[Federal Register Volume 78, Number 24 (Tuesday, February 5, 2013)]
[Proposed Rules]
[Pages 8273-8294]
[FR Doc No: 2013-01858]

Vol. 78

Tuesday,

No. 24

February 5, 2013

Part III

Environmental Protection Agency

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40 CFR Part 49

Approval of Air Quality Implementation Plans; Navajo Nation; Regional
Haze Requirements for Navajo Generating Station; Proposed Rule

Federal Register / Vol. 78 , No. 24 / Tuesday, February 5, 2013 /
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 49

[EPA-R09-OAR-2013-0009; FRL-9774-1]

Approval of Air Quality Implementation Plans; Navajo Nation;
Regional Haze Requirements for Navajo Generating Station

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing a
source-specific federal implementation plan (FIP) requiring the Navajo
Generating Station (NGS), located on the Navajo Nation, to reduce
emissions of oxides of nitrogen (NOX) under the Best
Available Retrofit Technology (BART) provision of the Clean Air Act
(CAA or Act) in order to reduce visibility impairment resulting from
NGS at 11 National Parks and Wilderness Areas. NGS, which was built
over 35 years ago, is the largest coal-fired power plant in the West in
terms of generating capacity. It is central to the economies of the
Navajo Nation and Hopi Tribe and supplies power to the states of
Arizona, Nevada, and California. Electricity produced by NGS is also
used to power the Central Arizona Project, which supplies surface water
to three counties and numerous Indian tribes in Arizona. NGS is
projected to continue operating at least until 2044. EPA is proposing
to require NGS to achieve a nearly 80 percent reduction of its current
overall NOX emission rate. Our analysis indicates that
installation of controls to achieve this reduction would result in
significant visibility improvement that is well-balanced with the cost
of those controls. For a number of reasons, including the importance of
NGS to numerous Indian tribes located in Arizona and the federal
government's reliance on NGS to meet the requirements of water
settlements with several tribes, EPA is proposing an alternative to
BART that would provide flexibility to NGS in the schedule for the
installation of new control equipment. We also describe other
compliance schedules for consideration and comment. We recognize that
there may be other approaches that could result in equivalent or better
visibility benefits over time and that there may be changes in energy
demand, supply or other developments over the next several decades that
may change electricity generation on the Navajo Nation. EPA encourages
a robust public discussion of our proposed BART determination and
alternative, the additional alternatives described herein, and other
possible approaches. EPA is prepared to issue a supplemental proposal
if approaches other than the proposed BART determination or proposed
alternative articulated in this notice are identified as satisfying the
requirements of the Clean Air Act and meeting the needs of the
stakeholders. EPA is committed to continuing to engage with
stakeholders to develop a final FIP that maintains benefits to tribes
and the regional economy while improving visibility in many of our
nation's most treasured National Parks and Wilderness Areas.

DATES: Comments must be submitted no later than May 6, 2013.

ADDRESSES: Submit comments, identified by docket number EPA-R09-OAR-
2013-0009, by one of the following methods:
    Federal eRulemaking Portal: www.regulations.gov. Follow the on-line
instructions.
    Email<EMAIL_ADDRESS>    Mail or deliver: Anita Lee (Air-2), U.S. Environmental Protection
Agency Region 9, 75 Hawthorne Street, San Francisco, CA 94105-3901.
    Instructions: All comments will be included in the public docket
without change and may be made available online at www.regulations.gov,
including any personal information provided, unless the comment
includes Confidential Business Information (CBI) or other information
whose disclosure is restricted by statute. Information that you
consider CBI or otherwise protected should be clearly identified as
such and should not be submitted through www.regulations.gov or email.
www.regulations.gov is an ``anonymous access'' system, and EPA will not
know your identity or contact information unless you provide it in the
body of your comment. If you send an email directly to EPA, your email
address will be automatically captured and included as part of the
public comment. If EPA cannot read your comment due to technical
difficulties and cannot contact you for clarification, EPA may not be
able to consider your comment.
    Hearings: EPA intends to hold public hearings to accept oral and
written comments on the proposed rulemaking. EPA will provide notice
and additional details at least 30 days prior to the hearings in the
Federal Register, on our Web site, and in the docket.
    Docket: The index to the docket for this action is available
electronically at www.regulations.gov and in hard copy at EPA Region 9,
75 Hawthorne Street, San Francisco, California. While documents in the
docket are listed in the index, some information may be publicly
available only at EPA Region 9 (e.g., maps, voluminous reports,
copyrighted material), and some may not be publicly available in either
location (e.g., CBI). To inspect the hard copy materials, please
schedule an appointment during normal business hours with the contact
listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Anita Lee, EPA Region 9, (415) 972-
3958<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, ``we'', ``us'',
and ``our'' refer to EPA.

Table of Contents

I. Background
    A. Navajo Generating Station
    B. Significance of NGS and Federal Collaboration
    C. Statutory and Regulatory Framework for Addressing Visibility
    D. Statutory and Regulatory Framework for Addressing Sources
Located in Indian Country
    E. Statutory and Regulatory Framework for BART Determinations
    F. Relationship of Air Pollutants to Visibility Impairment
    G. EPA's Advanced Notice of Proposed Rulemaking
    i. Information from Tribes
    ii. Information from NGS Owners
    iii. Comments from Other Stakeholders
    iv. Involvement of Other Federal Agencies
II. EPA's Proposed Action
    A. A NOX BART Determination for NGS Is ``Necessary or
Appropriate''
    B. Available and Feasible Control Technologies and Five Factor
Analysis for NOX Emissions
    i. Factor 1: Cost of Compliance
    ii. Factor 2: Energy and Non-Air Quality Impacts
    a. Affordability Analysis
    b. Electricity and Water Rate Analysis
    c. Summary of EPA's Affordability and Rate Impacts Analyses
    iii. Factor 3: Existing Controls at the Facility
    iv. Factor 4: Remaining Useful Life of Facility
    v. Factor 5: Degree of Visibility Improvement
    C. EPA's Proposed NOX Emission Limit for NGS
    D. EPA's Proposed BART Alternative
    i. Compliance Flexibility Is Necessary or Appropriate
    ii. Background on Alternative Measures to BART
    iii. Legal Rationale for Extending Compliance Schedule for
Alternative Measures for NGS
    iv. Description and Analysis of a Proposed Alternative Measure
to BART
    E. Analysis of Additional Alternative Compliance Schedules
    F. Solicitation of Comments
III. Administrative Requirements
    A. Executive Order 12866: Regulatory Planning and Review and
Executive

Order 13563: Improving Regulation and Regulatory Review 13563B.
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations

I. Background

A. Navajo Generating Station

    The Navajo Generating Station (NGS) is a coal-fired power plant
located on the Navajo Nation Indian Reservation, just east of Page,
Arizona, approximately 135 miles north of Flagstaff, Arizona. The three
750 MW units at NGS were constructed over 1974--1976. At a capacity of
2250 MW, NGS is the largest coal-fired power plant in the western
United States.
    NGS is located near many of our most treasured National Parks and
Wilderness Areas. Congress mandated heightened protection for these
areas in designating them as mandatory Class I Federal areas. Eleven
Class I areas are located within 300 km of NGS: Arches National Park
(NP), Bryce Canyon NP, Canyonlands NP, Capitol Reef NP, Grand Canyon
NP, Mazatzal Wilderness Area (WA), Mesa Verde NP, Petrified Forest NP,
Pine Mountain WA, Sycamore Canyon WA, and Zion NP. These areas support
an active tourism industry drawing over 4 million visitors to the Grand
Canyon National Park alone in 2011.\1\ In addition to EPA's role
implementing the Regional Haze program, the Federal Land Managers of
these areas, the National Park Service and the U.S. Fish and Wildlife
Service, under the Department of the Interior, and the U.S. Forest
Service, under the Department of Agriculture, also play important roles
in the protection of visibility in the mandatory Class I Federal areas.
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    \1\ See document titled ``Grand Canyon Annual Visitation.pdf''
in the docket for this proposed rulemaking, available through
https://irma.nps.gov/Stats/.
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    NGS is co-owned by six entities: The U.S. Bureau of Reclamation
(Reclamation)--24.3 percent, Salt River Project (SRP), which also acts
as the facility operator--21.7 percent, Los Angeles Department of Water
and Power (LADWP)--21.2 percent, Arizona Public Service (APS)--14
percent, Nevada Power Company (NPC)--11.3 percent, and Tucson Electric
Power (TEP)--7.5 percent. NGS uses hot-side electrostatic precipitators
(hot-side ESPs) to control emissions of particulate matter (PM) and
flue gas desulfurization units (FGDs) to control emissions of sulfur
dioxide (SO2). Over the 2009--2011 period, the owners of NGS
voluntarily installed modern low-NOX burners with separated
over-fire air (LNB/SOFA) to reduce emissions of NOX.

B. Significance of NGS and Federal Collaboration

    Federal participation in NGS was authorized in the Colorado River
Basin Project Act of 1968 as a preferred alternative to building
hydroelectric dams in the Grand Canyon for providing power to the
Central Arizona Project.\2\ The Central Arizona Project (CAP) is a 336-
mile water distribution system that delivers about 1.5 million acre-
feet (AF) per year of Colorado River water from Lake Havasu in western
Arizona to non-tribal agricultural water users in central Arizona,
Indian tribes located in Arizona, and municipal water users in
Maricopa, Pinal, and Pima counties.\3\ This CAP water is used to meet
the terms of a number of Indian water rights settlements in central
Arizona and to reduce groundwater usage in the region.\4\ Electricity
from NGS powers the pumps that move CAP water to its destinations along
the distribution system.
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    \2\ See information on the Central Arizona Project at http://
www.usbr.gov/projects/Project.jsp?proj--
Name=Central+Arizona+Project. See also report by the National
Renewable Energy Lab (NREL), discussed in more detail in Section
G.iii of this notice, titled ``Navajo Generating Station and Air
Visibility Regulations: Alternatives and Impacts'', revision dated
March 2012 (NREL report) in the docket for this proposed rulemaking.
    \3\ See Section titled ``Welcome'' on CAP homepage: http://www.cap-az.com/
    \4\ See, for example, Section 4 of the NREL report and Comments
from the Central Arizona Water Conservation District on the NREL
report to DOI and EPA dated February 23, 201[2], in the docket for
this proposed rulemaking.
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    Several tribes located in Arizona have allocations of CAP water
through water settlement agreements that have been approved through
acts of Congress.\5\ In exchange for allocations of CAP water at
reduced cost and access to funds for the development of water
infrastructure, these tribes have released their claims to other water
in Arizona. Excess NGS power owned by Reclamation that is not used by
CAP is sold and profits are deposited into a fund to support the tribal
water settlement agreements.\6\ The Department of the Interior (through
the Bureau of Reclamation) plays an important role in the
implementation of these settlement agreements and the management of the
funds set aside for water infrastructure development for tribes.
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    \5\ See, for example, Section 6 of the NREL report.
    \6\ Id.
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    The coal used by NGS is supplied by the Kayenta Mine, operated by
Peabody Energy and located on reservation lands of both the Navajo
Nation and the Hopi Tribe. Taxes and royalties from NGS and the Kayenta
Mine paid to the Navajo Nation and Hopi Tribe contribute significantly
to the annual revenues for both governments.\7\
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    \7\ Id.
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C. Statutory and Regulatory Framework for Addressing Visibility

    Part C, subpart II, of title I of the CAA as amended in 1977
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). The terms ``impairment of visibility'' and ``visibility
impairment'' are defined in the Act to include a reduction in visual
range and atmospheric discoloration. Id. 7491A(g)(6). A fundamental
requirement of the visibility protection program was for EPA, in
consultation with the Secretary of the Interior, to promulgate a list
of ``mandatory class I Federal areas'' where visibility is an important
value. Id. 7491A(a)(2). These areas include national wilderness areas
and national parks greater than six thousand acres in size. Id.
7472(a).
    On November 30, 1979, EPA identified 156 mandatory Class I Federal
areas where visibility is an important value, including: Grand Canyon
NP in Arizona (40 CFR 81.403); Mesa Verde NP in Colorado (Id. 81.406);
and Arches, Bryce Canyon, Canyonlands, Capitol Reef, and Zion NP in
Utah (Id. 81.430). These mandatory Class I Federal areas are among the
11 Class I areas within an approximately 300 km radius of NGS.
    On December 2, 1980, EPA promulgated the first phase of the
required visibility regulations addressing visibility impairment that
is reasonably attributable to a single source or a small group of
sources, codified at 40 CFR 51.300-307. 45 FR 80084. The 1980
regulations deferred regulating regional haze (i.e., widespread haze
from a multitude of sources which impairs visibility in every direction
over a large area), based

on a finding that the scientific data were inadequate at that time. Id.
at 80086.
    Congress added Section 169B to the Act in the 1990 CAA Amendments,
requiring EPA to take further action to reduce visibility impairment in
broad geographic regions. 42 U.S.C. 7492. In 1993, the National Academy
of Sciences released a comprehensive study required by the 1990
Amendments concluding that ``current scientific knowledge is adequate
and control technologies are available for taking regulatory action to
improve and protect visibility.'' \8\
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    \8\ Protecting Visibility in National Parks and Wilderness
Areas, Committee on Haze in National Parks and Wilderness Areas,
National Research Council, National Academy Press (1993). Available
through: http://www.nap.edu/openbook.php?record_id=2097&page=R2
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    EPA promulgated regulations to address regional haze 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 regulations (RHR)
include a provision that states must require certain major stationary
sources ``in existence on August 7, 1977, but which ha[ve] not been in
operation for more than fifteen years as of such date'' which emit
pollutants that are reasonably anticipated to cause or contribute to
any visibility impairment to procure, install and operate BART. 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. These five factors are the cost of controls, the energy
and non-air quality impacts of controls, the existing controls at the
source, the remaining useful life of the source, and the anticipated
visibility benefits of controls. The CAA and RHR require BART to be
installed and operated as expeditiously as practicable, but in no event
later than five years from the date of the approved plan. 42 U.S.C
7491(b)(2)(A), 42 U.S.C 7491(g)(4), and 40 CFR 51.308(e)(1)(iv). EPA
made revisions to the RHR after 1999 and those revisions together with
the RHR are codified at 40 CFR Part 51, Subpart P and Appendix Y. The
regulations allow EPA to promulgate an alternative to BART provided the
alternative results in greater reasonable progress than will result
from installation and operation of BART. 40 CFR 51.308(e)(2).

