April 15, 2011

BY CERTIFIED MAIL

RETURN RECEIPT REQUESTED Administrator Division of Air Quality Department of Environmental Quality 122 West 25th St. Cheyenne, WY 82002 Re: Proposed Initial Title V Permit for Wygen II Power Plant Dear Administrator: WildEarth Guardians and the Sierra Club submit the following comments in response to the Wyoming Department of Environmental Quality’s (“DEQ’s”) proposal to issue an initial Title V operating permit under the Clean Air Act to allow Cheyenne Light, Fuel, and Power Company, a subsidiary of Black Hills Corporation, to operate the Wygen II coal-fired power plant in Campbell County, Wyoming. These comments are submitted no later than April 18, 2011, as required by the public notice for the proposed Title V permit. The Wygen II power plant is a 100 megawatt coal-fired power plant. The facility consists of a coal-fired boiler, as well as coal, lime, and fly ash handling facilities. The facility is estimated to release 71 tons of particulate matter, including 12 tons of particulate matter than 10 microns in diameter (“PM10”), 569 tons of sulfur dioxide (“SO2”), 399 tons of nitrogen oxides (“NOx”), 854 tons of carbon monoxide (“CO”), 57 tons of volatile organic compounds (“VOCs”), and 5 tons of hazardous air pollutants (“HAPs”). Our comments are as follows:

1. The Title V Permit Must Ensure Compliance with PSD and Title V Permitting Requirements With Regards to Other Pollutant Emitting Activities at the Neil Simpson Energy Complex

A Title V Permit is required to include emission limitations and standards that assure

compliance with all applicable requirements at the time of permit issuance. See 42 U.S.C. § 7661c(a); 40 C.F.R. § 70.6(a)(1). Applicable requirements include, among other things, requirements under Title V of the Clean Air Act, Prevention of Significant Deterioration (“PSD”) requirements set forth under Title I of the Clean Air Act, regulations at 40 C.F.R. § 51.166, and the Wyoming SIP at Wyoming Air Quality Standards and Regulations (“WAQSR”)

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Chapter 6. See 40 C.F.R. § 70.2 (defining of applicable requirements). PSD requirements apply to the construction of major stationary sources and/or major modifications of major stationary sources of air pollution in areas designated as attainment. See 42 U.S.C. § 7475; 40 C.F.R. § 51.166(a)(7); WAQSR Chapter 6. Title V requirements apply to the operation of major sources. See 42 U.S.C. § 7661a(a) (requiring major source to operate with Title V permit and in compliance with all Title V requirements); see also 40 C.F.R. § 70.1(b).

PSD regulations at 40 C.F.R. § 51.166(b)(5) define a stationary source as, “any building,

structure, facility, or installation which emits or may emit a regulated NSR pollutant.” See also AQCC Regulation No. 3, Part A, Section I.B.41. These regulations further define “building, structure, facility, or installation” as “all of the pollutant emitting activities which belong to the same industrial grouping, are located on one or more contiguous or adjacent properties, and are under the control of the same person (or persons under common control)[.]” 40 C.F.R. § 51.166(b)(6); see also WAQSR Chapter 6, Section 4(a) (setting forth same definitions). These definitions are echoed in EPA’s Title V regulations. See 40 C.F.R. § 70.2 (providing definition of “major source” and “stationary source”). Thus, a permitting authority must apply a three-part test to determine whether multiple pollutant emitting activities should be aggregated for PSD and Title V purposes in order to ensure accurate source determinations:

(1) whether the sources belong to the same industrial grouping, (2) whether the sources are located on one or more contiguous or adjacent properties, and (3) whether the sources are owned or under the control of the same person.

40 C.F.R. § 51.166(b)(6). Thus, if multiple pollutant emitting activities meet this three-part test, then they are collectively considered to be a “building, structure, facility, or installation,” and thus one “stationary source” for PSD and Title V purposes. Such a single source must be permitted accordingly under PSD and Title V. In this case, the proposed Title V Permit does not include all emissions from stationary pollutant emitting activities that belong to the same industrial grouping, that are located on one or more contiguous or adjacent properties, and that are owned or under common control by the same person. Namely, the Title V Permit fails to include emissions from other coal-fired power plants and other facilities at the Neil Simpson Energy Complex. According to the industrial siting application submitted by Black Hills Corp. for its Wygen III power plant, “The Neil Simpson Energy Complex is a heavily industrialized site that contains five coal-fired power plants, two gas-fired turbines, and the Wyodak [coal] mine.” See Wyoming Industrial Development Information and Siting Act 109 Application Permit, Wygen III, Campbell County, Wyoming, Prepared for Black Hills Corporation by CH2MHill (October 2007) at ES-1, attached as Exhibit 1. Altogether, the complex includes six coal-fired power plants—Neil Simpson I, Neil Simpson II, Wygen I, Wygen II, Wygen II, and Wyodak, two natural gas-fired simple cycle turbines, and the Wyodak coal mine. See also Image below.

