality environmental impacts of compliance, any 
existing pollution control technology in use at the source, the 
remaining useful life of the source, and the degree of improvement in 
visibility which may reasonably be anticipated to result from the use 
of such technology.'' \169\
---------------------------------------------------------------------------

    \169\ CAA section 169A(g)(2), 42 U.S.C. 7491(g)(2); 40 CFR 
51.308(e)(1)(ii)(A).
---------------------------------------------------------------------------

    APS's comments appear to be based in part on a misunderstanding 
that an analysis of ``non-air quality environmental impacts'' must 
include economic effects. In fact, the plain language of the statute, 
as well as the RHR, makes clear that this factor is limited to non-air 
quality environmental impacts.\170\ The BART Guidelines note that 
examples of such impacts would include ``solid or hazardous waste 
generation and discharges of polluted water from a control device.'' 
\171\
---------------------------------------------------------------------------

    \170\ Id.
    \171\ BART Guidelines section IV.D.4.h
---------------------------------------------------------------------------

    The BART Guidelines do allow for (but do not require) the 
consideration of ``significant economic disruption or unemployment'' as 
part of ``energy impacts.'' Specifically, the Guidelines provide that:

    * * * the energy impacts analysis may consider * * * whether a 
given alternative would result in significant economic disruption or 
unemployment. For example, where two options are equally cost 
effective and achieve equivalent or similar emissions reductions, 
one option may be preferred if the other alternative results in 
significant disruption or unemployment.\172\
---------------------------------------------------------------------------

    \172\ Id. section IV.E.2.

The Guidelines also allow for consideration of ``affordability'' as 
---------------------------------------------------------------------------
part of the ``costs of compliance'' under certain circumstances:

    1. Even if the control technology is cost effective, there may 
be cases where the installation of controls would affect the 
viability of continued plant operations.
    2. There may be unusual circumstances that justify taking into 
consideration the conditions of the plant and the economic effects 
of requiring the use of a given control technology. These effects 
would include effects on product prices, the market share, and 
profitability of the source. Where there are such unusual 
circumstances that are judged to affect plant operations, you may 
take into consideration the conditions of the plant and the economic 
effects of requiring the use of a control technology. Where these 
effects are judged to have a severe impact on plant operations you 
may consider them in the selection process, but you may wish to 
provide an economic analysis that demonstrates, in sufficient detail 
for public review, the specific economic effects, parameters, and 
reasoning.\173\
---------------------------------------------------------------------------

    \173\ Id. section IV.E.3.

Thus, only under ``unusual circumstances'' where a potential control 
option is expected to have a ``severe impact on plant operations'' or 
``result in significant economic disruption or unemployment'' can we 
consider economic effects as part of a BART determination. In this 
case, APS has provided no evidence to support its assertions that our 
proposed FIP would result in significant rate increases, jeopardize the 
plant's operations, or result in any other economic effects. In the 
absence of such evidence, APS's assertions regarding plant shutdown, 
rate increases and job losses are speculative, and we cannot consider 
them as part of our BART determination.
    Comment: One commenter (PacifiCorp) stated that because the 
regional haze actions in Arizona, Wyoming, Colorado and elsewhere will 
have an impact of $100 million or more on the company and its 
customers, EPA must conduct the regulatory analyses required by the 
Unfunded Mandates Reform Act (UMRA) and Actions Concerning Regulations 
That Significantly Affect Energy Supply, Distribution, or Use 
(Executive Order 13211) before reaching conclusions regarding BART 
controls or imposing a regional haze FIP.
    Response: The commenter is combining separate regulatory actions. 
The commenter is not correct in aggregating the potential private 
sector mandate of separate rules to evaluate whether UMRA applies. UMRA 
defines the term `Federal private sector mandate' to mean any provision 
in regulation that would impose an enforceable duty upon the private 
sector. Under UMRA, the term ``regulation'' or ``rule'' means any rule 
for which the agency publishes a general notice of proposed rulemaking. 
The rule being finalized today is limited to addressing the obligations 
of three facilities in Arizona and does not include other regional haze 
actions occurring in separate rulemakings, such as for Wyoming and 
Colorado.
    Under section 202 of UMRA, before promulgating any final rule for 
which a general notice of proposed rulemaking was published, EPA must 
prepare a written statement, including a cost-benefit analysis, if that 
rule includes any ``Federal mandates'' that may result in expenditures 
to State, local, and Tribal governments, in the aggregate, or to the 
private sector, of $100 million or more (adjusted for inflation) in any 
1 year. Under Title II of UMRA, EPA has determined that this rule does 
not contain a Federal mandate that may result in expenditures that 
exceed the inflation-adjusted UMRA threshold of $100 million (in 1996 
dollars) by State, local, or Tribal governments or the private sector 
in any one year. Even using the higher cost estimates in our 
supplemental analysis for the FIP we are finalizing today, we estimate 
that the total annual costs in the aggregate will not exceed $65 
million.\174\ Finally, this rule is not subject to Executive Order 
13211 (66 FR 28355 (May 22, 2001)), because it is not a significant 
regulatory action under Executive Order 12866.
---------------------------------------------------------------------------

    \174\ Using total annual costs from our supplemental analysis, 
annual aggregate cost equals $64,378,422. This amount consists of: 
$9,906,206 for Cholla Unit 2, $9,448,912 for Cholla Unit 3, and 
$13,590,853 for Cholla Unit 4 (See Table 10 of this NFRM); 
$12,103,941 for Coronado Unit 1 and $235,982 for Coronado Unit 2 
(See Tables 15 and 13 of this NFRM); and $9,546,264 for each of 
Apache Units 2 and 3 (See Table 5 of this NFRM).
---------------------------------------------------------------------------

    Comment: One commenter (APS) disagreed with EPA's conclusion that 
the use of anhydrous ammonia does not pose significant additional 
safety concerns compared to aqueous ammonia and urea. The commenter 
contends that while anhydrous ammonia would be transported by rail, 
safety concerns are not eliminated because the severity of damage in an 
accident can be much greater, if less frequent than truck accidents, 
and constitutes a much higher risk after delivery. Due to the hazards 
of moving and storing anhydrous ammonia, the Department of Homeland 
Security and EPA have additional requirements for anhydrous ammonia 
that result in additional costs to use it. Urea costs more than 
anhydrous ammonia, but it is safer and less expensive to use and store. 
Due to these factors the commenter stated that SNCR and SCR costs 
should include the use of urea rather than anhydrous ammonia.
    Response: The BART analyses submitted by APS indicate that the 
annualized cost of urea at each of the Cholla units would be less than 
the annualized cost of anhydrous ammonia.\175\ In addition, the cost 
estimates provided by APS in comments are based on the use of urea as a 
reagent. Accordingly, we have used the cost for urea in our 
supplemental cost analysis.
---------------------------------------------------------------------------

    \175\ See BART Analysis for Cholla Unit 2, Appendix A, Economic 
Analysis, Input Calculations; BART Analysis for Cholla Unit 3, 
Appendix A, Economic Analysis, Input Calculations; BART Analysis for 
Cholla Unit 4, Appendix A, Economic Analysis, Input Calculations.
---------------------------------------------------------------------------

    Comment: One commenter (APS) noted that Cholla has a long history 
of installing pollution control equipment,

[[Page 72552]]

has participated in a voluntary emissions reduction project, and has 
spent over $473 million to reduce emissions. While Unit 1 at Cholla is 
not BART-eligible, it is equipped with a wet-tray absorber to control 
SO2, a fabric filter to control particulates, and LNB with 
OFA to control NOX emissions. Unit 2 is BART-eligible and 
has a mechanical dust collector for particulate control, a wet flooded-
disk venturi scrubber and absorbers to control SO2, 
additional particulate controls, and LNB with OFA to control 
NOX emissions. Units 3 and 4 have wet open-spray FGD 
absorber to control SO2, fabric filters to control 
particulates, and LNB with OFA to control NOX emissions. 
Unit 2 is scheduled to upgrade its SO2 and particulate 
controls to be identical to Units 3 and 4 by January 1, 2016.
    Response: We appreciate that APS has installed various controls on 
the Cholla units over the last several years and we have taken these 
existing controls into account as part of our BART analysis for 
NOX.\176\ However, we note that, even with all of these new 
controls, emissions from Cholla still cause visibility impairment at 
nine Class I areas and contribute to impairment at an additional two 
areas.\177\
---------------------------------------------------------------------------

    \176\ 77 FR 42854, July 20, 2012 (noting that ``[t]he baseline 
emissions used by EPA reflect current fuels and control technologies 
in place at the facilities, as well as regulatory requirements the 
facilities will be required to meet independent of EPA's BART 
determination.'').
    \177\ See 77 FR 42861, July 20, 2012, Table 20 (showing baseline 
impacts from Cholla of over 1 dv at nine Class I areas, and impacts 
of over 0.5 dv at eleven areas).
---------------------------------------------------------------------------

    Comment: One commenter (APS) requested that EPA allow the 
flexibility of averaging NOX emissions across all the BART-
eligible units at the plant. The commenter stated that allowing for 
this flexibility would make no difference from a visibility improvement 
perspective.
    Response: We agree with the commenter, and have finalized a single 
NOX emission limit across Cholla Units 2, 3 and 4.
3. Comments on Coronado Units 1 and 2
a. Selection of Baseline Period
    Comment: Two commenters (ADEQ and SRP) stated that EPA's selected 
baseline emissions period inappropriately eliminated consideration of 
LNB with OFA as a viable BART control strategy. SRP asserted that EPA's 
decision to include LNB with OFA in its baseline NOX 
emissions estimate cannot, consistent with the BART rules, foreclose 
consideration of those controls as BART for Coronado, and that EPA's 
failure to consider these controls in its BART assessment makes the 
proposed rule invalid. The commenter added that emission reductions 
already achieved at the facility using LNB with OFA should not be 
ignored in EPA's analysis simply because EPA delayed review of ADEQ's 
SIP until 2012. The commenter concluded that EPA should give deference 
to the baseline emissions period selected by the State in its SIP 
analysis and fully consider LNB with OFA as an appropriate basis for 
BART emission limitations for Coronado.
    Another commenter (NPS) preferred the use of a baseline period 
before the installation of LNB with OFA instead of the post-
installation period (May 16, 2009 to December 31, 2010) used by EPA. 
For Unit 2, the commenter stated that the federally enforceable limit 
of 0.080 lb/MMBtu is a realistic depiction of future emissions even 
though the required SCR system has not yet been installed.
    Response: As explained in the general discussion regarding 
selection of baseline periods above, we disagree that our use of 
updated baseline periods for BART determinations is inappropriate or 
inconsistent with the CAA or the RHR. Moreover, updating the baseline 
did not eliminate LNB with OFA from consideration as BART for Coronado 
Unit 1, since existing controls can constitute BART, if additional 
controls are not warranted based on the five-factor analysis. For 
example, EPA recently approved a determination by Colorado that 
existing LNB at Comanche Units 1 and 2 constituted BART where ``the 
State determined that the added expense of achieving lower limits 
through different controls was not reasonable based on the high cost-
effectiveness [$9,900/ton] coupled with the low visibility improvement 
(under 0.2 dv) afforded.'' \178\ In the case of Coronado, by contrast, 
the cost-effectiveness of post combustion controls is reasonable and 
the expected visibility improvements are substantial, as explained 
below. Nonetheless, in order to address the commenter's concerns that 
we did not properly consider LNB with OFA as a potential control 
option, and therefore precluded a BART determination of LNB with OFA, 
we have used a baseline period of 2001-2003, which corresponds to the 
period used in SRP's original BART analysis. Our supplemental cost 
analysis for Coronado is summarized in Table 15.\179\
---------------------------------------------------------------------------

    \178\ 77 FR 18052, 18066 (March 15, 2012) (Proposed Rule); pre-
publication version of Final Rule, signed September 10, 2012, 
available at: http://www.epa.gov/region8/air/FinalActionOnColoradoRegionalHazePlanSep2012.pdf.
    \179\ A spreadsheet titled ``Supplemental Cost Analysis 2012-11-
15.xls'' is in the docket.
---------------------------------------------------------------------------

b. Control Efficiencies
    Comment: One commenter (SRP) stated that the SNCR NOX 
emission rate evaluated by EPA is incorrect. The commenter cited an 
SNCR conceptual design estimate prepared by S&L (attached to the 
submission) asserting that, based on an initial review of SNCR 
implementation at Coronado, the expected NOX reductions 
would be 25 percent and notes that additional studies would be needed 
to guarantee this performance. According to the commenter, this 
estimate also was verified by an independent vendor, FuelTech, whose 
assessment was also attached to the submission.
    The commenter (SRP) assumed that EPA evaluated an emission limit 
that is based on a higher reduction efficiency (i.e., 30 percent) 
applied to a starting NOX emission limit of 0.30 lb/MMBtu. 
According to the commenter, given Coronado's current NOX 
emissions limit of 0.320 lb/MMBtu following the installation of LNB 
with OFA on each of the units and an SNCR control efficiency of 25 
percent, the appropriate NOX emission rate to use in the 
BART analysis would be 0.24 lb/MMBtu, rather than EPA's assumed value 
of 0.21 lb/MMBtu. The commenter contended that this NOX 
emission rate (i.e., 0.24 lb/MMBtu) represents a level that can likely 
be achieved on a consistent basis based on input from SRP's vendors who 
have specific SNCR implementation experience.
    Response: We partially agree with this comment. Coronado Unit 1 
currently operates with a federally-enforceable NOX emission 
limit of 0.320 lb/MMBtu.\180\ A review of recent emission data in CAMD 
indicates NOX emission levels below this limit. As noted in 
our response to SRP's comments regarding SCR, we agree that when using 
an annual average design emission rate to establish a rolling 30-day 
limit that will apply during periods of startup, shutdown, and 
malfunction events, it is appropriate to include some type of measure 
that provides a compliance margin.
---------------------------------------------------------------------------

    \180\ See Coronado Title V Permit, Attachment B, section 
II.E.1.a.ii.
---------------------------------------------------------------------------

    In submitted comments, SRP provided a conceptual design estimate 
for SNCR which was based upon 25 percent control efficiency 
(incremental from LNB) and a resulting emission rate of 0.24 lb/MMBtu. 
While this control efficiency is less than the 30 percent

[[Page 72553]]

control efficiency used by our contractor, we consider it to be a 
reasonable estimate based upon the vendor quotes provided by SRP.\181\ 
When using a control efficiency of 25 percent and our baseline period 
of LNB performance for Coronado Unit 1, we estimate an annual average 
SNCR emission rate of 0.22 lb/MMBtu.
---------------------------------------------------------------------------

    \181\ Although the report cites lower NOX 
concentrations, due to the lower inlet NOX emission rate, 
removal efficiency is also reduced making it more difficult to 
reduce NOX emissions.
---------------------------------------------------------------------------

    For the purposes of our cost calculations and visibility modeling, 
however, we have retained the use of our original SNCR emission rate 
(0.21 lb/MMBtu). A less stringent SNCR emission rate, by itself, would 
primarily make the next most stringent control option, SCR, appear to 
remove a greater amount of emissions. This in turn would make the SCR 
control option appear more incrementally cost-effective by removing a 
greater amount of emissions, relative to SNCR, for the same cost. As 
discussed in our proposal and in response to comments, we already 
consider SCR to be cost-effective. It is not determinative to our 
decision to find that SCR is ``even more'' incrementally cost-
effective.
    In the context of establishing a BART emission limit consistent 
with the use of SNCR technology, however, we would use the annual 
average SNCR emission rate of 0.22 lb/MMBtu as our basis, rather than 
our original estimate based on 30 percent SNCR control efficiency. As 
noted in a separate response, when using an annual average design 
emission rate to establish a rolling 30-day limit that would apply 
during periods of startup, shutdown, and malfunction, we consider it 
appropriate to provide some type of measure that provides a compliance 
margin for such events. A 0.24 lb/MMBtu emission limit, as requested by 
SRP, established on a rolling 30-day average represents about a 10 
percent increase from the 0.22 lb/MMBtu annual average emission rate. 
We would consider this magnitude of upward revision appropriate to 
accommodate startup, shutdown, and malfunction events as well as the 
unit cycling nature of Coronado Unit 1. As a result, we would consider 
the BART emission limit corresponding to the SNCR with LNB and OFA 
option to be 0.24 lb/MMBtu.
    Comment: One commenter (SRP) stated that EPA improperly ignored the 
Coronado consent decree in its selection of the proposed BART controls 
for NOX. The commenter noted that ADEQ determined that 
NOX BART for Coronado Units 1 and 2 is LNB with OFA and a 
corresponding emission limit of 0.320 lb/MMBtu, making Units 1 and 2 
currently subject to a 0.320 lb/MMBtu NOX limit. The 
commenter added that Unit 2 will be subject to a 0.080 lb/MMBtu 
NOX emission limit as soon as the SCR for that unit is 
installed and operational (i.e., by June 1, 2014), pursuant to the 
consent decree, a limit that is significantly more stringent than what 
the state determined to be BART for Coronado.
    The commenter (SRP) asserted that the consent decree controls are 
better than BART. The commenter pointed out that once SCR is installed 
on Unit 2, the facility will be subject to a plant-wide emission limit 
of 7,300 tons of NOX per year under the consent decree 
which, according to the commenter, translates to an effective emission 
rate of 0.20 lb/MMBtu for Coronado as a whole, and is more stringent 
than the state's NOX BART determination and EPA's 
presumptive NOX limits.
    The commenter (SRP) also contended that EPA's BART rules support 
the conclusion that the existing and currently planned controls are 
better than NOX BART because those controls and emission 
rates were agreed to by SRP and EPA to resolve allegations of 
violations of certain requirements of the PSD program for both units. 
According to the commenter, those limits are intended to reflect 
compliance with the PSD program's BACT requirements. The commenter 
noted that BACT, by definition, reflects the maximum degree of control 
for new facilities or existing facilities undergoing a major 
modification while BART is to apply to unmodified existing sources. So 
BACT would be expected to be more stringent, and certainly not less 
stringent, than BART. The commenter quoted a recent EPA statement about 
the Four Corners Power Plant indicating that BART need not be 
equivalent to BACT (citing 77 FR 51620, 51636, August 24, 2012).
    The commenter (SRP) asserted that the BART rules reflect this 
understanding, providing that PSD settlement agreements generally 
satisfy BART requirements (citing 70 FR 39164). According to the 
commenter, EPA recently recognized this principle in its final regional 
haze rule for North Dakota in which EPA concluded that it was 
appropriate to rely on North Dakota's BACT determination for the two 
units at the Milton R. Young Station (0.36 lb/MMBtu and 0.35 lb/MMBtu) 
to satisfy BART because emissions control technology had not changed 
appreciably since that BACT determination (citing 77 FR 20897, April 6, 
2012). The commenter stated that a similar situation is present in the 
case of Coronado, and the recent PSD consent decree should, pursuant to 
the BART Guidelines, be deemed to satisfy BART.
    Response: We do not agree that we improperly ignored the existing 
consent decree in our proposed BART determination for NOX at 
Coronado, since we specifically took the consent decree into account 
throughout our NOX BART analysis.\182\ We also do not agree 
that the Coronado consent decree represents BACT or BART for 
NOX. While the consent decree concerned alleged violations 
of the PSD provisions of the CAA, it does not indicate that its 
provisions represent either BACT or BART. Rather, it specifically 
provides that:
---------------------------------------------------------------------------

    \182\ See 77 FR 42849-42850, July 20, 2012, (summarizing terms 
of consent decree), 42861-42862 (describing consideration of consent 
decree requirements in baseline for Coronado analyses), 42863 
(noting potential effect of consent decree activities on cost 
analysis), 42864 (proposing emission limit of 0.080 lb/MMBtu and 
compliance deadline of June 1, 2014 at Coronado Unit 2, consistent 
with the emission limit in the consent decree).

    Compliance with the terms of this Consent Decree does not 
guarantee compliance with all applicable federal, state, or local 
laws or regulations. The emission rates and removal efficiencies set 
forth herein do not relieve SRP from any obligation to comply with 
other state and federal requirements under the Clean Air Act * * * 
\183\
---------------------------------------------------------------------------

    \183\ Consent Decree in United States v. Salt River Project, CV 
08-1479-PHX-JAT (entered December 19, 2008).

While the BART Guidelines provide that NSR/PSD settlement agreements 
may represent BART in some instances, they do not establish a 
presumption that such settlements represent BART, nor do they indicate 
that a BART analysis is unnecessary where such a settlement 
exists.\184\ In Coronado's case, we do not agree that the consent 
decree represents BART for NOX for either unit or for the 
facility as a whole. Nonetheless, we are taking the consent decree into 
account in our BART determination for NOX at Coronado, as 
described below.
---------------------------------------------------------------------------

    \184\ BART Guidelines, 40 CFR Part 51, Appendix Y, section IV.C.
---------------------------------------------------------------------------

    Comment: In arguing against the achievability of EPA's proposed 
limit, two commenters (AUG and SRP) cited a report prepared by RMB 
Consulting & Research, Inc. (RMB) for the San Juan Generating Station 
in New Mexico, which reportedly states that the 0.05 lb/MMBtu limit 
imposed on that facility does not represent a consistently achievable 
level of emissions for the units at the facility. In addition, SRP 
contracted with RMB and Sargent and Lundy (S&L) to review the ability 
of the Coronado units to achieve the 0.050 lb/MMBtu emission limit 
proposed by EPA

[[Page 72554]]

using SCR control technology. Their reports were submitted as 
attachments to the commenter's submission. According to the commenter, 
both consultants concluded that a NOX BART limit of 0.050 
lb/MMBtu is not achievable at Coronado on a 30-day rolling average that 
includes periods of startup, shutdown, and malfunction. The commenter 
made the following arguments against the achievability of a limit of 
0.050 lb/MMBtu relying first on RMB's analysis and then on S&L's 
analysis.
    RMB's analysis stated that EPA did not adequately consider the 
impact of startup and shutdown emissions or the ability to measure such 
emissions in its BART determination. RMB examined operating data from 
2001 to 2011 in order to identify the number of startup events (both 
``cold'' and ``warm'' starts) and shutdown events associated with each 
unit. RMB's analysis shows that the average number of startup/shutdown 
events for Coronado Units 1 and 2 is one per month (each), and that the 
maximum number of startup/shutdown events is five per month (Coronado 
Unit 1) and six per month (Coronado Unit 2). RMB then developed a 
computer model to estimate the 30-day rolling average the Coronado 
units could achieve based upon the emissions profile of these startup/
shutdown events, the maximum number of startup/shutdown events, and an 
assumption of a NOX emission rate of 0.04 lb/MMBtu over the 
life of the catalyst. RMB's analysis indicates that the maximum 30-day 
average the units could achieve is well above 0.050 lb/MMBtu.
    S&L's analysis focused on the ability of Coronado Unit 2, which has 
been designed to achieve a 0.08 lb/MMBtu emission rate, to achieve a 
lower 0.05 lb/MMBtu emission rate. S&L's analysis considered multiple 
design changes and examined their potential impact on reducing the 
design emission rate, as well as the costs and design/construction time 
associated with these options. S&L concluded that, at a minimum, SRP 
would be required to install a low load temperature control system 
designed to increase flue gas temperatures at the SCR inlet during 
periods of low load cycling to achieve any additional reduction in 
average NOX emissions. S&L's analysis concluded that even 
with a low-load temperature control system, Unit 2 could not 
consistently achieve the proposed limit when periods of low-load 
cycling, startup and shutdown are taken into account, and could only 
achieve within the range of 0.053 to 0.072 lb/MMBtu.
    Finally, both AUG and SRP noted that the BART Guidelines authorize 
application of BART emission limits on a plant-wide basis, rather than 
a unit-by-unit basis, and that use of plant-wide limits would not 
affect the expected visibility benefits of controls. Therefore, they 
requested that EPA allow for plant-wide averaging at Coronado.
    Response: We partially agree with this comment. As noted by the 
commenters, the BART Guidelines recommend that states ``consider 
allowing sources to `average' emissions across any set of BART-eligible 
emission units within a fenceline * * *'' \185\ Given that such a 
``bubbling'' approach would not diminish the visibility benefits of 
controls, we have decided to finalize a single plant-wide limit across 
the two Coronado units.
---------------------------------------------------------------------------

    \185\ BART Guidelines, 40 CFR Part 51, Appendix Y, section V.
---------------------------------------------------------------------------

    In analyzing what emission limit would represent BART for 
NOX on a plant-wide basis, we have taken a number of factors 
into consideration. In our proposal, we used an annual average design 
value for SCR of 0.050 lb/MMBtu at Coronado Unit 1 and proposed an 
emission limit for this same value on a rolling 30-day average. At 
Coronado Unit 2, we proposed an emission limit of 0.080 lb/MMBtu, but 
solicited comment on whether a more stringent limit would be feasible 
and cost-effective for Unit 2. SRP submitted comments stating that an 
emission rate of 0.05 lb/MMBtu was not achievable by either unit, due 
to the startup/shutdown operating profile of the Coronado units. As 
noted in other responses, BART limits apply at all times including 
periods of startup, shutdown, and malfunction. As a result, we agree 
with commenters that when establishing a rolling 30-day BART emission 
limit that is based upon an annual average design value, it is 
appropriate to provide a compliance margin for periods of startup and 
shutdown. Therefore, we have taken into consideration the startup/
shutdown operating profile of the Coronado units.
    In submitted comments, SRP included reports prepared by S&L and RMB 
Consulting summarizing an analysis performed to determine the rolling 
30-day emission rates the units could achieve when accounting for 
startup and shutdown events, as well as the load cycling operating 
profile of the plant.\186\ The analyses in the two reports were based 
on slightly different assumptions. RMB's analysis, which examined both 
Coronado Units 1 and 2, included the following assumptions:
---------------------------------------------------------------------------

    \186\ In addition to the final reports, SRP provided certain 
supporting spreadsheets upon request. We have placed these 
spreadsheets in the docket.
---------------------------------------------------------------------------

     Five to six startups (1 cold/remainder warm) per month 
(which is the maximum observed based on 2001 to 2011 historical 
performance);
     Startup emissions based on the maximum value observed 
during that startup period;
     Non-startup periods of operation based on historical load 
operation, which consists of a mixture of low load and high-load 
cycling operation;
     Inclusion of a low load temperature control system; and
     Maintaining the catalyst guarantee of 0.04 lb/MMBtu during 
full load, steady-state operations over the life of the catalyst.