D. Statutory and Regulatory Framework for Addressing Sources Located in
Indian Country

    When the CAA was amended in 1990, Congress included a new
provision, Section 301(d), granting EPA authority to treat Indian
tribes in the same manner as states where appropriate. See 40 U.S.C.
7601(d). Congress also recognized, however, that such treatment may not
be appropriate for all purposes of the Act and that in some
circumstances, it may be inappropriate to treat tribes identically to
states. Therefore, Section 301(d)(2) of the Act directed EPA to
promulgate regulations ``specifying those provisions of [the CAA] for
which it is appropriate to treat Indian tribes as states.'' Id.
7601(d)(2). In addition, Congress provided that ``[i]n any case in
which [EPA] determines that the treatment of Indian tribes as identical
to states is inappropriate or administratively infeasible, the
Administrator may provide, by regulation, other means by which the
Administrator will directly administer such provisions so as to achieve
the appropriate purpose.'' Id. 7601(d)(4).
    In 1998, EPA promulgated regulations at 40 CFR Part 49 (which have
been referred to as the Tribal Authority Rule or TAR) relating to
implementation of CAA programs in Indian country. See 40 CFR Part 49;
see also 59 FR 43956 (Aug. 25, 1994)(proposed rule); 63 FR 7254 (Feb.
12, 1998)(final rule); Arizona Public Service Company v. EPA, 211 F.3d
1280 (DC Cir. 2000), cert. den., 532 U.S. 970 (2001)(upholding the
TAR). The TAR allows EPA to treat eligible Indian tribes in the same
manner as states ``with respect to all provisions of the [CAA] and
implementing regulations, except for those provisions [listed] in Sec.
49.4 and the [EPA] regulations that implement those provisions.'' 40
CFR 49.3. EPA recognized that tribes may, but are not required to
administer air programs under the CAA, were in the early stages of
developing air planning programs known as Tribal Implementation Plans
(TIPs) and would need additional time to develop air quality programs.
63 FR 7264-65. Thus, EPA determined that it was not appropriate to
treat tribes in the same manner as states for purposes of those
provisions of the CAA imposing air program submittal deadlines. See 59
FR 43964-65; 63 FR 7264-65. Similarly, EPA determined that it would be
inappropriate to treat tribes in the same manner as states for purposes
of the related CAA provisions establishing sanctions and federal
oversight mechanisms where states fail to meet applicable air program
submittal deadlines. Id. In particular, EPA found that it was
inappropriate to treat tribes in the same manner as states for the
purposes of Section 110(c)(1), which requires EPA to promulgate a FIP
within 2 years after a state fails to make a required plan submission.
    Although EPA determined that it was inappropriate to treat tribes
in the same manner as states for the purposes of Section 110(c)(1), EPA
also determined that under other provisions of the CAA, it has the
discretionary authority to promulgate ``such federal implementation
plan provisions as are necessary or appropriate to protect air
quality'' when a Tribe has not submitted a TIP. 40 CFR 49.11. EPA
determined in promulgating the TAR that it could exercise discretionary
authority to promulgate FIPs based on Section 301(a) of the CAA, which
authorizes EPA to prescribe such regulations as are necessary to carry
out the Act, and Section 301(d)(4), which authorizes EPA to directly
administer CAA provisions for which EPA has determined it is
inappropriate or infeasible to treat tribes as identical to states so
as to achieve the appropriate purpose. 40 CFR 49.11. See also 63 FR
7265. Specifically, 40 CFR 49.11(a) provides that EPA:

    [s]hall promulgate without unreasonable delay such Federal
implementation plan provisions as are necessary or appropriate to
protect air quality, consistent with the provisions of sections
30[1](a) and 301(d)(4), if a tribe does not submit a tribal
implementation plan or does not receive EPA approval of a submitted
tribal implementation plan.

    As described in detail below, EPA has previously promulgated FIPs
to regulate air pollutants emitted from the two coal-fired electric
generating facilities on the Navajo Nation, Four Corners Power Plant
(FCPP) and NGS. In 1991, prior to the promulgation of the TAR, EPA
revised an existing FIP that applied to Arizona to include a
requirement for NGS to substantially reduce its SO2
emissions by installing scrubbers, based on a finding that the
SO2 emissions were contributing to visibility impairment at
the Grand Canyon National Park. 56 FR 50172 (October 3, 1991); see also
Central Arizona Water Conservation District v. United States
Environmental Protection Agency, 990 F.2d 1531 (9th Cir.
1993)(upholding EPA's promulgation of the FIP). Then, in 1999, EPA
proposed a FIP for NGS to fill the regulatory gap that existed because
SIP rules issued by Arizona to regulate NGS were not applicable or
enforceable on the Navajo Nation, and the Tribe had not sought approval
of a TIP covering the plant. 64 FR 48731 (September 8, 1999). EPA did
not finalize the 1999 proposal and proposed a new FIP for NGS on
September 12, 2006. 71 FR 53631. EPA finalized the NGS FIP in 2010
generally making the emission limits from the Arizona SIP

rules for NGS federally enforceable, with one modification.\9\ 75 FR
10174 (March 5, 2010). The 2010 NGS FIP was promulgated under the
authority in the CAA and 40 CFR 49.11(a) that underlies our proposal
today.
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    \9\ In the 2010 NGS FIP, EPA finalized federally enforceable
emission limits for SO2, particulate matter (PM), and
opacity, and control measures for dust for NGS. The 2010 FIP lowered
the opacity limit from 40 percent to 20 percent and included
requirements to control emissions associated with coal and ash
handling and storage.
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    Because the Arizona SIP did not contain any NOX emission
limits for NGS, the final 2010 FIP did not impose any limits on
NOX. However, NGS is subject to the federal Acid Rain
Program requirements under title IV of the Clean Air Act. NGS elected
to comply early as a Phase I NOX facility subject to a
NOX limit of 0.40 lb/MMBtu, per unit, on an annual basis.
Over the 2009--2011 timeframe, the owners of NGS voluntarily installed
new LNB/SOFA at NGS, with a NOX emission limit of 0.24 lb/
MMBtu.

E. Statutory and Regulatory Framework for BART Determinations

    When Congress enacted Section 169A of the CAA in 1977 to protect
visibility, it directed EPA to promulgate regulations that would
require applicable implementation plans to include a determination of
BART for certain major stationary sources that are ``reasonably
anticipated to cause or contribute to any impairment of visibility in
any [Class I area]''. 42 U.S.C. 7491(b)(2)(A) & (g). A source is BART-
eligible if it is a fossil fuel-fired steam electric plant of more than
250 MMBtu/hr heat input or other listed industrial source that has the
potential to emit 250 tons or more of any visibility-impairing
pollutant and that came into operation between 1962 and 1977. Id. NGS
meets these criteria and is a BART-eligible source.
    A BART-eligible source with a predicted visibility impact of 0.5
deciviews (dv) or more in a Class I area ``contributes'' to visibility
impairment and is subject to BART. See 70 FR at 39161 (July 6, 2005).
NGS contributes to visibility impairment at 11 surrounding Class I
areas in excess of this threshold, and is thus subject to BART.
    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, referred to as the BART Guidelines, and must be followed
in making BART determinations for fossil fuel-fired electric generating
plants larger than 750 MW.

F. Relationship of Air Pollutants to Visibility Impairment

    Emissions of NOX contribute to the formation of
particulate matter (PM), which, in turn, interacts with light to impair
visibility. The fundamental science of haze formation and visibility
impairment is described in greater detail in a comprehensive study by
National Research Council.\10\
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    \10\ Protecting Visibility in National Parks and Wilderness
Areas, Committee on Haze in National Parks and Wilderness Areas,
National Research Council, National Academy Press (1993).
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    Briefly, the smallest particles in the 0.1 to 1 micron range
interact with light most strongly as they are about the same size as
the wavelengths of visible light. The effect of the interaction is to
scatter light from its original path. Conversely, for a given line of
sight, such as between a mountain scene and an observer, light from
many different original paths is scattered into that line. The
scattered light appears as whitish haze in the line of sight, obscuring
the view.
    Boiler stacks and material handling are sources of primary PM, or
PM emitted directly into the atmosphere. Of primary PM emissions, those
in the smaller particle size range, less than 2.5 microns, tend to have
the largest impact on visibility. PM emissions from boiler stacks can
have varying particle size makeup depending on the PM control
technology. PM from material handling, however, tends to be coarse,
i.e., around 10 microns, because it is created from the breakup of
larger particles of coal, soil, and rock.
    PM that is formed in the atmosphere from the photochemical
transformation and condensation of gaseous chemical pollutants, also
called secondary PM, tends to be fine, i.e., smaller than 1 micron,
because it is formed from the buildup of individual molecules. This
secondary PM tends to contribute more to visibility impairment than
primary PM because it is in the size range that most effectively
interacts with visible light. NOX and SO2
emissions from coal-fired power plants are examples of gaseous chemical
pollutants that react with other compounds in the atmosphere to form
secondary PM.
    NOX is a gaseous pollutant that can be oxidized to form
nitric acid. In the atmosphere, nitric acid in the presence of ammonia
forms particulate ammonium nitrate. The formation of particulate
ammonium nitrate depends on temperature and relative humidity, and
therefore varies by season. Particulate ammonium nitrate can grow into
the size range that effectively interacts with light by coagulating
together and by taking on additional pollutants and water.