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Black Hills Corp. Overview of its Neil Simpson Energy Complex. See Exhibit 1 at Appendix C.

DEQ must at least analyze whether emissions from all or a portion of these pollutant

emitting activities at the Neil Simpson Energy Complex must be aggregated together with Wygen II to ensure compliance with applicable requirements in the proposed Title V Permit. However, in this case, aggregation of the pollutant emitting activities at the Neil Simpson Energy Complex appears entirely appropriate and compelled by applicable requirements.

To begin with, the coal-fired power plants, gas-fired turbines, and the Wyodak coal mine

are all pollutant emitting activities. Data from DEQ’s Title V Permits indicates the other coal-fired power plants and natural gas-fired turbines on site all release significant amounts of air pollution. See Table below.

We are also hard-pressed to believe that the Wyodak coal mine is not a pollutant emitting

activity. Indeed, DEQ normally requires coal mines in the Powder River Basin to obtain permits that limit PM and NOx emissions. Additionally, given that much of the coal from the Wyodak mine feeds the power plants at the Neil Simpson Energy Complex, it seems very likely that the pollutant emitting activities at the mine include crushing, screening, cleaning, hauling, blasting,

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and other coal production and preparation activities. We are therefore fairly certain that the operation of the Wyodak coal mine and its various activities is a pollutant emitting activity.

Emissions from Neil Simpson I, Neil Simpson II, Wygen I, Wygen II, Wygen III, and Wyodak Coal-fired Units, in Tons/Year (emissions data from Title V Permits for coal-fired units, available on DEQ’s website at http://deq.state.wy.us/aqd/TitleVPermitsIssued.asp).1

Power Plant Owner Generating Capacity

(MW) PM10 NOx SO2 HAPs

Neil Simpson I Black Hills Corp. 20 55.1 962.5 1540 0.9

Neil Simpson II (including two natural gas-fired turbines)

Black Hills Corp.

80 coal, 80 gas 161 1,323 924 4.5

Wygen I Black Hills Corp. (76.5%) 80 91 736 755 9

Wygen II

Black Hills Corp. (Cheyenne Light, Fuel and Power)

100 12 399 569 5

Wygen III Black Hills Corp. (52%) 100 68 285 512 (not

available)

Wyodak

Pacificorp (80%); Black Hills Corp. (20%)

362 1,241 5,930 8,979 19

TOTALS 742 coal, 80 gas 1,628.1 9,635.5 13,279 >38.4

Given that the other activities at the Neil Simpson Energy Complex are pollutant emitting, the remaining questions are whether they belong to the same industrial grouping, whether they are contiguous or adjacent, and whether they are owned or under common control by the same entity. With regards to ownership and common control, Black Hills Corp. either owns or commonly controls the pollutant emitting activities at the Neil Simpson Energy Complex. Indeed, Black Hills Corp.’s most recent Form 10-K Annual Report filing with the U.S. Securities and Exchange Commission indicates that the company owns 100% of Neil Simpson I and II (including the natural gas-fired combustion turbines), 76.5% of Wygen I, 100% of Wygen II (through its subsidiary Cheyenne Light, Fuel, and Power Co.), 52% of Wygen III, and also owns

1 HAP emissions are based on estimates set forth in the Title V Permits and do not represent actual limits. HAP emission estimates for Wygen III are not readily available online.

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the Wyodak coal mine. See Black Hills Corp., Form 10-K Annual Report for Fiscal Year 2010 (Feb. 25, 2011) at 12 and 45, attached as Exhibit 2. Black Hills Corp. also owns 20% of the Wyodak power plant as well (see id.), which indicates the existence of ownership and common control, a relationship bolstered by the fact that Black Hills Corp.’s Wyodak coal mine supplies 100% of the coal burned at the power plant.

