Daily Rules, Proposed Rules, and Notices of the Federal Government
EPA has established a docket for this action under Docket ID No. EPA-R09-OAR-2010-0683. The index to the docket for this action is available electronically at
Throughout this document, “we”, “us”, and “our” refer to EPA.
FCPP is a privately owned and operated coal-fired power plant located on the Navajo Nation Indian Reservation near Farmington, New Mexico. Based on lease agreements signed in 1960, FCPP was constructed and has been operating on real property held in trust by the Federal government for the Navajo Nation. The facility consists of five coal-fired electric utility steam generating units with a total capacity of 2060 megawatts (MW). Units 1, 2, and 3 at FCPP are owned entirely by Arizona Public Service (APS) which serves as the facility operator, and are rated to 170 MW (Units 1 and 2) and 220 MW (Unit 3). Units 4 and 5 are each rated to a capacity of 750 MW, and are co-owned by six entities: Southern California Edison
EPA's proposed BART determination for FCPP, published on October 19, 2010, provided a thorough discussion of the statutory and regulatory framework for addressing visibility through application of BART for sources located in Indian country, and of the factual background for BART determinations at FCPP. 75 FR 64221.
On February 25, 2011, as a result of additional information provided by stakeholders, EPA published a Supplemental Proposal. FR 76 10530. We briefly summarize the provisions of our Proposal and our Supplemental Proposal below.
Part C Subpart II of the 1977 CAA establishes a visibility protection program that sets forth “as a national goal the prevention of any future, and the remedying of any existing, impairment of visibility in mandatory class I Federal areas which impairment results from manmade air pollution.” 42 U.S.C. 7491A(a)(1). EPA promulgated regional haze regulations on April 22, 1999. 64 FR 35765. Consistent with the statutory requirement in 42 U.S.C. 7491(b)(2)(a), EPA's 1999 regional haze
In determining BART, States are required to take into account five factors identified in the CAA and EPA's regulations. 42 U.S.C. 7491(g)(2) and 40 CFR 51.308. Those factors are: (1) The costs of compliance, (2) the energy and non-air quality environmental impacts of compliance, (3) any pollution control equipment in use or in existence at the source, (4) the remaining useful life of the source, and (5) the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology. 40 CFR 51.308(e)(1)(ii)(A). EPA's guidelines for evaluating BART are set forth in Appendix Y to 40 CFR Part 51.
In 1998, EPA promulgated the Tribal Authority Rule (TAR) relating to implementation of CAA programs in Indian country.
In the TAR, EPA determined that it has the discretionary authority to promulgate “such federal implementation plan provisions as are necessary or appropriate to protect air quality” consistent with CAA sections 301(a) and 301(d)(4) when a Tribe has not submitted or EPA has not approved a Tribal Implementation Plan (TIP). 40 CFR 49.11(a).
EPA has previously promulgated FIPs under the TAR to regulate air pollutants emitted from FCPP. In 1999, EPA proposed a FIP for FCPP. That FIP proposed to fill the regulatory gap that existed because New Mexico permits and State Implementation Plan (SIP) rules are not applicable or enforceable in the Navajo Nation, and the Tribe had not sought approval of a TIP covering the plant. 64 FR 48731 (Sept. 8, 1999).
Before EPA finalized the 1999 FIP, the operator of FCPP began negotiations to reduce SO
APS, the operator of FCPP, and Sierra Club each filed Petitions seeking judicial review of EPA's promulgation of the 2007 FIP for FCPP on separate grounds. The Court of Appeals for the Tenth Circuit rejected both Petitions. The Court agreed with EPA's request for a voluntary remand of a single narrow aspect of the 2007 FIP: The opacity limit for the fugitive dust for the material handling operations. Id. At 1131.
On October 19, 2010 (75 FR 64221) EPA proposed a second FIP under 40 CFR 49.11(a) finding it is necessary or appropriate to establish BART requirements for NO
On November 24, 2010, APS, acting on behalf of FCPP's owners, submitted a letter to EPA offering an alternative to reduce visibility-impairing pollution. APS proposed to close Units 1-3 by 2014 and install and operate SCR on Units 4 and 5 to each meet an emission limit of 0.11 lb/MMBtu by the end of 2018. On February 25, 2011, we published a Supplemental Proposal (76 FR 10530) with a technical evaluation of APS' alternative. Our Supplemental Proposal also provides a detailed summary of the legal background for proposing an alternative emission control strategy as achieving better progress towards the national visibility goal (76 FR 10530).