G. EPA's Advanced Notice of Proposed Rulemaking

    On August 28, 2009, EPA published an Advanced Notice of Proposed
Rulemaking (ANPRM) regarding EPA's intention to implement the BART
requirement of the RHR for the two subject-to-BART coal-fired power
plants located on the Navajo Nation, the Four Corners Power Plant \11\
and the Navajo Generating Station. 74 FR 44313. In that ANPRM, EPA put
forth our analysis of the cost and anticipated visibility benefits
comparing selective catalytic reduction (SCR) and modern combustion
controls for both power plants and requested comment. The ANPRM marked
the beginning of an ongoing process of consultation with tribes and
discussions with other key stakeholders on the issue of NOX
control at FCPP and NGS. EPA received over 6,000 comments on the ANPRM,
most of which were identical electronic mail messages in support of
requiring stringent air pollution controls at NGS. Comments from tribes
located in Arizona, the owners of NGS, other stakeholders, and other
federal agencies are discussed briefly below, and described in more
detail in the TSD for this proposed rulemaking.
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    \11\ EPA has taken final action on our BART determination for
the Four Corners Power Plant. See 77 FR 51620 dated August 24, 2012.
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i. Information from Tribes
    EPA received numerous comments on the ANPRM from tribes and tribal
organizations, including the Navajo Nation, Hopi Tribe, Gila River
Indian Community, Ak-Chin Indian Community, Tohono O'odham Nation,
Pascua Yaqui Tribe, Fort McDowell Yavapai Nation, Yavapai-Apache
Nation, and the Inter Tribal Council of Arizona. Comments from the
Navajo Nation and Hopi Tribe focused on the significant contribution of
coal-related royalties, taxes, and employment at NGS and the Kayenta
Mine to the economies of the Navajo Nation and the Hopi Tribe. Comments
from the Gila River Indian Community, the Tohono

O'odham Nation, and other tribes located in Arizona focused on the
importance of continued operation of NGS as a source of power to the
Central Arizona Water Conservation District (CAWCD), the operating arm
of CAP, in order for the federal government to meet obligations under
existing water settlement agreements. The importance to tribes of
continued operation of NGS and affordable water costs cannot be
overemphasized. Detailed discussions of tribal interests in NGS,
including studies submitted by the Hopi Tribe and the Gila River Indian
Community, are provided in the TSD for this proposed rulemaking.
    EPA has met with tribes on numerous occasions to discuss the
significance of NGS to tribal economies and tribal water interests in
Arizona.\12\ Consultations with tribes included potential economic
impacts associated with a BART determination for NGS, as well as
potential impacts from EPA's Mercury and Air Toxics Standards (MATS)
rulemaking.
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    \12\ See document titled ``Timeline of All Tribal Consultations
on NGS.docx'' in the docket for this proposed rulemaking.
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    In recognition of the unusual complexity of regulating NGS,
representatives from EPA, including the Assistant Administrator and the
Deputy Assistant Administrator for the Office of Air and Radiation and
the Regional Administrator for Region 9, visited NGS and affected
communities in the area. EPA officials have also met with additional
stakeholders, at various locations, including EPA offices in San
Francisco, California and Washington, DC, and offices of individual
tribal governing councils and the Inter Tribal Council of Arizona.
ii. Information from NGS Owners
    SRP, operator and part-owner of NGS, provided information to EPA
outlining several uncertainties that significantly increase the
financial risk of near-term investments in new air pollution controls,
including uncertainties in plant ownership and lease agreements.\13\
---------------------------------------------------------------------------

    \13\ See March 12, 2012 letter from four owners of NGS to EPA
regarding Pending BART Determination for Navajo Generating Station,
in the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    One of the owners of NGS is the Los Angeles Department of Water and
Power (LADWP), a public utility located in California. Under California
law (Senate Bill 1368),\14\ long-term investments in base load
generation by California utilities must meet a carbon dioxide emission
performance standard based on a combined cycle natural gas-fired base
load power plant. NGS and other traditional coal-fired power plants
that operate without carbon capture and sequestration do not meet this
standard. Therefore, LADWP will be prohibited from continued
participation and long-term investments in NGS beyond its current
contract term of 2019. As a result, LADWP has indicated its intention
to sell its 21.2 percent ownership stake in NGS. The future owner of
LADWP's share of NGS is currently uncertain.\15\
---------------------------------------------------------------------------

    \14\ See information on SB 1368 Emission Performance Standards
at http://www.energy.ca.gov/emission_standards/
    \15\ See, for example, 2012 Draft Integrated Resource Plan
Executive Summary available at https://www.ladwp.com/ladwp/faces/wcnav_externalId/a-p-doc?_adf.ctrl-state=a8ti68apu_29&_afrLoop=234058941927000, or in the docket for this proposed
rulemaking.
---------------------------------------------------------------------------

    In addition, NGS's current site lease with the Navajo Nation, as
well as several other agreements and contracts, expire in 2019. Table 1
lists several leases, agreements, and contracts that must be renewed to
ensure continued operation of NGS into the future.\16\ Although the
owners of NGS are in negotiations with the Navajo Nation for a lease
renewal to extend to 2044 and with Peabody Energy for a renewed coal
supply contract, the outcomes of these negotiations are also not yet
finalized.
---------------------------------------------------------------------------

    \16\ Information in Table 1 is based on Table 1-3 on page 13 of
the NREL report.

 Table 1--Leases, Agreements, and Contract Renewals for NGS and Kayenta
                                  Mine
------------------------------------------------------------------------
                                                                 Renewal
                          Description                             year
------------------------------------------------------------------------
Peabody Lease Renewal with Navajo Nation and Hopi Tribe.......      2017
Coal Supply Contract between Peabody and NGS..................      2019
NGS Project Lease Renewal with Navajo Nation (Federal Rights        2019
 of Way)......................................................
Water Intake/Water Line Renewal (Federal Rights of Way).......      2019
Railroad and Transmission Line Renewals (Federal Rights of          2021
 Way).........................................................
Southern Transmission Line Easement (Federal Rights of Way)...      2022
------------------------------------------------------------------------

    Because NGS is located in Indian country, lease and other rights-
of-way agreement renewals must be approved by the Department of the
Interior. These approvals, which are an unusual requirement for
continued operation of a power plant, are federal actions that trigger
review under the National Environmental Protection Act (NEPA).\17\ For
actions significantly affecting the environment, NEPA review requires
the development of an Environmental Impact Statement (EIS) and includes
a substantial process for public involvement. The Department of the
Interior estimates that NEPA review for approval of leases and other
rights-of-way agreements may require approximately five years to
complete.\18\ Therefore, even if the Navajo Nation and the owners of
NGS reach agreement on renewed leases and other rights-of-way shortly,
the owners of NGS may not have a lease fully approved by the Department
of the Interior until 2019 or later.
---------------------------------------------------------------------------

    \17\ Id.
    \18\ See email and attachment from Letty Belin, DOI to Janet
McCabe, EPA, dated August 20, 2012, in the docket for this proposed
rulemaking.
---------------------------------------------------------------------------

iii. Comments from Other Stakeholders
    In addition to the identical electronic mail messages from private
citizens, EPA received general comments, both in support of and in
opposition to stringent air pollution controls at NGS, from numerous
individuals, state and local agencies, industry, utility and water
groups, environmental and community-based organizations, cities and
municipalities in Arizona, U.S. and State Representatives, and the
Governor and Treasurer of Arizona. All comments received on the ANPRM
are available in the ANPRM docket.\19\
---------------------------------------------------------------------------

    \19\ See Docket : EPA-R09-OAR-2009-0598 on
www.regulations.gov.
---------------------------------------------------------------------------

    Several groups provided separate comment letters on the five-factor
BART analysis discussed in the ANPRM, including the Arizona Department
of Environmental Quality, the Utility Air Research Group, and a
consortium of environmental and Navajo community organizations. The
Colorado Department of Public Health and the Environment and the
Attorney General of New Mexico submitted separate comments on potential
co-benefits to mercury reduction resulting from certain NOX
controls. Numerous groups and individuals, including elected officials
in Arizona, stressed the importance of NGS to the Arizona economy and
raised concerns that a stringent BART determination such as SCR might
force closure of NGS or otherwise result in economic harm to cities,
tribes, and agricultural water users in Arizona. Other commenters
stressed the importance of reducing the plant's contribution to
regional haze. EPA discusses comments, both in support of and in
opposition to stringent controls at NGS, in more detail in the TSD for
this proposed rulemaking.

iv. Involvement of Other Federal Agencies
    Following the ANPRM, EPA received comments from other federal
agencies that have authority to oversee interests and activities
related to NGS. The Bureau of Reclamation, under the Department of the
Interior, is a part-owner of NGS. However, Reclamation and four
additional Interior agencies (National Park Service, Bureau of Indian
Affairs, Office of Surface Mining, and U.S. Fish and Wildlife Service)
also have regulatory authorities relating to NGS or the Kayenta coal
mine that serves it. The U.S. Forest Service, an agency within the
Department of Agriculture, has authority to protect visibility in the
Class I areas in its jurisdiction. EPA has Clean Air Act authority to
maintain air quality and improve visibility. The Department of Energy
(DOE) Office of Energy Efficiency and Renewable Energy, Office of
Indian Energy Policy and Programs, and National Laboratories have
technical expertise and other resources related to clean energy
development and production in Indian country.
    In 2011, DOI entered into an interagency agreement with DOE to
commission the National Renewable Energy Laboratory (NREL) to conduct a
study with the goal of providing an objective assessment of issues
related to the power sector that are important for understanding the
potential impacts on power and water rates of BART options for NGS.
Under phase 1 of an intended two-phase study, NREL conducted an
analysis focusing on the potential effects from costs associated with
NOX control options or NGS closure. NREL completed the first
part of its study in January 2012 and provided public comments it
received on the study to EPA in March 2012.\20\ In June 2012, NREL
completed a final chapter as part of its phase 1 study that provides a
high-level examination of alternatives to NGS.\21\
---------------------------------------------------------------------------

    \20\ See ``March 2012 Revision to NREL Report.pdf'' and
``Comments on NREL Report.pdf'' in the docket for this proposed
rulemaking.
    \21\ See June 2012 report by NREL titled ``Navajo Generating
Station and Clean-Energy Alternatives: Options for Renewables'' in
the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    Given the extent of federal and tribal interests in NGS, on January
4, 2013, EPA, DOI, and DOE signed a joint federal agency statement
committing to collaborate on several short- and long-term goals,
including analyzing and pursuing strategies for providing clean,
affordable and reliable power, affordable and sustainable water, and
sustainable economic development to key stakeholders who currently
depend on NGS.\22\ The agencies will work together with stakeholders to
identify and undertake actions that support implementation of BART,
including seeking funding to cover expenses for pollution control or
other necessary upgrades for the federal portion of NGS. The agencies
will also work to jointly support a phase 2 report to analyze a full
range of clean energy options for NGS over the next decades and work
with stakeholders to develop a roadmap for achieving long-term,
innovative clean energy solutions for NGS. This collaboration may span
several years and EPA expects alternative strategies resulting from the
collaboration may contribute to reductions in NOX emissions
at NGS.
---------------------------------------------------------------------------

    \22\ See Joint Federal Agency Statement Regarding Navajo
Generating Station, dated January 4, 2013, in the docket for this
proposed rulemaking.
---------------------------------------------------------------------------

II. EPA's Proposed Action

A. A NOX BART Determination for NGS Is ``Necessary or
Appropriate''

    The numerous Class I areas that surround NGS are sometimes known as
the Golden Circle of National Parks.\23\ Millions of tourists visit
these areas, many visiting from other countries, to view the unique
vistas of the Class I areas in this region.
---------------------------------------------------------------------------

    \23\ See Navajo National Monument: A Place and its People, An
Administrative History, Hal K. Rothman, 1991, National Park Service,
Chapter IV: ``Land-Bound:'' 1938-1962, available at: http://www.nps.gov/history/history/online_books/nava/adhi/adhi4e.htm.
---------------------------------------------------------------------------

    As Congress recognized, visibility is an important value and must
be protected in these areas. Currently, air quality and visibility are
impaired in the Class I areas surrounding NGS. The National Park
Service noted in 2008 that ``[v]isibility is impaired to some degree at
all units where it is being measured and remains considerably higher
than the target natural conditions in many places, particularly on the
haziest days.'' \24\ Of the 11 mandatory Class I federal areas located
within 300 km of NGS, eight national parks, including Grand Canyon,
Canyonlands, and Capitol Reef, are among the areas monitored by the
National Park Service.\25\ NGS is one of many contributors to regional
haze in these areas and Congress recognized that all sources that emit
air pollutants that may reasonably be anticipated to cause or
contribute to visibility impairment would need to do their part to
address the problem.
---------------------------------------------------------------------------

    \24\ Air Quality in National Parks, 2008 Annual Performance &
Progress Report, National Resource Report NPS/NRPC/ARD/NRR--2009/
151, September 2009, p. 30, in the docket for this proposed
rulemaking.
    \25\ Id. Appendix B. Note that the other three mandatory Class I
Federal areas located within 300 km of NGS are Wilderness Areas that
are managed by the U.S. Forest Service.
---------------------------------------------------------------------------

    Because NGS is a subject-to-BART source that would undergo a BART
determination if located on state land, and based on the importance of
visibility in the Golden Circle of National Parks, EPA is proposing to
find that a BART determination for NOX emissions from NGS is
``necessary or appropriate'' under the TAR. See 40 CFR 49.11.
    Emissions of PM and SO2 at NGS are controlled by hot-
side electrostatic precipitators (HS-ESPs) and wet scrubbers,
respectively. EPA finalized emission controls and limits for
SO2 and PM in our FIPs in 1991 and in 2010 (75 FR 10174). On
February 16, 2012, EPA finalized the MATS rulemaking that set a lower
emission limit for PM (77 FR 9304). The emission limits EPA established
for SO2 in 1991 were determined to achieve greater
reasonable progress than would BART,\26\ therefore the reasonable
progress goals of CAA Section 169A(b)(2) for SO2 at NGS are
already satisfied. Because emissions of PM are well controlled at NGS
through federally enforceable limits, EPA is not proposing that it is
``necessary or appropriate'' under the TAR to determine BART for PM
emissions at NGS.
---------------------------------------------------------------------------

    \26\ See 56 FR 50172 (October 3, 1991) and 75 FR 10174 (March 5,
2010).
---------------------------------------------------------------------------