It further appears that these multiple pollutant emitting activities are part of the same industrial grouping. All of the coal-fired power plants and natural gas-fired turbines belong to the standard industrial classification (“SIC”) code 4911. Although it is true that the Wyodak coal mine may have a different SIC code—in this case 1221—given the support role that the mine plays in providing coal to the coal-fired power plants, it is appropriate to classify the Wyodak mine within SIC 4911 in this case. Indeed, according to fuel receipt records file with the Federal Energy Regulatory Commission and the Energy Information Administration, more than 50% of all the coal produced at the Wyodak mine feeds the coal-fired power plants at the Neil Simpson Energy Complex.2 In other words, a majority of the output of the coal mine is dedicated to the operation of the on-site coal-fired power plants, indicating the coal mine serves as a support facility to the coal-fired power plants, which appear to be the primary pollutant emitting activity occurring at the Neil Simpson Energy Complex. Accordingly, the coal mine must be classified according to the primary activity, in this case the coal-fired power plants, even though the mine’s SIC code differs. As the EPA has noted:

[S]ources [are] to be classified according to [their] primary activity, which is determined by [their] principal product or group of products produced or distributed, or services rendered. Thus, one source classification encompasses both primary and support facilities, even when the latter includes units with a different two-digit SIC code.

45 Fed. Reg. 52676 (Aug. 7, 1980). With regards to contiguousness or adjacency, there is no question that Wygen II is contiguous or adjacent to the other power plants and the Wyodak coal mine. The other power plants are clearly located at the same site as Wygen II. Wygen III is not only right next to Wygen II (and controlled via the same control room), but Wyodak, Neil Simpson I and II, and the combustion turbines are located on the same property less than a half of a mile away from each other. The Wyodak coal mine would also be considered contiguous or adjacent, if not due to the close proximity of the mine to Wygen II, then due to the functional interrelationship between the mine and the power plants. Indeed, the EPA has noted on a number of occasions that where pollutant emitting activities are interrelated, such as through the existence of dedicated connections (e.g., pipelines, conveyor systems, etc.), and where each activity is dependent upon the operation of the other, that the contiguous or adjacent prong is met. Finally, it is important to note that even Black Hills Corp. considers the pollutant emitting activities that are part of the Neil Simpson Energy Complex to be adjacent. With regards to Wygen III, which is right next to Wygen II, the company explained “Adjacent industrial uses include the following power plants; Neil Simpson, Wyodak, Neil Simpson II, Wygen I, Wygen II, two gas-fired turbines, and the Wyodak Coal Mine.” Exhibit 1 at 4-9 (emphasis added). Just as Wygen III is adjacent to these activities, it stands to reason that Wygen II is as well. 2 These records are available at http://www.eia.gov/cneaf/electricity/page/eia423.html.

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It therefore appears that the pollutant emitting activities at the Neil Simpson Energy

Complex should be aggregated together with Wygen II and regulated as a single source to ensure compliance with PSD and Title V requirements under Clean Air Act. These activities are pollutant emitting, they are owned or under common control by the same company, they belong to the same major industrial grouping, and they are contiguous or adjacent to each other. To this end, the pollutant emitting activities should be regulated as a single source under Title V and PSD. The aggregation of these pollutant emitting activities is by no means unusual. With regards to the Clean Water Act, DEQ already regulates all the activities at the Neil Simpson Energy Complex under a single discharge permit. See DEQ, Wyoming Pollutant Discharge Elimination System Renewal Permit No. WY0001384 (Feb. 23, 2010), attached as Exhibit 3. Indeed, the most recent Clean Water Act permit issued for the activities states, “This permit authorizes discharge of wastewater from six coal fired power plants, two combustion turbine power plants, and one coal mine.” Id. at 1. The permit explicitly regulates discharge from the Wyodak plant, Neil Simpson I, Neil Simpson II, Wygen I, Wygen II, Wygen III, the natural gas-fired combustion turbines, and the Wyodak coal mine. See id. at 1-3. The fact that DEQ regulates the Complex as a single discharge source under the Clean Water Act gives credence to the need to regulate the Complex as a single source under the Clean Air Act.