The analysis performed by S&L examined only Coronado Unit 2, and was 
one element of S&L's broader analysis examining the ability of Coronado 
Unit 2 to meet a limit more stringent than the 0.080 lb/MMBtu limit in 
the consent decree. The analysis performed by S&L was based on the 
following assumptions:

     One to three startup events per month;
     Non-startup periods of operation based entirely on low 
load cycling scenario (40-100 percent gross load cycling);
     Inclusion of a low load temperature control system; \187\ 
and
---------------------------------------------------------------------------

    \187\ S&L's analysis also included emission modeling of Coronado 
Unit 2 without the low load temperature control system, which, as 
discussed in further detail below, is not part of the current SCR 
design.
---------------------------------------------------------------------------

     Maintaining the catalyst guarantee of 0.04 lb/MMBtu during 
full load, steady-state operations over the life of the catalyst.
    The results of both of these analyses indicates that the Coronado 
units could achieve a rolling 30-day emission rate in the range of 
0.053 to 0.072 lb/MMBtu based on all the assumptions listed above. We 
acknowledge that different assumptions, such as using fewer startups 
per month, or using a load operating profile during non-startup periods 
that corresponded to a greater fraction of high-load cycling 
operations, could produce a lower range of emission values. However, we 
find that the assumptions used in both analyses are reasonable based on 
the historic performance data supplied by SRP and its consultants. 
Therefore, we have concluded that a 0.050 lb/MMBtu emission rate is not 
achievable on a rolling 30-day average at either of the Coronado 
units.\188\ Nonetheless, we note

[[Page 72555]]

that the results of these analyses (particularly those produced by the 
RMB report) indicate that Coronado Unit 1 could meet a 0.050 lb/MMBtu 
limit on an annual average basis. As a result, we conclude that 0.050 
lb/MMBtu is appropriate as an annual average design value, but not as 
30-day rolling average emission limit at the Coronado units.
---------------------------------------------------------------------------

    \188\ Nonetheless, we note that the emission modeling results 
(particularly those produced by the RMB report) indicate that 
Coronado Unit 1 could meet a 0.050 lb/MMBtu limit on an annual 
average basis. As a result, we conclude that the use of a 0.050 lb/
MMBtu as annual average design value in our proposal was 
appropriate.
---------------------------------------------------------------------------

    With respect to Coronado Unit 2, we have also taken into account 
the fact that Unit 2 is already subject to a consent decree limit of 
0.080 lb/MMBtu with a compliance deadline of June 1, 2014. We consider 
the SCR system that SRP has designed to meet this limit to constitute 
``pollution control equipment in use at the source.'' Therefore, 
consistent with the BART Guidelines, we have considered various ways in 
which the performance of the current SCR design for Unit 2 could be 
improved.\189\ In its analysis examining whether the SCR system for 
Unit 2 could achieve an emission rate more stringent than the 0.080 lb/
MMBtu limit in the consent decree for which the SCR was designed, S&L 
examined a number of different potential measures. One of these 
measures was the installation of a low load temperature control system, 
which the current SCR design for Unit 2 does not include.
---------------------------------------------------------------------------

    \189\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.3.
---------------------------------------------------------------------------

    As described in the S&L report, periods of low load operation 
generally consist of operation between loads of 138 MW to 270 MW 
(operation above 270 MW can be considered ``high'' load). Broadly 
speaking, the temperature in the SCR system will fall below 599 degrees 
F during these periods of low load operation, which is the minimum 
temperature required for effective NOX control. A low load 
temperature control system increases the temperature at the SCR inlet 
in order to maintain 599 degrees F, allowing operation of the SCR 
system during periods of low load.\190\ Without this control system, 
the Coronado Unit 2 SCR system will not operate during periods of low 
load. Under EPA's visibility regulations, ``BART means an emission 
limitation based on the degree of reduction achievable through the 
application of the best system of continuous emission reduction * * 
*''\191\ While SCR represents the most stringent technology for 
NOX control, an SCR system that is designed not to function 
during a period of operation that represents a substantial fraction of 
the unit's overall operating profile cannot be considered continuous. 
In examining the installation of a low load temperature control system 
as an upgrade option to Coronado Unit 2, we note that the S&L report 
estimated the costs for the low load temperature control system as 
shown in Table 13.
---------------------------------------------------------------------------

    \190\ We note that this is not an unusual control system, and is 
commonly included in typical SCR systems. If SCR were to be 
installed on Coronado 1, for example, the information SRP has 
provided indicates that such a system would include a low load 
temperature control system.
    \191\ 40 CFR 51.301.

                     Table 13--S&L's Cost Estimates for Low Load Temperature Control System
----------------------------------------------------------------------------------------------------------------
                                                                    Annualized
                     Measure                       Capital cost    capital cost     Annual O&M     Total annual
                                                     \1\  ($)       \2\  ($/yr)    costs  ($/yr)   costs  ($/yr)
----------------------------------------------------------------------------------------------------------------
Low load temperature control system.............      $2,500,000        $235,982  ..............        $235,982
----------------------------------------------------------------------------------------------------------------
\1\ Represents the mid-range value of S&L's estimate of capital costs.
\2\ Capital costs annualized using a 7 percent interest rate over a 20 year lifetime.

    Although it is not clear what annual average emission rate can be 
achieved by Coronado Unit 2 with installation of a low load temperature 
control system, the upper range of rolling 30-day emission rates 
modeled for Coronado Unit 2 is 0.072 lb/MMBtu. We consider this a 
conservative estimate (i.e., a high estimate in this case, as the 
annual average number will certainly be lower than the 30-day value), 
and have used this emission rate with the cost information contained in 
the S&L report, to calculate the cost-effectiveness value shown in 
Table 14. Installation of a low load temperature controller results in 
a cost-effectiveness of $1,900/ton, which is in a range that we 
consider cost-effective.
    In addition, SRP stated that it considered the incremental 
visibility benefit of an emission limit more stringent than 0.080 lb/
MMBtu to be insignificant. In relation to installation of a low load 
temperature controller, we disagree. Specifically, SRP bases this 
comment on the visibility improvement associated with a 0.080 lb/MMBtu 
limit and a lower value such as 0.07 or 0.05. Visibility modeling, 
however, is based on the highest emission rate observed on a 24-hour 
average, not on a 30-day or annual average basis. Since Coronado Unit 2 
is not equipped with a low load temperature controller and therefore 
cannot operate the SCR during periods of low load operation, emissions 
from Coronado Unit 2 during these periods correspond to operation of 
LNB with OFA. A review of Coronado Unit 2's operating history since 
June 2011, which is approximately when LNB was installed, indicates 
several instances in which it operates at low load for periods that can 
exceed a 24-hour calendar day. Based on the Acid Rain Program data 
provided by SRP and included in CAMD, the longest such period of 
continuous low load operation extended from May 20 to May 22, 
2012.\192\ As a result, although equipped with an SCR system, the 
maximum 24-hour average emission rate for Coronado is more accurately 
represented by an emission rate corresponding to LNB and OFA, and not 
SCR.
---------------------------------------------------------------------------

    \192\ We have identified these dates in both sets of data, per 
``SRP 2 NOX analysis (EPA edits).xls'' and ``Coronado 2 
2011-12Q3 NOX Emission Data (daily).xls''.
---------------------------------------------------------------------------

    We consider this distinction crucial. In our base case modeling 
runs, the maximum 24-hour average emission rate modeled for Coronado 
Unit 2 was represented by a NOX emission rate of 0.08 lb/
MMBtu, corresponding to the emission limit for SCR in the consent 
decree. However, the highest 24-hour average emission rate is more 
accurately represented by a 24-hour period of low load operation, where 
the SCR system would not be operating. Based on Acid Rain Program data 
reported to CAMD, this corresponds to a NOX emission rate of 
0.23 lb/MMBtu and 13,684 lb/day.\193\ By allowing the SCR system to run 
during all loading periods, the installation of a low load temperature 
control system would result in a

[[Page 72556]]

decrease in the maximum 24-hour average emission rate from 0.21 lb/
MMBtu to 0.080 lb/MMBtu. The visibility improvement associated with 
this emission decrease at the single most affected Class I area is 0.52 
(Gila Wilderness). Cumulatively, across all of the affected Class I 
areas, this results in visibility improvement of 2.64 deciviews. We 
consider this degree of visibility improvement substantial, especially 
when taking into consideration the cost-effectiveness of installing a 
low load temperature control system.
---------------------------------------------------------------------------

    \193\ This represents the emission rate on April 1, 2012, which 
is the highest emitting day that consisted of 24 consecutive hours 
of low-load operation, as identified in ``SRP 2 NOX 
analysis (EPA edits).xls'' and ``Coronado 2 2011-12Q3 NOX 
Emission Data (daily).xls''.

                                                      Table 14--Coronado Unit 2: Cost-Effectiveness
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Emission            Emission rate \1\                                             Cost-
                                                            factor (lb/  --------------------------------  Removed (tpy)  Annual cost ($/  effectiveness
                                                              MMBtu)          (lb/hr)          (tpy)                            yr)           ($/ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
SCR+LNB+OFA (no low load temp ctrl sys).................           0.080             319           1,242  ..............  ..............  ..............
SCR+LNB+OFA (with low load temp ctrl sys)...............           0.072             287           1,118             124         235,982           1,900
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Emissions calculated based on 3,984 MMBtu/hr and 0.89 capacity factor, as used in the TSD for our proposal.

    In recognition of the work already performed by SRP to meet the 
consent decree emission limit of 0.080 lb/MMBtu for Unit 2, and to 
avoid interfering with SRP's ability to meet that requirement by the 
deadline of June 1, 2014, we have decided not to require a BART 
emission limit for Coronado 2 more stringent than 0.080 lb/MMBtu. 
Instead, we are finalizing a plant-wide NOX emission limit 
for Coronado of 0.065 lb/MMBtu on a rolling 30-day average, which will 
provide a sufficient compliance margin for startup and shutdown events. 
We are also structuring the compliance determination method so that, 
when one of the two units is not operating, its emissions from the 
preceding thirty boiler-operating-days will continue to be included in 
the two-unit average. We expect that SRP can meet this limit by 
installing a low load temperature control system on Unit 2 and an SCR 
system including a low load temperature control system on Unit 1. We 
are setting a compliance deadline for achieving this limit of five 
years from publication of this final rule, which will ensure that SRP 
has adequate time to design and install these controls without 
interfering with the consent decree deadline of June 1, 2014 for 
operation of SCR on Unit 2. Finally, we are including in the regulatory 
text of the FIP a requirement that pollution control equipment be 
designed and capable of operating properly to minimize emissions during 
all expected operating conditions, consistent with the regulatory 
definition of BART as ``an emission limitation based on the degree of 
reduction achievable through the application of the best system of 
continuous emission reduction for each pollutant which is emitted by an 
existing stationary facility.'' \194\
---------------------------------------------------------------------------

    \194\ 40 CFR 51.301. See also, CAA section 302(k), 42 U.S.C. 
7602 (defining ``emission limitation'' as ``a requirement 
established by the State or the Administrator which limits the 
quantity, rate, or concentration of emissions of air pollutants on a 
continuous basis, including any requirement relating to the 
operation or maintenance of a source to assure continuous emission 
reduction * * *'').
---------------------------------------------------------------------------

    Comment: While supporting EPA's determination that SCR is BART for 
Coronado Unit 1, one commenter (Earthjustice) stated that lower 
NOX emission limits are cost-effective and achievable. For 
Unit 1, the commenter made the following two points based on a report 
(the ``Sahu report'') submitted with the comments. First, SCR can 
achieve even greater NOX reductions at less cost than EPA's 
calculations. EPA failed to analyze whether an emission limit lower 
than 0.05 lb/MMBtu is achievable and cost-effective with SCR at Unit 1 
as required under the BART Guidelines. Second, the NOX 
emissions exiting Coronado Unit 1's boiler could be reduced 
significantly from the current rate of approximately 0.3 lb/MMBtu to a 
rate of 0.15 to 0.20 lb/MMBtu, which would result in a lower achievable 
emission rate. Neither ADEQ nor EPA analyzed the various methods of 
reducing these NOX emissions.
    The commenter (Earthjustice) noted that SRP submitted comments to 
EPA shortly before EPA issued the proposed rule arguing that SCR with a 
0.05 lb/MMBtu NOX emission limit is unachievable at Unit 1 
(and Unit 2).\195\ According to the commenter, SRP argued that EPA's 
proposal is not achievable by pointing to BART proposals in other 
states that required SCR with an emission limit less stringent than 
0.05 lb/MMBtu. The commenter countered that these BART determinations 
for other sources in other states do not show that EPA's BART proposal 
is unachievable at Coronado Unit 1, as BART determinations are source-
specific. The commenter added that SRP's comments provide no source-
specific data explaining why SCR at Unit 1 could not achieve a 0.05 lb/
MMBtu NOX emission limit. The commenter asserted that, in 
contrast, the Sahu report explains why an even lower 0.04 lb/MMBtu 
emission limit is achievable at Unit 1. Accordingly, the commenter 
believes that EPA should not weaken its BART proposal as SRP requested.
---------------------------------------------------------------------------

    \195\ Citing Docket Item C-16 (SRP Letter to DJordan 06-26-
2012).
---------------------------------------------------------------------------

    Response: We disagree with the commenter's assertion that our BART 
analysis should have examined the potential for lower ``boiler-out'' 
NOX emission rates.\196\ The commenter cites several 
examples of other coal-fired boilers using PRB coal achieving boiler-
out NOX emission rates in the range of 0.096 to 0.154 lb/
MMBtu, and points to these examples as evidence that the Apache and 
Coronado units could attain lower emission rates through the use of 
combustion controls. We note that the best performing units on this 
list are primarily tangential- or wall-fired units, and that none of 
the units appear to be Riley turbo-fired boilers. Particularly in the 
case of the Apache and Coronado units, which are turbo-fired boilers, 
we consider this distinction crucial when determining the appropriate 
units with which to compare emission performance. The Riley-turbo 
boiler is a unique wall-fired boiler design that is characterized by a 
venturi-shaped lower section (often described as a ``pinch'' in the 
boiler wall) with burners located on the underside of the pinched wall, 
tilted slightly downwards.\197\ It is a relatively uncommon design, 
with only two dozen such units currently in operation.\198\

[[Page 72557]]

The turbo boiler was developed in the 1960s and, unlike many other 
wall-fired boilers, was generally able to meet the NOX 
emission limits contained in the 1971 New Source Performance Standards 
for fossil fuel fired steam generators.\199\ While Babcock Power, which 
acquired Riley Stoker, has developed new burner upgrades to meet more 
stringent NOX emission standards, the combustion control 
designs available for turbo-fired boilers have not been through the 
same number of design iterations, and are therefore not as effective as 
those for other boiler types.\200\ We therefore do not consider it 
appropriate to compare the ``boiler-out'' emission rates of the Riley 
turbo design with those achieved by tangential and more traditional 
wall-fired units.
---------------------------------------------------------------------------

    \196\ As described by the commenter, the ``boiler-out'' 
NOX emission rate refers to the emission rate after 
including the effects of combustion controls such as low 
NOX burners, over-fire air, neural networks, adaptive 
controls, etc.
    \197\ See ``Design and Operation of Coal-fired TURBO furnaces 
for NOX control'', Riley Stoker Corporation, November 
1978.
    \198\ Acid Rain Program data indicates 22 turbo units were in 
operation in 2011.
    \199\ ``An Overview of Riley Stoker's Burner Development Efforts 
for NOX Control'', Riley Stoker Corporation, April 7, 
1983.
    \200\ ``Low NOX Combustion System Solutions for Wall 
Fired,T-Fired, and Turbo Fired Boilers.'' Babcock Power, August 28-
31, 2006.
---------------------------------------------------------------------------

    More specifically, combustion controls on Coronado 1 (LNB) were 
installed in 2009, and the commenter has not indicated any design 
improvements or upgrades that would achieve improved performance. We 
note that the baseline period for our analysis represented the use of 
combustion controls (in the form of LNB with OFA) and that our emission 
estimate of LNB is based on past actual emission data, as reported to 
CAMD, over the baseline period. As part of the supplemental cost 
analysis we performed, we used a baseline period that predated 
installation of LNB, and consisted of emission rates corresponding to 
OFA only.\201\ Comparing annual average emission rates during the 
periods prior to and following LNB installation, we note that Coronado 
Unit 1 has achieved approximately 25 percent reduction from installing 
LNB at an emission rate of approximately 0.30 lb/MMBtu. We consider 
these values reasonable, as it is supported by actual emission data and 
represents a control efficiency similar to the 30 percent control 
efficiency assumed by our contractor.
---------------------------------------------------------------------------

    \201\ Supplemental Cost Analysis 2012-11-15.xls.
---------------------------------------------------------------------------

    In addition, we disagree with the commenter's assertion that 0.04 
lb/MMBtu is an appropriate SCR emission limit to consider for Coronado 
Unit 1. As discussed in the previous response to SRP's comments, we 
have examined the analysis performed by SRP and determined that a 0.050 
lb/MMBtu emission rate is not achievable by Coronado Unit 1 on a 
rolling 30-day average. Although we note that SRP's analysis is based 
on a 0.04 lb/MMBtu emission rate at full load, steady state conditions, 
and that SRP's analysis indicates Coronado Unit 1 could achieve 0.050 
lb/MMBtu on an annual average basis, we do not consider this emission 
rate achievable as a rolling 30-day limit based on the number of 
startup and shutdown events associated with its operating profile.
    Comment: While supporting EPA's determination that SCR is BART for 
Coronado Unit 2, one commenter (Earthjustice) stated that lower 
NOX emission limits are cost-effective and achievable. For 
Unit 2, the commenter made four major points. First, the NSR consent 
decree does not exempt Coronado Unit 2 from a NOX BART 
determination based on a valid five-factor BART analysis. Second, 
contrary to the argument that the 0.08 lb/MMBtu limit on Coronado Unit 
2 under the consent decree was developed to address BACT obligations, 
that emission limit is not BACT, which requires a top-down analysis 
that selects the ``maximum degree of reduction.'' There is no BACT 
analysis in the consent decree and no explanation of how the 0.08 lb/
MMBtu emission limit was selected. In addition, while BACT requires 
case-by-case analysis, the consent decree limit was not specific to 
Unit 2; it simply required installation of SCR on one of the two units. 
Third, the negotiated limit contained in the NSR consent decree cannot 
replace the required five-factor BART analysis for Coronado Unit 2 
because BART is more stringent than the consent decree's emission 
limit. The Sahu report shows that an emissions limit lower than 0.08 
lb/MMBtu is cost-effective and achievable at Unit 2. Fourth, the 
NOX emissions exiting Coronado Unit 2's boiler could be 
reduced significantly from the current rate of approximately 0.33 lb/
MMBtu to a rate of 0.15 to 0.20 lb/MMBtu, which would result in a lower 
achievable emission rate. Neither ADEQ nor EPA analyzed the various 
methods of reducing these NOX emissions. SCR with a 0.04 lb/
MMBtu emission limit at Coronado Unit 2 is achievable with various 
control methods and is even more cost-effective than EPA`s calculations 
suggest. Because of this, the commenter requested that EPA revise its 
BART determination to reflect this lower level.
    The commenter (Earthjustice) stated that SRP has claimed that a 
NOX emission limit of 0.05 lb/MMBtu is unachievable based on 
its progress in constructing the SCR unit required by the NSR consent 
decree, but does not explain how construction progress to date would 
prevent it from calibrating the SCR to achieve a 0.05 lb/MMBtu emission 
limit (or a 0.04 lb/MMBtu limit). The commenter noted that EPA 
requested information concerning whether the amount and management of 
catalyst could be altered to meet a 0.05 lb/MMBtu NOX limit 
at Unit 2, but according to the commenter SRP did not provide any such 
information. As a result, the commenter urged EPA to revise its BART 
determination to require SCR with an emission limit lower than 0.08 lb/
MMBtu.
    Response: We disagree with the commenter's assertion that it is 
appropriate to consider lower ``boiler-out'' NOX emissions 
for Coronado Unit 2, for the same reasons we noted in the previous 
response for Coronado Unit 1 on this issue. We also disagree with the 
commenter's assertion that 0.04 lb/MMBtu is an appropriate SCR emission 
rate to consider for Coronado Unit 2, also for the same reasons we 
noted in the previous response for Coronado Unit 1 on this issue.
    We agree with the commenter's assertions that the consent decree is 
not a replacement for a five-factor BART analysis. We also agree that 
while the consent decree resolved NSR/PSD obligations such as BACT, a 
``top-down'' BACT analysis was not performed as part of the consent 
decree negotiations. Based on our review of SRP's August 24, 2012 
letter and submitted comments, we do not consider the SCR system for 
Coronado Unit 2, as currently designed, to constitute BART. As noted in 
the analysis contained in our response to SRP's comments, we consider 
the installation of a low-load temperature controller to be both cost-
effective and to result in substantial visibility improvement. We are 
not, however, finalizing a more stringent emission limit for Coronado 
Unit 2. Instead, we are finalizing a requirement that pollution control 
equipment be designed and capable of operating properly to minimize 
emissions during all expected operating conditions, consistent with the 
regulatory definition of BART as ``an emission limitation based on the 
degree of reduction achievable through the application of the best 
system of continuous emission reduction for each pollutant which is 
emitted by an existing stationary facility.'' \202\
---------------------------------------------------------------------------

    \202\ 40 CFR 51.301. See also, CAA section 302(k), 42 U.S.C. 
7602 (defining ``emission limitation'' as ``a requirement 
established by the State or the Administrator which limits the 
quantity, rate, or concentration of emissions of air pollutants on a 
continuous basis, including any requirement relating to the 
operation or maintenance of a source to assure continuous emission 
reduction * * *'').