B. Available and Feasible Control Technologies and Five Factor Analysis
for NOX Emissions

    Reducing NOX emissions from electric generating units
generally involves: (1) Combustion controls to reduce the production of
NOX from fuel-bound nitrogen and as a by-product of high
temperature combustion reactions between atmospheric nitrogen
(N2) and oxygen (O2) in the air; or (2)
combustion controls in combination with post-combustion add-on controls
to reduce the amount of NOX emitted in flue gas by
converting NOX to diatomic nitrogen (N2) via a
catalytic or non-catalytic process.
    As discussed in detail in the TSD for this proposed rulemaking, SRP
submitted to EPA a BART analysis in 2008 and several revisions
thereafter. SRP identified the following control options as technically
feasible at NGS for reducing NOX emissions: LNB/SOFA, flue
gas recirculation (FGR), selective non-catalytic reduction (SNCR), and
selective catalytic

reduction (SCR).\27\ The option that achieves the largest reduction in
NOX emissions is a combination of combustion controls and
post-combustion add-on controls, i.e., LNB/SOFA in combination with
SCR. Although SRP identified FGR as technically feasible, it did not
conduct additional analysis on FGR, based on its determination that FGR
is less effective than LNB/SOFA.
---------------------------------------------------------------------------

    \27\ BART Analysis for the Navajo Generating Station Units 1--3,
Prepared for Salt River Project--Navajo Generating Station by
ENSRAECOM, Document Number 05830-012-300, dated November 2007.
---------------------------------------------------------------------------

    For the control of NOX emissions, EPA has determined
that the technologies identified by SRP are the main technically
feasible NOX control technologies. For the most stringent
control option (LNB/SOFA in combination with SCR), SRP determined that
a 2+2 catalyst system (four-catalyst layer design with initial
deployment of two catalyst layers) could achieve an emission rate of
approximately 0.05 lb/MMBtu under ideal operating conditions in order
to ensure compliance with an emission limit of 0.07--0.08 lb/MMBtu on a
30-day rolling average. SRP suggested that the 60 percent compliance
margin between its intended design target (0.05 lb/MMBtu) and its
suggested NOX emission limit (0.08 lb/MMBtu) is needed to
allow for normal operating fluctuations associated with minor equipment
upsets, fuel characteristics impacting NOX production, and
SCR process delays due to load changes.
    As discussed in more detail in the TSD for this proposed
rulemaking, for several reasons, including information from a catalyst
vendor that an SCR system at NGS using three layers of catalyst can
meet a limit of 0.08 lb/MMBtu and four layers of catalyst can meet a
limit of 0.05 lb/MMBtu, EPA is proposing to determine that Units 1--3
can meet an emission limit of 0.055 lb/MMBtu using four layers of
catalyst. EPA expects this proposed emission limit of 0.055 lb/MMBtu to
provide an adequate compliance margin for normal fluctuations because
compliance will be measured on a plant wide rolling average basis of 30
boiler operating days. EPA understands that Units 1--3 at NGS currently
operate on a 3-year outage cycle and that if SCR is installed, catalyst
replacement would be timed to coincide with outage cycles to reduce
costs. EPA is specifically requesting comment on whether NGS can
maintain its current 3-year outage cycle with four layers of catalyst
to meet a limit of 0.055 lb/MMBtu and on the adequacy of the margin of
compliance provided by the limit.
i. Factor 1: Cost of Compliance
    The cost of compliance is expressed as the total capital cost of
controls, the total annual cost of controls (i.e., annual operating
costs plus amortized capital costs), and the cost effectiveness of
controls. Cost effectiveness is expressed in cost per ton of pollutant
reduced ($/ton), and is calculated by dividing the total annual cost by
the total amount of pollutant reduced per year. 40 CFR Part 51,
Appendix Y, IV.D.4.c.
    For this proposed rulemaking, EPA evaluated the total capital and
total annual cost estimates SRP submitted to EPA for SCR (excluding
additional costs for LNB/SOFA) in 2010 against the EPA Control Cost
Manual.\28\ EPA has generally accepted the total capital and total
annual cost estimates submitted by SRP, except that we have used an
interest rate that is consistent with EPA cost analyses and eliminated
three line item costs that are not included in the EPA Control Cost
Manual. The costs presented in Table 2 for SCR+LNB/SOFA with four
layers of catalyst represent EPA's estimate for SCR+LNB/SOFA at 0.055
lb/MMBtu. The TSD for this proposed rulemaking describes our analysis
and rationale to support our revised cost analysis for SCR at NGS, as
well as our cost analyses for SCR with 3 layers of catalyst at a level
of 0.08 lb/MMBtu.
---------------------------------------------------------------------------

    \28\ See Salt River Project--Navajo Generating Station Units 1,
2, 3 SCR and Baghouse Capital Cost Estimate Report, Prepared by
Sargent and Lundy, Project Number 12656-001, August 17, 2010, in the
docket for this proposed rulemaking.
---------------------------------------------------------------------------

    In January 2012, SRP provided updated cost estimates for SNCR and
LNB/SOFA.\29\ EPA did not make any revisions to these estimates.
Although SRP's 2010 cost estimate for SCR and their 2012 cost estimate
for SNCR excluded the costs of LNB/SOFA, the values shown in Table 2
are for SCR+LNB/SOFA and SNCR+LNB/SOFA. Between 2008 and 2012, SRP has
suggested different emission rates achievable with SNCR, ranging from
0.15 lb/MMBtu to 0.20 lb/MMBtu. EPA evaluated SNCR+LNB/SOFA at a level
of 0.18 lb/MMBtu, and LNB/SOFA at a level of 0.24 lb/MMBtu. Our
evaluation of SNCR+LNB/SOFA at 0.18 lb/MMBtu is generally consistent
with levels achieved at NGS during a SNCR demonstration test (0.16--
0.17 lb/MMBtu), but lower than the emission limit of 0.20 lb/MMBtu SRP
suggested as providing an adequate margin of compliance.\30\
---------------------------------------------------------------------------

    \29\ See Updated Best Available Retrofit Technology Analysis,
Navajo Generating Station, from Kelly J. Barr, SRP to Deborah
Jordan, EPA dated January 20, 2012, in the docket for this proposed
rulemaking.
    \30\ See letter from Kelly J. Barr, SRP to Deborah Jordan, EPA
dated July 20, 2012, in the docket for this proposed rulemaking.

                Table 2--Total Capital and Total Annual Costs of NOX Controls on Units 1-3 at NGS
----------------------------------------------------------------------------------------------------------------
                                                                                SCR+ LNB/SOFA   SCR+ LNB/SOFA
                                                     LNB/SOFA*    SNCR+ LNB/SOFA  (EPA estimate)  (SRP estimate)
----------------------------------------------------------------------------------------------------------------
Total Capital Cost ($ millions).................             $45             $84            $541            $589
Total Annual Costs..............................              $5             $29             $64             $80
($ millions)....................................
Annual NOX Reductions Estimated by EPA (tpy)....          10,865          16,608          28,573          26,180
----------------------------------------------------------------------------------------------------------------
* Costs for LNB/SOFA are actual costs expended over 2009--2011.

    Average cost effectiveness and incremental cost effectiveness of
SCR+LNB/SOFA, SNCR+LNB/SOFA, and LNB/SOFA are presented in Table 3. The
SRP average and incremental cost effectiveness numbers reported in
Table 3 come from SRP and are generally based on the assumption that
SCR+LNB/SOFA would achieve an emission limit of 0.08 lb/MMBtu.\31\ The
EPA cost effectiveness values in Table 3 for SCR+LNB/SOFA are based on
a NOX emission limit of 0.055 lb/MMBtu and the EPA estimates
for total annual cost

in Table 2. EPA did not revise SRP cost estimates for LNB/SOFA or
SNCR.\32\
---------------------------------------------------------------------------

    \31\ See Updated Best Available Retrofit Technology Analysis,
Navajo Generating Station, from Kelly J. Barr, SRP to Deborah
Jordan, EPA, dated January 20, 2012, in the docket for this proposed
rulemaking.
    \32\ See TSD for this proposed rulemaking for a discussion of
small differences in cost effectiveness values for LNB/SOFA and
SNCR+LNB/SOFA calculated by EPA and SRP, and shown in Table 3.

 Table 3--Average and Incremental Cost Effectiveness for NOX Controls on Units 1-3 at NGS Calculated by EPA and
                                                       SRP
----------------------------------------------------------------------------------------------------------------
                                               LNB/SOFA          SNCR+LNB/SOFA ($/ton)     SCR+LNB/SOFA ($/ton)
----------------------------------------------------------------------------------------------------------------
                               Average Cost Effectiveness (Average for Units 1--3)
----------------------------------------------------------------------------------------------------------------
EPA..................................  $486 per ton...........  $1,745 per ton.........  $2,240 per ton.
SRP..................................  $519 per ton...........  $1,481 per ton.........  $2,926 per ton.
----------------------------------------------------------------------------------------------------------------
                             Incremental Cost Effectiveness (Average for Units 1--3)
----------------------------------------------------------------------------------------------------------------
                                       SNCR+LNB/SOFA (vs. LNB/  SCR+LNB/SOFA (vs.        SCR+LNB/SOFA (vs. LNB/
                                        SOFA).                   SNCR+LNB/SOFA).          SOFA)
----------------------------------------------------------------------------------------------------------------
EPA..................................  $4,110 per ton.........  $2,933 per ton.........  $3,315 per ton.
SRP..................................  $3,135 per ton.........  $5,282 per ton.........  Not calculated.
----------------------------------------------------------------------------------------------------------------

    The average cost effectiveness of SCR+LNB/SOFA estimated by EPA is
not substantially higher than the average cost effectiveness of
SNCR+LNB/SOFA, and the incremental cost effectiveness of SCR+LNB/SOFA
is lower than SNCR+LNB/SOFA (see Table 3).
    The cost effectiveness values calculated by both EPA and SRP for
SCR+LNB/SOFA are lower than or within the range of other BART
evaluations that required SCR. For example, BART analyses for other
electric generating facilities requiring SCR had a range of costs: Four
Corners Power Plant (on the Navajo Nation) Units 1--5: $2,500--$3,200
per ton of NOX removed;\33\ PacifiCorp Naughton Plant Unit 3
(Wyoming): $2,830 per ton of NOX removed;\34\ and Hayden
Station (in Colorado) Units 1 and 2: $3,400--$4,100 per ton of
NOX removed.\35\
---------------------------------------------------------------------------

    \33\ 77 FR 51619 (August 24, 2012).
    \34\ 77 FR 33021 (June 4, 2012).
    \35\ See Colorado Department of Public Health BART Determination
for Public Service Company--Hayden Station, available at http://www.colorado.gov/cs/Satellite/CDPHE-AP/CBON/1251595092457, and in
the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    Based on EPA's cost estimates and our analysis of average and
incremental cost effectiveness, EPA has determined that SCR is cost
effective at NGS.\36\
---------------------------------------------------------------------------

    \36\ EPA's Cost Control Manual does not include indirect or
ancillary costs such as water rates in the evaluation of cost-
effectiveness under factor 1. EPA is considering those costs under
factor 2.
---------------------------------------------------------------------------

ii. Factor 2: Energy and Non-Air Quality Impacts
    The BART Guidelines describe the second factor, the energy and non-
air quality environmental impacts of compliance, as an examination of
whether the use of the control technology would result in direct energy
penalties or benefits, and whether there are environmental impacts
other than air quality due to emissions of the pollutant in question or
due to the control technology. The BART Guidelines also state that
under the energy impacts analysis, the reviewing authority may consider
``whether a given alternative would result in significant economic
disruption or unemployment.'' 70 FR 39169. In selecting a ``best''
alternative, the BART Guidelines further state that ``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.'' 70 FR 39171. Thus, although neither
the CAA nor the RHR require states or EPA to consider the affordability
of controls or ratepayer impacts as part of a BART analysis, the BART
guidelines allow (but do not require) consideration of
``affordability'' in the BART analysis.
    EPA is exercising its discretion to include in this second factor
an analysis to examine the viability of NGS's continued operation if
new NOX controls are required. This analysis compares
electricity generation costs after installing new NOX
controls at NGS against the cost to purchase an equivalent amount of
power on the wholesale market. Because stakeholders have expressed
concern that installation of new controls at NGS may cause the facility
to close, the purpose of this analysis is to assess whether it would be
more economical for the owners of NGS to install controls and continue
operation, or to retire the facility and purchase power in order to
meet their obligations to supply electricity to their customers. EPA
has also included an analysis to estimate potential indirect impacts to
ratepayers who use electricity supplied by SRP or water supplied by
CAP. A complete discussion of other energy and non-air quality impacts
is provided in the TSD for this proposed rulemaking.
    As discussed previously, NGS is unique because it was constructed
and is owned in part by the federal government to provide electricity
to distribute water to tribes located in Arizona and a diverse group of
other water users. NGS is also located on the Navajo Nation and the
Kayenta Mine that supplies its coal is located on the reservation lands
of both the Navajo Nation and the Hopi Tribe.
    The Navajo Nation and the Hopi Tribe have expressed concern that
requiring additional controls at NGS could result in lost employment,
taxes, and royalties to their tribal governments if the owners of NGS
chose to retire units or curtail operations rather than install new air
pollution controls.
a. Affordability Analysis
    As mentioned above, EPA conducted an analysis to estimate
electricity generation costs if SCR or SNCR were installed at NGS
within 5 years of a final rulemaking (i.e., by 2018 if this rule is
finalized in 2013) \37\ compared to costs to purchase an equivalent
amount of power on the wholesale market. This analysis assumes that the
owners of NGS would choose the least costly option for providing power
to their

customers. The results of this analysis are summarized briefly here.
---------------------------------------------------------------------------

    \37\ Given the time that will likely be required for full public
discussion of this proposal, consideration of the information
submitted during the public comment, and the possibility of a
supplemental proposal following comments we receive on Alternatives
2 and 3, it is possible that this rule may not be finalized until
2014, in which case the timeframe for compliance would also shift,
from 2018 to 2019.
---------------------------------------------------------------------------

    Our analysis is based on a 25-year discounted cash flow model that
calculates the net present value (NPV) of the total revenue required to
generate electricity at NGS over 2012-2036 for several different
operating scenarios. The model assumes a 20-year amortization period
for scenarios involving installation of new air pollution controls and
uses a 25-year discounted cash flow to account for the approximate 5-
year period between the present day and the installation of new
controls. The scenarios include: The current Business As Usual (BAU)
scenario that accounts for installation in 2009--2011 of LNB/SOFA, the
installation of SNCR on all units at NGS by 2018, the installation of
SCR on all units by 2018, and the scenario of purchasing energy on the
wholesale market beginning in 2018 and thereafter.\38\ The results are
shown in Table 4.
---------------------------------------------------------------------------

    \38\ The results reported here assume that LADWP's share of NGS
is purchased by another publicly-owned utility. Results from other
scenarios (e.g., if LADWP's share is purchased by an investor-owned
utility) are discussed in the TSD for this proposed rulemaking.

