The U.S. Environmental Protection Agency is proposing to approve New Mexico State Implementation Plan (SIP) revisions covering a regional haze plan that doesn’t answer the controversial question about new NOx restrictions on the coal-fired San Juan Generating Station (SJGS) of operator Public Service Co. of New Mexico.
The SIP revisions were submitted to EPA in July 2011 and December 2003 and address the regional haze requirements for the 16 Class I areas covered by the Grand Canyon Visibility Transport Commission Report and a separate submittal for other federal mandatory Class I areas. EPA said in a June 15 Federal Register notice that it is proposing to find that the submittals meet the requirements.
It is proposing action on all components of the state’s submittals except for the submitted NOX Best Available Retrofit Technology (BART) determination for SJGS. EPA proposes to approve all other components, including the SO2 emission reduction milestones and backstop trading program and the particulate matter BART determination for the SJGS.
EPA is also proposing to approve several SIP submissions offered as companion rules to the regional haze plan, including submitted regulations for the Western Backstop Sulfur Dioxide Trading Program and for the inventorying of emissions. EPA will be taking comments on these proposed approvals until July 16.
The NOX BART requirement for the SJGS is presently satisfied by the BART determination under a federal implementation plan. “We have no current statutory duty or consent decree obligation to act on this component of the state’s Regional Haze SIP submittal,” EPA wrote. “We will, however, propose action on the submitted NOX BART determination for San Juan Generating Station through a future, separate proposal, unless the state of New Mexico earlier withdraws it in favor of an alternative that it may develop through discussions with the source and EPA.”
San Juan units the only BART sources in New Mexico
A screening modeling analysis evaluated sources that were identified as BART-eligible and determined the only sources that did not screen out in New Mexico were the four units of the SJGS. The results of this analysis indicated that SJGS, on a facility-wide basis, causes visibility impairment at all 16 Class I areas that lie within 300 kilometers of the facility.
However, this modeling was based on the installed control technology at the time and does not reflect emission reductions due to the installation of consent decree controls. Revised modeling performed by state and EPA, including controls required by the consent decree and currently installed, further confirmed that SJGS still causes visibility impairment at more than half of the Class I areas in the vicinity of the facility and contributes to visibility impairment at the remaining areas on a facility-wide basis. Modeling indicates that the visibility impairment is primarily dominated by nitrate particulates.
The consent decree is a 2005 legal agreement between regulators and San Juan owners that resulted in the installation of low-NOX burners with overfire air ports and a neural network system to reduce NOX emissions, and a full-sized pulse jet fabric filter (PJFF) to reduce particulate matter (PM) emissions. The wet limestone scrubber was modified to eliminate flue gas bypass, and dibasic acid was added to the scrubber process to improve SO2 removal. Installation of these controls on all four units was completed in the spring of 2009. The consent decree has emission limits of 0.3 lb/MMBtu NOX, 0.015 lb/MMBtu PM, and 90% annual average control, not to exceed 0.25 lb/MMBtu SO2 for a seven day block average for each unit.
EPA proposes to approve the state’s subject-to-BART determination and find that units 1, 2, 3, and 4 of the SJGS are the only New Mexico sources subject to BART. SJGS Units 1 and 2 have a unit capacity of 350 and 360 MW, respectively. Units 3 and 4 each have a unit capacity of 544 MW.
The SJGS currently has the pulse jet fabric filters installed and an emission limit of 0.015 lb/MMBtu for PM. Public Service Co. of New Mexico identified flue gas conditioning with hot side electrostatic precipitator (ESP), pulse jet fabric filter (PJFF), compact hybrid particulate collector, and max-9 electrostatic fabric filter as available controls for PM at SJGS. At the state’s request, PNM also identified wet ESP (WESP). The state concluded that BART for Units 1–4 for PM is the existing PJFF and the existing emission limit of 0.015 lb/MMBtu. EPA had some quibbles with the state’s methodology, but is proposing to approve the state’s PM BART determination.
EPA isn’t acting on NOx because the issue is tied up in court
PNM Resources (NYSE: PNM), the parent of PNM, pointed out in its May 4 Form 10-Q filing that the state of New Mexico submitted its SIP on the two elements of the visibility rules – regional haze and interstate transport – for review by EPA in June 2011. The SIP found that BART to reduce NOx emissions from SJGS is selective non-catalytic reduction (SNCR) and requires SJGS to install SNCR on each of its four units. In August 2011, EPA published its FIP, stating that it was required to do so by virtue of the consent decree. The FIP included a regional haze BART determination for SJGS that requires installation of selective catalytic reduction (SCR) on all four units within five years of the rule’s effective date of Sept. 21, 2011.
PNM said it filed a petition for review in the U.S. Court of Appeals for the Tenth Circuit in September 2011, challenging EPA’s regional haze FIP decision as arbitrary, capricious, or otherwise not in accordance with law. PNM has also asked EPA to reconsider the FIP. In October 2011, the state petitioned the Tenth Circuit to review EPA’s decision on the same grounds as PNM’s challenge and requested EPA to reconsider its decision. These parties filed motions with the Tenth Circuit to stay the effective date of the rule, which were denied on March 1. These parties have also asked EPA to stay the effective date of the rule, but EPA has not responded, said the Form 10-Q. WildEarth Guardians also filed an action to challenge EPA’s rule in the Tenth Circuit, seeking to shorten its compliance period from five years to three years. Various environmental groups intervened in support of EPA in both PNM’s challenge and in the case brought by the state. The Tenth Circuit entered an order in March scheduling briefing on the merits in the challenges to the FIP. Briefing is scheduled to be complete by mid-September, with oral argument scheduled for late October.
On March 30, the U.S. District Court for the District of Columbia entered a consent decree to settle litigation with several environmental groups, which requires EPA to review and take action through a proposed rulemaking on New Mexico’s regional haze SIP on or before April 16 and a final rulemaking on or before Aug. 15. On April 13, a stipulation among the parties to the consent decree was filed in the District Court giving EPA a 30-day extension, until May 16, to review and take proposed action on the New Mexico SIP. The Aug. 15 deadline for final rulemaking was not affected by the stipulation.
The compliance deadline of the FIP requires PNM to take immediate steps to commence installation of SCR. In January, PNM said it issued an RFP to prospective bidders for the project with bids due in April 2012. PNM received bids for this project from several bidders on April 20 and was as of early May in the process of evaluating these proposals. PNM estimates that the installation of SCR at SJGS will cost $750m to $1bn and installation of SNCR at SJGS will cost about $77m. PNM’s share under either technology is 46.3% based upon its SJGS ownership interest.
On April 25, PNM received a copy of a letter from two of the five commissioners of the New Mexico Public Regulation Commission addressed to the governor of New Mexico and the state’s congressional delegation. In the letter, the commissioners ask that the parties to the litigation join to ask EPA to stay both the FIP and the litigation and to consider a “third alternative” to the FIP and the SIP. They suggest that the third alternative be retiring one or more of the existing coal units at SJGS and replacing that capacity with gas-fired generation. On April 26, PNM received a copy of a letter from the governor of New Mexico addressed to the EPA Administrator. In that letter, the governor requested that EPA stay the FIP and respond to the SIP by approving it or explaining why it is not approvable. The governor requested PNM to develop viable alternatives to the FIP, assuming that EPA stays the FIP and responds to the SIP.