Thus, to ensure compliance with applicable requirements, the proposed Title V Permit must include all pollutant emitting activities that should be aggregated together with Wygen II, as well as ensure that all pollutant emitting activities are appropriately permitted under PSD in this regard. This means that DEQ must ensure that the single source has been appropriately permitted under PSD over the years. To this end, DEQ must ensure that all emissions have been appropriately accounted for, including fugitive emissions at the Wyodak coal mine, that all relevant PSD requirements have been applied (e.g., best available control technology requirements, source impact assessment requirements, etc.). If applicable PSD requirements have not been met, then the Title V Permit must contain a compliance schedule to bring the source into compliance with PSD requirements in accordance with the Clean Air Act. See 42 U.S.C. § 7661b(b); 40 C.F.R. § 70.6(b)(3).

2. Wygen II is Subject to Case-by-Case Maximum Achievable Control Technology Requirements Under Section 112(g) of the Clean Air Act

It appears that Wygen II was either a modification to, or a construction or reconstruction

of, a major source of HAPs, and therefore was subject to case-by-case maximum achievable control technology (“MACT”) requirements in accordance with Section 112(g) of the Clean Air Act. Unfortunately, the proposed Title V Permit does not seem to ensure compliance with this applicable requirement.

In 2000, EPA placed “electric utility steam generating units” (“EGUs”) on the list of categories of sources of hazardous air pollutants established by Clean Air Act Section 112(c), making them subject to regulation under Section 112. 65 Fed. Reg. 79830 (Dec. 20, 2000). An

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EGU is defined in this context as “any fossil fuel fired combustion unit of more than 25 megawatts that serves a generator that produces electricity for sale.” 42 U.S.C. § 7412(a)(8).

After a source category is placed on the Section 112(c) list, EPA is required to promulgate maximum achievable hazardous air pollutant emissions standards for that category within two years, at which point all new and modified plants must meet those standards. See 42 U.S.C. §§ 7412(c)(5); 7412(d). However, where EPA fails to promulgate a required MACT standard, Congress provided a mechanism to ensure that new, reconstructed, or modified listed source categories do not escape MACT regulation. This is done through a case-by-case MACT determination for new, reconstructed, or modified sources under Section 112(g).

Specifically, section 112(g)(2)(A) of the Clean Air Act prohibits any person from “modify[ing] a major source of hazardous air pollutants” unless the Administrator or the State determines that the maximum achievable control technology emissions limitation for existing sources will be met.” 42 U.S.C. § 7412(g)(2)(B). Further, section 112(g)(2)(B) of the Clean Air Act prohibits any person from “construct[ing] or reconstruct[ing] any major source of hazardous air pollutants unless the Administrator (or the State) determines that the maximum achievable control technology emissions limitation under this section for new sources will be met.” 42 U.S.C. § 7412(g)(2)(B). This section further requires that the MACT determination, whether for a modification or a construction or reconstruction “shall be made on a case-by-case basis where no applicable emission limitations have been established . . . .” Id.

A “modification” of a major source of HAPs is defined as, “any physical change in, or change in the method of operation of, a major source which increases the actual emissions of any hazardous air pollutant emitted by such source by more than a de minimis amount[.]” 42 U.S.C. § 7412(a)(5). Construction is defined as “the on-site fabrication, erection, or installation of an affected source.” 40 C.F.R. § 63.2. Reconstruction is defined as:

[T]he replacement of components of an affected or a previously non-affected source to such an extent that: (1) The fixed capital cost of the new components exceeds 50 percent of the fixed capital cost that would be required to construct a comparable new source; and (2) It is technologically and economically feasible for the reconstructed source to meet the relevant standard(s) established by the Administrator (or a State) pursuant to section 112 of the Act. Upon reconstruction, an affected source, or a stationary source that becomes an affected source, is subject to relevant standards for new sources, including compliance dates, irrespective of any change in emissions of hazardous air pollutants from that source.

Id.

In this case, case-by-case MACT requirements under Section 112(g) are applicable under

the Clean Air Act. Indeed, since listing EGUs under Section 112(c) in 2000, EPA has yet to promulgate the required MACT standards for EGUs. Although EPA subsequently attempted to delist EGUs from the list of source categories under Section 112, this attempt to delist was held unlawful by the D.C. Circuit Court of Appeals and on March 14, 2008, the D.C. Circuit vacated as unlawful EPA’s attempted delisting. See New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008).