---------------------------------------------------------------------------

[[Page 72558]]

c. Costs of Compliance
    Comment: One commenter (NPS) agreed with EPA that SRP did not 
provide ADEQ with control cost calculations at a level of detail that 
allowed for a comprehensive review. The commenter conducted analysis of 
the cost and cost-effectiveness of adding SCR to reduce emissions of 
NOX at Coronado Unit 1 using the cost methodologies of the 
CCM and relying on the IPM to reflect the most recent SCR cost levels, 
and submitted the detailed calculations as Appendix E to its comments. 
The commenter's analysis yielded a cost-effectiveness value of $2,540/
ton. The commenter noted that EPA's analysis yielded a cost-
effectiveness value of $2,405/ton, which EPA considers cost-effective. 
Another commenter (Earthjustice) also asserted that SCR at Coronado 1 
is cost-effective. When calculated based on an SCR emission rate of 
0.04 lb/MMBtu, and when accurate cost figures and proper baselines are 
used, the commenter asserts that SCR would reduce NOX 
emissions at a cost of just $2,024/ton of NOX removed.
    NPS commented that it was not able to conduct a cost analysis for 
Coronado Unit 2, on which SRP is installing SCR to meet an emission 
limit of 0.080 lb/MMBtu under a consent decree with EPA. However, the 
commenter used the CCM to evaluate the differences between an SCR on 
this unit at 0.050 lb/MMBtu versus 0.080 lb/MMBtu. According to the 
commenter, an SCR meeting the more stringent limit would have 
essentially the same footprint as the less effective unit, but would 
require an additional layer of catalyst and would be seven feet taller. 
The commenter presented basic design parameters for SCR units achieving 
the two levels of control.
    Response: We agree with NPS's assertion that SRP's cost figures, as 
provided in their original BART analysis and in the subsequent response 
to ADEQ's information request, were not sufficiently documented. While 
we also agree with the commenters' assertion that SCR with LNB and OFA 
is cost-effective, we decline to modify our estimates of cost- 
effectiveness to reflect the cost items noted in these comments, as it 
is not in any way determinative to our decision to find that SCR is 
``even more'' cost-effective, or that the incremental cost-
effectiveness value between SCR and SNCR is ``even more'' incrementally 
cost-effective.
    Comment: One commenter (SRP) argued that EPA's cost of compliance 
analysis for Coronado is flawed and must be replaced with 
site[hyphen]specific costs. The commenter asserted that EPA improperly 
ignored site[hyphen]specific cost estimates for Coronado BART control 
options by substituting its own estimates, and ignored the fact that 
Arizona has ``the lead role in designing and implementing [its] 
regional haze program'' and ``broad authority over BART 
determinations'' (citing Corn Growers, 291 F.3d at 3, 8). The commenter 
stated that ADEQ fully complied with the BART Guidelines and was 
justified in any deviation from the specific terms of the CCM because 
ADEQ engaged in a reasoned, site-specific cost analysis. The commenter 
added that ADEQ has discretion to conduct and document its cost 
assessment at a level that it deems appropriate, and that the 
documentation that supports ADEQ's BART determination is reasonable by 
any objective standard.
    The commenter (SRP) asserted that EPA improperly ignored 
site[hyphen]specific cost estimates for Coronado BART control options, 
instead using the IPM to calculate the capital costs and annual 
operating costs associated with the various NOX control 
options that EPA considered. Moreover, the commenter added that no cost 
estimate derived from a model designed to produce generalized 
information about utilities throughout the nation could satisfy the CAA 
requirement that BART be determined based on a site[hyphen]specific 
analysis. SRP provided adjusted inputs for use in IPM for unit size, 
gross heat rate, NOX removal factor, NOX removal 
efficiency, ammonia cost, operating labor rate, bare module costs, urea 
costs and property taxes and insurance. SRP asserted that when these 
values are used in the model, the IPM outputs validate the site-
specific costs provided by SRP (based on detailed SCR and SNCR cost 
comparisons provided in the comments), although the adjusted IPM 
results still under-predict the costs based on site-specific 
considerations.
    The commenter (SRP) stated that its site[hyphen]specific costs for 
SCR are based on the actual cost projections associated with the 
current SCR installation at Unit 2. The commenter stated that SRP has 
already made substantial progress on the Unit 2 SCR installation with 
more than 40 percent of the project already complete, with the 
engineering design effort more than 90 percent complete, and the 
overall procurement efforts more than 75 percent complete. As such, the 
commenter believes that the site[hyphen]specific costs are appropriate 
for use in any evaluation of BART controls.
    In addition, the commenter (SRP) indicated that its cost estimates 
for Unit 1 are conservative since they are based on actual costs 
experienced for Unit 2 for which SCR has been designed to achieve an 
emission limit of 0.080 lb/MMBtu, rather than the 0.050 lb/MMBtu 
assumed by EPA for Unit 1. According to the commenter, there could be 
additional costs for Unit 1 of as much as $117 million for additional 
catalyst and an increased ammonia emission rate, a dry sorbent 
injection control system to address increased sulfuric acid mist and 
condensable PM emissions, and a fabric filter baghouse and induced 
draft fans to address increased filterable PM emissions. The commenter 
stated that even without these additional costs, the site-specific cost 
estimate for an SCR system on Unit 1 is almost twice the value used by 
EPA in its BART determination, and for the SCR system on Unit 2, the 
actual cost incurred by SRP is likewise almost twice the value used by 
EPA in its BART determination. The commenter concluded that this 
documentation demonstrates the importance of using available site-
specific cost estimates when conducting a BART determination for 
Coronado.
    Response: We disagree with the commenter's assertion that the cost 
calculations SRP provided to ADEQ as part of the original BART 
analysis, or in the subsequent response to ADEQ's information request, 
were supported by sufficient documentation. For example, the annual O&M 
costs associated with an SCR system will involve such costs as reagent 
usage, catalyst replacement costs, and labor costs, among others. SRP 
provided no breakdown of annual O&M costs beyond the total annual O&M 
value. Similarly, SRP's capital cost estimates consist of only a total 
value, accompanied by a capital recovery factor to determine the 
corresponding annualized cost. This level of detail does not allow us, 
and could not have allowed ADEQ, to evaluate the reasonableness of 
SRP's cost estimates for Coronado. As noted in a previous response, we 
have identified several issues with the cost calculations performed for 
the Apache and Cholla units that are inconsistent with the methodology 
established by EPA's CCM. SRP's cost estimates do not provide 
sufficient detail for us to evaluate if they are consistent with CCM 
methodology.
    Although we do not agree that our cost-effectiveness estimates were 
incorrect, we have performed a supplemental analysis for Coronado 1 
using portions of the updated cost estimates provided by SRP in its 
comments. Our use of these cost estimates in this supplemental analysis 
should not be construed to represent an acceptance of SRP's revision to 
our IPM

[[Page 72559]]

assumptions. Rather, this supplemental analysis represents a 
conservative estimate of costs (i.e., an assumption that would tend to 
overestimate rather than underestimate the annualized cost of 
controls). A summary of cost estimates based on this supplemental 
analysis is displayed in Table 15.
     SRP's revised SNCR cost estimates: SRP also submitted a 
conceptual capital cost estimate for an SNCR system as part of its 
comments. This estimate has excluded cost items not allowed by the CCM, 
such as AFUDC, escalation, and owner's costs, and have been included in 
the supplemental analysis.
     Original baseline period: As discussed elsewhere in our 
responses, we consider our use of a more recent baseline as consistent 
with BART Guidelines. However, in order to address commenter's concerns 
that we did not properly consider LNB and OFA as a potential control 
option and therefore precluded a BART determination of LNB and OFA, we 
have used a baseline period of 2001-2003, which corresponds to the 
period used in SRP's original BART analysis. This represents a time 
period prior to the installation of LNB, during which the control 
technology in place on Coronado 1 was OFA-only.

                                Table 15--Coronado Unit 1: Control Cost Estimates
                                          [Per SRP with EPA revisions]
----------------------------------------------------------------------------------------------------------------
                                                                    Annualized
         Coronado 1  control technology            Capital cost    capital cost     Annual O&M     Total annual
                                                        ($)           ($/yr)       cost  ($/yr)    cost  ($/yr)
----------------------------------------------------------------------------------------------------------------
LNB+OFA.........................................      $6,500,000        $613,554              $0        $613,554
SNCR w/LNB+OFA..................................      14,164,000       1,336,981       5,829,800       7,166,781
SCR w/LNB+OFA...................................      80,633,219       7,611,205       4,492,736      12,103,941
----------------------------------------------------------------------------------------------------------------

    Regarding SRP's concern that its own costs for Coronado Unit 1 are 
conservative (i.e., underestimated in this context) because they are 
based on a Coronado Unit 2 design that achieves 0.080 lb/MMBtu instead 
of 0.050 lb/MMBtu, we partially agree. For Coronado Unit 2, SRP 
identified certain additional costs that would be associated with 
design changes necessary to meet an emission rate more stringent than 
the consent decree limit of 0.080 lb/MMBtu. The two most important 
changes would be increased levels of ammonia injection and additional 
SCR catalyst (in the form of an additional fourth catalyst layer at the 
time of initial catalyst fill). The SCR catalyst is responsible for a 
certain amount of SO2 to SO3 conversion, which 
can then form sulfuric acid (H2SO4). SRP notes 
that the additional fourth catalyst layer can be expected to result in 
a collateral increase in sulfuric acid (H2SO4) 
emissions. A dry sorbent injection (DSI) system may be needed to 
address this increase in sulfuric acid, which itself has the potential 
to increase filterable particulate emissions. Addressing this increase 
in filterable particulate emissions may in turn require installation of 
a fabric filter baghouse. Of the $117 million in capital costs 
identified by SRP, the majority of these costs ($113 million) are 
associated with construction of the DSI and fabric filter.
    While we agree that designing Coronado Unit 1 to meet an annual 
average emission limit of 0.050 lb/MMBtu will involve greater costs 
than a system designed to meet 0.080 lb/MMBtu, we disagree that the 
costs for Coronado Unit 1 are of the magnitude of those described above 
for Coronado Unit 2. Based on SRP's comments, we note that the SCR 
reactor box for Unit 2 has been designed for a ``3+1'' configuration 
(i.e., an initial three catalyst layers, with space for a fourth layer 
to be added later in the system's lifetime to maintain the same level 
of effectiveness) and has perhaps already been fabricated. As a result, 
accommodating additional catalyst cannot be achieved by increasing the 
volume of the initial three layers, but must be achieved by including 
the fourth catalyst layer (or some portion of it) during the initial 
fill. Since each catalyst layer is designed for a certain amount of 
SO2 to SO3 conversion, inclusion of an additional 
layer unavoidably results in an increase in the overall conversion 
rate. However, since an SCR system for Coronado Unit 1 has not been 
designed, we consider it feasible for SRP to specify a design at the 
outset that accommodates additional volume in the initial catalyst 
layers, thereby achieving a more stringent emission rate without the 
higher SO2 to SO3 conversion rate associated with 
a fourth catalyst layer. Moreover, even if SRP were required to install 
a DSI system or DSI and a fabric filter, EPA does not agree that these 
costs should be considered part of the cost of compliance for the 
purposes of a BART determination. EPA cannot anticipate what control 
technology might be required in the future for sulfuric acid mist under 
PSD or minor NSR. The BART Guidelines do not require the inclusion of 
potential future costs that might be associated with permit 
requirements as part of the cost estimates for a BART determination.
    Therefore, while we acknowledge that there are costs associated 
with additional catalyst and increased ammonia injection, they 
represent a small fraction ($4 million) of the $117 million total 
identified by SRP. We have used certain elements from SRP's estimates 
in preparing our supplemental cost analysis for Unit 1, but we have not 
adjusted SRP's estimates to reflect these factors since the cost 
estimates provided by SRP do not include a level of detail that would 
allow us to properly make such adjustments.
    A summary of emission rates and emission reductions associated with 
each control option is in Table 16. As noted previously, these emission 
estimates are based on a 2001-2003 baseline period, during which the 
Coronado units operated only with OFA. We have calculated annual 
emission rates for the OFA baseline using the annual average emission 
data (lb/MMBtu) reported to CAMD over this 2001-2003 baseline period.

[[Page 72560]]

                                                     Table 16--Coronado 1: Annual Emission Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Emission                         Annual               Emission rate
              Coronado 1 control technology                factor  (lb/      Heat rate       capacity    --------------------------------    Emissions
                                                            MMBtu) \1\      (MMBtu/hr)        factor          (lb/hr)          (tpy)      removed  (tpy)
--------------------------------------------------------------------------------------------------------------------------------------------------------
OFA (only)..............................................           0.407           4,316            0.84           1,756           6,462  ..............
LNB+OFA.................................................           0.303           4,316            0.84           1,308           4,811           1,651
SNCR w/LNB+OFA..........................................           0.212           4,316            0.84             915           3,368           3,095
SCR w/LNB+OFA...........................................           0.050           4,316            0.84             216             794           5,669
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Annual average basis.

    Cost-effectiveness values for each control technology are 
summarized in Table 17, and are based on the total annual costs and 
annual emissions removed listed in the previous tables.

                             Table 17--Coronado 1: Control Option Cost-Effectiveness
----------------------------------------------------------------------------------------------------------------
                                                                                    Cost-effectiveness  ($/ton)
          Coronado 1 control technology            Total annual      Emissions   -------------------------------
                                                   cost  ($/yr)   removed  (tpy)       Avg.            Incr.
----------------------------------------------------------------------------------------------------------------
OFA (only)......................................  ..............  ..............  ..............  ..............
LNB+OFA.........................................        $613,554           1,651            $372  ..............
SNCR w/LNB+OFA..................................       7,166,781           3,095           2,316           4,540
SCR w/LNB+OFA...................................      12,103,941           5,669           2,135           1,918
----------------------------------------------------------------------------------------------------------------

    Based on SRP's capital and O&M cost estimates, we still consider 
the cost-effectiveness values of SCR, on an average ($2,135/ton) and 
incremental ($1,918/ton) basis, to not be cost-prohibitive. We consider 
these results supportive of our proposed determination that SCR with 
LNB and OFA is cost-effective. We note that while the LNB and OFA 
option is the least expensive (i.e., lowest annual cost) and is the 
most cost-effective of the control technologies (i.e., has the lowest 
$/ton value), it is also the least effective control option (i.e., 
removes smallest quantity of NOX). It removes substantially 
fewer emissions than either of the other two control options, the SNCR- 
and SCR-based systems. As discussed in our proposed action, and in 
other responses in this document, we have not identified any energy or 
non-air quality impacts that warrant eliminating SCR from consideration 
for Coronado Unit 1. Combined with the modeled visibility improvement 
associated with the SCR control option, SRP's cost estimates continue 
to support the selection of SCR with LNB and OFA as BART for Coronado 
1.
    Comment: One commenter (SRP) stated that the proposed rule and the 
TSD say almost nothing about how IPM was used to calculate costs, 
instead directing the public to an EPA contractor report for more 
information. The commenter asserted that no contractor report in the 
docket for the rulemaking supplies additional detail on precisely how 
IPM was used. The commenter added that this failing renders EPA's 
proposed rule inconsistent with the CAA's public notice requirements.
    Response: We disagree with the commenter's assertion that we have 
not provided sufficient information regarding our cost calculations. In 
the e-docket for our proposal, we included the raw cost calculation 
spreadsheets from our contractor that contain the IPM equations, 
corresponding variable values, selected notes regarding assumptions and 
variable ranges, as well as selected tables from the IPM Base Case 
v4.10.\203\ In addition, Web links were provided (both in the raw cost 
calculation spreadsheet and in our proposal) to the location on the 
publicly available EPA Web site that contains full IPM documentation.
---------------------------------------------------------------------------

    \203\ Document ID: EPA-R09-OAR-2012-0021-0008, File name: G-15--
MODELING--FILES--EGU--BART--Costs--Apache--Cholla--Coronado--FINAL2.
---------------------------------------------------------------------------

    Comment: One commenter (SRP) stated that EPA failed to follow the 
BART Guidelines by not conducting an incremental cost analysis for 
Coronado. According to the commenter, the proposed rule and TSD both 
provide a single entry for incremental costs for each of the Coronado 
units that reflect the incremental cost of the most stringent 
NOX BART control option compared to the baseline. The 
commenter asserted that this is not a complete incremental analysis 
because it ignores incremental comparisons between identified control 
options. SRP contended that in the absence of a proper NOX 
BART assessment, the proposed rule lacks an adequate foundation. The 
commenter stated that the high incremental costs of post-combustion 
NOX control technologies when compared to combustion control 
technologies reinforces the conclusion that post-combustion control 
technologies cannot be the basis for BART for the units at Coronado.
    Response: We disagree with the commenter's assertion that we did 
not perform a sufficient incremental cost analysis for the Coronado 
units. In our control cost summaries (Table 22 in the proposed rule and 
Table 32 in the TSD), the column labeled ``incremental cost-
effectiveness'' represents the $/ton of the control option when 
compared to the preceding control option. The column labeled ``average 
cost-effectiveness'', represents the $/ton of the control option when 
compared to the baseline control. In the case of Coronado Unit 1, we 
considered two control options beyond the baseline: SNCR with LNB and 
OFA, and SCR with LNB and OFA. The ``single entry for incremental 
costs'', as described in the comment, represents the incremental cost 
between the SNCR- and SCR-based options. An incremental cost value was 
not calculated between LNB with OFA (which is the option preceding the 
SNCR-based option) and SNCR because LNB with OFA represented the 
baseline control in our analysis. The cost-effectiveness of moving from 
LNB with OFA to SNCR with LNB and OFA is therefore

[[Page 72561]]

adequately captured in the ``average cost-effectiveness'' column. We do 
note that, in our supplemental cost analysis, we have used OFA as the 
baseline control, and have therefore calculated an incremental cost-
effectiveness value for moving from LNB with OFA to SNCR with LNB and 
OFA. These results are described in a previous comment and, as noted in 
that comment, we disagree with the commenter's assertion that the 
incremental cost of post-combustion controls is cost-prohibitive.
d. Visibility Improvement
    Comment: One commenter (SRP) asserted that EPA is without basis for 
establishing in the proposed rule a 0.5 deciview comparison threshold 
as a touchstone for analyzing impacts from Coronado BART controls, 
citing the BART Guidelines and associated preamble. According to the 
commenter, even if EPA could impose a 0.5 deciview comparison 
threshold, it is only by substituting its own preferred modeling 
methodology (which the commenters argued is something EPA cannot 
lawfully do) that EPA can project that requiring SCR at Unit 1 would 
barely yield a projected improvement of more than 0.5 deciview at one 
area. The commenter also noted that 0.5 deciview is below the level of 
human perceptibility.
    Response: As explained above, we have not used 0.5 dv as a 
threshold, but as one point of comparison such as a ``benchmark'' or 
``yardstick'' to gauge the magnitude of impacts under various control 
scenarios.
e. Other Comments
    Comment: The commenter (NPS) agreed with EPA's determination that 
NOX BART for Coronado Units 1 and 2 is SCR with LNB and OFA. 
The commenter noted that EPA proposed on Unit 1 an emission limit for 
NOX of 0.050 lb/MMBtu, based on a rolling 30-boiler-
operating-day average, and on Unit 2 an emission limit of 0.080 lb/
MMBtu, which is consistent with the emission limit in the consent 
decree. The commenter stated that EPA acknowledged that the emission 
limit for Unit 2 established in the consent decree was not the result 
of a BART five-factor analysis, and that the consent decree does not 
indicate that SCR at 0.080 lb/MMBtu represents BART. The commenter 
commended EPA for soliciting additional information on the feasibility 
of achieving a more stringent limit.
    Response: We acknowledge the comment.
    Comment: In response to EPA's proposed BART determination in the 
proposed FIP, one commenter (SRP) performed and submitted an assessment 
of the critical components of a BART analysis for Coronado, including 
control costs and the visibility improvements associated with the 
control options. The commenter indicated that this analysis shows that 
even without considering other energy and non-air quality environmental 
impacts associated with the implementation of SNCR or SCR, it is clear 
that the visibility benefits realized from implementation of post-
combustion controls are not justified by the cost. The commenter also 
submitted the results of this analysis using CALPUFF version 6.42 in 
place of version 5.8. The commenter stated that this analysis provides 
even stronger evidence that selection of post-combustion controls as 
BART for Coronado is inappropriate.
    Response: We disagree with this comment. As noted in a separate 
response, we have performed a supplemental cost analysis that relies 
upon many elements of the cost analysis provided by the commenter. Even 
with the higher cost estimates provided by the commenter, we consider 
the costs of post-combustion controls such as SNCR and SCR to be cost-
effective on a $/ton basis. In addition, as noted in a separate 
response, we disagree with several assumptions used in the commenter's 
visibility modeling, such as the use of an unapproved CALPUFF model 
version and treatment of ammonia background concentrations. We 
therefore disagree that the visibility benefits modeled by the 
commenter are representative of the benefits that will accrue with the 
use of post-combustion controls. The modeling results performed in 
support of our proposal indicate substantial visibility benefits, 
especially with the SCR control option. As a result, we do not consider 
it appropriate to eliminate either of the post-combustion controls from 
consideration as BART. Although SCR is the most stringent control 
option, its associated visibility benefits and cost-effectiveness 
justify this technology as BART.

E. Comments on Enforceability Requirements in EPA's BART FIP

    Comment: One commenter (SRP) made the following points concerning 
the proposed enforceability requirements:
     EPA must modify the monitoring requirements to be 
consistent with existing requirements. If EPA proceeds to impose 
additional controls at Coronado beyond those specified in the consent 
decree and already included in the Coronado permit, it must align these 
requirements to eliminate unnecessary and unreasonable compliance 
burdens.
     The commenter supports and appreciates the use of the 
monitoring system certification and quality assurance (QA) procedures 
in 40 CFR Part 75. However, EPA's proposed definition of ``valid'' data 
is broader than 40 CFR Part 75, and EPA also should make clear that the 
``bias'' adjustment procedures in 40 CFR Part 75 do not apply to data 
used to calculate the 30-day rolling averages.
     The commenter objects to the proposed additional relative 
accuracy requirements. Imposing additional relative accuracy test audit 
(RATA) specifications will not increase the accuracy of any monitoring 
system, but would increase the difficulty and cost of testing. It also 
could result in additional missing data if tests must be repeated to 
meet the specifications. To proceed with combined RATA specifications, 
EPA also would need to either propose (and solicit comment on) 
alternative low-emitter combined specifications that have been 
demonstrated to be consistently achievable, or exempt units meeting any 
of the applicable 40 CFR Part 75 low-emitter thresholds from those 
specifications.
     The commenter stated that the proposed data availability 
requirements are unnecessary and too stringent. Source owners and 
operators already have sufficient incentive to obtain valid data in 
order to avoid the increasingly conservative (and ultimately punitive) 
missing data substitution procedures that apply under 40 CFR Part 75. 
Regarding stringency, if a unit has a significant missing data event 
during a calendar quarter in which it also has a significant period of 
unit downtime (e.g., as a result of an outage), the percent of 
operating hours during the quarter with valid data could easily be less 
than 90 percent. It is in part for this reason that 40 CFR Part 75 
measures data availability over each 8,760-operating-hour period. EPA 
should either eliminate the unnecessary requirement or provide data to 
justify its proposed requirement that take into account the differences 
described above.
     EPA must modify the quarterly reporting requirements to be 
consistent with existing requirements.
     EPA must modify the notification requirements in the 
proposed rule because they are overly broad and overly prescriptive. 
First, EPA should clarify the proposed provision by requiring notice 
only of new controls that will be required to meet the FIP or regional 
haze SIP. Second, because installation of controls is a complex 
process, and the point at which that

[[Page 72562]]

process is ``complete'' may not be immediately clear, EPA must revise 
the requirement to use a more objective term and allow sufficient time 
for owners and operators to comply. Third, because the proposed 
requirement duplicates reporting already required for a new add-on 
NOX emission control under 40 CFR Part 75, EPA should rely 
on (and if necessary refer to) the notice required under Part 75.
    Response: We partially agree with this comment and are adjusting 
the enforceability requirements of the final FIP accordingly. EPA 
agrees that the Part 75 bias adjustment should not be applied to the 
compliance data for the BART rules in this action and is making changes 
to the final rule to address this comment. However, EPA does not agree 
that only the incentives under the Acid Rain Part 75 rules are 
sufficient to assure adequate valid data for this rule. Part 75 relies 
on progressively punitive data substitution procedures to promote good 
valid data availability for its program. Our rule does not substitute 
data, so the incentives of the Part 75 rules do not exist. Therefore, 
EPA is requiring that each unit subject to this rule obtain 90 percent 
valid data, as determined under Part 75, for each calendar year.
    It should be noted that the commenter did not submit any data 
specific to its EGUs indicating the difficulty of meeting the proposed 
valid data availability requirements. Also, the other two utility 
companies affected by this rule did not make any objection to the 
proposed data requirements. However, EPA, as a result of this comment, 
has reconsidered the additional quality assurance and valid data 
requirements from the proposal. As indicated by the commenter, 
measurement and QA requirements for NOX lb/hour are not 
currently required by Part 75. In addition, EPA recognizes that the 
calculation of heat input requires the combination of the flow and 
diluent (O2 or CO2) CEMS along with measurements 
of temperature and estimation of moisture. In addition in the final 
rule, EPA is providing for a multi-unit determination of compliance. 
This would compound the valid data concerns of the commenter. EPA 
requires monitoring data used for compliance determinations to be of 
known quality as demonstrated through Quality Assurance/Quality Control 
(QA/QC) procedures.\204\ In place of the requirement to validate 
through RATA testing of the NOX lb/hour measurement and heat 
input, EPA will require that all of the CEMS required by Part 75 and 
used for the compliance demonstrations for this action obtain 90 
percent valid data (per Part 75 specifications) for each unit over each 
calendar year. In addition, the rule will require the affected units to 
conduct RATA evaluations and calculate the quarterly valid data hours 
for NOX lb/hour and heat input. EPA will not finalize the 
minimum data requirements in the proposal, but will require these data 
to be calculated (all data for determining the relative accuracy in 
these units are available when Part 75 RATAs are performed) and 
reported to both EPA and ADEQ to determine if these data are capable of 
meeting more rigorous QA/QC requirements in the future. We also note 
that the final rule will add QA/QC and minimum valid data requirements 
for the inlet SO2 CEMS that are needed to calculate the 
SO2 removal efficiencies for the Cholla EGUs. Finally, EPA 
agrees that semiannual reporting will be sufficient for this rule, and 
the final rule will reflect this.
---------------------------------------------------------------------------