   Table 4--Net Present Value (NPV) of Total Revenue Required to Generate Electricity Over 2012-2036 With NOX
                        Controls Compared to Equivalent Wholesale Market Power Purchases
----------------------------------------------------------------------------------------------------------------
                                                                            Increase from BAU if power purchased
                                    Business as    Increase     Increase                 on market
                                    usual (BAU)  from BAU if  from BAU if --------------------------------------
                                     (LNB/SOFA)      SNCR         SCR          Low          Mid          High
----------------------------------------------------------------------------------------------------------------
NPV ($ millions)..................       $7,766         $278         $648         $673         $951       $1,040
Percent Increase compared to BAU..          n/a           4%         8.3%         8.7%        12.2%        13.4%
----------------------------------------------------------------------------------------------------------------

    We estimate that the retrofit of all three units at NGS with SCR
would result in an incremental increase in the NPV of the revenue
required to generate electricity at NGS of $648 million over the
business as usual (BAU) case, which is lower than the increase over BAU
of the cost to purchase the equivalent amount of electricity on the
wholesale market considering the low, mid, and high market trends
($673--$1,040 million). These results shows that although SCR would
increase the cost of electricity generation by 16 percent in 2018 (see
Table 5), on a 25-year NPV basis, installation and operation of SCR
remains less than the total cost to purchase electricity on the
wholesale market from elsewhere in the West. The analysis conducted by
NREL shows similar results that also indicate that installation of SCR
at NGS by 2018 would likely cost less than replacing it with power
purchased from elsewhere in the West.\39\
---------------------------------------------------------------------------

    \39\ NREL further concludes that even with electricity
generation rate increases resulting from SCR, NGS would still be one
of the lowest cost generators in the Desert Southwest.

                Table 5--Increase in Electricity Generation Costs in 2018 if SCR Installed at NGS
----------------------------------------------------------------------------------------------------------------
                                                                                Percent
                                                Business as usual       Electricity generation cost    increase
                                           electricity generation cost            with SCR           compared to
                                                                                BAU
----------------------------------------------------------------------------------------------------------------
Bureau of Reclamation....................  3.27 cents/kWh.............  3.73 cents/kWh.............           14
Publicly-Owned Utilities (SRP, LADWP)....  3.49 cents/kWh.............  3.97 cents/kWh.............           14
Investor-Owned Utilities (APS, TEP, NPC).  3.88 cents/kWh.............  4.61 cents/kWh.............           19
                                          ----------------------------------------------------------------------
    Average Total Plant..................  3.56 cents/kWh.............  4.13 cents/kWh.............           16
----------------------------------------------------------------------------------------------------------------

    Table 5 shows that the increase in electricity generation cost for
the owners of NGS, ranging from a 14 percent increase for Reclamation
and the publicly-owned utilities to an estimated 19 percent increase
for the investor-owned utilities, would differ based on how each owner
recovers capital investments. In other words, the increase in
electricity generation costs for investor-owned utilities is higher
because the capital recovery includes a rate of return for investors.
b. Electricity and Water Rate Analysis
    In order to determine how the projected increase in electricity
generation cost would affect retail customers, EPA also estimated the
potential increase in retail electricity rates for SRP customers, and
the potential increase in CAP water rates.\40\
---------------------------------------------------------------------------

    \40\ The NREL analysis commissioned by DOI, as well as separate
studies commissioned by other stakeholders, conducted similar rate
analyses. Two studies by Harvey Economics, one commissioned by SRP
and the other commissioned by the Gila River Indian Community
examined potential impacts to electricity rates and Tribal and non-
Tribal CAP water users in Arizona. A third study by Arizona State
University commissioned by SRP examined the contribution of NGS and
the Kayenta Mine to the broader regional and Arizona economy.
Although EPA has included these studies in the docket for our
proposed rulemaking, EPA is not providing a critical review or
assessment of the methodologies of those studies.
---------------------------------------------------------------------------

    As discussed previously, Reclamation owns 24.3 percent of NGS for
the benefit of the CAP. Power from NGS is used by CAP to pump surface
water from the Colorado River to much of Arizona. Construction of CAP
was authorized by Congress in 1968 under the Colorado River Basin
Project Act to deliver Arizona's surface water entitlement of the
Colorado River to the state.
    Under the Colorado River Basin Project Act, any electricity owned
by Reclamation based on its percentage ownership of NGS that is not
used by CAP (excess power) is sold. The Colorado River Basin Project
Act requires profits from Reclamation's excess power sales to be
deposited in the Lower Colorado River Basin Development Fund
(Development Fund). The Development Fund was originally authorized
under the

Colorado River Basin Project Act to repay construction costs of CAP to
the federal government. Subsequent settlement acts with several tribes,
however, have authorized use of the Development Fund to pay the
delivery portion of the cost of CAP water (also called fixed operation,
maintenance and replacement costs, or OM&R costs) \41\ for certain
Indian tribes, and to pay the costs to construct the delivery systems
to bring CAP water to certain Indian tribes.
---------------------------------------------------------------------------

    \41\ CAWCD calls the delivery portion of water costs the ``fixed
OM&R'' costs and the energy portion of water costs (the portion
associated with NGS power costs) the ``variable OM&R'' costs.
---------------------------------------------------------------------------

    CAP's 336-mile water delivery system was completed in 1993 and
delivers 1.5 million AF of water annually to Maricopa, Pima, and Pinal
Counties through a series of canals and pumping stations. The CAP water
delivery system is required to pump water up an elevation of 3,000 feet
from Lake Havasu to the city of Tucson. The Central Arizona Water
Conservation District (CAWCD) is the operating entity for CAP.
According to CAWCD, CAP water currently meets over 20 percent of
Arizona's total water demands, and within CAP's service area, which
encompasses about 80 percent of Arizona's water users and taxpayers,
CAP water meets about 50 percent of the municipal demands.
Approximately 40 percent of CAP's water delivery supply is dedicated to
Native American use.
    Our analysis indicates that, although SRP's cost to generate
electricity would increase by 16 percent if SCR were installed (Table
5), the maximum increase for SRP's retail customers is estimated to be
0.06 cents per kWh, an increase of 0.66 percent (Table 6). For
customers of the utilities that have a portfolio of power generating
sources, e.g., all NGS owners except Reclamation,\42\ the increased
electricity generation cost at NGS from installation of SCR would flow
into a broader consumer retail rate calculation based on the entire
portfolio of the utility's electricity generation assets and purchase
power contracts, which typically include coal (including other coal
plants in addition to NGS), natural gas, nuclear, and some renewable
energy. Therefore, the increase in retail rates paid by SRP customers
is not expected to be proportional, on a percentage basis, to SRP's
increase in electricity generation costs at NGS.
---------------------------------------------------------------------------

    \42\ Although the Bureau of Reclamation has constructed dams
that generate hydroelectric power, EPA understands that CAP's main
source of power comes from Reclamation's ownership share in NGS.
---------------------------------------------------------------------------

    In contrast, Reclamation's share of power produced by NGS is used
by CAP or sold for the benefit of the Development Fund. CAP relies on
NGS for over 90 percent of its power needs. The estimated 14 percent
increase in the electricity generation cost for Reclamation (Table 5),
would translate into a 14 percent increase in the portion of the CAWCD
water rate associated with the electrical cost of pumping water (energy
costs, or variable OM&R), as shown in Table 6, because NGS is CAP's
main source of power.

           Table 6--Projected Electricity and Water Rates in 2018 if NOX Controls Are Installed at NGS
----------------------------------------------------------------------------------------------------------------
                                                                 SNCR                           SCR
                                                    ------------------------------------------------------------
                                   BAU  (LNB/SOFA)                       Percent                        Percent
                                                       Rate increase     increase    Rate increase     increase
----------------------------------------------------------------------------------------------------------------
Electricity Rate to SRP          9.26 cents/kWh....  0.02 cents/kWh...        0.2  0.06 cents/kWh...        0.66
 Customers.
CAWCD Water Rate paid by M&I     $141/AF...........  $2.99/AF.........        2.1  $8.40/AF.........        6.0
 Users.
(fixed + variable OM&R)........
CAWCD Water Rate paid by Tribal  $58/AF............  $2.99/AF.........        5.2  $8.40/AF.........       14
 and Agricultural Users.
(variable OM&R)................
----------------------------------------------------------------------------------------------------------------

    Municipal and industrial (M&I) users of CAP water pay not only
energy costs (variable OM&R) but also delivery costs (fixed OM&R) of
water. Total water rates in 2018 for M&I users are projected by CAWCD
to be $141 per AF; therefore, a rate increase from SCR of $8.40 per AF
represents a 6 percent increase in CAP water rates.\43\ However, the
actual increase to total water costs would depend on the user's
individual degree of reliance on CAP water. For example, the city of
Phoenix relies on CAP for 45 percent of its water supply. Therefore, a
6 percent increase in CAP water rates would effectively result in a 4
percent overall water cost increase to customers in Phoenix because CAP
water represents only a portion of its water.
---------------------------------------------------------------------------

    \43\ For comparison, two Navajo non-governmental organizations,
the To Nizhoni Ani and Black Mesa Water Coalition, provided
information on their water costs to EPA in the docket for this
proposed rulemaking. This information stated that members of the
Navajo Nation, who do not get water from CAP, pay much higher costs
for water than CAP customers, ranging from one to four cents per
gallon (equivalent to over $3,000 to over $13,000 per acre foot of
water).
---------------------------------------------------------------------------

    In contrast to M&I users, as part of the Arizona Water Settlements
Act of 2004, agricultural water users and tribes pay only the energy
costs of CAP water; therefore, the same $8.40 per AF increase in water
rates represents a 14 percent increase. EPA is aware of 13 tribes
located in Arizona that currently have CAP water allocations through
settlement agreements or use CAP water under contract (see Table 7 and
the TSD for this proposed rulemaking for additional information and
references). EPA does not have information regarding the degree of
reliance on CAP water for tribes or agricultural water users. However,
agricultural or tribal customers that have non-CAP sources of water
will experience a smaller percentage increase in total water costs than
users that rely entirely on CAP water (e.g., see Phoenix example
discussed above).

          Table 7--Tribes With CAP Allocations or CAP Contracts
------------------------------------------------------------------------
                                                                 CAP
                                                              Allocation
                                                             or contract
                           Tribe                                volume
                                                              (acre feet
                                                              per year)
------------------------------------------------------------------------
Gila River Indian Community................................      311,800
Ak-Chin Indian Community...................................       85,000
Tohono O'odham Nation......................................       74,000
San Carlos Apache Tribe....................................       60,665
White Mountain Apache Indian Tribe.........................       23,782
Fort McDowell Yavapai Nation...............................       18,233
Salt River Pima-Maricopa Indian Community..................       13,300
Navajo Nation..............................................        6,411
Yavapai-Apache Nation (Camp Verde).........................        1,200
Hopi Tribe.................................................        1,000
Pascua Yaqui Tribe.........................................          500
Yavapai-Prescott Tribe.....................................          500
Tonto Apache Nation........................................          128
------------------------------------------------------------------------

    In its analysis, NREL estimated a low and high range of potential
water rate increases based on SCR installation and operation cost
estimates from the National Park Service and from SRP (see Table 8).
NREL's estimates of increased water rates from the installation and
operation of SCR are consistent with our estimates. Separate analyses
for the Gila River Indian Community and SRP by Harvey Economics
estimated pumping cost increases that are slightly lower than NREL and
EPA estimates.