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In doing so, the D.C. Circuit held that EGUs “remain listed under section 112.” Id. at 583. The practical effect of this ruling is that for any EGU constructed, reconstructed, or modified between March 29, 2005—the date that the EPA attempted to delist EGUs—and the March 14, 2008 vacatur by the D.C. Circuit, as well as to the present, case-by-case MACT requirements under Section 112(g) would apply.

In light of the D.C. Circuit’s ruling, and in light of the fact that Wygen II commenced

construction in September of 2005 (see http://www.blackhillscorp.com/news05/082205.htm)—subsequent to the EPA’s two year deadline for promulgating a MACT standard for EGUs, case-by-case MACT requirements were applicable to Wygen II at the time of its construction and therefore currently applicable requirements that must be incorporated into the Title V Permit. Thus, if Wygen II had the potential to emit more than 10 tons/year of any single HAP or 25 tons/year of any combination of HAPs at the time construction commenced, it would have been a major source subject to case-by-case MACT requirements for constructed or reconstructed sources under Section 112(g)(2)(B). And, if Wygen II had the potential to emit less than major source thresholds—which would be likely given that the Neil Simpson Energy Complex appears to have been a major source of HAPs prior to the permitting of Wygen II—then it would constitute a modification of a major source and be subject to case-by-case MACT requirements under Section 112(g)(2)(A). Unfortunately, the proposed Title V Permit contains no case-by-case MACT limits for HAPs from Wygen II. The DEQ either needs to include such limits in the Title V Permit or include a schedule of compliance to bring Wygen II into compliance with applicable requirements under Section 112.

Although DEQ may claim that it is appropriate to overlook applying Section 112(g) requirements with regards to modifications due to the failure of the EPA to promulgate guidance in terms of what constitutes a modification, such a position is contrary to the Clean Air Act. To begin with, although Section 112(g)(1)(B) requires the EPA to promulgate guidance with respect to modifications of major sources, it is only in the context of the offset requirements of Section 112(g)(1)(A). For case-by-case determinations under Section 112(g)(2)(A), the EPA, or the State, must only ensure that “reasonable procedures for assuring that the requirements applying to modifications under this section are reflected in the permit.” In this case, the Clean Air Act compels DEQ to ensure only that reasonable procedures are reflected through any permit. Therefore, if Wygen II is subject to case-by-case MACT as a modification to an existing major source, DEQ must ensure, through this permit proceeding, a reasonable procedure for assessing whether Wygen II constituted a modification to an existing major source and apply MACT requirements accordingly pursuant to Section 112(g).

However, even if DEQ interprets Section 112(g)(1)(B) to limit its ability to comply with

Section 112(g)(2)(A) in the absence of EPA guidance, we submit that DEQ’s interpretation is flawed. There is nothing in the Clean Air Act that indicates EPA’s failure to promulgate its guidance under Section 112(g)(1)(B) would act as an impenetrable barrier to compliance with Section 112(g)(2)(A), especially given that EPA’s guidance was required to be promulgated within 18 months of the enactment of the Clean Air Act Amendments of 1990. Although a 1995 interpretive rule by the EPA espouses the position that the Agency’s delay in promulgating its

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guidance is an excuse for State’s to turn a blind eye to Section 112(g)(2)(A) requirements (see 60 Fed. Reg. 8333 (Feb. 14, 1995)), this interpretive rule is contrary to the Clean Air Act. If anything, if Wygen II constituted a modification to a major source of HAPs, Section 112(g)(1)(B) must be interpreted to prevent Wygen II from operating until EPA promulgates its guidance, especially given that EPA is nearly 20 years late in promulgating the guidance required by Section 112(g)(1)(B).

3. The Title V Permit Inappropriately Identifies Ambient Air Quality Standards as State-only Enforceable

The proposed Title V Permit states that ambient air quality standards for NOx, particulate

matter, and ozone set forth at WAQSR Chapter 2, Sections 2, 3, and 6 are “State only requirements and are not federally enforceable.” Proposed Title V Permit at 24, Condition (S1). However, this does not appear to be the case. WAQSR Chapter 2, Sections 2, 3, and 6 have been approved by the EPA for incorporation into the Wyoming SIP. See EPA, “Approval and Promulgation of Air Quality Implementation Plans; Wyoming; Restructuring and Renumbering of Wyoming Air Quality Standards and Regulations,” 69 Fed. Reg. 44965 (July 28, 2004); see also 40 C.F.R. § 52.2620(c)(1). All SIP-approved ambient air quality standards must be identified as federally enforceable in order to ensure compliance with all applicable requirements pursuant to Title V of the Clean Air Act.