    \204\ See, e.g., 40 CFR 60.13(a) and 40 CFR Appendix F.
---------------------------------------------------------------------------

    Comment: One commenter (AEPCO) requested that EPA clarify that 
AEPCO has longer than 180 days to comply with the non-SCR limits. The 
commenter is particularly concerned about the time needed for the ESP 
and scrubber upgrades and believes a five-year period for all BART 
implementation would be appropriate. ADEQ also commented that the 
facility will need more than 180 days to complete the upgrades needed 
to meet the SO2 BART limits, and stated that a five-year 
compliance time frame from the time the BART limit is finalized, as 
specified in RHR Appendix Y, is most appropriate.
    Response: EPA agrees that AEPCO would need more than the 180 days 
in the proposed rule. However, we do not agree that five years is 
necessary to perform the necessary upgrades. The final rule will 
require AEPCO's two units to meet the SO2 and 
PM10 limits within four years of the effective date of this 
rule. This time frame will allow AEPCO to perform the upgrades to the 
two units during regularly scheduled maintenance outages.
    Comment: Several commenters (ADEQ, AEPCO, APS, EarthJustice, NPS, 
SRP) provided feedback on test methods. AEPCO supported maintaining the 
use of EPA Method 201A to comply with the proposed BART PM10 
limits. In contrast, ADEQ and APS only supported the use of Methods 
201A and 202 if SCR controls are not used. These commenters stated that 
SCR causes an increase in sulfuric acid aerosol mist, which results in 
an increase in condensable particulate matter. APS suggested Methods 1-
4 and Method 5 or 5e are appropriate where SCR is used. ADEQ suggested 
Method 5 or 5e where SCR is used, and states that any collateral 
increase in acid mist should be addressed through a permitting process. 
SRP stated that wet scrubbers also render Methods 201 and 201A 
inapplicable, and requested that EPA specify the use of Method 5, 5B, 
5I or an approved alternative.
    One commenter (NPS) pointed out that use of SCR at these units is 
expected to result in increased condensable particulate matter in the 
form of sulfuric acid mist (H2SO4), which would 
have the effect of making the emission limit more stringent than 
intended by ADEQ, and likely not be achievable in practice. To address 
EPA's request for comment on whether to allow compliance with the 
PM10 limit to be demonstrated using test methods that do not 
capture condensable particulate matter, namely EPA Methods 1 through 4 
and Method 5 or Method 5e, the commenter conducted and submitted an 
analysis of H2SO4 emissions. According to the 
commenter, H2SO4 emissions will not be 
significant, contributing less than 10 percent to the PM10 
limit. The commenter suggested that the 0.030 lb/MMBtu limit proposed 
by ADEQ for the Apache and Coronado units be adjusted to 0.033 lb/MMBtu 
to reflect the increase in total PM10 attributable to SCR, 
and that PM10 emissions would be measured by conducting EPA 
Method 201A/202 tests consistent with the ADEQ's SIP.
    In contrast to the previous commenters, one commenter 
(Earthjustice) stated that EPA should approve the test methods in the 
ADEQ RH SIP (i.e., EPA Methods 201 and 202) and ensure that the BART 
limit includes both filterable and condensable PM fractions. The 
commenter asserted that if EPA allows or requires a test method other 
than Method 201 and 202, the PM10 BART emission limit would 
effectively be less stringent because it would only apply to filterable 
PM, and not total PM. The commenter indicated that requiring different 
test methods would in effect be proposing an even less-stringent 
PM10 BART limit, which would require EPA to undertake an 
independent BART analysis that demonstrates that the less-stringent 
emission limit is BART. Consequently, according to the commenter, if 
EPA requires or allows a different test method, it must lower the 
emission limit to reflect only the filterable PM10 fraction. 
The commenter added that in this case, EPA should ensure that 
compliance with the filterable PM10 limit is demonstrated 
with use of CEMS

[[Page 72563]]

for filterable PM, which is currently available.
    Response: ADEQ selected test methods 201 and 202 for determining 
compliance with this limit. EPA noted in the proposal that the proposed 
addition of SCR for NOX control would likely increase the 
quantity of PM collected as condensable PM by method 202 due to an 
increase in H2SO4 from the oxidation of 
SO2 to SO3. EPA requested comment on changing the 
test method from methods 201 and 202 to EPA Method 5 which measures 
only the filterable PM. Method 5 measures all sizes of filterable PM 
which results in a higher filterable PM value than Methods 201 or 
Method 201A, which only measure filterable PM10.
    In its comments concerning the proposal for Coronado, SRP noted 
that Method 201A cannot be used in a wet exhaust gas stream. We agree 
with this comment. In promulgating amendments to Method 201A and Method 
202 in 2010, EPA explained that:

    Method 201A cannot be used to measure emissions from stacks that 
have entrained moisture droplets (e.g., from a wet scrubber stack) 
since these stacks may have water droplets that are larger than the 
cut size of the PM10 sizing device. The presence of 
moisture would prevent an accurate measurement of total 
PM10 since any PM10 dissolved in larger water 
droplets would not be collected by the sizing device and would 
consequently be excluded in determining total PM10 mass. 
To measure PM10 in stacks where water droplets are known 
to exist, EPA's Technical Information Document 09 (Methods 201 and 
201A in Presence of Water Droplets) recommends use of Method 5 of 
appendix A-3 to 40 CFR part 60 (or a comparable method) and 
consideration of the total particulate catch as PM10 
emissions.\205\
---------------------------------------------------------------------------

    \205\ 75 FR 80118, 80121.

It is also true that the rarely used Method 201 cannot be used in a wet 
exhaust stream (also known as a ``wet stack'').\206\
---------------------------------------------------------------------------

    \206\ See EPA's Technical Information Document 09, ``Methods 201 
and 201A in Presence of Water Droplets'' (September 9, 1991).
---------------------------------------------------------------------------

    At this time, the three facilities subject to this BART rule have a 
mix of wet and dry stacks. EPA anticipates that the SO2 BART 
limits set by ADEQ will result in 100 percent of the exhaust gas 
undergoing SO2 scrubbing. Neither ADEQ nor EPA is requiring 
reheat of the exhaust gas stream. Therefore, it is likely that all of 
the coal-fired units covered by this action will have wet stacks. So it 
is doubtful that any filterable PM10 method would work as 
the compliance method.\207\ Therefore, EPA is finalizing a decision to 
allow either Method 5 or Methods 201A and 202 for demonstrating 
compliance with the BART PM10 limits set by ADEQ.
---------------------------------------------------------------------------

    \207\ See, e.g. 75 FR 80126 (``Monitoring the emission of 
PM10 or PM2.5 from a wet gas stream is a 
challenging problem that has not been addressed successfully despite 
considerable effort. A consensus method to provide this information 
has not emerged.'')
---------------------------------------------------------------------------

    As noted above, the addition of the SCR to these EGUs for 
NOX control will likely increase the condensable PM that 
will be measured by Method 202. By offering the option of Method 5 or 
Methods 201A and 202, the facilities can determine which methods are 
compatible with their units' stack conditions and will best demonstrate 
the proper operation of their PM controls. Any significant increase in 
H2SO4 and the appropriate control of this 
visibility impairing pollutant will be addressed through the PSD 
permitting process with a BACT determination for 
H2SO4 control. The significance level that 
triggers permitting for H2SO4 is an increase of 
seven tons per year of this pollutant.\208\ Coronado has already 
received a PSD permit for H2SO4 that is likely to 
result from the increase in H2SO4 resulting from 
the SCR required under the consent decree.
---------------------------------------------------------------------------

    \208\ See 40 CFR 52.21(b)(23)(i).
---------------------------------------------------------------------------

    EPA's AP-42 indicates that approximately one third of the 
filterable PM emissions from EGUs are larger than PM10. This 
means that the change from Method 201 (or 201A) to Method 5 as the 
compliance method will result in this increased measurement of PM. This 
is offset by the elimination of the condensable measurement of Method 
202 and as noted above, the utilities will have the option of using 
either testing approach.
    Comment: One commenter (APS) requests that EPA change the 
compliance date for the PM10 limit at Cholla Unit 2 to 
January 1, 2016, rather than January 1, 2015. The commenter explained 
that EPA misunderstood the language of the ADEQ SIP, which refers to 
APS's commitment to install a fabric filter by 2015, to mean 
installment and operation by the first of the year, whereas this 
commitment actually meant by the end of 2015, or December 31, 2015. The 
commenter further requested that this date be extended to April 16, 
2016, if the ADEQ approves APS's request for a one-year extension to 
comply with the Mercury and Air Toxics Standards (MATS) before EPA 
finalizes this BART determination.
    The commenter also requested that EPA change the compliance date 
with the 0.15 lb/MMBtu SO2 emissions standard from 180 days 
after promulgation to January 1, 2016, or April 16, 2016, to allow 
sufficient time to do the necessary upgrades for Unit 2. This unit will 
require scrubber upgrades that need to be done concurrent with the 
fabric filter installation to accommodate the increase in pressure drop 
that a new fabric filter will impose. ADEQ also stated a compliance 
date of April 1, 2016, would be more appropriate than January 1, 2015, 
for both the PM10 and SO2 limits at Cholla Unit 
2.
    Response: EPA agrees with this comment and has changed the 
compliance date in the final rule to April 1, 2016.\209\ In addition, 
as explained above, in order to ensure that the wet FGD (i.e. 
scrubbers) on all three units at Cholla are properly operated and 
maintained, consistent with 40 CFR 51.308(e)(1)(v), we are finalizing a 
removal efficiency requirement for SO2 of 95 percent on a 
30-day rolling basis for Cholla Units 2, 3 and 4. Compliance with the 
efficiency requirement will be determined by SO2 continuous 
emission monitoring systems (CEMS) operated at the inlets and outlets 
of the scrubbers. Units 3 and 4 already have SO2 and 
CO2 CEMS installed after the scrubbers, and Unit 2 has 
SO2 and CO2 CEMS installed before the 
scrubbers.\210\ Therefore, SO2 and diluent CEMS will need to 
be installed at the inlets to the scrubbers on Units 3 and 4. We 
estimate that the total annualized cost for this installation 
(including ongoing operation and maintenance costs) will be 
approximately $51,000 per unit.\211\ We also note that this efficiency 
requirement will probably result in a slight increase in operation and 
maintenance costs in the form of additional limestone and scrubber 
waste disposal expenses. Even considered collectively, these additional 
costs are de minimis in comparison to the annualized cost of SCR (i.e., 
$9,906,206 to $13,590,853 per unit at Cholla, according to our 
supplemental cost analysis) or the total cost of installing a new wet 
FGD system, which APS has estimated to be $67.0 to $70.9 million.\212\ 
In order to allow sufficient

[[Page 72564]]

time for installation of the CEMS, the compliance deadline for this 
removal efficiency requirement at these units will be one year after 
publication of this final rule for Units 3 and 4. The removal 
efficiency compliance deadline for Unit 2 will coincide with the 
compliance date for the lb/MMBtu SO2 emission limit for this 
unit (i.e., April 1, 2016).
---------------------------------------------------------------------------

    \209\ Although APS requested a deadline of April 16, 2016, this 
request was contingent upon ADEQ's approval of APS's August 7, 2012 
request for a one-year extension to comply with the MATS. ADEQ's 
comments indicate that April 1, 2016 is the appropriate deadline for 
this requirement, so we have modified the final compliance deadline 
to April 1, 2016.
    \210\ See Cholla Title V Permit (2012), Table C-3: Continuous 
Emission Monitors.
    \211\ We used EPA's CEMS Cost Model (available at http://www.epa.gov/ttn/emc/cem.html) to estimate the total annualized cost 
of adding inlet CEMS for SO2 and CO2. See 
``CEMS Cost Calculation.''
    \212\ APS Comments, Table 3-8. No annualized cost was provided.
---------------------------------------------------------------------------

    Comment: Two commenters requested that EPA implement SCR 
installation in three rather than five years. Earthjustice claimed that 
the proposed five-year compliance deadline is unreasonable and 
inconsistent with the CAA and RHR requirements, noting that compliance 
before the ``outside date'' is required whenever earlier compliance is 
possible. This commenter contended that average SCR installations have 
required 37 to 43 months to implement, and EPA has provided no site-
specific factors for these plants to require a longer-than-average 
installation time. The commenter notes that ADEQ has an ``accelerated 
permit processing'' program, so that any PSD permits needed to address 
sulfuric acid mist increases should not require an extension of the 
compliance deadline to five years. The commenter also requested that 
EPA obtain and post to the docket the outage schedule for these plants, 
which may provide additional justification for a compliance deadline 
shorter than five years. In contrast, SRP commented that, if EPA 
finalizes a requirement for SCR at Unit 1 ``a five[hyphen]year 
compliance period is certainly warranted.'' SRP noted that it estimated 
it would require 48 months to install SCR at Coronado Unit 2, and that 
installing SCR on Unit 1 would be even more complicated due to the 
reduced amount of space following the installation on Unit 2.
    Response: We are finalizing a compliance deadline of five years 
from final publication of this notice for all SCR-based emission 
limits. As explained in our proposal, five years is a reasonable time 
frame for SCR design and installation, particularly where retrofits of 
multiple units at a single facility are required. Granting the full 
five years for SCR design and installation will allow the facilities to 
tie in the SCR systems during routinely scheduled maintenance outages, 
which are typically scheduled for every three years. With respect to 
Coronado in particular, the five-year compliance schedule will allow 
SRP sufficient time to design and install the SCR system on Unit 1 and 
to design and install a low-load temperature controller on Unit 2, 
which likely must be done in the period after the SCR for Unit 2 is 
placed into operation (June 1, 2014).
    Comment: One commenter (Earthjustice) stated that EPA should set 
BART limits for PM2.5 and PM10, rather than just 
PM10. The commenter indicated that the BART Guidelines 
specify that BART should be evaluated and defined for both 
PM2.5 and PM10 (citing 40 CFR part 51, Appendix 
Y, section II.A.3).
    Response: The BART Guidelines do not require states to set BART 
limits for PM2.5 in addition to limits for PM10. 
The portions of the BART Guidelines cited by commenters (i.e. sections 
II.A.3 and III.A.2) pertain to the identification of sources that are 
BART-eligible and sources that are subject-to-BART, not the actual 
five-factor analysis or determination of BART for a given source, which 
is described in section IV of the Guidelines. With respect to the five-
factor analysis, the Guidelines provide that, ``[m]odeling should be 
conducted for SO2, NOX and direct PM emissions 
(PM2.5 and/or PM10).'' \213\ The Guidelines thus 
provide states with the flexibility to consider either 
PM2.5 or PM10 emissions or both, as part of their 
five-factor analysis. Likewise, the Guidelines do not require that the 
emission limits reflecting BART should include separate limits for 
PM2.5 and PM10.\214\ Thus, we are not required by 
the RHR to set separate BART limits for PM2.5.
---------------------------------------------------------------------------

    \213\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.5.
    \214\ Id. Section V.
---------------------------------------------------------------------------

F. Comments on Legal Issues

    Comment: A number of commenters asserted that EPA has acted in a 
manner contrary to the CAA, under which states are to play the lead 
role in designing and implementing the regional haze program. These 
commenters typically indicated that EPA is required to defer to the 
states' judgment regarding BART where the state has considered the five 
statutory BART factors, and has no authority to override a state's BART 
determination simply because it disagrees with the state's conclusions. 
The commenters often stated that the states are empowered by the CAA to 
determine how best to weigh each of the statutory BART factors and that 
EPA's only legal role in SIP review is to determine whether the state's 
plan is consistent with the CAA. The commenters generally stated the 
belief that ADEQ's BART determinations fully complied with the CAA, the 
Regional Haze Rule and the BART Guidelines. The commenters frequently 
cited American Corn Growers Ass'n. v. EPA, 291 F.3d (D.C. Cir. 2002); 
EME Homer City Generation, L.P. v. EPA, No. 11[hyphen]1302, slip op. at 
42 (D.C. Cir. Aug. 21, 2012) (``CSAPR decision''); Luminant Generation 
Co. v. EPA, 675 F.3d 917, 921 (5th Cir. 2012); and State of Texas, et 
al., v EPA. 690 F.3d 670 (5th Cir. 2012).
    Several commenters stated that EPA made no finding that Arizona 
failed to satisfy its statutory obligation to consider and weigh the 
BART factors, and asserted that EPA conceded that the state had done so 
in its FIP proposal (citing 77 FR 42851). Some commenters (AEPCO, SRP) 
stated that EPA proposed to disapprove the SIP, in part, because it is 
not consistent with BART decisions that other states have made (citing 
77 FR 42836), and contended that this finding is irrelevant to the 
approvability of ADEQ's SIP. One commenter (SRP) added that ADEQ's BART 
determinations are entirely legal and reasonable and, to the extent 
that other states' BART determinations may be relevant, consistent not 
only with the action of other states, but with action that EPA has 
approved or proposed to approve for those states (i.e., combustion 
controls as BART for NOX).
    Two commenters added that EPA purported to defer to ADEQ's BART 
determinations by indicating that it would prefer to act on a SIP 
revised to address the deficiencies perceived by EPA (citing 77 FR 
42839), but the commenters asserted that it is not deference to invite 
the State to submit a SIP that conforms to EPA's policy choices. The 
commenters contended that in any case, with the court ordered deadline 
of November 15, 2012, for EPA to finalize the proposed FIP, it would be 
impossible for Arizona to prepare and adopt a revised SIP in time.
    Response: We do not agree that our partial disapproval of the 
Arizona Regional Haze SIP is contrary to the CAA. As noted by several 
commenters, States have the lead role in determining BART for 
individual sources through SIPs. However, EPA also has a crucial role 
in reviewing SIPs for compliance with the requirements of the CAA and 
its implementing regulations. Pursuant to CAA section 110, States must 
submit SIPs to EPA for review and EPA must review SIPs for consistency 
with the Act's requirements and disapprove any SIP revision that 
``would interfere with any applicable requirement'' of the Act.\215\ 
The CAA also empowers EPA to call for SIP revisions ``[w]henever [EPA] 
finds that the applicable implementation plan for any area is 
substantially inadequate to * * * comply with any requirement of this

[[Page 72565]]

chapter,'' and impose sanctions when EPA determines they are 
``reasonable and appropriate for the purpose of ensuring that the 
requirements [of the Act] * * * are met.'' \216\ Furthermore, the Act 
mandates that EPA promulgate a FIP when EPA finds that a State has 
failed to submit a required SIP to the Agency, failed to submit a 
complete SIP, or where EPA disapproves a SIP.\217\ Thus, the CAA 
provides EPA with a critical oversight role in ensuring that SIPs meet 
the requirements of the CAA.
---------------------------------------------------------------------------

    \215\ CAA section 110(a)(1), (k)(3) and (l), 42 U.S.C. 
7410(a)(1), (k)(3) and (l).
    \216\ See id. 42 U.S.C. 7410(k)(5), (m).
    \217\ See id. section 7410(c)(1).
---------------------------------------------------------------------------

    Nothing in the CAA indicates that EPA's role is less important in 
the context of the Regional Haze program than under other CAA programs. 
On the contrary, CAA section 110(a)(2)(J) explicitly requires that SIPs 
``meet the applicable requirements'' of Part C of Title I of the CAA 
including the requirements for visibility protection set forth in 
sections 169A and 169B.\218\ Pursuant to section 169A(b), EPA is 
required to promulgate visibility protection regulations that apply to 
``each applicable implementation plan'' (i.e., each SIP or FIP) \219\ 
for each State containing one or more Class I areas and each State 
``emissions from which may reasonably be anticipated to cause or 
contribute to any impairment of visibility in any [Class I area].'' 
\220\ The CAA specifies that these regulations (including the RHR) must 
require each such SIP or FIP to ``contain such emission limits, 
schedules of compliance and other measures as may be necessary to make 
reasonable progress toward meeting the national goal,'' including 
implementation of BART, as determined by the State (or by EPA in the 
case of a FIP).\221\ Moreover, the CAA requires that BART for each 
``fossil-fuel fired generating power plant having a total generating 
capacity in excess of 750 megawatts'' must be determined pursuant to 
the guidelines promulgated by EPA (i.e., the BART Guidelines).\222\ 
Thus, the statute provides EPA a key oversight role in reviewing SIPs 
for compliance with the RHR and BART requirements.
---------------------------------------------------------------------------

    \218\ CAA sections 110(a)(2)(J), 169A and 169B 42 U.S.C. 
7410(a)(2)(J), 7491 and 7492.
    \219\ Under the CAA, ``applicable implementation plan'' is 
defined as ``the portion (or portions) of the implementation plan, 
or most recent revision thereof, which has been approved under [CAA 
section 110], or promulgated under [CAA section 110](c) * * * and 
which implements the relevant requirements of [the CAA].'' CAA 
section 302(q), 42 U.S.C. 7602(q). In other words, an ``applicable 
implementation plan'' is an EPA-approved SIP or Tribal 
Implementation Plan, or an EPA-promulgated FIP.
    \220\ 42 U.S.C. 7491(b)(2). In promulgating the RHR, EPA 
determined that ``all States contain sources whose emissions are 
reasonably anticipated to contribute to regional haze in a Class I 
area and, therefore, must submit regional haze SIPs.'' 64 FR 35720; 
see also 40 CFR 51.300(b)(3).
    \221\ 42 U.S.C. 7491(b)(2).
    \222\ Id. In this case, Cholla and Coronado each have a total 
generating capacity in excess of 750 megawatts, while Apache has a 
total plant-wide generating capacity of 560 megawatts. Thus, the 
BART Guidelines are mandatory for BART determinations at Cholla and 
Coronado and serve as non-binding guidance with respect to Apache.
---------------------------------------------------------------------------

    The cases cited by commenters do not support an argument that EPA's 
role as a reviewer is any less critical in the regional haze context 
than it is in reviewing other SIP components. In American Corn Growers 
v. EPA, the petitioners challenged the original RHR because, among 
other things, the RHR treated one of the five statutory factors 
differently than the others by requiring States to consider the degree 
of visibility improvement from imposing BART on a group of sources 
rather than on a source-specific basis.\223\ The court concluded that 
such a requirement could force States to apply BART controls at sources 
without evidence that the individual sources contributed to visibility 
impairment at a Class I area, which encroached on States' primary 
authority under the regional haze provisions to determine which 
individual sources are subject to BART and what BART controls are 
appropriate for each source.\224\ Therefore, the court vacated the 
visibility improvement part of the original RHR as contrary to the 
statute.\225\ Contrary to some commenters' suggestions, however, the 
American Corn Growers decision did not address EPA's authority to 
reject a State's BART determinations for failure to conform to the CAA, 
the RHR or the BART Guidelines.
---------------------------------------------------------------------------

    \223\ 291 F.3d at 5-9.
    \224\ Id. at 7-8.
    \225\ EPA revised the RHR to address the court's decision in 
American Corn Growers at the same time as we promulgated the BART 
Guidelines. 70 FR 39104 (July 6, 2005). The revised RHR and the 
Guidelines were upheld by the D.C. Circuit in Utility Air Regulatory 
Group v. EPA, 471 F.3d 1333 (D.C. Cir. 2006).
---------------------------------------------------------------------------

    Commenters also cite Luminant Generation v. EPA, 675 F.3d 917, 921 
(5th Cir. 2012) and Texas v. EPA, 690 F.3d 670 (5th Cir. 2012). Neither 
of these cases involves BART or the CAA's regional haze provisions at 
all. Rather, they involved EPA's disapprovals of SIP revisions 
involving Texas's minor new source review (NSR) program. As noted by 
the Luminant court, ``because `the Act includes no specifics regarding 
the structure or functioning of minor NSR programs' and because the 
implementing regulations are `very general [,] * * * SIP-approved minor 
NSR programs can vary quite widely from State to State.''' \226\ By 
contrast, Regional Haze SIPs and BART determinations are subject to 
detailed requirements set forth in CAA sections 169A, the RHR and the 
BART Guidelines. While in Luminant and Texas, the Fifth Circuit found 
that EPA had failed to tie its disapproval to any requirement of the 
CAA or EPA's implementing regulations,\227\ in this case our 
disapproval is based on the SIP's failure to comply with CAA sections 
110(a)(2) and 169A(b)(2)(A), as implemented through the RHR and the 
BART Guidelines.
---------------------------------------------------------------------------

    \226\ 675 F.3d at 922 (citing 74 FR 51418, 51421 (Oct. 6, 2009).
    \227\ 675 F.3d at 924, 929; 690 F.3d at 679, 682, 686.
---------------------------------------------------------------------------

    As noted above, CAA section 110(a)(2)(J) requires all SIPs to 
``meet the applicable requirements'' of Part C of Title I of the CAA, 
including the requirement that each source found subject-to-BART, 
``procure, install, and operate, as expeditiously as practicable (and 
maintain thereafter) the best available retrofit technology * * *'' 
\228\ Section 169A(g)(2) further provides that:
---------------------------------------------------------------------------

    \228\ CAA section 169A(b)(2)(A)., 42 U.S.C. 7491(b)(2)(A).

