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Daily Rules, Proposed Rules, and Notices of the Federal Government

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.
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 NOXat 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 athttp://www.regulations.govor 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 athttp://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 atwebb.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 initialsCAAorActmean or refer to the Clean Air Act, unless the context indicates otherwise.

(2) The initialsACCrefer to the Arizona Corporation Commission.

(3) The initialsACCCEmean or refer to American Coalition for Clean Coal Electricity.

(4) The initialsADEQmean or refer to the Arizona Department of Environmental Quality.

(5) The initialsAEPCOmean or refer to Arizona Electric Power Cooperative.

(6) The initialsAFUDCmean or refer to allowance for funds used during construction.

(7) The termApacherefers to Apache Generating Station.

(8) The initialsAPSmean or refer to Arizona Public Service Company.

(9) The wordsArizonaandStatemean the State of Arizona.

(10) The initialsBARTmean or refer to Best Available Retrofit Technology.

(11) The termBART unitsrefers 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 initialsCBImean or refer to Confidential Business Information.

(13) The initialsCCMmean or refer to EPA's Cost Control Manual.

(14) The initialsCEMSmean or refer to continuous emission monitoring system.

(15) The termChollarefers to Cholla Power Plant.

(16) The termClass I arearefers to a mandatory Class I Federal area.1

1Although 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.”

(17) The termcoal-fired BART unitsrefers 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 initialsCOFAmean or refer to close-coupled overfire air.

(19) The termCoronadorefers to Coronado Generating Station.

(20) The initialsCYmean or refer to Calendar Year.

(21) The initialsEGUmean or refer to Electric Generating Unit.

(22) The initialsESPsmean or refer to electrostatic precipitators.

(23) The wordsEPA, we, usorourmean or refer to the United States Environmental Protection Agency.

(24) The initialsFGDmean or refer to flue gas desulfurization.

(25) The initialsFGRmean or refer to flue gas recirculation.

(26) The initialsFIPmean or refer to Federal Implementation Plan.

(27) The initialsFLMsmean or refer to Federal Land Managers.

(28) The initialsFRmean or refer to theFederal Register.

(29) The initialsGEPmean or refer to Good Engineering Practice.

(30) The initialsIMPROVEmean or refer to Interagency Monitoring of Protected Visual Environments monitoring network.

(31) The initialsIWAQMmean or refer to Interagency Workgroup on Air Quality Modeling.

(32) The initialsIPMmean or refer to Integrated Planning Model.

(33) The initialsLNBmean or refer to low-NOXburners.

(34) The initialsLTSmean or refer to Long-Term Strategy.

(35) The initialsMMBtumean or refer to Million British thermal units.

(36) The initialsMWmean or refer to megawatts.

(37) The initialsMWhmean or refer to megawatt hours.

(38) The initialsNEImean or refer to National Emission Inventory.

(39) The initialsNH 3mean or refer to ammonia.

(40) The initialsNO Xmean or refer to nitrogen oxides.

(41) The initialsNPmean or refer to National Park.

(42) The initialsNPRMmean or refer to Notice of Proposed Rulemaking.

(43) The initialsO&Mmean or refer to operation and maintenance.

(44) The initialsOCmean or refer to organic carbon.

(45) The initialsOFAmean or refer to over fire air.

(46) The initialsPMmean or refer to particulate matter.

(47) The initialsPM 10mean or refer to particulate matter with an aerodynamic diameter of less than 10 micrometers (coarse particulate matter).

(48) The initialsPM 2.5mean or refer to fine particulate matter with an aerodynamic diameter of less than 2.5 micrometers.

(49) The initialsPNGmean or refer to pipeline natural gas.

(50) The initialsppmmean or refer to parts per million.

(51) The initialsPSDmean or refer to Prevention of Significant Deterioration.

(52) The initialsRACTmean or refer to Reasonably Available Control Technology.

(53) The initialsRAVImean or refer to Reasonably Attributable Visibility Impairment.

(54) The initialsRATAmean or refer to relative accuracy test audit.

(55) The initialsRHRmean or refer to the Regional Haze Rule, originally promulgated in 1999 and codified at 40 CFR 51.301-309.

(56) The initialsRMBrefer to RMB Consulting & Research, Inc.

(57) The initialsRMCmean or refer to Regional Modeling Center.