Furthermore, Wyoming’s Title V Permitting rules state that applicable requirements

include “Any state ambient air quality standard or increment or visibility requirement of the WQASR.” WAQSR Chapter 6, Section 3(b)(v)(L). Thus, it would appear that “applicable requirements” include all ambient air quality standards set forth at WAQSR Chapter 2, including ambient air quality standards for PM2.5, sulfates, fluorides, and odors. The Title V Permit must assure compliance with these applicable requirements.

4. The Title V Permit Does not Assure Compliance with Ambient Air Quality Standards in the Wyoming SIP

The proposed Title V Permit does not assure compliance with PM10 and ozone ambient

air quality standards in the Wyoming SIP, as well as PM2.5 standards set forth in the WAQSR, which are also applicable requirements, in accordance with Title V of the Clean Air Act.

In this case, we are concerned that recent modeling prepared for the U.S. Bureau of Land

Management by AECOM, Inc. indicates that widespread violations of 24-hour PM2.5, annual PM2.5, and 24-hour PM10 ambient air quality standards are occurring and are projected to occur in the region where Wygen II, as well as all the other pollutant emitting activities at the Neil Simpson Energy Complex, are located. See AECOM, Inc., Update of Task 3A Report for the Powder River Basin Coal Review Cumulative Air Quality Effects for 2020, Prepared for U.S. Bureau of Land Management (Dec. 2009), attached as Exhibit 4. This modeling report looked at the impacts of a number of activities in the Powder River Basin of Wyoming, including coal-fired power plants (including all power plants at the Neil Simpson Energy Complex) and all

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other coal-related activities (e.g., mines, railroads, etc.), to a number of air quality standards. The report not only found that violations of the 24-hour PM2.5 and PM10 ambient air quality standards are currently occurring, but that violations are expected to worsen over time, and that violations of the annual PM2.5 standards are expected by 2020. The modeling reports that projected 24-hour PM10 concentrations in Wyoming may exceed 600 micrograms/cubic meter, four times higher than the ambient air quality standard, by 2020. See Table below.

PM2.5 and PM10 Data from AECOM Report, in Micrograms/Cubic Meter (see Exhibit 4 at ES-6)

Standard Level of Standard (micrograms/cubic

meter)

Base Year 2004 Impacts

2020 Lower Development

Scenario

2020 Upper Development

Scenario 24-hour PM2.5 35 87.6 218.4 218.5 Annual PM2.5 15 13.4 16.3 16.3 24-hour PM10 150 250.4 624.1 624.3 Importantly, the modeling that coal-fired power plants, such as Wygen II, and related coal activities, such as the Wyodak coal mine, are major contributors to the region’s PM2.5 and PM10 concentrations. See Figures below. Although other activities, including coalbed methane development, clearly contribute to the problem, it is clear that the current Title V permit for the Wygen II coal-fired power plant may not ensure compliance with PM2.5 and PM10 ambient air quality standards. Especially given that the Title V Permit and likely the underlying PSD permit for Wygen fail to address or account for emissions from other pollutant emitting activities at the Neil Simpson Energy Complex, it is crucial that DEQ take into account this information and ensure that permit limits in the Title V Permit assure compliance with this applicable requirement.

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Contribution of Various Activities to PM2.5 and PM10 Concentrations in the Wyoming

Portion of the Powder River Basin (see Exhibit 4 at 3-4). We are finally concerned that it appears no modeling has ever been prepared demonstrating that Wygen II, together with all other pollutant emitting activities at the Neil Simpson Energy Complex, will assure compliance with the ozone ambient air quality standard set forth in the Wyoming SIP. This standard limits ozone concentrations to no more than 0.080

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parts per million (“ppm”) over an eight-hour period.3 This oversight is of concern because the Wygen II facility, together with the other pollutant emitting activities at the Neil Simpson Energy Complex, has the potential to release significant amounts of NOx, a key ozone precursor. It is critical that DEQ ensure that the Title V Permit assure compliance with the ozone ambient air quality standards by preparing a sufficient analysis and setting appropriate limits on NOx emissions.