    In determining best available retrofit technology the State (or 
the Administrator in determining emission limitations which reflect 
such technology) shall take into consideration the costs of 
compliance, the energy and nonair quality environmental impacts of 
compliance, any existing pollution control technology in use at the 
source, the remaining useful life of the source, and the degree of 
improvement in visibility which may reasonably be anticipated to 
result from the use of such technology.\229\
---------------------------------------------------------------------------

    \229\ 42 U.S.C. 7491(g)(2).

---------------------------------------------------------------------------
Similarly, the RHR provides that:

    The determination of BART must be based on an analysis of the 
best system of continuous emission control technology available and 
associated emission reductions achievable for each BART-eligible 
source that is subject to BART within the State. In this analysis, 
the State must take into consideration the technology available, the 
costs of compliance, the energy and nonair quality environmental 
impacts of compliance, any pollution control equipment in use at the 
source, the remaining useful life of the source, and the degree of 
improvement in visibility which may reasonably be anticipated to 
result from the use of such technology.\230\
---------------------------------------------------------------------------

    \230\ 40 CFR 51.308(e)(1)(ii)(A).

ADEQ's BART determinations for NOX at Apache Units 2 and 3, 
Cholla Units 2, 3 and 4 and Coronado Units 1 and 2 fall short of these 
requirements in several respects.
    First, ADEQ did not analyze the ``best system of continuous 
emission control

[[Page 72566]]

technology available and associated emission reductions achievable.'' 
Rather it accepted the source's own assertions about what emissions 
reductions were achievable with various control technologies. For 
example, in response to comments from the FLMs arguing that SCR could 
achieve lower rates on 30-day-rolling average, ADEQ stated that:

    ADEQ's BART evaluations were based on site-specific information 
provided by the applicants. It is the Department's understanding 
that such information was based partially on feedback received from 
vendors and plant personnel who are intimately familiar with the 
specific equipment that is being considered. In that regard, the 
Department based its BART computations on the emission rates 
proposed by the applicant for the different control technology 
options.\231\
---------------------------------------------------------------------------

    \231\ Arizona Regional Haze SIP, Appendix E, ``Responsiveness 
Summary'' at 13.

While it is certainly reasonable to consider site-specific information 
provided by the sources as part of a BART analysis, it is not 
reasonable to assume, with no independent analysis, that the sources 
have appropriately identified the emissions reductions achievable with 
the best available controls. ADEQ provided no evidence that the 
sources' estimates were based on legitimate site-specific 
considerations or that ADEQ undertook any verification of these 
estimates. Therefore, ADEQ has not demonstrated that its BART 
determinations were ``based on an analysis of the best system of 
continuous emission control technology available and associated 
emission reductions achievable.''
    Second, ADEQ has not demonstrated that it actually took into 
consideration the BART factors in making its determinations. In 
particular, while ADEQ provided information regarding each of the 
factors, it gave no explanation or rationale for how it reached a 
determination based on that information.
    Finally, ADEQ did not appropriately consider the ``degree of 
improvement in visibility which may reasonably be anticipated'' from 
installation of BART because it did not consider visibility benefits at 
all of the affected Class I areas, nor did it consider the total 
visibility benefit expected to result from the entire BART-eligible 
source. Overlooking significant visibility benefits at additional areas 
and from multiple BART-eligible units considerably understates the 
overall benefit of controls to improve visibility and is contrary to 
the very purpose of BART, i.e., ``eliminating or reducing'' visibility 
impairment at all Class I areas.\232\ Thus ADEQ's BART determinations 
for NOX at Apache Units 2 and 3, Cholla Units 2, 3 and 4 and 
Coronado Units 1 and 2 do not meet the requirements of CAA section 
169A(g)(2) or 40 CFR 51.308(e)(1)(ii)(A).
---------------------------------------------------------------------------

    \232\ CAA section 169A(b)(2)(A).
---------------------------------------------------------------------------

    In addition, 40 CFR 51.308(e)(1)(ii)(B) provides that:

    The determination of BART for fossil-fuel fired power plants 
having a total generating capacity greater than 750 megawatts must 
be made pursuant to the guidelines in appendix Y of this part 
(Guidelines for BART Determinations under the Regional Haze Rule).

Cholla and Coronado each have a generating capacity greater than 750 
megawatts. Therefore, the BART determinations for these BART sources 
must be made pursuant to the BART Guidelines. However, ADEQ's BART 
determinations for these sources did not fully comply with the BART 
Guidelines. In particular, as explained more fully above, contrary to 
the Guidelines' direction that ``cost estimates should be based on the 
OAQPS Control Cost Manual, where possible,'' the control cost 
calculations supplied by the utilities and relied upon by ADEQ included 
line item costs not allowed by the Control Cost Manual, such as owner's 
costs, surcharge, and AFUDC. Thus, ADEQ's consideration of the ``cost 
of compliance'' for these units was not consistent with the Guidelines. 
Furthermore, as explained above, ADEQ's consideration of visibility 
benefits was inconsistent with the Guidelines because the State did not 
consider benefits at multiple Class I areas and multiple BART-eligible 
units at each source. In addition, ADEQ failed to provide ``a 
justification for adopting the technology [the State selected] as the 
`best' level of control, including an explanation of the CAA factors 
that led [the State] to choose that option over other control levels.'' 
\233\ Therefore, ADEQ's BART determinations for NOX at 
Cholla and Coronado do not comply with 40 CFR 51.308(e)(1)(ii)(B).
---------------------------------------------------------------------------

    \233\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.E.2.
---------------------------------------------------------------------------

    Finally, for all pollutants at all units covered by today's action, 
ADEQ's Regional Haze SIP does not meet the requirements of 40 CFR 
51.308(e)(1)(iii) and (iv) because it lacks the following elements:

     A requirement that each source subject to BART be 
required to install and operate BART as expeditiously as 
practicable, but in no event later than 5 years after approval of 
the implementation plan revision.
     A requirement that each source subject to BART maintain 
the control equipment required by this subpart and establish 
procedures to ensure such equipment is properly operated and 
maintained.

These two requirements are mandatory elements of the RHR and are 
necessary to ensure that BART is procured, installed and operated, as 
expeditiously as practicable and maintained thereafter, as required 
under CAA section 169A(b)(2)(A). Moreover, CAA section 110(a)(2) 
requires that emissions limits such as BART be ``enforceable'' and 
section 302(k) requires emissions limits to be met on a continuous 
basis. Arizona's Regional Haze SIP lacks requirements for monitoring, 
recordkeeping and reporting sufficient to ensure that the BART limits 
are enforceable and are met on a continuous basis.
    Therefore, Arizona's BART determinations for Apache, Cholla and 
Coronado do not meet several requirements of the CAA, the RHR and the 
BART Guidelines. Accordingly, we are compelled to partially disapprove 
Arizona's Regional Haze SIP.
    Finally, several commenters cited EME Homer City Generation v. EPA, 
No. 11-1302 (D.C. Cir. Aug. 21, 2012). In EME Homer City Generation, 
the D.C. Circuit vacated EPA's ``Transport Rule'' (also known as the 
``Cross-State Air Pollution Rule'' or ``CSAPR''), which was promulgated 
by EPA to address interstate transport of SO2 and 
NOX under CAA section 110(a)(2)(D). The court found that the 
Transport Rule exceeded EPA's authority under section 110(a)(2)(D) 
because the rule had the potential to require upwind States to reduce 
emissions by more than their own significant contributions to downwind 
nonattainment and because EPA had not given states an opportunity to 
submit SIPs after it quantified their obligations for emissions 
reductions to address transport. Commenters here point to the D.C. 
Circuit's statements concerning state and federal roles under the CAA 
and argue that EPA has exceeded its statutorily mandated role in 
proposing to disapprove portions of Arizona's Regional Haze SIP and 
promulgate a FIP.
    While we agree that the general principles concerning state and 
federal roles under Title I of the CAA apply to our action here, we do 
not agree that our action here is inconsistent with those principles. 
In this action, we are fulfilling our statutory duty to review 
Arizona's Regional Haze SIP, including its BART determinations, for 
compliance with the applicable requirements of the CAA and the RHR, and 
to disapprove any portions of the

[[Page 72567]]

plan that do not meet those requirements. Based on our review of the 
SIP, we proposed to determine that certain elements of Arizona's 
Regional Haze SIP did meet the requirements of the CAA and the RHR, and 
we proposed to approve those elements. However, for the reasons 
explained in detail in our proposal and elsewhere in this document, we 
have concluded that Arizona's BART determinations for NOX at 
several units did not comply with the requirements of the CAA and the 
RHR. Based on these findings, we are required to disapprove these 
portions of Arizona's Regional Haze SIP.
    In some instances, we expressed our findings of non-compliance with 
the relevant requirements in terms of ``disagreement'' with the state's 
analysis. These statements were not intended to suggest that our 
proposed partial disapproval was simply based on policy disagreements 
with the state. Rather we used the term ``disagree'' as a short hand 
for our findings that specific elements of Arizona's analyses did not 
meet the requirements of the CAA and the RHR. For example, we noted 
that, ``[w]e disagree with several aspects of the NOX BART 
analysis for Apache Units 2 and 3.'' \234\ We then went on to list the 
specific deficiencies in the state's analysis, and concluded that ``we 
are proposing to disapprove ADEQ's BART determination for 
NOX at Apache Units 2 and 3, since it does not comply with 
40 CFR 51.308(e)(1)(ii)(A).'' \235\ We made similar findings with 
respect to ADEQ's BART determination for NOX at Cholla Units 
2, 3 and 4 and Coronado Units 1 and 2.\236\ We have also described in 
detail, both in our proposal and in this document, the other aspects of 
the state's BART determinations that do not comply with the CAA and the 
RHR.
---------------------------------------------------------------------------

    \234\ 77 FR 42846.
    \235\ Id.
    \236\ 77 FR 42849, 42851.
---------------------------------------------------------------------------

    Finally, some commenters appear to have misunderstood our statement 
that ADEQ's ``NOX BART determinations for the coal-fired 
units are neither consistent with the requirements of the Act nor with 
BART decisions that other states have made.'' As noted by several 
commenters, the CAA and the RHR provide states with considerable 
discretion in deciding how to weigh the statutory factors as a part of 
a BART analysis. However, this discretion must be reasonably exercised 
in compliance with the applicable requirements. Consistency with other 
EPA-approved BART determinations is one marker of reasonableness, as 
well as compliance with the requirements of the RHR. Such consistency 
is particularly relevant for BART determinations at fossil-fuel fired 
power plants having a capacity in excess of 750 megawatts, which must 
be made pursuant to the BART Guidelines.\237\ To the extent a BART 
determination for such a power plant is plainly inconsistent with EPA-
approved determinations for similar sources, it is more likely to be 
inconsistent with the RHR and the BART Guidelines and therefore to 
warrant greater scrutiny for compliance with the applicable 
requirements.
---------------------------------------------------------------------------

    \237\ CAA section 169A(b) and 40 CFR 51.308(e)(1)(ii)(B).
---------------------------------------------------------------------------

    Comment: Several commenters (ACCCE, ADEQ, APS, SRP) asserted that 
it is contrary to the CAA for EPA to propose action on only the 
portions of ADEQ's SIP that address the three power plants that are the 
subject of the proposed FIP. One commenter (APS) stated that EPA may 
not ignore all other sources of visibility-impairing pollutants in the 
state (nor may it ignore the other categories of visibility-impairing 
pollutants by focusing only on nitrates, sulfates and PM) and establish 
BART limitations for the three affected power plants outside the 
context of the long-term strategy and larger reasonable progress 
requirements of the regional haze program. Commenters ACCCE, ADEQ and 
SRP contended that CAA section 110(k)(3) requires EPA either to approve 
a SIP submittal ``as a whole'' or to approve that SIP submittal in part 
and disapprove it in part in a single rulemaking that addresses in its 
entirety ``the plan revision.'' The commenters indicated that this 
requirement of the CAA is sensible because it is the plan as a whole, 
with all its elements working together, that must ensure that the CAA's 
regional haze[hyphen]related goals are being reached; any other 
approach to SIP review and approval would fail to take into account the 
full array of regulatory choices that Arizona has made to address 
regional haze.
    Response: We do not agree that we are required to act on Arizona's 
Regional Haze SIP as a whole. As noted by some commenters, our action 
on Arizona's Regional Haze SIP is governed by inter alia, CAA section 
110(k)(3), which provides that in the case of any submittal on which 
the Administrator is required to act under section 110(k)(2), the 
Administrator shall approve such submittal as a whole if it meets all 
of the applicable requirements of this chapter. If a portion of the 
plan revision meets all the applicable requirements of this chapter, 
the Administrator may approve the plan revision in part and disapprove 
the plan revision in part. The plan revision shall not be treated as 
meeting the requirements of this chapter until the Administrator 
approves the entire plan revision as complying with the applicable 
requirements of this chapter.\238\
---------------------------------------------------------------------------

    \238\ 42 U.S.C. 7410(k)(3).
---------------------------------------------------------------------------

    Some commenters have read this provision as requiring that EPA act 
on Arizona's Regional Haze SIP as a whole. We disagree that this 
language addresses the question of whether EPA may consider different 
elements of a State's plan in separate notice and comment rulemakings. 
However, even assuming that this provision of the Clean Air Act did 
limit EPA's ability to act sequentially on portions of a SIP 
submission, the requirement to act on a submittal ``as a whole'' 
applies only if the submittal meets all of the applicable requirements 
of the CAA. As explained in our proposal and elsewhere in this 
document, we have determined that the Arizona Regional Haze SIP does 
not meet all of the applicable requirements of the CAA. Specifically, 
we have determined that the submittal as a whole does not meet the 
requirements of CAA section 169A(b)(2)(A), as implemented through the 
RHR and the BART Guidelines. Under these circumstances, we are clearly 
not obligated to act on the plan as a whole, but are given discretion 
to act on distinct portions of the plan.\239\
---------------------------------------------------------------------------

    \239\ See Hall v. EPA, 273 F.3d 1146, 1159 (9th Cir. 2001) 
(section 110(k)(3) ``permits the EPA to issue `partial approvals,' 
that is, to approve the States' SIP revisions in piecemeal 
fashion'').
---------------------------------------------------------------------------

    While we agree that, as a matter of policy, it is generally 
preferable to act on plan submissions as a whole, we are currently 
subject to a court-ordered deadline of November 15, 2012 to act on the 
BART determinations for Apache Generating Station, Cholla Power Plant 
and Coronado Generating Station.\240\ Although these BART 
determinations are part of the overall Regional Haze plan for Arizona, 
they are also severable from that plan, since BART determinations are 
made on a source-by-source basis and are not dependent upon other 
elements of the plan.\241\

[[Page 72568]]

Therefore, we are taking action on these BART determinations first and 
we will act on the remainder of the Arizona Regional plan in accordance 
with the court-ordered deadlines for that action.
---------------------------------------------------------------------------

    \240\ EPA agreed to this deadline after concluding that 
litigation would most likely result in a shorter schedule than that 
to which Plaintiffs had agreed in negotiation. See Sierra Club v. 
Johnson, 444 F.Supp.2d 46, 58 (D.D.C. 2006) (``this case devolves to 
a single issue: whether defendant has met the `heavy burden' of 
demonstrating that it would be impossible to comply with plaintiff's 
proposed * * *'').
    \241\ See 40 CFR 51.308(e)(1)(ii)(A)(``[t]he determination of 
BART must be based on an analysis of the best system of continuous 
emission control technology available and associated emission 
reductions achievable for each BART-eligible source that is subject 
to BART within the State.''
---------------------------------------------------------------------------

    Comment: One commenter (ADEQ) asserts that EPA does not have the 
authority to adopt a FIP because none of the three triggering events 
for a FIP under CAA section 110(c)(1) has occurred. Specifically, the 
commenter states that:

* * * for EPA to have authority to promulgate a regional haze FIP in 
Arizona, one of three events must have occurred: (1) a finding of 
failure to submit a regional haze SIP, (2) a finding of failure to 
satisfy the minimum criteria for a complete regional haze SIP under 
section 110(k)(1)(A) or (3) disapproval of a regional haze SIP 
submitted by Arizona. None of these three events has occurred.

With respect to EPA's January 2009 finding of failure to submit, the 
commenter argues that:

    Section 110(c)(1) * * * does not allow EPA to treat the omission 
of elements from a SIP submission as a failure to submit a SIP. 
Section 110(c)(1) is quite specific. If EPA believes SIP omissions 
render a SIP incomplete, the agency may make a finding under section 
110(k)(1)(A) within the time period required by section 110(k)(1)(B) 
and start the FIP clock under the second clause of section 
110(c)(1)(A). If EPA cannot make such a finding or, as in this case, 
fails to do so, the agency may disapprove the SIP, and start the FIP 
clock under section 110(c)(1)(B). By treating the alleged omission 
of elements from a SIP as the failure to make a required submission 
under the first clause of section 110(c)(1)(A), EPA is circumventing 
these procedures.

The commenter adds that if EPA did have the authority to promulgate a 
regional haze FIP, it would only have the authority to address those 
elements of the SIP that EPA identified as having not been submitted, 
and EPA has never found that Arizona failed to submit a SIP 
establishing BART.
    Response: We do not agree that we lack authority to issue a FIP 
addressing BART requirements for the three sources covered by today's 
action. The commenter's arguments in this regard appear to be based on 
a misunderstanding of the requirements of the CAA and the RHR in 
relation to Arizona's Regional Haze submittals.
    EPA promulgated the original RHR in 1999.\242\ As relevant here, 
section 308 of the RHR requires states to submit SIPs that establish 
reasonable progress goals and long-term strategies for achieving those 
goals and provide for implementation of BART.\243\ In addition to the 
general requirements of section 308, EPA also adopted specific 
provisions that gave a handful of states, including Arizona, the option 
of submitting a regional haze SIP based on the recommendations of the 
Grand Canyon Visibility Transport Commission (GCVTC). Under the RHR, a 
SIP approved by EPA as meeting all of the requirements of section 309 
would be ``deemed to comply with the requirements for reasonable 
progress with respect to the 16 Class I areas [on the Colorado Plateau] 
for the period from approval of the plan through 2018.'' \244\
    Arizona made two submittals under section 309 in 2003 and 2004, but 
never submitted a complete 309 SIP.\245\ Rather, on December 24, 2008, 
ADEQ sent a letter to EPA re-submitting its prior 309 SIP submissions 
and acknowledging that the submittal did not include provisions to 
address the requirements of 309(d)(4) or 309(g).\246\ These were not 
minor omissions: 309(d)(4) required the submission of ``better than 
BART'' milestones and a trading program for SO2, as well as 
BART requirements for stationary source PM and NOX 
emissions, and 309(g) required implementation of any additional 
measures necessary to demonstrate reasonable progress for the 
additional Class I areas, in compliance with the provisions of Sec.  
51.308(d)(1) through (4).\247\ Thus, as of 2008, ADEQ's Regional Haze 
SIP, by its own admission, did not include provisions addressing BART 
(or for an alternative to BART) for NOX, PM or 
SO2. On January 15, 2009 EPA found that 37 states, including 
Arizona, had failed to make all or part of the required SIP submissions 
to address regional haze.\248\ We explained that:
---------------------------------------------------------------------------

    \245\ We have included a more detailed history of Arizona's 
submissions under 309 in the docket for this action (Docket No. EPA-
R09-OAR-2012-0021).
    \246\ Letter from Stephen A. Owens, ADEQ, to Wayne Nastri, EPA 
(Dec. 14, 2008).
    \247\ 40 CFR 51.309(d)(4)(i) and (vii), (g)(2).
    \248\ 74 FR 2392.

    This finding starts the two year clock for the promulgation by 
EPA of a FIP. EPA is not required to promulgate a FIP if the state 
makes the required SIP submittal and EPA takes final action to 
approve the submittal within two years of EPA's finding.\249\
---------------------------------------------------------------------------

    \249\ Id. at 2393

Under the CAA, any party seeking judicial review of EPA's finding of 
failure to submit (``2009 Finding'') was required to file a petition 
for review with the appropriate United States Circuit Court of Appeals 
within 60 days of publication of the Finding in the Federal 
Register.\250\ No party filed such a petition.
---------------------------------------------------------------------------

    \250\ CAA section 307(b). 42 U.S.C. 7607(b).
---------------------------------------------------------------------------

    At the time of the 2009 Finding, EPA anticipated that ADEQ would 
submit a SIP revision covering 309(d)(4) and 309(g), which would enable 
EPA to fully approve ADEQ's 309 SIP as meeting all of the requirements 
of the Regional Haze Rule, thus ending the FIP clock. However, ADEQ did 
not submit a 309 SIP revision to address these two elements, but 
instead decided to develop a 308 SIP, which it submitted to EPA in 
February 2011.
    In January 2011, EPA received a notice of intent to sue covering 
dozens of states, including Arizona, stating that we had not met the 
statutory deadline for promulgating Regional Haze FIPs and/or approving 
Regional Haze SIPs. This notice was followed by a lawsuit filed by 
several advocacy groups (Plaintiffs) in August 2011.\251\ In order to 
resolve this lawsuit and avoid litigation, EPA entered into a Consent 
Decree with the Plaintiffs, which sets deadlines for action for all of 
the states covered by the lawsuit, including Arizona. This decree was 
entered and later amended by the Federal District Court for the 
District of Columbia over the opposition of Arizona.\252\
---------------------------------------------------------------------------

    \251\ National Parks Conservation Association v. Jackson (D.D.C. 
Case 1:11-cv-01548).
    \252\ National Parks Conservation Association v. Jackson (D.D.C. 
Case 1:11-cv-01548), Memorandum Order and Opinion (May 25, 2012) and 
Minute Order (July 2, 2012).
---------------------------------------------------------------------------

    In opposing the entry of the consent decree, Arizona argued that 
the 2009 Finding did not give EPA authority to promulgate a Regional 
Haze FIP for Arizona. The court rejected this argument, explaining 
that:

    Arizona contends that the Finding did not constitute a 
disapproval of the SIPs that had previously been submitted because 
it only notes that Arizona did not submit two of Section 309's 
required elements. Ariz. Opp. [Dkt.  24] at 6. The Court 
does not read the 2009 Finding so narrowly. In the Court's view, the 
2009 Finding reaches a conclusion that Arizona `has failed to make a 
required submission or finds that the plan or plan revision 
submitted by the State does not satisfy the minimum criteria.' 42 
U.S.C. 7410(c)(1). Under the CAA, this triggers the EPA's statutory 
obligation to promulgate a FIP.\253\
---------------------------------------------------------------------------

    \253\ See NPCA v. EPA, (D.D.C. Case 1:11-cv-01548). Dkt 
 35, at 3, n. 1.