 Table 8--Comparison of Projected Water Rate Increases From SCR Installation Estimated by EPA and Other Studies
----------------------------------------------------------------------------------------------------------------
                                     NREL High              EPA              NREL Low              Harvey
----------------------------------------------------------------------------------------------------------------
CAP Water Rate Increase.......  $8.58/AF..........  $8.40/AF..........  $7.10/AF.........  $6.60/AF
Increase to M&I Users.........  7%................  6%................  6%...............  Not calculated
Increase to Tribes and          16%...............  14%...............  13%..............  11%
 Agricultural Users.
----------------------------------------------------------------------------------------------------------------

c. Summary of EPA's Affordability and Rate Impacts Analyses
    Based on our analyses, the 25-year NPV of costs to produce power at
NGS with SCR installed and operated on all units should be below the
market prices of wholesale power.
    However, as discussed previously in section I.G.ii, EPA understands
that the timing of regulatory compliance is an important consideration
given potential ownership changes and that the current term of NGS's
lease with the Navajo Nation, as well as other leases and rights-of-way
agreements, extend only to 2019. Based on public statements made by
stakeholders, and as indicated in the March 2012 NREL report, the
owners of NGS intend to pursue a renewed lease agreement with the
Navajo Nation that extends to 2044. However, until a renewed lease that
supports continued long-term operation of NGS is negotiated and
approved by DOI, significant capital investment needed to modernize NGS
with new air pollution controls may be viewed unfavorably without
additional certainty that the costs can be recovered over a reasonable
amortization period.
    Our analysis also shows that increased electricity rates to
customers of the utilities that own NGS should be relatively low.
However, because of CAP's nearly complete reliance on NGS for power, we
estimate that CAP water rates would increase by $8.40 per AF,
representing a 6 percent increase in rates to M&I users and a 14
percent increase to tribes and agricultural water users.
    EPA understands that a potential increase in water rates to tribes
is a critical issue for them. We note that, as described in the
following section, past pollution control investments at this facility
have made use of alternative financing methods that limited impacts on
CAP water rates. Furthermore, the NREL report indicated that mechanisms
may exist to help avoid or mitigate the estimated level of impact. EPA,
in conjunction with DOI and DOE, have committed to work together on
several short- and long-term goals, including innovative clean energy
options for electricity generation and seeking funding to cover
expenses for the federal portion of pollution control at NGS. However,
it is not clear at this time whether or what type of mechanisms might
be available to lessen increased costs. Therefore, as explained further
below, EPA believes that the potential economic impacts discussed in
this section argue for thoughtful consideration of how flexibility in
the compliance timeframe can be provided consistent with the air
quality goals of the Clean Air Act.
    EPA seeks comment on opportunities to reduce and/or avoid
significant impacts on tribes while ensuring visibility protection for
the 11 affected Class I areas.
iii. Factor 3: Existing Controls at the Facility
    As stated previously, NGS currently uses hot-side ESPs to control
PM. To reduce emissions of SO2, SRP installed wet limestone
FGDs over the period 1997-1999 on each unit, as required under a FIP
issued by EPA on October 3, 1991 (56 FR 50172, codified at 40 CFR
49.5513(d)(1)), to remedy visibility impairment at the Grand Canyon
National Park that was reasonably attributable to NGS. The total cost
of the FGD units was $420 million. Reclamation's 24.3 percent share of
the FGD units was funded through CAP construction appropriations and
CAWCD is repaying these costs to the federal government as part of
total CAP project costs over a 50-year period. The 1991 FIP set an
emission limit for SO2 of 0.10 lb/MMBtu on a plant-wide
rolling annual average basis. On March 5, 2010 (75 FR 10174), EPA
issued a gap-filling FIP for NGS to federalize emission limits for PM
of 0.06 lb/MMBtu on a plant-wide 3-hour average basis, an opacity limit
of 20 percent, and a 3-hour average SO2 limit of 1 lb/MMBtu.
The SO2 emission limit in the final 2010 FIP ensures that
actual SO2 emissions from NGS will remain 90 percent lower
on an annual basis than they were before the scrubbers were installed
to comply with the 1991 visibility FIP. Additionally, EPA's final MATS
rule set a filterable PM limit of 0.03 lb/MMBtu. This limit applies to
Units 1-3 at NGS.
    Prior to 2009, NGS used close-coupled over fire air (CCOFA) to
control NOX emissions. In April 2009, SRP submitted a
Prevention of Significant Deterioration (PSD) permit application to EPA
Region 9 to voluntarily install and operate advanced combustion
controls (LNB/SOFA) on Units 1--3. The LNB/SOFA triggered PSD review
for significant increases in emissions of carbon monoxide (CO).
Reclamation's share of the LNB/SOFA installation was funded from the
Development Fund. These costs were then reimbursed by SRP on an
amortized basis and the remaining balance was reimbursed by CAWCD.\44\
Because SRP submitted its permit application for the LNB/SOFA
modification after EPA had begun its BART analysis for NGS, in the
Ambient Air Quality Impact Report (AAQIR) \45\ for the proposed PSD
permit (AZ 08-01) EPA stated that:
---------------------------------------------------------------------------

    \44\ See page 22 of NREL report.
    \45\ See EPA's Ambient Air Quality Impact Report, dated October
2008, for the proposed PSD permit for NGS, in the docket for this
proposed rulemaking.

    The early installation of the LNB/SOFA systems will not affect
the baselines for cost or visibility improvements in the BART
determination, and therefore will not influence EPA's determination
of the proper NOX reductions required to be achieved from
---------------------------------------------------------------------------
BART.

    Additionally, in an agreement \46\ regarding the EPA proposed PSD
permit AZ 08-01, signed November 19, 2008, by Bill Heddon, Executive
Director of Grand Canyon Trust (GCT) and Richard

Hayslip, Associate General Manager of SRP, GCT agreed to withdraw its
November 14, 2008, comment letter to EPA, provided SRP understood that:
---------------------------------------------------------------------------

    \46\ See Agreement between Grand Canyon Trust and Salt River
Project on NGS dated November 19, 2008, in the docket for this
proposed rulemaking.

    Grand Canyon Trust stands by its support for the installation of
low-NOX burners and separated overfire air at the Navajo
Generating Station as long as their installation and operation will
not prejudice in any way the implementation of more effective
NOX and particulate matter controls (including SCR or
SNCR, and baghouse technology) to more fully address Navajo's
visibility impacts under the reasonable attribution and regional
---------------------------------------------------------------------------
haze programs.

    SRP installed LNB/SOFA combustion controls on Unit 3 in 2009, on
Unit 2 in 2010, and on Unit 1 in 2011. Therefore, all three units
currently operate with modern advanced combustion controls and are
required to meet the NOX limit set in the final PSD permit
issued by EPA on November 20, 2008, of 0.24 lb/MMBtu on a 30-day
rolling average.\47\
---------------------------------------------------------------------------

    \47\ See final PSD permit issued by EPA Region 9 dated November
20, 2008, in the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    Because EPA, GCT, and SRP agreed that the installation of advanced
combustion controls would not affect or prejudice our BART
determination for NGS, EPA's analysis of the cost effectiveness of SCR
used the baseline emission rate from 2001--2003, prior to the
installation of the LNB/SOFA. However, because EPA's proposed BART
determination is being issued for public comment in 2013, after the
installation of advanced combustion controls has been completed on all
units, EPA is also providing cost effectiveness information calculated
using LNB/SOFA as the baseline, which is equivalent to calculating
incremental cost effectiveness of SCR+LNB/SOFA compared to LNB/SOFA
alone (see Table 3). These values are also discussed as the incremental
cost effectiveness estimates in Section 3 of the TSD for this proposed
rulemaking. The affordability and rate impact analysis, discussed
above, considers the installation of LNB/SOFA over the period of 2009--
2011 as expenditures that have already occurred; therefore, additional
calculations for the analysis using LNB/SOFA as baseline are not
needed.
    Based on the information above, EPA is proposing to determine that
consideration of the existing controls at NGS does not warrant
eliminating SCR as the top technically feasible and cost effective
NOX emission control technology for NGS.
iv. Factor 4: Remaining Useful Life of Facility
    EPA is proposing to determine that the appropriate remaining useful
life for NGS, as used as an amortization period for the cost of
controls, should be 20 years. The various uncertainties currently
facing NGS, including ownership changes and current lease and right-of-
way agreement negotiations, could affect NGS's ability to operate into
the future; however, without an enforceable obligation for a shorter
useful life, EPA has determined it is most appropriate to rely on a 20-
year useful life as the default for amortization purposes.
    EPA also understands from recent discussions on the lease renewal
for NGS that the owners may be negotiating the renewal lease period to
end in 2044 (over 30 years from 2013). Although a 30-year amortization
period may be more realistic for NGS, a longer amortization period
would reduce the annualized cost of capital improvements and, thus,
decrease the $/ton cost effectiveness value. Because the use of the
shorter amortization period is more conservative (increases the $/ton
cost effectiveness value), EPA's calculations of cost effectiveness in
our analysis rely on a 20-year amortization period. However, EPA
recognizes that if the capital costs of controls can be amortized over
a longer period, the cost effectiveness of new controls would appear
more favorable.
    The default amortization period used in the EPA Control Cost Manual
is 20 years,\48\ and given the indications that the remaining life of
NGS could be shorter or longer, EPA is proposing to determine that use
of a 20-year remaining useful life is appropriate.
---------------------------------------------------------------------------

    \48\ See EPA Control Cost Manual, Section 6, page 2-48,
available from http://www.epa.gov/ttncatc1/dir1/c_allchs.pdf.
---------------------------------------------------------------------------

v. Factor 5: Degree of Visibility Improvement
    The fifth factor to consider under EPA's BART guidelines is the
degree of visibility improvement from the BART control options. See 59
FR 39170. The BART guidelines recommend using the CALPUFF air quality
dispersion model to estimate the visibility improvements from
alternative control technologies at each nearby Class I area, typically
those within a 300 km radius of the source, and to compare these to
each other and to the impact of the baseline (i.e., current) source
configuration. EPA included in our modeling analysis the 11 Class I
areas that are within 300 km of NGS. These areas are listed in Table 10
below, along with estimated visibility impacts.
    Visibility is often described in terms of visual range in
kilometers or miles. The deciview scale is an alternative measure of
visibility impairment: lower deciview values represent better
visibility and greater visual range, while increasing deciview values
represent increasingly poor visibility.
    EPA's BART guidelines recommend comparing visibility improvements
between control options using the 98th percentile of 24-hour delta
deciviews, which is roughly equivalent to the facility's 8th highest
visibility impact day. The 98th percentile is recommended rather than
the maximum value to avoid undue influence from unusual meteorological
conditions. The ``delta'' refers to the difference between total
deciview impact from the facility including natural background, and
deciviews of natural background alone, so ``delta deciviews'' is the
estimate of the facility's impact on visibility. In practice,
``deciview impact'' is often used in place of ``delta deciview impact''
and the two terms should be assumed to have the same meaning.
    In the BART guidelines, EPA noted that a 1.0 deciview impact from a
source is sufficient to ``cause'' visibility impairment and that a
source with a 0.5 deciview impact would ``contribute'' to visibility
impairment.
    CALPUFF modeling is generally performed according to a modeling
protocol, which sets out the model version, choice of geographic
domain, input preparation procedures, and the various model settings to
be used. EPA's modeling for this proposed rulemaking generally followed
the same approach in SRP's modeling,\49\ which in turn was based on the
2006 Western Regional Air Partnership (WRAP) protocol,\50\ developed
for subject-to-BART screening modeling of NGS and other western
facilities. The WRAP protocol was reviewed by multiple regulatory
agencies, including EPA, the National Park Service, the U.S. Forest
Service (USFS), and air agencies of WRAP member states; it was accepted
by

WRAP states for use in their Regional Haze SIPs. Differences between
the SRP approach and the WRAP approach are discussed in more detail in
the TSD for this proposed rulemaking.
---------------------------------------------------------------------------

    \49\ The SRP approach, and differences from the WRAP protocol,
are described in Appendix A of Revised BART Analysis for the Navajo
Generating Station Units 1-3, ENSR Corporation, Document No. 05830-
012-300, January 2009, Salt River Project, Tempe, AZ, in the docket
for this proposed rulemaking.
    \50\ CALMET/CALPUFF Protocol for BART Exemption Screening
Analysis for Class I Areas in the Western United States, Western
Regional Air Partnership (WRAP); Gail Tonnesen, Zion Wang; Ralph
Morris, Abby Hoats and Yiqin Jia, August 15, 2006. Available on UCR
Regional Modeling Center web site, BART CALPUFF Modeling, http://pah.cert.ucr.edu/aqm/308/bart.shtml.
---------------------------------------------------------------------------