In our Supplemental Proposal, EPA proposed to allow APS the option to comply with the alternative emission control strategy in lieu of complying with our October 19, 2010, proposed BART determination. EPA's alternative emission control strategy involved closure of Units 1-3 by 2014 and installation and operation of add-on post combustion controls on Units 4 and 5 to each meet a NO
EPA is finding today that it is necessary or appropriate to promulgate a source-specific FIP requiring FCPP to achieve emissions reductions required by the CAA's BART provision. Specifically, EPA is requiring FCPP to meet new emissions limits for NO
Alternatively, FCPP may choose to comply with an alternative emission control strategy for NO
For PM, EPA is requiring Units 4 and 5 to meet a BART emission limit of 0.015 lb/MMBtu within 60 days after restart following the scheduled major outages for Units 4 and 5 in 2013 and 2014. This emission limit is achievable through the proper operation of the existing baghouses. EPA is determining that it is not necessary or appropriate to finalize our proposed PM BART determination for Units 1-3 or our proposed opacity limit of 10 percent on Units 1-5. FCPP must continue to meet the existing 20 percent opacity limit on Units 1-5.
To address our voluntary remand of the material handling requirements from the 2007 FIP, EPA is finalizing our proposal to require FCPP to comply with a 20 percent opacity limit on its material handling operations, including coal handling.
In our final rule, EPA has made several revisions to the proposed rule and Supplemental Proposal based on comments we received during the public comment period. These revisions include: revising the compliance date under BART from within 3 to 5 years
Our October 19, 2010, proposal included a 60-day public comment period that ended on December 20, 2010. On November 12, 2010, EPA published a notice of public hearings to be held in the Four Corners area on December 7-9, 2010 (75 FR 69374). On December 8, 2010, EPA published in the
We received nearly 13,000 written comments. Of these, over 12,800 comments came from private citizens who submitted substantially similar comments. We received an additional 110 unique written comments (not including duplicates, requests for extension of the public comment period, or requests for additional hearings). We do not consider or address letters or comments unrelated to the rulemaking in this notice or in our response to comments document. The unique comments can be broken down by general type as follows: 78 from private citizens, eight from environmental advocacy groups, four from the owners of FCPP, five from state/local government entities, four from public interest advocacy groups, two from tribes, four from utility industry associations, three from federal agencies, one from a U.S. Senator, and one from the operator of the Navajo Mine.
We received a number of comments on our approach for estimating the cost of SCR at FCCP, the incremental cost effectiveness of controls, and on our top-down approach for evaluating controls.
Our cost analysis relied primarily on the highest cost estimates submitted by APS. EPA accepted all site-specific costs provided by APS for cost categories (
Our detailed, line-by-line analysis
Additionally, a comparison of the average cost effectiveness estimates in the 2005 BART guidelines against EPA's cost effectiveness estimates in 2010 for FCPP is not an “apples to apples” comparison. The technical support documentation for the 2005 BART guidelines indicate that cost effectiveness of controls was not determined based on site-specific cost estimates developed for each BART-eligible facility; rather, cost estimates for existing facilities were determined using assumptions for capital and annual costs per kilowatt (kW)
In determining that a different level of control than the presumptive limit was warranted as BART for FCPP, EPA evaluated the five statutory factors in our assessment for FCPP. This evaluation was detailed in the Technical Support Document for our proposed BART determination and included an analysis of cost effectiveness, energy and non-air quality impacts of controls, existing controls at the facility, the remaining useful life of the facility, and the visibility improvement reasonably anticipated to result from controls. Therefore, EPA has not improperly disregarded the BART guidelines in our analysis for FCPP.
EPA considered cost of controls, including the total capital costs, annual costs, and $/ton of NO
The BART guidelines specify that the cost of controls be estimated by identifying the emission units being controlled, defining the design parameters for emission controls, and developing a cost estimate based on those design parameters using the
Similarly, an affordability analysis of the alternative emission control strategy is not required under the Regional Haze Rule; however, at the request of the Navajo Nation, pursuant to EPA's customary practice of engaging in extensive and meaningful consultation with tribes, EPA commissioned a study to estimate potential adverse impacts to the Navajo Nation of APS's option to close Units 1-3 and will provide the report to the Navajo Nation by letter as a follow-up to our consultation.