Under the terms of the Consent Decree, as amended, EPA is currently 
subject to two sets of deadlines for taking action on Arizona's 
---------------------------------------------------------------------------
Regional Haze SIP. Specifically, the CD requires that:

    By the ``Proposed Promulgation Deadlines'' set forth in Table A 
below EPA shall sign a notice(s) of proposed rulemaking in which it

[[Page 72569]]

proposes approval of a SIP, promulgation of a FIP, partial approval 
of a SIP and promulgation of a partial FIP, or approval of a SIP or 
promulgation of a FIP in the alternative, for each State therein, 
that collectively meet the regional haze implementation plan 
requirements that were due by December 17, 2007 under EPA's regional 
haze regulations.
    By the ``Final Promulgation Deadlines'' set forth in Table A 
below, EPA shall sign a notice(s) of final rulemaking promulgating a 
FIP for each State therein to meet the regional haze implementation 
plan requirements that were due by December 17, 2007 under EPA's 
regional haze regulations, except where, by such deadline EPA has 
for a State therein signed a notice of final rulemaking 
unconditionally approving a SIP, or promulgating a partial FIP and 
unconditional approval of a portion of a SIP, that collectively meet 
the regional haze implementation plan requirements that were due by 
December 17, 2007 under EPA's regional haze regulations.

Table A, as revised, sets a proposal deadline for BART determinations 
for Apache Generating Station, Cholla Power Plant and Coronado 
Generating Station of July 2, 2012 and the final action deadline for 
these three BART determinations of November 15, 2012. The deadline for 
EPA to propose action on the remainder of the Arizona Regional Haze SIP 
is December 8, 2012, and the deadline for final action is July 15, 
2013.\254\
---------------------------------------------------------------------------

    \254\ On November 13, 2012, the D.C. District Court granted a 
motion by EPA to modify the Consent Decree to extend the deadlines 
for promulgation of a FIP for any remaining elements of the SIP that 
are disapproved. Under the revised deadlines, EPA will propose any 
necessary FIP elements by March 8, 2013, and finalize such elements 
by October 15, 2013.
---------------------------------------------------------------------------

    Thus, pursuant to CAA section 110(c)(1) and the court's orders 
entering and amending the Consent Decree, we are not only authorized, 
but are required to issue a FIP for any portion of the Arizona SIP that 
we cannot approve. For the reasons stated in our proposal and elsewhere 
in this document, we have determined that we cannot approve the state's 
BART determinations for NOX at Apache, Cholla and Coronado, 
nor can we approve the compliance-related requirements that were 
omitted from the Arizona Regional Haze SIP. Therefore, we are obligated 
to promulgate a FIP to address these requirements.
    Comment: Several commenters (AUG, EEI, PacifiCorp, SRP) stated that 
EPA cannot propose or finalize a NOX BART FIP for these 
Arizona plants until it has taken final action (following notice-and-
comment rulemaking) on ADEQ's Regional Haze SIP. According to the 
commenters, EPA's authority to propose and then take final action to 
promulgate a FIP comes into existence only when a state has not 
submitted a SIP or when EPA has made a final determination that a 
submitted SIP is not approvable (citing Train v. NRDC, 421 U.S. 60, 79 
(1975)). The commenters believe this principle is confirmed by CAA 
sections 307(d)(1)(B), (3) and (6) because EPA cannot present the 
relevant factual, legal, and policy information and rationale necessary 
to justify a proposed or final FIP rule until it has properly taken 
final action on any relevant SIP before it.
    One commenter (EEI) also states that EPA's assertion that it was 
compelled to propose a FIP at the same time that it disapproved a 
portion of the Arizona SIP, due to a two-year FIP clock that started 
with EPA's 2009 Finding of Failure to Submit, is inconsistent with the 
CSAPR decision. The commenter stated that EPA did not provide 
sufficient notice of the problems with the SIP to enable Arizona to 
remedy them, which is precisely the same problem identified by the 
CSAPR court. The commenter adds that EPA must provide the state a 
realistic opportunity to avoid being pulled into a FIP. Given that EPA 
has consent decree obligations to finalize BART requirements for the 
EGUs addressed by the proposed SIP by November 15, 2012, and EPA did 
not propose disapproval of the SIP until July 20, 2012, a reasonable 
opportunity to develop and receive approval of a revised SIP was not 
offered to the state.
    Response: We do not agree that we are required to take final action 
on Arizona's Regional Haze SIP before promulgating a FIP. Commenters' 
arguments to this effect appear to conflate the procedural requirements 
for EPA's issuance of a FIP with procedural requirements for action on 
a SIP. In fact, these are two actions are governed by different 
provisions of the CAA.
    As explained in the previous response, EPA's 2009 finding that 
Arizona failed to submit a complete Regional Haze SIP triggered a ``FIP 
clock'' under CAA section 110(c).\255\ This FIP clock could only have 
been stopped if Arizona had submitted, and EPA had fully approved a 
Regional Haze SIP, before January 15, 2011. Neither of these two things 
occurred. Therefore, EPA remains subject to this ``FIP duty.'' Our 
action today fulfills part of that duty.
---------------------------------------------------------------------------

    \255\ 42 U.S.C. 7410(c). See also Train, 421 U.S. at 64, 79 
(explaining that the 1970 CAA Amendments ``sharply increased federal 
authority and responsibility in the continuing effort to combat air 
pollution,'' including giving EPA authority to devise a FIP if the 
State's plan fails to satisfy the standards of section 7410(a)(2)).
---------------------------------------------------------------------------

    As several commenters noted, Arizona submitted a Regional Haze SIP 
on February 28, 2011, and the SIP was deemed complete by operation of 
law on August 28, 2011, pursuant to CAA section 110(k)(1)(B).\256\ 
This, in turn, triggered a deadline of August 28, 2012, for us to take 
final action on the SIP, pursuant to CAA section 110(k)(1)(B).\257\ We 
acknowledge that this deadline has now passed and we intend to act as 
quickly as possible to fulfill our duty to act on those portions of the 
SIP not addressed in today's action. However, the fact that we have not 
acted on the entirety of the SIP submittal does not remove or otherwise 
alter our legal obligation to promulgate a FIP under CAA section 
110(c). Our FIP duty does not terminate until we have actually approved 
the submitted SIP. As explained in our NPRM, TSD and elsewhere in this 
document, we cannot approve the State's BART determinations for 
NOX at Apache, Cholla and Coronado, nor can we approve the 
compliance-related requirements that were omitted from the Arizona 
Regional Haze SIP. Therefore, we are obligated to promulgate a FIP to 
address these requirements, and we are doing so in today's action.
---------------------------------------------------------------------------

    \256\ 42 U.S.C. 7410(k)(1)(B).
    \257\ 42 U.S.C. 7410(k)(2).
---------------------------------------------------------------------------

    Furthermore, while we agree that the procedural requirements for 
promulgation of a FIP under 110(c) are set forth in CAA section 
307(d),\258\ we do not agree that our action violates that provision in 
any way. Consistent with the requirements of that section, our proposal 
included a summary of the factual data on which our proposed FIP was 
based, as well as the methodology used in obtaining the data and in 
analyzing the data and the major legal interpretations and policy 
considerations underlying the proposed FIP.\259\ In addition, we 
provided a detailed evaluation of Arizona's BART analyses for the 
relevant units, which formed the basis for our proposed action on those 
portions of the Arizona Regional Haze SIP.\260\ This final rulemaking 
includes similar information with respect to the SIP and the FIP, as 
well as ``an explanation of the reasons for any major changes in the 
promulgated rule from the proposed rule'' and ``a response to each of 
the

[[Page 72570]]

significant comments, criticisms, and new data submitted in written or 
oral presentations during the comment period.'' \261\ Therefore, our 
action complies with the applicable procedural requirements of the CAA.
---------------------------------------------------------------------------

    \258\ See CAA section 307(d)(1)(B), 42 U.S.C. 7607(d)(1)(B), 
(``This subsection applies to * * * the promulgation or revision of 
an implementation plan by the Administrator under [CAA section 
110](c)'']
    \259\ See CAA section 307(d)(3), 42 U.S.C. 7607(d)(3).
    \260\ The SIP portion of our action is subject to the procedural 
requirements of section 553(b) of Administrative Procedure Act 
(APA), 5 U.S.C. 553(b), rather than the requirements of CAA 
subsection 307(d), 42 U.S.C. 7607(d).
    \261\ CAA section 307(d)(6)(A) & (B), 42 U.S.C. 7607(d)(6)(A) & 
(B).
---------------------------------------------------------------------------

    Finally, we do not agree with commenters' assertions that the D.C. 
Circuit's decision in EME Homer City Generation precludes us from 
promulgating a partial FIP concurrently with our partial disapproval of 
Arizona's Regional Haze SIP. In EME Homer City Generation, the court 
found that EPA had acted improperly in issuing the Transport Rule 
because we simultaneously defined states' ``good neighbor obligations'' 
under CAA section 110(a)(2)(D)(i)(I) and issued FIPs to address those 
obligations.\262\ The court explained that:
---------------------------------------------------------------------------

    \262\ EME Homer City Generation, slip op. at 7.

* * * the triggers for a FIP are EPA's finding that the SIP fails to 
contain a ``required submission'' or EPA's disapproving a SIP 
because of a ``deficiency.'' But logically, a SIP cannot be deemed 
to lack a required submission or be deemed deficient for failing to 
implement the good neighbor obligation until after EPA has defined 
the State's good neighbor obligation. Once it defines the 
obligation, then States may be forced to revise SIPs under Section 
110(k)(5) or to submit new SIPs under Section 110(a)(1). Only if 
that revised or new SIP is properly deemed to lack a required 
submission or is properly deemed deficient may EPA resort to a FIP 
for the State's good neighbor obligation.\263\
---------------------------------------------------------------------------

    \263\ Id. at 46.

In essence, the D.C. Circuit found that EPA's findings of failure to 
submit and disapprovals of state transport SIPs did not trigger FIP 
obligations under CAA section 110(c) because these actions occurred 
``before [EPA] told the States what emissions reductions their SIPs 
were supposed to achieve under the good neighbor provision.'' \264\
---------------------------------------------------------------------------

    \264\ Id. at 47 (emphasis in original).
---------------------------------------------------------------------------

    In this case, by contrast, EPA defined states' obligations under 
the RHR and the BART Guidelines well in advance of its findings of 
failure to submit and subsequent SIP disapprovals. EPA promulgated the 
original RHR on July 1, 1999.\265\ Following the D.C. Circuit's 
decision in American Corn Growers, EPA revised the RHR and issued the 
final BART Guidelines on July 6, 2005.\266\ The revised RHR and the 
Guidelines were upheld by the DC Circuit in Utility Air Regulatory 
Group v. EPA, 471 F.3d 1333 (D.C. Cir. 2006).\267\ As explained in our 
proposal and elsewhere in this document, the BART Guidelines provide 
detailed instructions to states on how to determine which sources are 
subject to BART and how to analyze the five statutory factors in order 
to set emissions limits representing BART for each subject-to-BART 
source.\268\ In 2006, responding to specific questions from various 
States and Regional Planning Organizations (RPOs), EPA issued further 
guidance to help States implement the RHR and BART Guidelines.\269\
---------------------------------------------------------------------------

    \265\ 64 FR 35714.
    \266\ 70 FR 39104. This finding covered 37 states, the District 
of Columbia and the Virgin Islands.
    \267\ In response to another D.C. Circuit decision, Center for 
Energy and Economic Development v. EPA, 398 F.3d 653 (D.C. Cir. 
2005), EPA revised the RHR's provisions governing alternatives to 
source-specific BART determinations on October 13, 2006. These 
revisions did not alter the requirements for source-specific BART 
determinations that apply to Arizona's BART determinations at issue 
here.
    \268\ 40 CFR Part 51, Appendix Y. While the Guidelines are only 
mandatory for fossil fuel-fired electric generating plants with a 
total generating capacity in excess of 750 megawatts, States are 
encouraged to follow the BART Guidelines in making BART 
determinations for other types of sources. Id. section I.H. The 
Guidelines also set specific presumptive limits for SO2 
and NOX for these large power plants, but allow states to 
apply more or less stringent limits based upon source-specific five-
factor analyses. 70 FR 39131-39132.
    \269\ Memo from Joseph W. Paise Regarding Regional Haze 
Regulations and Guidelines for BART (July 19, 2006); Additional 
Regional Haze Questions (Guidance) (Sept. 27 2006). In addition, EPA 
issued final ``Guidance for Setting Reasonable Progress Goals Under 
the Regional Haze Program'' on June 1, 2007, but this Guidance is 
not directly relevant for individual BART determinations.
---------------------------------------------------------------------------

    As noted in prior responses, EPA issued a finding of failure to 
submit for Regional Haze SIPs on January 15, 2009, thus triggering a 
FIP clock under CAA section 110(c).\270\ By this time, states had 
already had more than three years since issuance of the final BART 
Guidelines (and more than two years since the final revisions to the 
RHR and the issuance of further guidance on the RHR and BART) to 
develop their Regional Haze SIPs. By the time the FIP clock actually 
ran out in January 2011, EPA had received Regional Haze SIPs from 
nearly every state. EPA has since proposed to approve, in part or in 
whole, the vast majority of these SIPs.\271\ We have also has taken 
final action to approve, in part or in whole, many of these SIPs.\272\ 
This stands in contrast to the situation in EME Homer City Generation, 
where, the court noted that, ``every Transport Rule State that 
submitted a good neighbor SIP for the 2006 24-hour PM2.5 
NAAQS was disapproved.'' \273\ Thus, it is clear that states had ample 
opportunity to submit approvable Regional Haze SIPs before EPA was 
obligated to promulgate Regional Haze FIPs under CAA section 110(c).
---------------------------------------------------------------------------

    \270\ 74 FR 2392.
    \271\ See, e.g., 76 FR 36450 (Nevada); 77 FR 24794 (New York); 
76 FR 13944 (California); 77 FR 11798 (Rhode Island); 76 FR 27973 
(Delaware); 77 FR 12770 (Nebraska); 77 FR 18052 (Colorado); 76 FR 
16168 (Oklahoma); 77 FR 11914 (Vermont); 77 FR 11928 (Wisconsin); 76 
FR 52604 (Kansas); 76 FR 64186 (Arkansas); 77 FR 11839 (Maryland); 
76 FR 58570 (North Dakota); 77 FR 3966 (Illinois); 76 FR 76646 
(South Dakota). EPA proposed limited approval and limited 
disapproval of the Regional Haze SIPs of states covered by the Clean 
Air Interstate Rule (CAIR), due to the remand of CAIR by the D.C. 
Circuit. See, e.g. 77 FR 3691 (Jan. 25, 2012) (proposing limited 
approval and limited disapproval of Virginia's Regional Haze SIP).
    \272\ See, e.g., 76 FR 34608 (California); 76 FR 42557 
(Delaware); 76 FR 80754 (Kansas); 77 FR 19 (New Jersey); 77 FR 5191 
(District of Columbia); 77 FR 14604 (Arkansas); 77 FR 17334 
(Nevada); 77 FR 24845 (South Dakota); 77 FR 40150 (Nebraska); 77 FR 
51915 (New York).
    \273\ Slip op. at 57.
---------------------------------------------------------------------------

    With respect to Arizona's Regional Haze SIP in particular, we note 
that Arizona first made public its proposed 308 SIP during a comment 
period beginning on October 28, 2010.\274\ At that time, EPA, the 
National Park Service (NPS) (in consultation with the Fish and Wildlife 
Service) and the U.S. Forest Service all submitted comments expressing 
concern about the proposed SIP's compliance with the CAA, the RHR and 
the BART Guidelines.\275\ Among other things, EPA noted that the SIP, 
``does not provide a sufficient level of information and analysis to 
support its conclusions.'' \276\ NPS provided extensive comments on the 
proposed SIP, including detailed evaluations of ADEQ's BART analyses 
for each of the three sources at issue in today's action.\277\ In each 
instance, NPS concluded that ADEQ had not conducted a valid BART 
analysis for NOX.\278\ The Forest Service concurred with the 
initial comments provided by NPS on Arizona's BART exclusion process 
and ``strongly disagree[d] with the adequacy of the Arizona reasonable 
progress analysis.'' \279\ Therefore, ADEQ had the benefit not only of 
the generally applicable requirements of the RHR, the

[[Page 72571]]

BART Guidelines and EPA Guidance, but also specific guidance from EPA 
and the FLMs pointing out shortcomings in its Regional Haze SIP. 
Following receipt of these comments, Arizona had the opportunity to 
revise its SIP to address the deficiencies identified by the 
commenters, but in most instances it chose not to do so.\280\
---------------------------------------------------------------------------

    \274\ Arizona Regional Haze SIP, Appendix E, Public Process. 
Approximately 60 days prior to the public comment period, ADEQ sent 
a draft of the SIP to the National Park Service and U.S. Forest 
Service.
    \275\ Id.
    \276\ Id. Letter from Colleen McKaughan, EPA, to Eric Massey, 
ADEQ (Dec. 2, 2010).
    \277\ Id. NPS Initial Comments Arizona Draft Section 308 
Regional Haze SIP (Nov. 29, 2010); NPS General BART Comments on ADEQ 
BART Analyses (Nov. 29, 2010); NPS Comments AEPCO--Apache Generating 
Station BART Analysis and Determination (Nov. 29, 2010); NPS 
Comments APS Cholla Generating Station BART Analysis and 
Determination (Nov. 29, 2010); NPS Comments SRP's Coronado 
Generating Station BART Analysis and Determination (Nov. 29, 2010); 
NPS Comments on ADEQ BART Exemptions, (Dec. 1, 2010).
    \278\ Id.
    \279\ U.S. Forest Service Specific Comments: Arizona Regional 
Haze SIP (Nov. 29, 2010).
    \280\ For example, in response to detailed comments from NPS 
regarding the efficiency and cost of SCR, ADEQ stated that:
    ADEQ has determined that the cost computations presented by the 
facilities in support of their BART applications are reasonable. 
Many of the computations are based on vendor data and site-specific 
conditions. The Department does not agree that the computations 
over-estimate the costs of retrofit technologies and under-estimate 
the associated emission decreases and visibility improvement.
---------------------------------------------------------------------------

    Finally, while we agree that, in the absence of an expired 
statutory duty and a court-ordered deadline to issue a FIP, it would be 
preferable for us to give Arizona additional time to revise its 
Regional Haze SIP prior to promulgation of a FIP, we simply do not have 
this option under these circumstances. As explained in our response to 
the previous comment, we are obligated to issue a FIP to address any 
gaps left by partial disapprovals of Arizona's Regional Haze SIP. 
Nonetheless, we encourage ADEQ to submit a revised SIP to replace the 
FIP and will work with ADEQ to develop such a revised plan to meet the 
requirements of the CAA and the RHR.
    Comment: One commenter (Earthjustice) stated that the CAA's 
Regional Haze program establishes a national regulatory floor and 
requires states to develop RH SIPs at least as stringent as this floor 
(citing 40 CFR 51.308). According to the commenter, ADEQ's SIP is 
legally and technically inadequate because it does not require adequate 
BART emission limits, does not achieve ``reasonable progress'' are 
required by the RHR and would fail to achieve natural visibility goals 
by 2064. The commenter believes that the Arizona RH SIP fails to 
establish a program that is at least as stringent as the national floor 
and that therefore EPA has a legal obligation to disapprove the SIP and 
to issue a FIP in its place under CAA section 110(c)(1).\281\
---------------------------------------------------------------------------

    \281\ The commenter cited Alaska Dep`t of Envtl. Conservation v. 
EPA, 540 U.S. 461, 470, 484 (2004); Mont. Sulphur & Chem. Co. v. 
EPA, 666 F.3d 1174, 1181 (9th Cir. 2012) to support the contention 
that Congress structured the CAA to provide expansive EPA oversight 
to ensure SIPs comply with the CAA. The commenter cited 42 U.S.C. 
7410(c), (k); EME Homer City Generation, L.P. v. EPA, No. 11-1302, 
----F.3d----, 2012 WL 3570721, at *17 (DC Cir. Aug. 21, 2012) to 
support the principle that EPA must issue a FIP when it determines 
that a SIP does not comply with the CAA.
---------------------------------------------------------------------------

    Response: We agree that the CAA, the RHR and the BART Guidelines 
set out specific requirements that Regional Haze SIPs must meet in 
order to be approved by EPA. Our action today addresses these 
requirements as they apply to ADEQ's BART determinations for Apache, 
Cholla and Coronado, but does not address the requirements as they 
apply to the remainder of Arizona's Regional Haze SIP (e.g., the 
reasonable progress goals set by the state). EPA will propose action on 
these aspects of the SIP shortly and take final action after receiving 
comments. As explained in the preceding responses, because of our prior 
finding of failure to submit, we are required to issue a FIP for any 
portion of the SIP that we cannot approve. Thus, we are promulgating a 
FIP for those aspects of ADEQ's BART determinations for Apache, Cholla 
and Coronado that we are not approving at this time.

G. Other Comments

 1. Comment on Public Health and Ecosystem Impacts
    Comment: A number of commenters provided comments on the potential 
health effects of our proposal. A number of other commenters stated 
that the Regional Haze program's sole focus is the improvement of 
visibility in Class I areas, and is not a health-based or emissions 
reduction program. In relation to the Regional Haze program, any EPA 
emphasis on health and emissions reduction is inappropriate. One 
commenter (SRP) stated that EPA's assertion of health benefits is 
unsubstantiated by the proposed rule. A few commenters noted that the 
air quality in Arizona varies from city to city, and stated that EPA 
should focus on the areas with the poorest air quality first, such as 
Phoenix.
    In contrast, one commenter (Earthjustice) stated that the same 
pollutants that reduce visibility also cause significant public health 
impacts. The commenter noted that NOX is a precursor to 
ground level ozone, which is associated with respiratory diseases, 
asthma attacks and decreased lung function, and that NOX 
reacts with other substances to form particulates that can cause and 
worsen respiratory diseases, aggravate heart disease, and lead to 
premature death. The commenter indicated that SO2 increases 
asthma symptoms, leads to increased hospital visits, and can form 
particulates that aggravate respiratory and heart diseases and cause 
premature death, and that PM can penetrate deep into the lungs and 
cause health problems such as aggravated asthma, chronic bronchitis, 
and heart attacks. Based on a report prepared by the Clean Air Task 
Force, the commenter asserted that Cholla, Coronado and Apache 
collectively cause approximately 41 deaths, 63 heart attacks and 747 
asthma attacks annually.\282\ Several other commenters provided similar 
comments concerning health effects.
---------------------------------------------------------------------------

    \282\ The commenter cited Clean Air Task Force, Death and 
Disease From Power Plants, http://www.catf.us/fossil/problems/power_plants/existing/map.php?state=Arizona.
---------------------------------------------------------------------------

    Response: We acknowledge the commenters' concerns regarding the 
adverse health impacts of haze-causing emissions. We agree that the 
same PM2.5 emissions that cause visibility impairment can 
cause respiratory problems, decreased lung function, aggravated asthma, 
bronchitis, and premature death. We also agree that the same 
NOX emissions that cause visibility impairment also 
contribute to the formation of ground-level ozone, which has been 
linked with respiratory problems, aggravated asthma, and even permanent 
lung damage. Finally, we also agree that SO2 emissions that 
cause visibility impairment also contribute to increased asthma 
symptoms, lead to increased hospital visits, and can form particulates 
that aggravate respiratory and heart diseases and cause premature 
death. Thus, to the extent that this FIP will lead to reductions in 
these pollutants, there will be co-benefits for public health. However, 
for purposes of this action, we are not authorized to consider these 
benefits and we have not done so.
    In our NPRM, while discussing Executive Order 13045 (Protection of 
Children from Environmental Health Risks and Safety Risks), we stated 
that, to the extent the proposed rule will limit emissions of 
NOX, SO2 and PM10, the rule will have 
a beneficial effect on children's health by reducing air pollution. In 
this action, while discussing Executive Order 13045 (Protection of 
Children from Environmental Health Risks and Safety Risks), we conclude 
that this action does not have a disproportionate effect on children, 
but again note that to the extent this final action will limit 
emissions of NOX, SO2 and PM10, the 
rule will have a beneficial effect on children's health by reducing air 
pollution that causes or exacerbates childhood asthma and other 
respiratory issues. However, we do not believe it is necessary or 
appropriate to quantify the extent of this beneficial effect because we 
are not relying upon health effects in the promulgation of this rule.
    Comment: One commenter (Earthjustice) stated that the RHR rule