5. It is Unclear Why the Title V Permit Does not Limit PM2.5

We are concerned that the proposed Title V Permit contains no limits on PM2.5 emissions. According to the statement of basis, the permit for Wygen II was modified in 2007 to “reflect current regulations,” and was also modified in 2008 and 2011. Given that the PM2.5 ambient air quality standards were revised in 2006, it appears that these standards would have been applicable at the time of these permit modifications, and the Title V Permit would need to limit emissions accordingly. The need to limit PM2.5 emissions is especially critical given that PM2.5 standards in the WAQSR are applicable requirements. Without emission limits, the Title V Permit cannot possibly assure compliance with applicable PM2.5 standards.

6. The Title V Permit Fails to Require Sufficient Particulate Matter Monitoring

A. Boiler Emissions

The proposed Title V Permit requires only once/year testing for particulate matter emissions. See Proposed Title V Permit at 7, Condition (F9)(e). This appears to be too infrequent to ensure compliance with the particulate matter limits at Wygen II, especially given that the Title V Permit limits PM/PM10 emissions on both a MMbtu and hourly basis. In other words, although the Title V Permit imposes short-term limits on PM/PM10, the Title V Permit requires no short-term monitoring of PM/PM10.

We are also concerned that the proposed Title V Permit does not assure compliance with

compliance assurance monitoring (“CAM”) requirements. CAM rules state that, after April 20, 1998, if an owner or operator has not yet submitted an application for an initial Title V Permit or has submitted an application that has not yet been determined to be complete by the permitting authority, the owner or operator is required to submit the information required by 40 C.F.R. § 64.4 with its Title V Permit application. In this case, it appears that the initial Title V Permit application for Wygen II was submitted after April 20, 1998. It thus appears that CAM information was required to be submitted at the time of the initial permit application, not at the time of permit renewal as asserted by DEQ.

B. Fugitive Particulate Matter

3 Although a newer standard was adopted in 2008 limiting ozone concentrations to no more than 0.075 ppm, this standard has not yet been incorporated into the WAQSR.

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We have a number of concerns over conditions in the permit related to fugitive emissions. Fugitive dust must be effectively limited to ensure compliance with PSD requirements under the Clean Air Act and to ensure compliance with applicable particulate matter ambient air quality standards.

We are first concerned over Condition (F3). This condition requires the application of

chemical dust suppressant for unpaved plant trafficked areas and that dust suppressant and water shall be applied at a “frequency sufficient to adequately control fugitive dust.” Unfortunately, it is unclear what “adequately control” means and it is unclear exactly what level of emissions control this condition is attempting to meet. Compounding our confusion is that it does not appear as if there are any applicable opacity or particulate matter limits related to fugitive emissions, both from Wygen II and other pollutant emitting activities at the Neil Simpson Energy complex. How will DEQ assess compliance with any work practice standards if there are no applicable emissions limits? This question is particularly relevant because the operative standard under condition (F3) is only that dust be “adequately” controlled. With no explanation as to what “adequately” means, there is no basis to conclude that the Title V Permit will appropriately limit fugitive dust emissions such that applicable particulate and visible emission limits will be met.

We are also concerned that the monitoring requirements set forth at Condition (F11) are

insufficient to ensure that fugitive emissions are limited to ensure compliance. These requirements simply require the permittee to monitor the amount and dates of application of dust suppressant and water, the quantity of water supplied to the pug mill and spray nozzles, the quantity of ash loaded, and the dates that the wet handling system is not operated. Although this is all valuable information to monitor, it is unclear how this monitoring will assure compliance with visible emission limits. Of particular concern is that no frequency of monitoring is set forth, and it is unclear exactly how the permittee is required to conduct the monitoring. For example, it is unclear what is meant by “quantity.” Does this refer to an actual measurement of quantity, such as gallons of water, or a qualitative measurement?

We are particularly concerned that the Title V Permit does not include limits or

monitoring, recordkeeping, or reporting requirements for fugitive emissions from other pollutant emitting activities at the Neil Simpson Energy Complex, including the Wyodak coal mine.

7. The Title V Permit Does not Appear to Require Prompt Reporting of Deviations

Condition (F25) of the proposed Title V Permit does not appear to suffice to constitute prompt reporting of permit deviations as required by Title V regulations.