    While EPA generally followed the SRP approach, EPA used different
ammonia background concentrations and a different method for converting
CALPUFF concentrations to visibility impact estimates. These
differences, described in detail below, result in substantial
differences in predicted visibility impacts.
    The values of ammonia background concentrations are important
because ammonia is a component of particulate ammonium sulfate and
ammonium nitrate, both of which degrade visibility. Ammonia is present
in the air from both natural and anthropogenic sources. The latter may
include motor vehicles, livestock operations, fertilizer application
associated with farming, and ammonia slip from the use of ammonia in
SCR and SNCR technologies to control NOX emissions.
Sensitivity of the model results to other ammonia assumptions are
discussed in the TSD, and do not change the ranking of control options
for evaluating visibility improvement, or the overall conclusions of
the visibility analysis.
    The U.S. Forest Service informed EPA that the ammonia background
concentrations modeled by Arizona Public Service for the Four Corners
Power Plant in January 2008 were lower than observed
concentrations.\51\ The USFS recommended a method of back-calculating
the ammonia background based on monitored values of sulfate and
nitrate. EPA's ANPRM provided modeling results based on using the
USFS's back-calculation methodology, for both Four Corners and NGS.
---------------------------------------------------------------------------

    \51\ Letter from Rick Cables (Forest Service R2 Regional
Forester) and Corbin Newman (Forest Service R3 Regional Forester) to
Deborah Jordan (EPA Region 9 Air Division Director) dated March 16,
2009, document number 0016 in the docket for the ANPRM: EPA-R09-OAR-
2009-0598.
---------------------------------------------------------------------------

    The visibility modeling supporting today's proposal for NGS uses a
constant ammonia background of 1 ppb, which is the default value
recommended for western areas by the Interagency Workgroup on Air
Quality Modeling.\52\ The TSD describes the results of sensitivity
simulations using different concentrations of background ammonia. This
includes supplemental modeling using a range of 0.2-1 ppb ammonia
background concentrations as used by SRP, as well as supplemental
modeling using back-calculated ammonia concentrations,\53\ with a
thorough discussion of the back-calculation methodology.
---------------------------------------------------------------------------

    \52\ 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,
available at: http://www.epa.gov/scram001/7thconf/calpuff/phase2.pdf, and in the docket for this proposed rulemaking.
    \53\ Ammonia concentrations for Mesa Verde National Park were
not based on the back-calculation method for these simulations, but
instead were derived from measured ammonia concentrations in the
Four Corners area, as described in Mark E. Sather et al., 2008.
``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).
---------------------------------------------------------------------------

    Aside from the background ammonia assumptions, the other
significant difference between EPA's modeling approach and the SRP
approach is the procedure for calculating visibility impacts within
CALPOST, a CALPUFF post-processor. This difference has two aspects, the
``visibility method'' used to convert CALPUFF pollutant concentrations
into deciviews, and the choice of natural background conditions, which
affects the calculation of delta deciviews.
    A key choice in the visibility method is between Method 6 and
Method 8, implementing the original and the revised IMPROVE equation,
respectively. The IMPROVE equation converts monitored or modeled
pollutant concentrations into extinction, which is the fraction of
light removed from a sight path; deciviews are calculated from
extinction. Many BART assessments were performed before the revised
IMPROVE equation was incorporated into CALPUFF, so the original
equation was generally used for past assessments. However, in this
proposal EPA is primarily relying on the revised IMPROVE equation. The
revised IMPROVE equation is currently preferred by the Federal Land
Managers,\54\ because it has less bias in estimating visibility under
the worst visibility conditions.\55\ As discussed in the TSD, EPA
performed sensitivity simulations and found that using the original
IMPROVE equation would on average give baseline impacts about 3 percent
lower than using the revised equation, with a range of 15 percent lower
to 9 percent higher depending on the Class I area.
---------------------------------------------------------------------------

    \54\ 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.
Available on web page http://www.nature.nps.gov/air/Permits/flag.
    \55\ Pitchford, Marc, 2006, ``New IMPROVE algorithm for
estimating light extinction approved for use'', The IMPROVE
Newsletter, Volume 14, Number 4, Air Resource Specialists, Inc.; web
page: http://vista.cira.colostate.edu/improve/Publications/news_letters.htm; Revised IMPROVE algorithm for Estimating Light
Extinction from Particle Speciation Data, IMPROVE, January 2006. web
page: http://vista.cira.colostate.edu/improve/publications/graylit/gray_literature.htm.
---------------------------------------------------------------------------

    The BART Guidelines recommend that visibility impacts should be
estimated in deciviews relative to natural background conditions, that
is, in delta deciviews. In accordance with the BART Guidelines, EPA
used the average of the best 20 percent days as background.\56\
---------------------------------------------------------------------------

    \56\ It is worth noting that an EPA guidance memo suggests that
the comparison can use either annual average background conditions,
or the average of the best (cleanest) 20 percent of days. ``Regional
Haze Regulations and Guidelines for Best Available Retrofit
Technology (BART) Determinations'', memorandum from Joseph W.
Paisie, EPA OAQPS, July 19, 2006, p. 2.
---------------------------------------------------------------------------

    Table 9 presents the visibility impacts of the 98th percentile of
24-hour delta deciviews for each Class I area for each year, averaged
over 2001-2003.\57\ For each Class I area, the table shows the deciview
impact for the base case, and the deciview improvement from that
baseline impact when controls are applied. Also shown are the
cumulative deciview impacts, which are the simple sum of impacts or
improvements over all the Class I areas. Table 10 shows the average
number of days with a baseline impact or improvement of at least 0.5
dv; it also shows two ``dollars per deciview'' measures of cost
effectiveness, both of which divide the total annual cost of the
control in millions of dollars per year by an improvement in deciviews.
For the first metric, ``$/max dv'', annual cost (Table 2) is divided by
the 98th percentile deciview improvement at the Class I area with the
greatest improvement (Table 9). The second metric, ``$/cumulative dv'',
divides annual cost by the cumulative 98th percentile deciview
improvement. In assessing the degree of visibility improvement from
controls, EPA relied heavily on the maximum deciview improvement among
the Class I areas and the number of areas showing improvement (i.e.,
all 11 Class I areas), with cumulative improvement providing a
supplemental measure that combines information on the number of areas
and on individual area improvement. The $/dv metrics shown in Table 10
provide additional, cost-related information that supplements to the
cost effectiveness ($/ton) that was considered in Factor 1: Cost of
Compliance.
---------------------------------------------------------------------------

    \57\ EPA did not average the 98th percentiles from each year as
did SRP, rather EPA used the 98th percentile from all the daily
values from the three years taken together. This does not
significantly affect the overall results.

    Table 9--EPA Modeling Results--Baseline Impacts and Improvement From NOX Controls, 98th Percentile Delta
                          Deciviews (dv) From 2001-2003, Using 1 ppb Ammonia Background
----------------------------------------------------------------------------------------------------------------
                                  Distance to    Baseline   Improvement from  Improvement from  Improvement from
                                      NGS         impact        LNB/SOFA        SNCR+LNB/SOFA     SCR+LNB/SOFA
          Class I area           -------------------------------------------------------------------------------
                                      (km)         (dv)       (dv)     (%)      (dv)     (%)      (dv)     (%)
----------------------------------------------------------------------------------------------------------------
Arches NP.......................          245          4.5      1.7       37      2.2       50      3.5       77
Bryce Canyon NP.................           96          4.9      1.6       33      2.3       46      3.6       74
Canyonlands NP..................          173          6.0      2.1       35      2.9       48      4.6       76
Capitol Reef NP.................           90          7.7      2.1       28      3.1       40      5.4       71
Grand Canyon NP.................           29          8.4      1.9       23      2.9       35      5.4       64
Mazatzal WA.....................          279          1.5      0.6       41      0.8       52      1.1       75
Mesa Verde NP...................          253          3.2      1.3       42      1.8       55      2.6       81
Petrified Forest NP.............          235          3.4      1.4       41      1.8       54      2.7       78
Pine Mountain WA................          287          1.3      0.5       41      0.7       54      1.0       75
Sycamore Canyon WA..............          204          2.4      0.9       37      1.2       50      1.8       75
Zion NP.........................          134          4.4      1.4       31      2.0       45      3.3       76
                                 -------------------------------------------------------------------------------
    Cumulative..................  ...........           48       16       33       22       45       35       73
----------------------------------------------------------------------------------------------------------------

  Table 10--EPA Modeling Results From 2001-2003, Using 1 ppb Ammonia Background--Additional Visibility Metrics
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
                                     Baseline
                                      Impact    Improvement From LNB/
                                                        SOFA
                                      Improvement from
                                        SNCR+LNB/SOFA
                                      Improvement From
                                        SCR+LNB/SOFA
----------------------------------------------------------------------------------------------------------------
Average number of days greater             130         27        21%         44        34%         72        55%
 than or equal to 0.5 dv at Class
 I area with most-impacted
 Baseline (Canyonlands NP).......
$/max dv (millions)..............          n/a       $2.5  .........       $9.3  .........      $11.8  .........
$/cumulative dv (millions).......          n/a       $0.3  .........       $1.3  .........       $1.8  .........
----------------------------------------------------------------------------------------------------------------

    As shown in Tables 9 and 10, the modeled visibility benefits of
SCR+LNB/SOFA are substantially greater than those of SNCR+LNB/SOFA or
LNB/SOFA. The modeled 98th percentile visibility improvement due to
installation of LNB/SOFA equals or exceeds 0.5 deciviews at all 11
Class I areas, exceeds 1 deciview at most of these Class I areas, and
reaches 2.1 deciviews at two of these Class I areas. For SNCR+LNB/SOFA,
the modeled visibility improvement exceeds 0.5 deciviews at all 11
Class I areas, exceeds 1 deciview at most of these Class I areas, and
reaches roughly 3 deciviews at three of these Class I areas. For
SCR+LNB/SOFA, the improvement exceeds 1 deciview at all 11 Class I
areas, exceeds 2 deciviews at most of these areas, and reaches 5.4
deciviews at two of these areas.
    EPA is proposing to determine that the anticipated visibility
benefits of NOX controls at NGS supports SCR+LNB/SOFA as the
most stringent technically feasible and cost effective NOX
emission control technology for NGS.

C. EPA's Proposed NOX Emission Limit for NGS

    The BART Guidelines give states and EPA discretion in determining
the relative weight of each factor in making a BART determination. A
summary of the results of EPA's factor analysis is shown in Table 11.

                        Table 11--Summary of EPA's Five Factor NOX BART Analysis for NGS
----------------------------------------------------------------------------------------------------------------
                Factor                         LNB/SOFA              SNCR+LNB/SOFA             SCR+LNB/SOFA
----------------------------------------------------------------------------------------------------------------
    Limit(lb/MMBtu)..................  0.24...................  0.18...................  0.055.
1 Average Cost Effectiveness.........  $486/ton...............  $1,745/ton.............  $2,240/ton.
    Incremental Cost Effectiveness...  N/A....................  $ 4,110/ton............  $2,933/ton (v. SNCR),
                                                                                $3,315/ton (v. LNB).
----------------------------------------------------------------------------------------------------------------
2 Comparison of SCR vs. Market         Increase in Net Present Value from SCR = $648 million vs. NPV from Market
 (compliance by 2018).                                         Cases = $673-$1040 million.
----------------------------------------------------------------------------------------------------------------
    SRP Electricity Rate in 2018       9.26[cent]/kWh           9.28[cent]/kWh.........  9.32[cent]/kWh.
     (compliance by 2018).              (Baseline).
    Energy-Only Water Rate in 2018     $58/acre-foot            $61/acre-foot..........  $66/acre-foot.
     (compliance by 2018).              (Baseline).
----------------------------------------------------------------------------------------------------------------
3 Existing Controls..................                       LNB/SOFA installed in 2009-2011
4 Remaining Useful Life..............   EPA Default Amortization Period is 20 years. NGS seeking to extend lease
                                                                         to 2044
----------------------------------------------------------------------------------------------------------------
5 Highest Visibility Benefit of        2.1 dv.................  3.1 dv.................  5.4 dv.
 Controls.
    Sum of Visibility Benefit from 11  16 dv..................  22 dv..................  35 dv.
     Class I areas.
----------------------------------------------------------------------------------------------------------------

    Based on our five factor analysis, EPA is proposing to determine a
plantwide emission limit of 0.055 lb/MMBtu as BART for NGS, based on a
rolling average of 30 boiler operating days, achievable with the
installation of SCR. We are proposing this emissions limit as BART for
NOX because: (1) The average and incremental costs of SCR
are cost effective; (2) EPA anticipates that the installation and
operation of SCR to meet the proposed BART limit should not cause the
owners of NGS to retire units and that the history of funding air
pollution control at NGS suggests that other significant impacts may be
avoided or mitigated; (3) the voluntary installation of LNB/SOFA in
2009-2011 at NGS has achieved some NOX reductions, but not
the level achievable with SCR; (4) NGS is projected to continue
operation at least to 2044; and (5) the anticipated visibility
improvements from SCR would be significant at 11 Class I areas. Based
on these factors, EPA is proposing to determine that an emission limit
of 0.055 lb/MMBtu is BART for NGS. This emission limit represents a
reduction of nearly 80 percent from the existing permitted
NOX emission limit.