[[Page 72572]]

provides important environmental benefits to plants and animals, soil 
health and entire ecosystems. The commenter noted that NOX 
and SO2 are the primary causes of acid rain, which acidifies 
lakes and streams, can damage certain types of trees and soils and 
accelerates the decay of building materials and paints, including 
irreplaceable buildings and statues that are part of our nation's 
cultural heritage. The commenter added that nitrogen deposition, caused 
by wet and dry deposition of nitrates derived from NOX 
emissions, causes well-known adverse impacts on ecological systems. The 
commenter also noted that NOX is a precursor to ozone, which 
impacts plants and ecosystems by interfering with plants' ability to 
produce food and increasing their susceptibility to disease and 
insects, and also contributes to wildfires and bark beetle outbreaks in 
the West by depressing plant water levels and growth.
    Response: We appreciate the commenter's concerns regarding the 
negative ecosystem impacts of emissions from the units at issue. We 
agree that both NOX and SO2 cause acid rain and 
can have negative impacts on ecosystems, damaging plants, trees, and 
other vegetation (including crop yields), which could have a negative 
effect on species diversity in our ecosystems. However, for purposes of 
this Regional Haze action, we are not authorized to consider these 
ecosystem impacts. Therefore, while we note the potential for co-
benefits to ecosystem health resulting from our action today, we have 
not taken these potential benefits into account in this action.
2. Comments on Economic Impacts
    Comment: Many commenters, including state officials, private 
citizens and representatives of local governments, schools, and 
business groups, expressed concern over potential economic effects 
resulting from EPA's proposed BART determinations, asserting that EPA's 
action would result in rate increases and possibly closures of one or 
more power plants. Some commenters cautioned EPA that rate increases 
would impact at-risk populations, such as seniors on fixed incomes. The 
commenters emphasized that the three plants have a large financial 
impact on the communities where they are located (i.e., they provide 
jobs and tax revenue) and expressed their concern over the three 
plants' economic viability if the plants are forced to install SCR to 
reduce NOX emissions. Several representatives of local 
school districts discussed the harm that large increases in electric 
power rates would do to their programs in this time of declining state 
support, and one representative of a local, nonprofit hospital 
similarly voiced the difficulty his facility would have in absorbing 
large rate increases. One commenter discussed the multiplier effect by 
which loss of income from any job losses or the reduction in disposable 
income due to increased power bills would ripple through the local 
economies and affect local businesses and employment. A few commenters 
discussed the impact on Arizona's water rates, and advised EPA to 
consider how these rate increases would affect Arizona's economy. A few 
commenters asserted that the proposed rule is intended to eliminate 
coal as a cheap and reliable energy source.
    By contrast, one commenter (Earthjustice) stated that the RHR 
provides substantial economic benefits, which far outweigh the costs of 
pollution control technologies such as SCR. The commenter noted that 
EPA has valued the RHR's health benefits at $8.4 to $9.8 billion 
annually. The commenter further asserted that requiring power plants to 
invest in pollution controls creates short-term construction jobs as 
well as permanent operations and management positions. In addition, the 
commenter indicated that the national parks and wilderness areas 
protected by the RHR serve as engines for sustainable local capital, 
with national park visitors contributing approximately $30 billion to 
local economies and supporting 300,000 jobs nationwide. Regarding 
Arizona specifically, the commenter stated that over 4.3 million people 
visited the Grand Canyon in 2010, and this supported over 6,800 jobs 
and resulted in over $428 million in visitor spending, while tourism at 
Petrified Forest National Park, Saguaro National Park and Chiricahua 
National Monument in 2010 supported over 1,100 jobs and resulted in 
over $74 million in visitor spending. The commenter contended that 
studies show that national park visitors highly value clean air, 
readily perceive haze and are willing to cut short visits to national 
parks based on their perception of air quality.\283\
---------------------------------------------------------------------------

    \283\ The commenter cited and submitted as Exhibit 11 Abt 
Assocs. Inc., Out of Sight: The Science and Economics of Visibility 
Impairment, at ES-7 (2000), available at http://www.abtassociates.com/reports/ES-clear.pdf.
---------------------------------------------------------------------------

    Response: As explained in our prior responses regarding economic 
issues, the BART Guidelines permit consideration of economic impacts 
only under ``unusual circumstances'' where a potential control option 
is expected to have a ``severe impact on plant operations'' or ``result 
in significant economic disruption or unemployment.'' None of the 
commenters have provided any evidence that our action today would 
result in the closure of any of the affected units. We discuss many of 
the potential economic impacts raised as concerns here in the context 
of our analysis of affordability of controls to AEPCO, above. Finally, 
we acknowledge that today's action may have positive economic impacts, 
as described by Earthjustice. However, we have not taken potential 
economic benefits into account in our action.
3. Comments From Tribal Representatives and Members
    Comment: One commenter (Navajo Nation) stated that comments on our 
proposed actions were provided pursuant to its government-to-government 
relationship with EPA. The commenter stated that this EPA rulemaking 
has adverse implications for a pending BART FIP for Navajo Generating 
Station, which is on Navajo Nation land and burns Navajo coal. The 
commenter also stated that this rule could impact BART decisions for 
Four Corners Power Plant, and San Juan Generating Station.
    The commenter states that EPA has an obligation to consult with 
Navajo Nation on a government-to-government basis for EPA actions and 
decisions that may affect the Navajo Nation's interests, and reminds 
EPA that it must defer to tribal government policy decisions, just as 
it would a state, when promulgating a FIP on tribal lands.
    The commenter further states that EPA has failed to analyze the 
cumulative effects of this rulemaking and the planned and proposed EPA 
actions on Navajo Generating Station, Four Corners Power Plant, and San 
Juan Generating Station, including both visibility improvement and 
potential regional economic impacts. The commenter noted that the 
fossil fuel economy is vitally important to the Four Corners region and 
the Navajo Nation, with many jobs and coal royalties at stake from loss 
of the area's coal fired power plants and their associated mines. The 
commenter states that EPA must consider these impacts, as well as the 
impacts of utility rate increases, in this BART decision for 
NOX.
    The commenter observed that it is possible to go forward without 
imposing a FIP in Arizona, as evidenced by the renewed consideration 
being given to the New Mexico regional haze SIP under the current stay 
on the proposed FIP for that state. The commenter stated

[[Page 72573]]

that the Navajo Nation, where two power plants that are undergoing EPA 
BART determinations are located, shares the concerns of Arizona and New 
Mexico regarding the economic impacts of requiring SCR. The commenter 
noted that the BART decision is not based only on the most effective 
control measures, but is to be based on an analysis of five factors 
which include non-air quality impacts such as economic impacts.
    The commenter also asserted that real data should underpin EPA's 
decisions, rather than modeling alone. The commenter also contended 
that a public health baseline is needed in order to chart any public 
health improvements that result from such emission controls.
    Response: EPA appreciates the comments provided by the Navajo 
Nation on our proposed action pursuant to its government-to-government 
relationship with EPA. As part of separate rulemakings, EPA has engaged 
in consultation with Navajo Nation regarding the Four Corners Power 
Plant \284\ and San Juan Generating Station. EPA is currently engaged 
in active consultation with the Navajo Nation and other affected tribes 
on the Navajo Generating Station.
---------------------------------------------------------------------------

    \284\ See document titled: ``Timeline of all tribal 
consultations on BART.docx'' in the docket for this final 
rulemaking.
---------------------------------------------------------------------------

    Today's rule approves Arizona's SIP (in part) and implements a FIP 
(in part) for Apache Units 2 and 3; Cholla Units 2, 3 and 4; and 
Coronado Units 1 and 2. This action has no retroactive effect on final 
BART determinations for other facilities. We disagree that this action 
has a nexus to the BART determination for Navajo Generating Station, 
because BART analyses, whether performed by the states or EPA, are 
conducted on a source-by-source basis, applying all five statutory 
factors to a facility on an individual basis. While there are certain 
commonalities among the sources mentioned by the commenter (e.g., all 
are coal-fired power plants), there are also significant differences 
that necessarily affect the case-by-case BART analysis. For example, 
the unit size, unit age, boiler type, existing controls, type of coal 
burned and proximity to Class I areas vary significantly among these 
sources. All of these differences have a bearing on at least one of the 
BART factors and thus on the ultimate BART determination. Given these 
various distinguishing factors, we do not agree that this rule will 
affect our BART determination for Navajo Generating Station.
    We also do not agree that we are required to consider the 
cumulative effects of today's rulemaking together with rulemaking 
actions on other BART determinations as part of our action today. As 
noted above, under the CAA, the RHR and the BART Guidelines, BART 
determinations are made on a source-by-basis, taking into account the 
five statutory factors. The cumulative improvements from the various 
SIPs, FIPs, and BART determinations are addressed in analyses under the 
RHR requirements for Reasonable Progress, Long Term Strategies and 
future updates to the SIP, which are separate from BART analyses. These 
cumulative improvements will be influenced by changes in hundreds or 
thousands of emission sources, so are more appropriately addressed 
through use of a grid model, such as CAMx or CMAQ, rather than the 
CALPUFF model recommended in the BART Guidelines, which is geared to a 
far lower number of sources, and lacks the detailed chemistry of the 
grid models.
    With regard to the economic concerns raised by the commenter, we 
are required by the CAA and the federal regulations implementing the 
CAA's BART provisions to evaluate (1) cost of compliance, (2) the 
energy and non-air quality environmental impacts of compliance, (3) any 
existing pollution control technology in use at the source, (4) 
remaining useful life of source, and (5) degree of improvement in 
visibility which may reasonably be anticipated to result from the use 
of such technology. As explained in our prior responses regarding 
economic issues, the BART Guidelines permit consideration of economic 
impacts only under ``unusual circumstances'' where a potential control 
option is expected to have a ``severe impact on plant operations'' or 
``result in significant economic disruption or unemployment.'' None of 
the commenters have provided any evidence that our action today would 
result in the closure of any of the affected units or result in 
significant economic disruption. We also note that none of the sources 
affected by today's rulemaking currently purchase coal from a mine that 
operates on the Navajo Nation.
    We take our duty to estimate the cost of controls very seriously, 
and make every attempt to make a thoughtful and well informed 
determination. However, we do not consider a potential increase in 
electricity rates to be the most appropriate type of analysis for 
considering the costs of compliance in a BART determination. 
Projections of electricity rate impacts are inherently fraught with 
uncertainty due to the numerous variables involved and the complexity 
of the regulatory regime governing the power sector. Nevertheless, as 
discussed elsewhere in this document, as part of our consideration of 
the affordability of controls on AEPCO, a small entity, we have 
analyzed the potential rate increases associated with our proposal for 
Apache Units 2 and 3. Given the uncertainty inherent in such an 
analysis, we have used conservative assumptions in an effort to guard 
against understating the potential rate impacts.
    Regarding the comment that EPA should not rely on modeling alone, 
it is extremely difficult in observational analyses to sufficiently 
control for all factors, including emissions from other sources, to be 
able to isolate the impacts of closure of a facility. A model such as 
CALPUFF essentially holds constant a number of factors in order to 
isolate the impacts of a single source. As discussed elsewhere in this 
document, EPA affirms that the regulatory version of CALPUFF is the 
correct model to use for these BART determinations.
    Assessing human exposure and quantifying health benefits are 
outside the scope of the requirements of the Regional Haze Rule. EPA 
sets National Ambient Air Quality Standards (NAAQS) to establish levels 
of air quality that are protective of public health, including the 
health of sensitive populations, for a number of pollutants including 
particulate matter. These ``sensitive'' populations include asthmatics, 
children, and the elderly. At this time the Navajo Nation is not 
identified as out of attainment with any of the NAAQS. However, EPA 
recognizes that there are significant concerns about risk and exposure 
to air pollutants on the Navajo Nation and EPA will continue 
discussions with the Navajo Nation and will involve other federal 
agencies, as appropriate, to help address these concerns.
    Comment: Various other representatives and members of the Hopi and 
Navajo Tribes provided oral testimony and/or submitted written comments 
at one or more of the public hearings. Most tribal community members 
supported the proposed FIP and stated their belief that it will improve 
air quality and human health in Arizona. Several commenters recounted 
their personal experiences with the deterioration of visibility in the 
rural areas in which they live, declining water supplies due to water 
use in mining operations, and illnesses that they believe are 
attributable to air pollution from the power plants and mines in the 
area (e.g., asthma and bronchitis). A number of commenters pointed out 
that there are numerous old power plants in and around the Navajo

[[Page 72574]]

Nation, which they believe are causing air pollution that contributes 
to haze and an increase in the incidence of lung and heart disease and 
cancer in humans, as well as harming native plants and animals. Some of 
these commenters advocated for a conversion to renewable energy 
sources, which they believe will provide jobs, improve health, and 
reduce emissions that contribute to climate change. One commenter 
specifically suggested that EPA promote alternatives like natural gas 
and algae ponds as a source of energy.
    One commenter indicated that reduced haze would improve tourism, 
resulting in increased jobs and tax receipts. Another tribal commenter 
stated that before acting, EPA should evaluate the impact on employment 
and on the Hopi's revenue from coal if the FIP causes power plants to 
close.
    One tribal commenter alleged that the National Academy of Sciences 
did a study a number of years ago that concluded that some areas of the 
country could be designated as ``national sacrifice areas'' that would 
be used for national priorities, irrespective of resulting permanent 
environmental damages. According to the commenter, many Indian 
reservations are located in such areas, such as all of the Navajo and 
Hopi reservations. The commenter asserted that the study concluded that 
the well-being of the people in such areas can be forfeited so that the 
rest of the country can enjoy cheap energy.
    Response: EPA acknowledges the comments. Neither Section 169A of 
the CAA nor the BART Guidelines requires that BART analyses include or 
quantify benefits to health or tourism or impact on employment. EPA 
does not intend for this action to cause any power plants to close. 
Although a quantitative analysis of the health and tourism benefits is 
beyond the scope of what is required under BART EPA agrees with 
commenters that emission reductions achieved to improve visibility will 
also improve air quality. Improved air quality, in turn, affects public 
health and may enhance tourism in the area. EPA notes that even if we 
had quantified the benefits to health and tourism, such an analysis 
would not likely have altered the outcome of our BART determination.
    Renewable energy technology is not a retrofit option for the 
sources subject to BART and is therefore outside the scope of our BART 
determination. As noted in the BART Guidelines, ``[w]e do not consider 
BART as a requirement to redesign the source when considering available 
control alternatives. For example, where the source subject to BART is 
a coal-fired electric generator, we do not require the BART analysis to 
consider building a natural gas-fired electric turbine although the 
turbine may be inherently less polluting on a per unit basis.'' \285\ 
Therefore, we did not consider such alternatives as part of our BART 
analyses. Nonetheless, we acknowledge that many kinds of renewable 
energy do not produce haze-causing pollutants, and transitioning to 
those sources of energy could lead to visibility improvements.
---------------------------------------------------------------------------

    \285\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.1.
---------------------------------------------------------------------------

    The CAA applies equally to all parts of the United States. In 
making a determination in this case, we have applied the applicable 
provisions of the CAA and the RHR. We have also considered other 
applicable requirements, including Executive Order 12898,\286\ which 
establishes federal executive policy on environmental justice. This 
Executive Order directs federal agencies, to the greatest extent 
practicable and permitted by law, to make environmental justice part of 
their mission by identifying and addressing, as appropriate, 
disproportionately high and adverse human health or environmental 
effects of their programs, policies, and activities on minority 
populations and low-income populations in the United States.
---------------------------------------------------------------------------

    \286\ 59 FR 7629, February 16, 1994.
---------------------------------------------------------------------------

    EPA has determined that our final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it increases the 
level of environmental protection for all affected populations without 
having any disproportionately high and adverse human health or 
environmental effects on any population, including any minority or low-
income population. This rule requires emissions reductions of NOx from 
three facilities in Arizona. The partial approval of the SIP approves 
state law as meeting Federal requirements.
    Comment: One commenter suggested that EPA investigate the 
technology of cooling steam exhaust through a magnetic refrigerator to 
remove NO2 as a liquid, since it would condense at the 
relatively high temperature of 294 K or 70 degrees F (boiling point).
    Response: The BART Guidelines provide that:

    Technologies which have not yet been applied to (or permitted 
for) full scale operations need not be considered as available; we 
do not expect the source owner to purchase or construct a process or 
control device that has not already been demonstrated in 
practice.\287\
---------------------------------------------------------------------------

    \287\ BART Guidelines, 40 CFR Part 51, Appendix Y, section 
IV.D.1.

---------------------------------------------------------------------------
The Guidelines further provide that:

    In order to provide certainty in the process, all technologies 
should be considered if available before the close of the State's 
public comment period. You need not consider technologies that 
become available after this date.

The commenter has not provided evidence that this technology has been 
demonstrated in practice or that it was available before the close of 
the State's public comment period. Therefore, we have not considered it 
as a potential control option. An additional consideration is that 
typically 90 percent of the NOX from combustion is emitted 
in the form of NO, rather than NO2. Since the boiling point 
of NO is 121 K or -242 degrees F, much lower than for NO2, 
and the stack exit temperature is the range of 300-400 K or 120-280 
degrees F, a large degree of cooling would be necessary to condense the 
NO, and so the energy costs could be substantial.
4. Requests for Extension of Comment Period and Additional Hearings
    Comment: A number of commenters remarked on EPA's timeline for 
soliciting public comments, and stated that they believe that the time 
allowed was insufficient. One commenter requested more public hearings, 
and another commenter requested a 90-day extension of the deadline for 
comments (starting from July 18, 2012), so that the public has ample 
time to review, analyze, comment, and react to the rule and in 
particular EPA's Technical Support Document. The commenter added that 
an extension would allow the ADEQ the opportunity to further 
collaborate with EPA in revising the state's SIP submittal (for the 
purpose of nullifying the proposed FIP), and thereby adhering to the 
intent of the CAA.
    Response: As explained above, our proposed rule, which was signed 
on July 2, 2012 and published in the Federal Register on July 20, 
2012,\288\ provided for a public hearing in Phoenix, Arizona, on July 
31, 2012, and a public comment deadline of August 31, 2012. In response 
to requests from various parties for a longer comment period and 
additional hearings, we extended the public comment period to a total 
of sixty days from publication in the Federal Register.\289\ We also 
scheduled two more public hearings in

[[Page 72575]]

Southern Arizona (Benson) and in Northern Arizona (Holbrook) on August 
14 and 15, 2012, respectively.
---------------------------------------------------------------------------

    \288\ 77 FR 42834.
    \289\ See 77 FR 45326 (July 31, 2012).
---------------------------------------------------------------------------

    Comment: One comment letter signed by 728 residents, business 
owners, citizens and other interested parties urged EPA to extend the 
comment period on our proposal and provide additional hearings near the 
Cholla Power Plant.
    Response: As noted the preceding response, we extended the comment 
period on our propose rule and we held additional public hearings, 
including one in Holbrook, Arizona, near the Cholla Power Plant.

V. Summary of Final Action

    EPA is taking final action to approve in part and disapprove in 
part a portion of Arizona's SIP for Regional Haze and to promulgate a 
FIP for the disapproved elements of the SIP. This final action 
addresses only the State's BART determinations for the specified units 
at the three power plants. We will propose action on the remainder of 
Arizona's Regional Haze SIP in a separate notice. EPA takes very 
seriously a decision to disapprove portions of a state plan. In this 
instance, we find that the State's NOX BART determinations 
for the coal-fired units are not consistent with the requirements of 
the Act and the RHR. In addition, the SIP lacks the necessary 
compliance deadlines and requirements for equipment maintenance and 
operation, including monitoring, recordkeeping and reporting 
requirements for all pollutants at all of the BART units. As a result, 
we find that this final disapproval is the only path that is consistent 
with the Act at this time.
    EPA estimates this action will improve visibility at 18 Class I 
areas by reducing NOX emissions from three power plants by 
about 22,700 tons per year. The total costs associated with these 
reductions, according to the supplemental cost analysis we performed 
based on cost estimates provided by the facility owners, are summarized 
in Table 18.

                                                     Table 18--Summary of Supplemental Cost Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Annualized                          Total
                                                                       Capital cost   capital cost ($/  Annual O&M ($/  annualized cost       Cost-
                                                                           ($)              yr)              yr)             ($/yr)       effectiveness
--------------------------------------------------------------------------------------------------------------------------------------------------------
Apache Unit 2......................................................      $82,481,439       $7,785,664       $1,760,600       $9,546,264           $3,450
Apache Unit 3......................................................       82,481,439        7,785,664        1,760,600        9,546,264            2,973
Cholla Unit 2......................................................       87,713,386        8,279,523        1,626,683        9,906,206            2,979
Cholla Unit 3......................................................       83,461,195        7,878,146        1,570,766        9,448,912            2,838
Cholla Unit 4......................................................      119,083,832       11,240,671        2,350,182       13,590,853            3,083
Coronado Unit 1....................................................       80,633,219        7,611,205        4,492,736       12,103,941            2,135
Coronado Unit 2....................................................        2,500,000          235,982  ...............          235,982            1,900
--------------------------------------------------------------------------------------------------------------------------------------------------------

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    This action finalizes approval of a source-specific portion of the 
Arizona SIP and a Regional Haze FIP for units at three facilities in 
Arizona. This action is not a rule of general applicability, and not a 
``significant regulatory action'' under the terms of Executive Order 
12866 (58 FR 51735, October 4, 1993). This type of action is exempt 
from review under Executive Order (EO) 12866 (58 FR 51735, October 4, 
1993) and is therefore not subject to review under Executive Order 
13563 (76 FR 3821, January 21, 2011).

 B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Burden is defined at 5 CFR 1320.3(b). Because this action will finalize 
approval of a source-specific portion of the Arizona SIP and a Regional 
Haze FIP for units at only three facilities in Arizona, the Paperwork 
Reduction Act does not apply. See 5 CFR 1320.3(c). An agency may not 
conduct or sponsor, and a person is not required to respond to a 
collection of information unless it displays a currently valid Office 
of Management and Budget (OMB) control number. The OMB control numbers 
for our regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions. For purposes 
of assessing the impacts of today's rule on small entities, small 
entity is defined as: (1) A small business as defined by the Small 
Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a 
small governmental jurisdiction that is a government of a city, county, 
town, school district or special district with a population of less 
than 50,000; and (3) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field. This action finalizes approval of a source-
specific portion of the Arizona SIP and a Regional Haze FIP for units 
at three electric generating facilities in Arizona. Firms primarily 
engaged in the generation, transmission, and/or distribution of 
electric energy for sale are small if, including affiliates, the total 
electric output for the preceding fiscal year did not exceed 4 million 
megawatt hours. Only one of the three facilities affected by this 
action is a small entity: AEPCO sold under 3 million megawatt hours in 
2011.
    Although a regulatory flexibility analysis as specified by the RFA 
is not required when a rule has impact on only one small entity, EPA 
estimated the potential impact to AEPCO of our proposal to require SCR 
in AEPCO's Units 1 and 2. EPA also requested information from AEPCO on 
the economics of operating Apache Generating Station and what impact 
the installation of SCR may have on the economics of operating Apache 
Generating Station. A summary of the comments regarding the impact of 
this action on AEPCO, and EPA's response to those concerns, is provided 
in section I.V. of this preamble. After considering the economic 
impacts of this action on small entities, I certify that this action 
will not have a significant economic impact on a substantial number of 
small

[[Page 72576]]

entities. The FIP for the three Arizona facilities being issued today 
does not impose new requirements on a substantial number of small 
entities because one significantly impacted small entity is not a 
``substantial'' number. Finalizing approval of a source-specific 
portion of the Arizona Regional Haze SIP merely approves state law as 
meeting Federal requirements and imposes no additional requirements 
beyond those imposed by state law. See Mid-Tex Electric Cooperative, 
Inc. v. FERC, 773 F.2d 327 (D.C. Cir. 1985).

 D. Unfunded Mandates Reform Act (UMRA)

    Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and Tribal governments and 
the private sector. Under section 202 of UMRA, EPA generally must 
prepare a written statement, including a cost-benefit analysis, for 
proposed and final rules with ``Federal mandates'' that may result in 
expenditures to State, local, and Tribal governments, in the aggregate, 
or to the private sector, of $100 million or more (adjusted for 
inflation) in any one year. Before promulgating an EPA rule for which a 
written statement is needed, section 205 of UMRA generally requires EPA 
to identify and consider a reasonable number of regulatory alternatives 
and to adopt the least costly, most cost-effective, or least burdensome 
alternative that achieves the objectives of the rule. The provisions of 
section 205 of UMRA do not apply when they are inconsistent with 
applicable law. Moreover, section 205 of UMRA allows EPA to adopt an 
alternative other than the least costly, most cost-effective, or least 
burdensome alternative if the Administrator publishes with the final 
rule an explanation why that alternative was not adopted. Before EPA 
establishes any regulatory requirements that may significantly or 
uniquely affect small governments, including Tribal governments, it 
must have developed under section 203 of UMRA a small government agency 
plan. The plan must provide for notifying potentially affected small 
governments, enabling officials of affected small governments to have 
meaningful and timely input in the development of EPA regulatory 
proposals with significant Federal intergovernmental mandates, and 
informing, educating, and advising small governments on compliance with 
the regulatory requirements.
    Under Title II of UMRA, EPA has determined that this rule does not 
contain a Federal mandate that may result in expenditures that exceed 
the inflation-adjusted UMRA threshold of $100 million (in 1996 dollars) 
by State, local, or Tribal governments or the private sector in any 1 
year. In addition, this rule does not contain a significant Federal 
intergovernmental mandate as described by section 203 of UMRA nor does 
it contain any regulatory requirements that might significantly or 
uniquely affect small governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132, because it addresses the State not 
fully meeting its obligation to protect visibility established in the 
CAA and this final action will reduce the emissions of NOX 
from three facilities in Arizona. Thus, Executive Order 13132 does not 
apply to this action. Although section 6 of Executive Order 13132 does 
not apply to this action, a summary of the concerns raised by State and 
local officials, and EPA's response to those concerns is provided in 
section I.V. of this preamble.

