limit below 0.06 lb/MMBtu is not achievable through retrofit of SCR on
coal[hyphen]fired electric generating units.\140\
---------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

    \145\ See 77 FR 42859, Table 18.

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

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

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

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

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

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

    \148\ 76 FR 58610.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    \160\ 70 FR 39129.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                     Table 16--Coronado 1: Annual Emission Estimates