Prompt reporting is typically defined “in relation to the degree and type of deviation

likely to occur and the applicable requirements.” 40 C.F.R. § 70.6(a)(3)(iii)(B). In explaining the meaning of “prompt,” the House Report for the Clean Air Act Amendments of 1990 stated that “the permittee would presumably be required to report that violation without delay.” H.F. Rep. No. 101-490, pt. 1, at 348 (1990). In commenting on other proposed state operating permit programs, the EPA has explained:

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In general, the EPA believes that ‘prompt’ should be defined as requiring reporting within two to ten days for deviations that may result in emissions increases. Two to ten day is sufficient time in most cases to protect public health and safety as well as to provide a forewarning of potential problems.

Clean Air Act Proposed Interim Approval of Operating Permits Program: State of New York, 61 Fed. Reg. 39617-39602 (July 30,1996). Most recently, the second circuit court of appeals held that “prompt” for purposes of prompt reporting of permit deviations must at least be less than every six months depending upon the source’s compliance history and public health risk. NYPIRG v. Johnson, 427 F.3d 172 (2nd Cir. 2005). In this case, condition (F25) has some issues and appears somewhat confusing. First, it only requires that annual reporting of permit deviations occurs, which does not appear to constitute prompt.

Second, to the extent it requires more frequent reporting of permit deviations, it appears that this only applies to sources and pollutants that are not continuously monitored and only when the limits are exceeded by 100%, or if a single episode of emission limit exceedance spans a period of 24 hours or more. This seems to indicate that if a source or pollutant is not continuously monitored, no deviations need to be reported unless the exceedance is 100% or more or if the episode spans 24 hours or more. This is contrary to prompt reporting requirements under Title V.

Finally, although condition (F25)(c) seems to require reporting of deviations within 30

days, it is unclear how this squares up with condition (F25)(b). Although we are concerned that a demonstration has not been made that 30 days constitutes prompt, the Title V Permit should also clarify how prompt reporting applies given the disconnect between (F25)(c) and (F25)(b).

8. SO2 Backstop Trading Program Concerns The Title V Permit requires Wygen II to comply with the SO2 backstop trading program

set forth at WAQSR, Chapter 14, Sections 1-3. See Proposed Title V Permit at 23, Condition (G24). However, it is unclear whether this is an applicable requirement and therefore whether it should be included in the Title V Permit.

We are particularly concerned because there appear to be a number of problems with WAQSR Chapter 14, Sections 2 and 3. For example, the EPA still has not approved any SO2 milestones that would form the basis of the backstop trading program. This raises questions over how allowances will be divvied up among the 309 States, which currently only number three—New Mexico, Utah, and Wyoming—and further how such allowances will be divvied among sources in Wyoming. Finally, we are also concerned that no analysis has been completed demonstrating that the milestones and backstop trading program currently contained in the WAQSR and Wyoming’s Regional Haze Plan would actually achieve greater reasonable

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progress than would otherwise be achieved through the application of Best Available Retrofit Technology (“BART”). In the meantime, given the fact that EPA has not yet approved Wyoming’s Regional Haze SIP, including the requirements of WAQSR Chapter 14, it appears inappropriate to include these requirements in the proposed Title V Permit. If anything, the issues surrounding Wyoming’s 309 Regional Haze Plan indicate that it may be more appropriate for the State to instead adhere to the requirements of 40 C.F.R. § 51.308 with regards ensuring compliance with applicable Regional Haze requirements under the Clean Air Act.

9. The Title V Permit Must Incorporate the Requirements of the Tailoring Rule and Federal Greenhouse Gas Reporting Rule The proposed Title V Permit fails to incorporate the deadlines and substantive

requirements of the EPA’s final Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule. See 75 Fed. Reg. 31514-31608 (June 3, 2010). This rule appears to be an applicable requirement under Title V and thus, DEQ must ensure that as the tailoring rule becomes applicable to Wygen II—as well as other pollutant emitting activities at the Neil Simpson Energy Complex, that it appropriately complies. The Title V Permit must also incorporate the requirements under the EPA’s greenhouse gas reporting rule, including all requirements under 40 C.F.R. §§ 98.10, 98.30, and 98.40.

Sincerely,

Jeremy Nichols Climate and Energy Program Director WildEarth Guardians 1536 Wynkoop, Suite 301 Denver, CO 80202 (303) 573-4898 x 1303 jnichols@wildearthguardians.org

and

Peter Morgan Project Attorney Sierra Club 1650 38th St. Ste. 102W Boulder, CO 80301 cc: EPA Region 8