 F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Subject to the Executive Order 13175 (65 FR 67249, November 9, 
2000) EPA may not issue a regulation that has tribal implications, that 
imposes substantial direct compliance costs, and that is not required 
by statute, unless the Federal government provides the funds necessary 
to pay the direct compliance costs incurred by tribal governments, or 
EPA consults with tribal officials early in the process of developing 
the proposed regulation and develops a tribal summary impact statement. 
We believe this rule does not have tribal implications, as specified in 
Executive Order 13175, and will not have substantial direct effects on 
tribal governments. Thus, Executive Order 13175 does not apply to this 
rule. However, in our proposal we requested comment on our proposed 
rule from tribal officials. The Navajo Nation Environmental Protection 
Agency provided comments on our proposed rule, both orally at a public 
hearing and by letter, which EPA considered in developing this final 
rule. EPA's summary of these comments and our response to Navajo Nation 
is provided in section I.V. of this preamble.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045: Protection of Children from Environmental 
Health Risks and Safety Risks (62 FR 19885, April 23, 1997), applies to 
any rule that: (1) Is determined to be economically significant as 
defined under Executive Order 12866; and (2) concerns an environmental 
health or safety risk that we have reason to believe may have a 
disproportionate effect on children. EPA interprets EO 13045 as 
applying only to those regulatory actions that concern health or safety 
risks, such that the analysis required under section 5-501 of the EO 
has the potential to influence the regulation. This action is not 
subject to EO 13045 because it implements specific standards 
established by Congress in statutes. Also, because this action only 
applies to three sources and is not a rule of general applicability, it 
is not economically significant as defined under Executive Order 12866, 
and the rule also does not have a disproportionate effect on children. 
However, to the extent this action will limit emissions of 
NOX, SO2, and PM10, the rule will have 
a beneficial effect on children's health by reducing air pollution that 
causes or exacerbates childhood asthma and other respiratory issues.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not subject to Executive Order 13211 (66 FR 28355 
(May 22, 2001)), because it is not a significant regulatory action 
under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, 12 (10) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards (VCS) in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. VCS are technical standards 
(e.g., materials specifications, test methods, sampling procedures and 
business practices) that are developed or adopted by the VCS bodies. 
The NTTAA directs EPA to provide Congress, through annual reports to 
OMB, with explanations when the Agency decides not to use available and 
applicable VCS. The

[[Page 72577]]

rulemaking involves technical standards. Therefore, the Agency 
conducted a search to identify potentially applicable voluntary 
consensus standards. However, we identified no such standards, and none 
were brought to our attention in comments. Therefore, EPA has decided 
to use 40 CFR Part 60 Appendix A Method 5, 40 CFR Part 51 Appendix M 
Methods 201A/202, 40 CFR Part 60 Appendix A Method 19, and 40 CFR Part 
75.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994), establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States. EPA has determined that this final 
rule will not have disproportionately high and adverse human health or 
environmental effects on minority or low-income populations because it 
increases the level of environmental protection for all affected 
populations without having any disproportionately high and adverse 
human health or environmental effects on any population, including any 
minority or low-income population. This rule requires emissions 
reductions of NOX from three facilities in Arizona. The 
partial approval of the SIP merely approves state law as meeting 
Federal requirements and imposes no additional requirements beyond 
those imposed by state law.

 K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. Section 804 exempts from section 801 the following types 
of rules (1) rules of particular applicability; (2) rules relating to 
agency management or personnel; and (3) rules of agency organization, 
procedure, or practice that do not substantially affect the rights or 
obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required 
to submit a rule report regarding today's action under section 801 
because this is a rule of particular applicability and only applies to 
three facilities.

L. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by February 4, 2013. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements. (See CAA section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Nitrogen oxides, Sulfur 
dioxide, Particulate matter, Reporting and recordkeeping requirements, 
Visibility, Volatile organic compounds.

    Dated: November 15, 2012.
Lisa P. Jackson,
Administrator.
    Part 52, chapter I, title 40 of the Code of Federal Regulations is 
amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for Part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart D--Arizona

0
2. Section 52.120 is amended by adding paragraph (c)(154) to read as 
follows:

Sec.  52.120  Identification of plan.

* * * * *
    (c) * * *
    (154) The following plan was submitted February 28, 2011, by the 
Governor's designee.
    (i) [Reserved]
    (ii) Additional materials.
    (A) Arizona Department of Environmental Quality.
    (1) Arizona State Implementation Plan, Regional Haze Under Section 
308 of the Federal Regional Haze Rule: Appendix D, Arizona BART--
Supplemental Information:
    (i) Table 1.1--NOX BART, entry for AEPCO [Apache], ST1 
[Unit 1] only.
    (ii) Table 1.2--PM10 BART, entries for AEPCO [Apache], 
APS Cholla Power Plant and SRP Coronado Generating Station.
    (iii) Table 1.3--SO2 BART, entries for AEPCO, APS Cholla 
Power Plant and SRP Coronado Generating Station.

0
3. Section 52.145 is amended by adding paragraphs (e) and (f) to read 
as follows:

Sec.  52.145  Visibility protection.

* * * * *
    (e) Approval. On February 28, 2011, the Arizona Department of 
Environmental Quality submitted the ``Arizona State Implementation 
Plan, Regional Haze Under Section 308 of the Federal Regional Haze 
Rule'' (``Arizona Regional Haze SIP'').
    (1) With the exception of the NOX BART determinations 
for Units ST2 and ST3 at AEPCO Apache Generating Station; Units 2, 3, 
and 4 at APS Cholla Power Plant; and Units 1 and 2 at SRP Coronado 
Generating Station, and the BART compliance provisions for all BART 
emissions limits at the eight units at the three power plants, the BART 
determinations for AEPCO Apache Generating Station, APS Cholla Power 
Plant, and SRP Coronado Generating Station in the Arizona Regional Haze 
SIP meet the applicable requirements of Clean Air Act sections 169A and 
169B and the Regional Haze Rule in 40 CFR 51.301 through 51.308.
    (f) Source-specific federal implementation plan for regional haze 
at Apache Generating Station, Cholla Power Plant, and Coronado 
Generating Station -- (1) Applicability. This paragraph (f) applies to 
each owner/operator of the following coal-fired electricity generating 
units (EGUs) in the state of Arizona: Apache Generating Station, Units 
2 and 3; Cholla Power Plant, Units 2, 3, and 4; and Coronado Generating 
Station, Units 1 and 2. This paragraph (f) also applies to each owner/
operator of the following natural gas-fired EGUs in the state of 
Arizona: Apache Generating Station Unit 1. The provisions of this 
paragraph (f) are severable, and if any provision of this paragraph 
(f), or the application of any provision of this paragraph (f) to any 
owner/operator or circumstance, is held invalid, the application of 
such provision to other owner/operators and other circumstances, and 
the remainder of this paragraph (f), shall not be affected thereby.
    (2) Definitions. Terms not defined below shall have the meaning 
given to them in the Clean Air Act or EPA's

[[Page 72578]]

regulations implementing the Clean Air Act. For purposes of this 
paragraph (f):
    ADEQ means the Arizona Department of Environmental Quality.
    Boiler-operating day means a 24-hour period between 12 midnight and 
the following midnight during which any fuel is combusted at any time 
in the unit.
    Coal-fired unit means any of the EGUs identified in paragraph 
(f)(1) of this section, except for Apache Generating Station, Unit 1.
    Continuous emission monitoring system or CEMS means the equipment 
required by 40 CFR Part 75 and this paragraph (f).
    Emissions limitation or emissions limit means any of the Federal 
Emission Limitations required by this paragraph (f) or any of the 
applicable PM10 and SO2 emissions limits for 
Apache Generating Station, Cholla Power Plant, and Coronado Generating 
Station submitted to EPA as part of the Arizona Regional Haze SIP in a 
letter dated February 28, 2011, and approved into the Arizona State 
Implementation Plan on December 5, 2012.
    Flue Gas Desulfurization System or FGD means a pollution control 
device that employs flue gas desulfurization technology, including an 
absorber utilizing lime, fly ash, or limestone slurry, for the 
reduction of sulfur dioxide emissions.
    Group of coal-fired units mean Units 1 and 2 for Coronado 
Generating Station; Units 2 and 3 for Apache Generating Station; and 
Units 2, 3, and 4 for Cholla Power Plant.
    lb means pound(s).
    NOX means nitrogen oxides expressed as nitrogen dioxide 
(NO2).
    Owner(s)/operator(s) means any person(s) who own(s) or who 
operate(s), control(s), or supervise(s) one or more of the units 
identified in paragraph (f)(1) of this section.
    MMBtu means million British thermal unit(s).
    Operating hour means any hour that fossil fuel is fired in the 
unit.
    PM10 means filterable total particulate matter less than 10 microns 
and the condensable material in the impingers as measured by Methods 
201A and 202.
    Regional Administrator means the Regional Administrator of EPA 
Region IX or his/her authorized representative.
    SO2 means sulfur dioxide.
    SO4 removal efficiency means the quantity of 
SO2 removed as calculated by the procedure in paragraph 
(f)(5)(iii)(B) of this section.
    Unit means any of the EGUs identified in paragraph (f)(1) of this 
section.
    Valid data means data recorded when the CEMS is not out-of-control 
as defined by Part 75.
    (3) Federal emission limitations.--(i) NOX emission limitations. 
The owner/operator of each coal-fired unit subject to this paragraph 
(f) shall not emit or cause to be emitted NOX in excess of 
the following limitations, in pounds per million British thermal units 
(lb/MMBtu) from any group of coal-fired units. Each emission limit 
shall be based on a rolling 30-boiler-operating-day average, unless 
otherwise indicated in specific paragraphs.

------------------------------------------------------------------------
                                                              Federal
                Group of coal-fired units                    emission
                                                            limitation
------------------------------------------------------------------------
Apache Generating Station Units 2 and 3.................           0.070
Cholla Power Plant Units 2, 3, and 4....................           0.055
Coronado Generating Station Units 1and 2................           0.065
------------------------------------------------------------------------

     (ii) SO2 removal efficiency requirement. The owners/operators of 
Cholla Power Plant Units 2, 3, and 4 shall achieve and maintain a 30-
day rolling average SO2 removal efficiency of 95 percent at 
each unit.
    (4) Compliance dates. (i) The owners/operators of each unit subject 
to this paragraph (f) shall comply with the NOX emissions 
limitations and other NOX-related requirements of this 
paragraph (f) no later than December 5, 2017.
    (ii) The owners/operators of each unit subject to this paragraph 
(f) shall comply with the applicable PM10 and SO2 
emissions limits submitted to EPA as part of the Arizona Regional Haze 
SIP in a letter dated February 28, 2011, and approved into the Arizona 
State Implementation Plan on December 5, 2012, as well as the related 
compliance, recordkeeping and reporting of this paragraph (f) no later 
than the following dates:

----------------------------------------------------------------------------------------------------------------
                                                                      Compliance date
                   Unit                   ----------------------------------------------------------------------
                                                       PM10                                SO2
----------------------------------------------------------------------------------------------------------------
Apache Generating Station, Unit 1........  June 3, 2013................  June 3, 2013.
Apache Generating Station, Unit 2........  December 5, 2016............  December 5, 2016.
Apache Generating Station, Unit 3........  December 5, 2016............  December 5, 2016.
Cholla Power Plant, Unit 2...............  April 1, 2016...............  April 1, 2016.
Cholla Power Plant, Unit 3...............  June 3, 2013................  June 3, 2013.
Cholla Power Plant, Unit 4...............  June 3, 2013................  June 3, 2013.
Coronado Generating Station, Unit 1......  June 3, 2013................  June 3, 2013.
Coronado Generating Station, Unit 2......  June 3, 2013................  June 3, 2013.
----------------------------------------------------------------------------------------------------------------

     (iii) The owners/operators of Cholla Power Plant Units 2, 3 and 4 
shall comply with the SO2 removal efficiency requirement in 
paragraph (f)(5)(iii)(B) of this section all related compliance, 
recordkeeping and reporting requirements no later than the following 
dates:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Cholla Power Plant, Unit 2...........  April 1, 2016.
Cholla Power Plant, Unit 3...........  December 5, 2013.
Cholla Power Plant, Unit 4...........  December 5, 2013.
------------------------------------------------------------------------

     (5) Compliance determinations for NOX and SO4--(i) Continuous 
emission monitoring system.
    (A) At all times after the compliance date specified in paragraph 
(f)(4) of this section, the owner/operator of each coal-fired unit 
shall maintain, calibrate, and operate a CEMS, in full compliance with 
the requirements found at 40 CFR Part 75, to accurately measure 
SO2, NOX, diluent, and stack gas volumetric flow 
rate from each unit. In addition, the owner/operator of Cholla Units 2, 
3, and 4 shall calibrate, maintain, and operate a CEMS, in full 
compliance with the requirements found at 40 CFR Part 75, to accurately 
measure SO2 emissions and diluent at the inlet of the sulfur 
dioxide control device. Apache Unit 1 NOX and diluent CEMs 
shall be operated to meet the requirements of Part 75. All valid CEMS 
hourly data shall be used to determine compliance with the emission 
limitations for NOX and SO2 in paragraph (f)(3) 
of this section for each unit. When the CEMS is out-of-control as 
defined by Part 75, that CEMs data shall be treated as missing data and 
not used to calculate the emission average. Each required

[[Page 72579]]

CEMS must obtain valid data for at least 90 percent of the unit 
operating hours, on an annual basis.
    (B) The owner/operator of each unit shall comply with the quality 
assurance procedures for CEMS found in 40 CFR Part 75. In addition to 
these Part 75 requirements, relative accuracy test audits shall be 
calculated for both the NOX and SO2 pounds per 
hour measurement and the heat input measurement. The CEMs monitoring 
data shall not be bias adjusted. The inlet SO2 and diluent 
monitors required by this rule shall also meet the Quality Assurance/
Quality Control (QA/QC) requirements of Part 75. The testing and 
evaluation of the inlet monitors and the calculations of relative 
accuracy for lb/hr of NOX, SO2 and heat input 
shall be performed each time the Part 75 CEMS undergo relative accuracy 
testing. In addition, relative accuracy test audits shall be performed 
in the units of lb/MMBtu for the inlet and outlet SO2 
monitors at Cholla Units 2, 3, and 4. Heat input for Apache Unit 1 
shall be measured in accordance with Part 75 fuel gas measurement 
procedures found in 40 CFR Part 75, Appendix D.
    (ii) Compliance determinations for NOX. (A) The 30-day rolling 
average NOX emission rate for each group of coal-fired units 
shall be calculated for each calendar day, even if a unit is not in 
operation on that calendar day, in accordance with the following 
procedure: step one, for each unit, sum the hourly pounds of 
NOX emitted during the current boiler-operating day (or most 
recent boiler-operating day if the unit is not in operation), and the 
preceding twenty-nine (29) boiler-operating days, to calculate the 
total pounds of NOX emitted over the most recent thirty (30) 
boiler-operating day period for each coal-fired unit; step two, for 
each unit, sum the hourly heat input, in MMBtu, during the current 
boiler-operating day (or most recent boiler-operating day if the unit 
is not in operation), and the preceding twenty-nine (29) boiler-
operating days, to calculate the total heat input, in MMBtu, over the 
most recent thirty (30) boiler-operating day period for each coal-fired 
unit; step 3, sum together the total pounds of NOX emitted 
from the group of coal-fired units over each unit's most recent thirty 
(30) boiler-operating day period (the most recent 30 boiler-operating 
day periods for different units may be different); step four, sum 
together the total heat input from the group of coal-fired units over 
each unit's most recent thirty (30) boiler-operating day period; and 
step five, divide the total pounds of NOX emitted from step 
three by the total heat input from step four for each group of coal-
fired units, to calculate the 30-day rolling average NOX 
emission rate for each group of coal-fired units, in pounds of 
NOX per MMBtu, for each calendar day. Each 30-day rolling 
average NOX emission rate shall include all emissions and 
all heat input that occur during all periods within any boiler-
operating day, including emissions from startup, shutdown, and 
malfunction.
    (B) The 30-day rolling average NOX emission rate for 
Apache Unit 1 shall be calculated in accordance with the following 
procedure: step one, sum the total pounds of NOX emitted 
from the unit during the current boiler-operating day and the previous 
twenty-nine (29) boiler-operating days; step two, sum the total heat 
input to the unit in MMBtu during the current boiler-operating day and 
the previous twenty-nine (29) boiler-operating days; and step three, 
divide the total number of pounds of NOX emitted during the 
thirty (30) boiler-operating days by the total heat input during the 
thirty (30) boiler-operating days. A new 30-day rolling average 
NOX emission rate shall be calculated for each new boiler-
operating day. Each 30-day rolling average NOX emission rate 
shall include all emissions and all heat input that occur during all 
periods within any boiler-operating day, including emissions from 
startup, shutdown, and malfunction.
    (C) If a valid NOX pounds per hour or heat input is not 
available for any hour for a unit, that heat input and NOX 
pounds per hour shall not be used in the calculation of the 30-day 
rolling average.
    (iii) Compliance determinations for SO2. (A) The 30-day rolling 
average SO2 emission rate for each coal-fired unit shall be 
calculated in accordance with the following procedure: Step one, sum 
the total pounds of SO2 emitted from the unit during the 
current boiler-operating day and the previous twenty-nine (29) boiler-
operating days; step two, sum the total heat input to the unit in MMBtu 
during the current boiler-operating day and the previous twenty-nine 
(29) boiler-operating day; and step three, divide the total number of 
pounds of SO2 emitted during the thirty (30) boiler-
operating days by the total heat input during the thirty (30) boiler-
operating days. A new 30-day rolling average SO2 emission 
rate shall be calculated for each new boiler-operating day. Each 30-day 
rolling average SO2 emission rate shall include all 
emissions and all heat input that occur during all periods within any 
boiler-operating day, including emissions from startup, shutdown, and 
malfunction.
    (B) The 30-day rolling average SO2 removal efficiency 
for Cholla Units 2, 3, and 4 shall be calculated as follows: Step one, 
sum the total pounds of SO2 emitted as measured at the 
outlet of the FGD system for the unit during the current boiler-
operating day and the previous twenty-nine (29) boiler-operating days 
as measured at the outlet of the FGD system for that unit; step two, 
sum the total pounds of SO2 delivered to the inlet of the 
FGD system for the unit during the current boiler-operating day and the 
previous twenty-nine (29) boiler-operating days as measured at the 
inlet to the FGD system for that unit (for each hour, the total pounds 
of SO2 delivered to the inlet of the FGD system for a unit 
shall be calculated by measuring the ratio of the lb/MMBtu 
SO2 inlet to the lb/MMBtu SO2 outlet and 
multiplying the outlet pounds of SO2 by that ratio); step 
three, subtract the outlet SO2 emissions calculated in step 
one from the inlet SO2 emissions calculated in step two; 
step four, divide the remainder calculated in step three by the inlet 
SO2 emissions calculated in step two; and step five, 
multiply the quotient calculated in step four by 100 to express as a 
percentage removal efficiency. A new 30-day rolling average 
SO2 removal efficiency shall be calculated for each new 
boiler-operating day, and shall include all emissions that occur during 
all periods within each boiler-operating day, including emissions from 
startup, shutdown, and malfunction.
    (C) If a valid SO2 pounds per hour at the outlet of the 
FGD system or heat input is not available for any hour for a unit, that 
heat input and SO2 pounds per hour shall not be used in the 
calculation of the 30-day rolling average.
    (D) If both a valid inlet and outlet SO2 lb/MMBtu and an 
outlet value of lb/hr of SO2 are not available for any hour, 
that hour shall not be included in the efficiency calculation.
    (6) Compliance determinations for particulate matter. Compliance 
with the particulate matter emission limitation for each coal-fired 
unit shall be determined from annual performance stack tests. Within 
sixty (60) days of the compliance deadline specified in paragraph 
(f)(4) of this section, and on at least an annual basis thereafter, the 
owner/operator of each unit shall conduct a stack test on each unit to 
measure PM10 using EPA Method 5, in 40 CFR part 60, Appendix 
A, or Method 201A/202 in 40 CFR Part 51, Appendix M. A test protocol 
shall be submitted to EPA and ADEQ a minimum of 30 days prior to the 
scheduled testing. The protocol shall identify which method(s)

[[Page 72580]]

will be used to demonstrate compliance. Each test shall consist of 
three runs, with each run at least 120 minutes in duration and each run 
collecting a minimum sample of 60 dry standard cubic feet. Results 
shall be reported in lb/MMBtu using the calculation in 40 CFR Part 60 
Appendix A Method 19. In addition to annual stack tests, the owner/
operator shall monitor particulate emissions for compliance with the 
emission limitations in accordance with the applicable Compliance 
Assurance Monitoring (CAM) plan developed and approved in accordance 
with 40 CFR Part 64. The averaging time for any other demonstration of 
the PM10 compliance or exceedance shall be based on a 6-hour 
average.
    (7) Recordkeeping. The owner or operator of each unit shall 
maintain the following records for at least five (5) years:
    (i) All CEMS data, including the date, place, and time of sampling 
or measurement; parameters sampled or measured; and results.
    (ii) Daily 30-day rolling emission rates for NOX and 
SO2 and SO2 removal efficiency, when applicable, 
for each unit, calculated in accordance with paragraph (f)(5) of this 
section.
    (iii) Records of quality assurance and quality control activities 
for emissions measuring systems including, but not limited to, any 
records required by 40 CFR Part 75.
    (iv) Records of the relative accuracy test for hourly 
NOX and SO2 lb/hr measurement and hourly heat 
input measurement.
    (v) Records of all major maintenance activities conducted on 
emission units, air pollution control equipment, and CEMS.
    (vi) Any other records required by 40 CFR Part 75.
    (8) Reporting. All reports and notifications under this paragraph 
(f) shall be submitted to the Director of Enforcement Division, U.S. 
EPA Region IX, at 75 Hawthorne Street, San Francisco, CA 94105.
    (i) The owner/operator shall notify EPA within two weeks after 
completion of installation of combustion controls or Selective 
Catalytic Reactors on any of the units subject to this section.
    (ii) Within 30 days after the applicable compliance date(s) in 
paragraph (f)(4) of this section and within 30 days of every second 
calendar quarter thereafter (i.e., semi-annually), the owner/operator 
of each unit shall submit a report that lists the daily 30-day rolling 
emission rates for NOX and SO2 for each unit and, 
for Cholla Units 2, 3, and 4, the SO2 removal efficiency, 
calculated in accordance with paragraph (f)(5) of this section. 
Included in this report shall be the results of any relative accuracy 
test audit performed during the two preceding calendar quarters.
    (9) Enforcement. Notwithstanding any other provision in this 
implementation plan, any credible evidence or information relevant as 
to whether the unit would have been in compliance with applicable 
requirements if the appropriate performance or compliance test had been 
performed, can be used to establish whether or not the owner or 
operator has violated or is in violation of any standard or applicable 
emission limit in the plan.
    (10) Equipment operations. At all times, including periods of 
startup, shutdown, and malfunction, the owner or operator shall, to the 
extent practicable, maintain and operate the unit including associated 
air pollution control equipment in a manner consistent with good air 
pollution control practices for minimizing emissions. Pollution control 
equipment shall be designed and capable of operating properly to 
minimize emissions during all expected operating conditions. 
Determination of whether acceptable operating and maintenance 
procedures are being used will be based on information available to the 
Regional Administrator which may include, but is not limited to, 
monitoring results, review of operating and maintenance procedures, and 
inspection of the unit.
    (11) Affirmative defense for malfunctions. The following 
regulations are incorporated by reference and made part of this federal 
implementation plan:
    (i) R-18-2-101, paragraph 65;
    (ii) R18-2-310, sections (A), (B), (D) and (E) only; and
    (iii) R18-2-310.01.

[FR Doc. 2012-28565 Filed 12-4-12; 8:45 am]
BILLING CODE 6560-50-P