D. EPA's Proposed BART Alternative

    Under the CAA, compliance with emission limits determined as BART
must be ``as expeditious as practicable but in no event later than five
years'' after the effective date of the final BART determination (See
CAA 169A(b)(2)(A) and (g)(4)). That date would be 2018, if the rule is
finalized in 2013, or 2019 if, due to a need for extended public
discussion or a supplemental proposal, the rule is finalized in
2014.\58\ As previously stated, EPA recognizes that the circumstances
related to NGS create unusual and significant challenges for a 5-year
compliance schedule. We therefore have considered other options that
are consistent with the CAA and RHR, that also provide for a more
flexible, extended compliance schedule.
---------------------------------------------------------------------------

    \58\ For simplicity, EPA has assumed the rule will be finalized
in 2013 in our analysis of alternatives to BART.
---------------------------------------------------------------------------

    EPA's BART regulations allow an alternative to BART provided the
alternative results in greater reasonable progress than would have been
achieved through installation of BART. 40 CFR 51.308(e)(2). The
regulations provide that an alternative to BART must ensure that all
necessary emission reductions occur during the period of the first
long-term strategy for regional haze, or in 2018 for States that were
required to submit regional haze SIPs in December 2007. 40 CFR
51.308(e)(2)(iii). Thus, the RHR provided five additional years for the
implementation of alternatives to BART (known as ``better than BART'').
    In today's proposal, we are proposing a BART alternative
(Alternative 1) for NGS that would require the plant to meet a
NOX limit of 0.055 lb/MMBtu on one unit per year in 2021,
2022, and 2023. We also describe and solicit comment on a framework for
extending the compliance schedule beyond 2023, and will issue a
supplemental proposal if we receive comments supporting a later
compliance date.
i. Compliance Flexibility Is Necessary or Appropriate
    EPA is proposing an alternative to provide the owners of NGS
options for flexibility in achieving emissions reductions required
under our proposed BART determination. SRP expressed concern that the
owners of NGS may choose to retire the facility if faced with the
financial risk of making a large capital investment within 5 years
without also having certainty that the lease and contract re-
negotiations would conclude in a timely and favorable manner. EPA
understands that the owners of NGS face numerous uncertainties and the
unusual requirement to comply with NEPA for lease and other rights-of-
way approvals, which apply only to NGS and Four Corners Power Plant.
EPA also understands the importance of the continued operation of NGS
and the Kayenta Mine to the Navajo Nation and Hopi Tribe as a source of
direct revenues through lease payments or coal royalties, as well as
the importance of Reclamation's share of NGS to supply water to many
tribes located in Arizona in accordance with several water settlement
acts.
    In this proposal, EPA is proposing Alternative 1 as a ``better than
BART'' alternative that addresses the uncertainties described in the
previous section. We are also requesting comment on two other
alternatives that provide longer schedules for compliance. Because we
would need additional information to propose to approve a longer
compliance schedule beyond the timeframe in Alternative 1, we would
supplement our proposal if we intend to finalize either of the longer
compliance schedules discussed below. As discussed below, all of the
alternatives include a NOX emission rate of 0.055 lb/MMBtu,
but vary in the amount of time provided for compliance. Alternative 1
and the other two on which we are soliciting comment assume that NGS
will continue to operate well into the future, but EPA recognizes that
there may be changes in energy demand or in how energy is supplied in
this region that could form the basis of other options. EPA welcomes
comment on our proposed BART determination and proposed alternative
(Alternative 1), as well as the other alternatives we describe here and
other options from interested parties.
ii. Background on Alternative Measures to BART
    EPA has previously provided flexibility to the Four Corners Power
Plant (FCPP), also located on the Navajo Nation, to achieve emission
reductions of NOX under either BART or an alternative
measure to BART. 77 FR 51619 (August 24, 2012). Changes in ownership at
FCPP and differences between the five boilers operated at FCPP,
contributed, in part, to a decision by the owners of FCPP to put forth
an alternative emission control strategy that included closure of the
three smaller and less efficient units and somewhat delayed
installation of SCR on the two largest units, resulting in greater
emission reductions than under EPA's proposed BART determination. On
February 25, 2011, EPA proposed this alternative emission control
strategy as an alternative measure that would result in more progress
towards achieving visibility improvements in the surrounding Class I
areas (76 FR 10530). In that Supplemental Proposal, EPA put forth the
legal and historical background for proposing a BART Alternative (76 FR
10533). Briefly, the RHR allows states (and EPA) the ability to
consider alternatives to BART (40 CFR 51.308(e)(2)). The regulation
requires a demonstration, based on a weight of evidence evaluation,
that the alternative measure will achieve greater reasonable progress
than would have resulted from installation and operation of BART. The
regulation provides that:

[i]f the distribution of emissions is not substantially different
than under BART, and the alternative measure results in greater
emission reductions, then the alternative measure may be deemed to
achieve greater reasonable progress.

    40 CFR 51.308(e)(3). The RHR also requires that emission reductions
from the alternative program take place during the period of the first
long-term strategy for regional haze (40 CFR 51.308(e)(2)(iii), which
ends in 2018. EPA's final action on FCPP required the facility to
achieve emission reductions under the alternative emission control
strategy by July 31, 2018.

iii. Legal Rationale for Extending Compliance Schedule for Alternative
Measures for NGS
    For NGS, EPA is proposing a BART alternative (Alternative 1)
consistent with 40 CFR 51.308(e)(2). In particular, EPA is proposing
that consideration of a compliance schedule beyond 2018 for Alternative
1 at NGS is appropriate for several reasons, including the singular
importance of NGS to many tribes located in Arizona and their water
settlement agreements with the federal government, the numerous
uncertainties facing the owners of NGS, the requirement for NEPA review
of a lease extension, and the early and voluntary installation of
modern combustion controls over the 2009-2011 timeframe. The timeframe
for compliance would not, in itself, avoid or mitigate increases in
water rates for tribes located in Arizona; however, it would provide
time for the collaborating federal agencies to explore options to avoid
or minimize potential impacts to tribes, including seeking funding to
cover expenses for the federal portion of pollution control at NGS.
    EPA is exercising its authority and discretion under section
301(d)(4) of the Clean Air Act, 42 U.S.C. 7601(d)(4), and 40 CFR
49.11(a) to propose an extended timeframe for an alternative measure
under the RHR for NGS. EPA considers this extension of time to be
consistent with the general programmatic requirements. In the 1999 RHR,
EPA provided states with the flexibility to adopt alternatives to BART
but required any such alternative to be fully implemented by the end of
the first planning period. 40 CFR 51.308(e)(2)(iii). States and
regulated sources accordingly had almost 20 years under the RHR to
design and implement alternative measures to BART. Because of the
myriad stakeholder interests and complex governmental interests unique
to NGS, we are only now addressing the BART requirements for NGS. Given
the timing of our proposed action, any BART alternative would need to
be fully implemented on the same timeframe as BART, under the current
regional haze regulations. For all the reasons explained above, we
consider it appropriate to consider an extended compliance period for
NGS. Therefore, notwithstanding the requirements in 40 CFR
51.308(e)(2)(iii) for BART alternatives to be implemented by 2018 (if
the rule is finalized in 2013), we are proposing in Alternative 1 to
require that emission reductions from an alternative to BART at NGS
take place by 2023.
    Our proposal to require emission reductions by 2023 is also
supported by the Tribal Authority Rule codified at 40 CFR 49.11(a). The
TAR reflects EPA's commitment to promulgate ``such Federal
implementation plan provisions as are necessary or appropriate to
protect air quality'' in Indian country where a tribe either does not
submit a tribal implementation (TIP) or does not receive approval of a
submitted TIP. (Emphasis added.)
    The use of the term ``provisions as are necessary or appropriate''
indicates EPA's determination that it may only be necessary or
appropriate to promulgate a FIP of limited scope. The United States
Court of Appeals for the Tenth Circuit has previously endorsed the
application of this approach in a challenge to the FIP for the Four
Corners Power Plant, stating: ``[40 CFR 49.11(a)] provides the EPA
discretion to determine what rulemaking is necessary or appropriate to
protect air quality and requires the EPA to promulgate suc
rulemaking.'' Arizona Public Service Company v. EPA. The court went on
to observe: ``Nothing in section 49.11(a) requires EPA * * * to submit
a plan meeting the completeness criteria of [40 CFR part 51] Appendix
V.'' Id. While the decision in Arizona Public Service Company focused
on 40 CFR Part 51 Appendix V, EPA believes the same considerations
apply to the promulgation of a FIP intended to address the objectives
set forth in 40 CFR 51.308(e)(2). In particular, EPA has discretion to
determine if and when a FIP addressing the objectives set forth in 40
CFR 51.308(e)(2) should be promulgated, which necessarily includes
discretion to determine the timing for complying with the requirements
of any such FIP.
iv. Description and Analysis of a Proposed Alternative Measure to BART
    EPA recognizes that the owners of NGS elected to install modern
LNB/SOFA on one unit per year at the facility over the 2009-2011
timeframe. The NOX reductions achieved by installing the
modern LNB/SOFA were not required under any regulatory program of the
CAA; therefore, installation of new combustion controls (i.e. LNB/SOFA)
was voluntary. SRP obtained a pre-construction PSD permit from EPA in
2008 for a significant increase in CO emissions, a criteria pollutant
that does not impair visibility, as a result of the installation and
operation of new combustion controls. EPA notes that LNB/SOFA is a
potential control option evaluated in this BART analysis, and that LNB/
SOFA is typically used in conjunction with installation of SCR or SNCR
to first reduce emissions of NOX formed during combustion
before further control by the downstream post-combustion control
system. EPA recognizes that the owners of NGS could have waited until a
final BART determination was issued and effective before installing any
new controls, including the LNB/SOFA.
    SRP's early and voluntary installation of LNB/SOFA over the 2009-
2011 timeframe resulted in more NOX emissions reductions
during the 2009-2018 period than if LNB/SOFA were installed
concurrently with SCR by 2018. Our BART proposal requires NGS to
achieve the BART limit of 0.055 lb/MMBtu no later than 5 years after
our final rule. For purposes of this evaluation, we are assuming the
rule is finalized in 2013 and that NGS would be required to meet the
emissions limit achievable with SCR+LNB/SOFA 5 years after 2013, or by
2018. EPA is proposing to apply these early and voluntary
NOX emission reductions as a credit in our analysis of BART
alternatives. EPA has determined that application of a credit for
NOX reductions achieved by LNB/SOFA during the 2009-2018
period is appropriate here because if LNB/SOFA were not already
installed at NGS, the BART determination EPA is proposing today would
have incorporated installation of LNB/SOFA in combination with SCR as
BART. We calculate that the early NOX emission reductions
achieved by installation of LNB/SOFA in the 2009-2011 timeframe at NGS
totals 92,715 tons.\59\ EPA is proposing to find that an alternative is
``better than BART'' if the adjusted total NOX emissions
over the 2009-2044 timeframe (i.e., emissions remaining after
subtracting 92,715 tons for the LNB/SOFA credit for early and voluntary
emission reductions) are less than total emissions under our proposed
BART determination for the same period (i.e., 358,974 tons).
---------------------------------------------------------------------------

    \59\ See spreadsheet titled ``BART Alternatives.xlsx'' in the
docket for this proposed rulemaking.
---------------------------------------------------------------------------

    We are proposing in Alternative 1, as an alternative to BART, to
require NGS to meet a NOX limit of 0.055 lb/MMBtu on one
unit per year in 2021, 2022, and 2023. EPA notes that the installation
years for Alternative 1 coincide with scheduled major outages at NGS.
    As shown in Table 12 below, EPA has calculated that the total
amount of NOX that would be emitted from NGS over the 2009-
2044 timeframe under EPA's proposed BART determination will

equal 358,974 tons.\60\ EPA has also calculated that the total
NOX emissions over 2009-2044 under Alternative 1, with the
credit for the actual early and voluntary emission reductions, will be
338,189 tons. Based on its adjusted total NOX emissions,
Alternative 1 meets the ``better than BART'' threshold (i.e., 338,189