(58) The initialsRPmean or refer to Reasonable Progress.

(59) The initialsRPGor RPGsmean or refer to Reasonable Progress Goal(s).

(60) The initialsRPOsmean or refer to regional planning organizations.

(61) The initialsSCRmean or refer to Selective Catalytic Reduction.

(62) The initialsSIPmean or refer to State Implementation Plan.

(63) The initialsSNCRmean or refer to Selective Non-catalytic Reduction.

(64) The initialsSO 2mean or refer to sulfur dioxide.

(65) The initialsSOFAmean or refer to separated over fire air.

(66) The initialsSRPmean or refer to Salt River Project Agricultural Improvement and Power District.

(67) The initialsTCImean or refer to total capital investment.

(68) The initialstpymean tons per year.

(69) The initialsTSDmean or refer to Technical Support Document.

(70) The initialsVOCmean or refer to volatile organic compounds.

(71) The initialsWAmean or refer to Wilderness Area.

(72) The initialsWEPmean or refer to Weighted Emissions Potential.

(73) The initialsWFGDmean or refer to wet flue gas desulfurization.

(74) The initialsWRAPmean 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 theFederal Registeron 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:

277 FR 42834.

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 SO2and PM10at all three sources and units and the emissions limit for NOXat Apache Unit 1.

Proposed Disapproval:We proposed to disapprove Arizona's BART emissions limits for NOXat 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 NOXat 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 SO2emissions 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

3Those provisions also include an affirmative defense for excess emissions due to startups and shutdowns, which we did not intend to incorporate.

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.Most notably, and with the exception of Apache Unit 1, the FIP includes NOXemission 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 NOXBART 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,PM10and SO2at Apache Unit 1 as proposed. We are approving the State's emissions limits for PM10and SO2for 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 NOXat 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

4For 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)).

Final Federal Implementation Plan:We are promulgating a FIP that includes emissions limitations representing BART for NOXat 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 PM10at 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 SO2on 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

5In 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.

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 NOXis 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 NOXlimit remains five years from the date of publication of this final rule. For SO2and PM10we 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 NOXis 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 thecompliance deadline to April 1, 2016, for both SO2and PM10in 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 NOXis 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 Source NOX Proposal Final PM10 Proposal Final SO2 Proposal Final Apache Unit 1 0.056, Five years 0.056, Five years 0.0075, 180 days 0.0075, 180 days 0.00064, 180 days 0.00064, 180 days. Apache Unit 2 0.050, Five years 0.070 (across two units) 0.03, 180 days 0.03, Four years 0.15, 180 days 0.15, Four 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 units) 0.015, Jan 1, 2015 0.015, Apr 1, 2016 0.15, 180 days Add 95 percent 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 units) 0.03, 180 days 0.03, 180 days 0.08, 180 days 0.08, 180 days. Coronado Unit 2 0.080, June 1, 2014 Five years 0.03, 180 days 0.03, 180 days 0.08, 180 days 0.08, 180 days. 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 atwww.epa.gov/region9/air/actions/arizona.htmlandhttp://www.regulations.gov.

677 FR 42834.

777 FR 45326 (July 31, 2012).

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 intocommercial 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:

8Exhibit 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

10Arizona 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.

13Email 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 NOXBART 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 NOXBART 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 NOXBART determinations.

14See 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.

15See, 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,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 NOXcontrol 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.

16See, 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, inanyformat. 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 NOXBART 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 PM10and SO2BART evaluations as were used for the NOXBART evaluation, yet EPA accepted the approach for only PM10and SO2.

Response:We disagree that we accepted ADEQ's approach for PM10and SO2.Although we did not disapprove ADEQ's PM10and SO2BART 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 PM10and SO2as for NOX,and that these analyses exhibit the same deficiencies we have noted elsewhere for the NOXBART determinations. However, we did not disapprove the PM10and SO2determinations 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 PM10visibility 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 PM10BART 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 PM10BART 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.

17See 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 PM10and SO2is 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 goodreference 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.

18BART 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 possible20 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.

19SeeId.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.”)

20BART 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.

21BART 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 NOXBART 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 modelingprotocol, 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.

2277 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

24BART Guidelines, 40 CFR Part 51, Appendix Y, section IV.D.5.

25See 70 FR 39126.

26See, 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.

2740 CFR 51.308(e)(1)(ii).

2840 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, rath