EPA estimated the total capital cost of BART for NO
We received a number of comments on the economic impacts and on the energy and non-air quality environmental impacts.
It is not EPA's intention to cause FCPP to shut down, nor is it within our regulatory authority under the Regional Haze Rule to require shutdown or redesign of the source as BART. As expressed in comments from the Navajo Nation to our Advanced Notice of Proposed Rulemaking,
The model was designed to determine which future alternative results in lower power costs: (a) Power produced at FCPP after installation of SCR or, (b) replacing the power from FCPP with the appropriate amount of wholesale power purchases. As discussed in the TSD for our proposed BART determination, the model results suggested that even if the owners of FCPP installed and operated SCR on all five units, the facility could still produce power at a lower cost than the cost to purchase replacement wholesale power on the open market. Thus, EPA concluded in our proposed BART determination that requiring SCR as BART on all five units would not likely result in plant closure. No information was provided by the commenter to change this conclusion in the proposal.
Although the Regional Haze Rule does not require a cost analysis of a BART alternative, at the request of the Navajo Nation, as part of EPA's customary
One of the owners of FCPP stated that installation of BART controls would increase its average residential customer monthly bills by $5.10 (3.8 percent) and larger industrial customer monthly bills by $17,400 (6.4 percent). The commenter also indicated that installing SCR and baghouses on Units 1-3 would increase the cost of electricity production on a $/MWh basis by more than 50 percent which, in conjunction with other market and regulatory uncertainties, may make the units uneconomical. The commenter also raised concerns related to the economic viability of Units 4 and 5 if SCR were installed on those units.
Another of the owners of FCPP, who also owns part of San Juan Generating Station and Navajo Generating Station, indicated that if SCR was required on all three power plants, its customers would face a rate increase of 4 to 6 percent, which would be significant because the local economy is fragile and has endured an 8 percent rate increase (not adjusted for inflation) since 1992.
EPA agrees with the commenter that there are many company-specific factors and a wide range of assumptions that would affect a given owner's decision to make further substantial investments (such as SCR) at FCPP. Although many of those factors were outside the focus of the modeling because they were either unrelated to BART or were related to regulatory uncertainties in the
With respect to the comment on the “payback period”, the economic analysis for the proposed BART determination did not identify “payback periods”. Rather, the commenter appears to be referring to the 25-year period used in the discounted cash flow model. EPA does not disagree with the commenter's stated concern that a shorter plant life, and thus shorter discounting periods, would yield different economic results. However, EPA disagrees with commenters that a shorter useful life should be considered in the economic analysis because there is no enforceable obligation on APS to cease operations on a given (earlier) date.
EPA also notes that APS proposed to purchase the shares of Units 4 and 5 currently owned by Southern California Edison in order to close Units 1-3 (of which APS is sole owner) and install SCR on Units 4 and 5 as an alternative to BART. APS has received approval from the Arizona Corporation Commission and the California Public Utilities Commission to purchase Southern California Edison's share of Units 4 and 5. APS is also seeking approval from the Federal Energy Regulatory Commission to implement its proposal.
Regarding health impacts, the commenter noted that the same pollutants that contribute to visibility impairment also harm public health—the fine particulates that cause regional haze can cause decreased lung function, aggravate asthma, and result in premature death in people with heart or lung disease. The commenter added that NO
The same commenter also contended that consideration of non-air quality impacts extends to impacts on wildlife and habitat as well as natural and cultural heritage. According to the commenter, haze-causing emissions also harm terrestrial and aquatic plants and animals, soil health, and water bodies by contributing to acid rain, ozone formation, and nitrogen deposition.
With these health and environmental considerations in mind, in addition to visibility and economic considerations discussed in other sections of this document, the commenter urged the EPA to finalize more stringent BART determinations for FCPP.
The commenter noted that FCPP is a significant source of mercury emissions and provided information on the health and ecosystem effects of mercury, as well as on the deposition of mercury and the levels of mercury found in the Four Corners area. In addition, the commenter stated that FCPP emits more than 16 million tons per year (tpy) of CO
One environmental advocacy group stated that a formal Health Impact Assessment should be conducted by independent experts before EPA's final decision to answer such questions as whether shutting down Units 1-3 is sufficient to protect local health, and what health impacts would result from delaying pollution controls on Units 4 and 5 until 2018.